Chapter 18 Industrial Revolution in the West: 1700-1914

Section 3 The Industrial Revolution: Second Phase

The Industrial Revolution of eighteenth and early nineteenth century Britain spread to the United States and then to the rest of Europe.  Great Britain was the leading industrial state until the 1860s; Germany and the United States rapidly caught up afterwards.  France and Russia began to develop their own industries as well. By the early 1900s, the European world was transformed. 

Electricity and Telecommunications

A new kind of energy source, electricity, came into use during the nineteenth century.  At first employed for communication, electricity became a source of power that dramatically changed life and work.

The telegraph and telephone.  Scientists discovered the principles of an electric circuit in the early 1800s.  In 1832, Samuel F. B. Morse of the United States conceived a system for switching a circuit on and off to transmit messages in a code of short and long stops ("dots and dashes").  Morse tested his system in 1844, and by the 1860s telegraph lines on land and undersea connected much of the world. By the 1870s, the demand for telegraph service began to outgrow the ability of new lines to provide it.  In 1876, Alexander Graham Bell, a Scottish-born American inventor, designed the first telephone, enabling people to speak directly to one another instead of in messages that required decoding. In 1888, Rudolf Hertz in Germany confirmed a theory that electric circuits emitted electromagnetic or "radio" waves through the air in addition to conducting electric current.  In 1894 Guglielmo Marconi of Italy invented a way to use these waves to transmit telegraph messages wirelessly.  Broadcasting voice and music with radio waves began in the 1920s with improvements in the means of transmission and reception. 

Electric light and power.  Before the 1870s, batteries were the only source of useful electricity.  However, the English scientist Michael Faraday had shown in 1831 that spinning a metal armature in a magnetic field could generate an electric current.  Using steam engines to spin the armatures, machines called generators could supply a continuous flow of electricity to attached circuits.  In 1878, Thomas Edison conceived a system for generating electric power to supply incandescent lamps that he designed, and in 1882 Edison began lighting part of New York City from an electrical generating station.  A rival, George Westinghouse, devised a system that could send electric power over much longer distances.  The Westinghouse system replaced the Edison one for most uses of electricity.

            In addition to lighting homes and workplaces, electricity supplied power to streetcars and to machinery in factories.  With electricity, machines in factories no longer needed to be connected to a nearby source of power by means of wheels and shafts.  Factories could rely on power generated many miles away. Electricity could also power smaller machines, which furthered the mechanization of small businesses and led to new household appliances that changed domestic life and work. Refrigeration enabled a wider range of food products, especially fresh meat, to be delivered over longer distances. 

Electric power did not lessen the need for coal.  Generating plants located away from sources of water power still needed to use steam to operate generators.  Coal was the fuel for producing this steam and it was also the main source of home and workplace heating until well into the twentieth century.  Refined petroleum and natural gas eventually took its place. 

New Chemicals and New Machines

New chemical industries also arose in the nineteenth century.  More economical processes for making steel provided a stronger material for building.  Refined petroleum at first provided lighting and then supplied the energy for a new kind of vehicle, the automobile.  Smaller chemical industries supplied soap to consumers, dyes for clothing, and specialized products for agriculture and industry.           

Steel.  Steel was a stronger form of iron traditionally produced in small quantities for weapons.  In 1856 the British engineer Henry Bessemer developed a blast process that made steel from iron much more economically.  The Scottish-born American Andrew Carnegie began making steel rails with the Bessemer process on a large scale in the United States in the 1870s.  The new rails lasted seven times longer than iron ones and could carry heavier trains.[20]  The use of steel for railways spread to Europe and the world.

            A few years after Bessemer, the German-born William Siemens developed in England the "open-hearth" method for producing steel.[21]  Open-hearth steel took longer to make but was better suited for buildings and bridges. As urban land became more expensive, tall buildings became economical, especially after the invention of the elevator.  Buildings in American cities grew taller after the 1890s.  European cities were less willing to alter their traditional appearance and did not allow buildings as tall as in America until the end of the twentieth century.  Structural steel allowed bridges of longer span to cross great rivers.  John A. Roebling's Brooklyn Bridge helped unify the boroughs of New York City upon its completion in 1883.           

Motor vehicles. The need for an external boiler to produce steam made steam engines "external combustion" engines.  In railway locomotives, high-pressure steam from the boiler went to a piston in a cylinder on each side of the locomotive, turning attached wheels. 

In 1876 the German inventor Nikolaus Otto developed an "internal combustion" engine, in which the combustion of a gas and air mixture inside the cylinder drove a piston and turned a wheel.  The power produced by this engine was much greater than that of a steam engine of comparable weight.[22] 

            In 1885 Karl Benz built a different kind of internal combustion engine, using liquid gasoline as a fuel, to drive a three-wheeled vehicle.[23]  Gottlieb Daimler soon made a gasoline car with four wheels.  During the 1890s, gasoline cars faced competition from battery-powered electric vehicles and from cars powered by small steam engines.  The greater range and speed of gasoline cars after 1900 soon eclipsed electric ones, though, and the complexity of steam cars made them difficult to maintain. 

Only the wealthy could afford automobiles until 1908, when Henry Ford in the United States introduced a rugged automobile, the Model T, that fell dramatically in price as he developed an assembly-line process to mass-produce it.[24]  Other car makers in America adopted Ford's methods, and by the end of the 1920s, a handful of large manufacturers dominated the U.S. auto industry.  In Europe, automobiles remained luxury vehicles for much longer, but mass-produced cars became common in Europe later in the twentieth century.            

Airplanes.  In 1799, the English experimenter Sir George Cayley proposed the basic design of an airplane, with main wings crossing a lengthwise aircraft body having a tail fin.  Before the twentieth century, though, steam engines were too heavy to lift a piloted airplane in steady level flight.  The gasoline engine made powered flight possible.  But the key to aviation was an understanding of how to design an airplane that could be maneuvered in the air.  The American pioneers Wilbur and Orville Wright experimented with gliders and homemade testing equipment.  After successfully flying a glider, the Wrights added a gasoline engine and made the first powered flight at Kitty Hawk, North Carolina, in 1903. 

Within a decade, improved airplanes could fly more than 100 miles per hour.[25]  But few airplanes carried paying passengers until the 1920s.  Airlines were too expensive for most travelers until the coming of jet airplanes later in the twentieth century. 

Petroleum.  During the 1850s, a new source of energy came onto the market.  Deposits of crude oil, or petroleum, underground had long been known to be combustible and lamps burning a petroleum distillate, kerosene, proved an acceptable source of indoor lighting.  The American refiner John D. Rockefeller built a near-monopoly, Standard Oil, in the 1870s by making a safe kerosene for indoor use and by buying out some of his competitors and forcing others out of business. The brothers Robert and Immanuel Nobel, originally from Sweden, held immense holdings in the Baku oil fields of Russia and created a worldwide kerosene refining business in competition with Standard Oil.[26] 

The new chemical industries generated the largest private fortunes and gave rise to new kinds of private philanthropy.  Alfred Nobel, a third Nobel brother and the inventor of dynamite, founded the Nobel Prizes to reward individual achievement in the sciences, literature, and public life.  John D. Rockfeller and Andrew Carnegie took a different approach and established foundations to improve society as a whole through better public health and higher education.

The spread of electric power at the end of the nineteenth century threatened the oil industry with the loss of its market for indoor lighting.  The automobile rescued the oil industry and provided an even larger market for a different distillate of crude oil, gasoline.  In 1912, the U.S. chemical engineers William Burton and Robert Humphreys devised a process that increased the gasoline refined from a barrel of crude oil from ten to twenty percent.  Later advances in refining doubled this amount and improved its quality.  

Industrialization in Europe

By 1850, only Great Britain had become extensively industrialized – an achievement that went together with becoming 50% urbanized.[27]  At first, the British tried to prevent their new technology from spreading.  Until 1841, British industrial craft workers and engineers were prohibited from traveling overseas or exporting any industrial equipment.  However, such restrictions were impossible to maintain and industrialization began to spread.  Belgium was the first country on the continent to follow Britain’s example of industrialization.  Germany and France followed, as did Russia later.[28]  Each nation experienced industrial development in its own way.[29]  

France.  The French Revolution and Napoleonic Wars (1789-1815), and upheavals later in the nineteenth century, delayed a stable form of government in France until the establishment of a third republic in 1871.  The country did not industrialize as fully as Britain.

The French Revolution distributed the land to those who farmed it, and afterward the peasantry resisted changes that might have sharply reduced the number of people in farming.  France's population growth also slowed in the nineteenth century, resulting in less incentive for people to move to the cities.[30] By 1900 nearly half of the French people still worked in agriculture.[31]  An iron and coal industry grew after 1820 and a railway network followed, but in 1870 France lost a war with Germany and had to surrender Alsace and part of Lorraine, two territories rich in iron ore.[32]  A modern steel industry appeared in France but was small in scale. 

            One reason that French industrialization lagged was that the French had a stronger craft tradition.  France had a reputation for fine silks and furniture, and traditional artisans were reluctant to risk losing that reputation by using modern technology.  France developed new industries, such as the automobile and the airplane, but its manufacturers favored small markets of wealthy buyers.[33]  Much of the funds available in France for investment after the 1890s also went to develop Russia, a country that France needed as a military counterweight to Germany. 

Germany.  After its unification in 1871, Germany industrialized quickly, but its economic advance strengthened a form of government that was only partly democratic.  The king of Prussia, who became emperor, could appoint ministers and set policy.  An elected German parliament had only limited powers. 

During the 1850s and 1860s, modern coal and iron industries established themselves in Germany, and after the country's unification a single national market permitted them to grow much larger in scale.[34]  The 1879 Gilchrist-Thomas process enabled steel to be produced from the kind of iron ore that was plentiful in the country, and the Ruhr valley in western Germany became a center for steel manufacturing.  The nation also became a world leader in chemicals by pioneering the use of industrial research laboratories.[35] 

            One of the fastest growing German industries was the electrical industry. Werner von Siemens (Vehr-nuhr fon Zee-muhnz) built a telegraph company that expanded to include factories for the production of telegraph and other electrical machines.[36]  His brother, Charles William Siemens, settled in England and pioneered the "open hearth" process of steel making.

            Emil Rathenau (ay-mil Rat-eh-now) believed that massive industrial organization would relieve the social tensions that rapid economic development had created.  The company he founded, AEG, was the nation's largest electrical firm by 1890.[37]  By 1914, the Siemens and Rathenau companies produced more electrical equipment than any country in the world.[38]

            In Britain, agriculture and industry had to fend for themselves under an economic policy of free trade that opened the country to competition from foreign producers.  In contrast, the German government encouraged its agriculture and industry to protect each other.[39]  German industry accepted high tariffs on imported food so that landowners and farmers did not have to compete with cheap foreign grain.  Landowners in turn supported high tariffs on foreign manufactured goods to protect German industry in its home market.  Rapid population growth supplied enough workers for the country's rapidly growing cities.   

Russia. While much of Western Europe rapidly modernized, Russia faced huge obstacles to industrialization.  The country was vast, with its natural resources widely dispersed and its transportation network limited.[40] Roads were few and navigable rivers froze in the winter and often flooded in the spring.[41]  Russia had merchants who could become entrepreneurs.  But despite having the largest population in Europem, Russia had few free workers because most of the people were bound by serfdom to the land that they farmed.[42]

            Tsar Nicholas I freed the serfs on state land in the 1840s, and after Russia's defeat in the Crimean War of 1854-56, his successor Alexander II emancipated the serfs owned by the nobility in 1861.  Rapid industrial development came in the 1890s under the direction of Sergei Witte (veet-ay), the minister of finance from 1891 until 1903. Witte encouraged foreign investment and doubled the mileage of Russian railroads between 1895 and 1905.[43]  He encouraged Russian industry by imposing high tariffs on imported goods, and he reformed the banking system to make money more available for industrial development.[44]  His successor, Pyotr Stolypin, removed barriers to individual landholding by farmers and promoted better farming methods.

            Because Russia industrialized so late, it could take advantage of the technological developments and skills that existed in western Europe. Russia imported experienced engineers and laborers to supplement its vast supply of unskilled labor.  In the years before 1914, the country built some of the most advanced manufacturing plants in the world and a third of all Russian factories employed more than 500 workers.  But many had very recently come from tightly knit villages, and the sheer size of the factories contributed to a sense of alienation that the squalor of Russia's newly industrializing cities engendered.[45]

            Much of the profit from Russia's new industries went to western investors rather than to Russia's own people.  Rapid population growth offset many of the gains in urban employment, and the Russian people as a whole remained poor.  More seriously, Russia's government remained autocratic and unrepresentative.  Popular unrest after the Russo-Japanese War of 1904-5 prompted only limited political reforms.

New Organizations for Business

Before the Industrial Revolution, most businesses were either sole proprietorships (owned by one person) or partnerships (owned by two or more people). While these business owners were free to make economic decisions, they were also personally responsible for all debts of the business.  New laws that allowed founders to incorporate a business with limited liability protected the owners from personal ruin if a business failed.  This new kind of corporation attracted outside investors who, in return for investing funds, received shares of the business (called shares of stock), could elect directors, and could receive profits (called dividends) according to the number of shares they owned.  

            A large corporation could produce goods more cheaply than small companies. When this happened, smaller businesses competing in the same industry often had to sell themselves to the larger firms or close down.  When a single company controlled nearly all of a market, it enjoyed a monopoly.  Although no company achieved a full monopoly in any major industry, many of the newer industries consolidated into a handful of large firms.

            In Great Britain, the chemical and electrical industries came under the control of large firms, as did shipping and mining overseas.  In the United States, Andrew Carnegie sold his company in 1901 to the American financier J. P. Morgan, who merged it with other steel firms to form the United States Steel Company with 60 percent of the nation's steel-making capacity.  The Ford Motor Company in the 1910s accounted for about half of U.S. auto production, and two firms, General Electric and Westinghouse, dominated the U.S. electrical industry.

            The German form of business combination, the cartel, was somewhat different. The cartel was an association of firms within the same industry. A cartel regulated prices and output in an industry.  Cartels in one country also made agreements with cartels or companies in others.  For example, German steel producers made agreements with steel makers in Britain, France, Belgium, and the U.S., thereby controlling the world's market for steel rails.

            Business combination was not restricted to newer industry.  Banks and other financial institutions began to consolidate in the late 1800s.  In Britain the number of London banks grew smaller, although their business grew as Britain became the world's leading lender and provider of insurance services.  In Germany after 1871, only four banks controlled the nation's financial business, and in America a single firm, the J. P. Morgan bank, was dominant.[46]

Section 3 Review

IDENTIFY and explain the significance of the following:

George Westinghouse

Andrew Carnegie


Emil Rathenau

Sergei Witte

LOCATE and explain the importance of the following:

Alsace and Lorraine

Ruhr Valley

1.      MAIN IDEA  How did electricity change industry and people's daily lives?

2.      MAIN IDEA  Was there a technological reason for large organizations?

3.      GEOGRAPHY  How did geography and natural resources affect industrialization in France, Germany, and Russia?

4.      WRITING TO EXPLAIN  Imagine that you are Sergei Witte. Prepare a presentation to the Tsar explaining how you would plan to build Russia as an industrial country.