Topic 4 : The Rise of The USA To Industrial
Pre-eminence
Department of Economics
University of Warwick
November, 2012
1. How important were institutions for the USA?
The U.S. growth was not just based on the blessing of rich
endowments.
Institutions that aided efficient utilization of resources were
crucial.
For example, due to the establishment of The U.S. Geological
Survey in 1879, it quickly rose to world leadership in training
mine engineers.
The consequence of this is clear as mass production industries
were intensive in the use of fuel and materials.
1. How important were institutions for the USA?
Establishment of state universities that were geared toward
agricultural and engineering educations
(Morrill Act of 1862, Hatch Act of 1887)
Business enterprises like GE, DuPont, AT&T and Kodak all
set up formal research laboratories before WWI
But note that American performance during this period was
not solely based on science nor advanced technical education.
American technology was practical, shop-floor oriented, built
on experiences (collective invention)
1. How important were institutions for the USA?
The role of tariff
High tariffs protected U.S. manufacturing from foreign
competition
Based on this protection, U.S. manufacturing could develop.
Obviously, high tariffs were costly for U.S. consumers because
they had to pay higher prices.
3. What does the Rothbarth-Habakkuk thesis state? How does this apply
to USA?
Rothbarth-Habakkuk thesis
A statement from the special report made by two renowned
British manufacturers visiting American factories in 1853,
“on the account of the high price of labour the whole energy
of the people [in the United States] is directed to improving
and inventing labour-saving machinery.”
This statement is the backbone of Rothbarth-Habakkuk thesis.
3. What does the Rothbarth-Habakkuk thesis state? How does this apply
to USA?
More specifically, R-H thesis claims that
US was scarce in labour but rich in raw materials
↓
High wages and cheap raw materials
↓
Incentive is to develop L-saving, K-using and
resource-using technology
↓
‘American system of manufactures’
3. What does the Rothbarth-Habakkuk thesis state? How does this apply
to USA?
A good example can be found in cotton textile industry.
(Sandberg, 1969)
Ring spinning used by U.S.
- required less skilled labour, more K, wasted more cotton
- better at producing coarse and low quality yarn
- this type of yarn more heavily demanded domestically
Mule spinning used by Britain
- required skilled labour and less K
- better at producing high quality yarn
- faced more diversified demand from international market
3. What does the Rothbarth-Habakkuk thesis state? How does this apply
to USA?
Generally ring spinning was considered to be more throughput
technique
But given the factor prices and demand conditions, Britain
was rationale in choosing mule spinning method.
4. How beneficial was a mass market for growth in the USA?
‘American manufacturing system’ and mass production were
crucial for the emergence of U.S. manufacturing.
Without mass market, mass production might not have been
so successful.
Moreover, American consumer tastes were relatively more
homogeneous and this made mass production system (which
produced standardized goods) more ideal.
5. How much did mass production contribute to productivity before 1914?
6. How transferable were the innovations that helped growth in the USA?
American technological progress was efficient response to its
distinct conditions which include
- factor endowments and prices
- market size
- tastes
Therefore adopting American technology to an economy that
had different economic conditions would not have yielded the
similar results.
In that sense Britain was rational in not adopting American
technology because it had completely different conditions.
7. Why was the USA able to absorb so many migrants between 1870 and
1914?
The Homestead Act
- Farmers could claim lands in the West for ‘relatively’ free
- This westward expansion didn’t lower city wages
- High wages attracted immigrants who helped US growth
Migration and investment policy
- Most of migrants were young, ‘free‘ boost to labour force
- Skilled labour brought technologies
- Fast K deepening due to K investment from Britain
- Also this enabled US to absorb more labours
7. Why was the USA able to absorb so many migrants between 1870 and
1914?
Population Growth in the U.S. 1800-1900
7. Why was the USA able to absorb so many migrants between 1870 and
1914?
2. What were the primary reasons that the USA overtook Britain?
Answers can be found by summing up the answers above.
8. What were the key reasons for the rise of the USA to industrial
pre-eminence?
Answers can be found by summing up the answers above.