Today I want to pick up from the last episode, where I talked about the birth and growth of Iron and Steel, railroads, and the oil industry through the early 1800s; evidence of the first industrial revolution in the US.
There’s no real date for when the “revolution” occurred, but the biggest enablers of that first industrial revolution were:
• coal-fired furnaces to convert iron ore to finished metals,
• the steam engine and steam driven equipment, and
• Eli Whitney’s milling machines which established the American System of Manufacturing, where machines would produce parts in volume to be assembled into products sometime later.
In the last decades of the 19th century, three more technological advances fueled a second industrial revolution:
• the completion of modern transportation and communications networks
• “the scientific method.”
The modern communication networks began with Samuel Morse’s invention of the telegraph in 1837. But it wasn’t until 1844, when Congress finally financed the construction of the first telegraph line from Washington DC to Baltimore, Maryland, that the revolutionary nature of this invention was realized. Within 10 years, 23,000 miles of cable connected the country. As railroads expanded westward, and eastward from California, the telegraph went along with it.
In 1856, the development of the “Bessemer” process for making steel dramatically reduced the time, energy, and money required for this task. Since steel lasts longer and is much harder than iron, it became the substance of choice for making railroad rails.
From 1864 to the end of the century, Bessemer converters produced millions of tons of steel rails as the nation expanded westward.
The expanding steel market, driven by the demand of railroad networks, led to more efficient production methods and to the discovery of new deposits of coal and iron ore, dramatically reducing prices. In 1880, Andrew Carnegie’s companies could produce a ton of steel for about $67. By the turn of the century, a ton of steel cost only $17. Steel mills ultimately exceeded 10 million tons annually. J.P. Morgan, Elbert Gary, and Charles Schwab built the US Steel Corporation into the largest industrial enterprise on Earth.
The discovery of new oil reserves and more efficient refining reduced the cost of producing a gallon of kerosene from 54 cents to less than ½ cent.
The deployment of electrical power generation provided a much more flexible power source to businesses than steam. Factories had also relied on kerosene lamps for illumination for years. With Edison’s perfecting of the incandescent lightbulb, factories began converting to electricity and adding better illumination, achieving higher production rates both day and night along the way.
Electricity provided the power behind exciting developments in chemistry and metallurgy, which were integrated into manufacturing operations. Engineering emerged as a dominant skill for manufacturing companies as they began to apply the scientific method (controlled experimentation) to solving problems with products and processes.
Companies operated with high levels of capital equipment and relatively low levels of labor (high capital to labor ratio for you economists) which resulted in economies of scale and lower unit costs. But sustaining those lower costs required operation of the equipment at near full capacity.
This strain on resources gave birth to the science of management and to mass production systems. These developments were put to use in two new industries born from the desire of Americans to have more control over getting around. As the railroads, the telegraph, the steamship, and long-distance cable networks brought more people together, the turn of the century witnessed the birth of the automobile industry and the aviation industry.
We’ll talk about these industries more in the next episode.
Have a great day and I’ll see you tomorrow.