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Reasons for rapid econmic growth after the civil war, : - Coggle Diagram
Reasons for rapid econmic growth after the civil war
Availability of Capital
This period was essential as entrepreneurs would often need to borrow money
There was an abundence of profits produced from the Civil War, this encouraged the development of an established stock market
Buisnessman were now able to raise the necessary finance from this stock exchange
The annual turnover of the New York stock exchange was $6 billion
Impact of the civil war
Stimulated demand for goods
Army needed guns, clothing and transport
Government had to raise money to pay for war
Paper currency introduced and the banking system had to evolve to cope with growing amount of money
Tariffs - reduced competition, protected US manufactured goods and provided income for the government
Availability of land
Expanded Westwards
Created markets for manufactured goods
Encouraged more railroad development
Fertile land – production of wheat, in turn farming expanded plenty of food for the population
Greater demand for food at home and export encouraged mechanisation in agriculture
Increased demand for manufactured goods
The role of government
The constitution provided the federal government with a minor role
Buisnessman thus had substantial freedom to run their enterprises
There was a long period of minimal government interference in the economy
Congress and State governments were occupied by global issues which allowed for little interference with buisness
Congress was more than happy to impose tariffs which protected the local government
Population growth
1860/70 rapid growth
Cheap labour for expansion
1860 31.5 million
1880 50 million due to increased income, better food, better housing, public health, medical knowledge and lower death rate.
Immigration 2.8 million moved to USA in 1870s from Europe and Asia
Stimulated further demand for coal, clothes and food.
Transport
1869 first transcontinental railroad opened the west for mining a ranching
New York to San Francisco 6 days instead of 6 months
1868-1873 53,000Km of new track laid
Expansion in transport stimulated growth:
Employed 1 million by 1900
Needed steel, coal, encouraged manufacturers to provide engines, vehicles and stations.
Encouraged competition, push down prices, technological improvements to improve quality
Rail centres needed roads to distribute goods
Technological innovation
Andrew Carnegie
Brought the Bessemer Converter process to the USA (reduced production costs)
Carnegie kept prices low and re-invested in new manufacturing plants and equipment
Corporations and Trusts
Corporations
Own several businesses
Hire a management team to run the corporation
Buy, sell and own property
Take over more companies
Trusts
Some states stopped people from owning shares in more than one state/company
Henry Flagler – Secretary for Standard Oil
‘Trustee’ for stocks and property that the company was not allowed to own
Three employees told to act as trustees for all property outside the state
Legal way to avoid state laws
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