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The Modern Industrial Economy

Before the beginning of the eighteenth century, Europe was in dire need of a transformation. One that would change their style of life, not only for the well being of the countries, but for the people as well. This transformation could mean the development of nations into world powers. This need was fulfilled by one word, industrialization. Perhaps the biggest change in history was the Industrial Revolution of the 18th century. This was not only carrying economic changes, but social changes as well.

This extensive mechanization from home manufacturing to large-scale factory production was without doubt, the largest conversion for labor fabrication. Let’s take a look at some necessities for a country to industrialize. First of all, raw materials would be needed in whatever industry you would want to develop. Without a source of power or materials, the product would not be able to be produced at a large factory. Surplus of food is another necessity for industrialization. Without this extensive food supply, laborers would not be fed properly which could result in catastrophic losses.

Another major element in the development of industry is entrepreneurs. Since Britain had a sizable middle-class with entrepreneur ideas, they seemed to fit more and more into this equation. Labor Force is also a large contributor to this cause. With an ability of laborers to leave their homes and go into factories, people started realizing the positive effects of big business. One distinct feature that was possessed by Britain was wealth. At the time, Great Britain was one of the wealthiest nations and could afford to dump large sums of money into buildings and export.

Finally, one of the last things that were needed that could limit all the other elements is the possession of a government that was open to new ideas. If people in a nation could not get their government to back the ideas, they would have nothing. It was up to the entrepreneurs to convince the government officials that money could be made and power could be established. But why did Britain industrialize first? In the beginning of the 18th century, these qualities were not that noticeable. Actually, the Netherlands and France were just as wealthy at the time, had equally skilled populations, and had just as powerful of an empire.

The French government truly was seen as more quick to respond, especially in the area of transportation and communication. The French had also established schools for technicians and did their own training for civil engineers to build such things as roads, bridges, canals, etc. One reason that Britain left France in the dust was the desire to change their traditional ways. Britain was willing to risk everything that came along with changing everyday life; France was not quite ready for this. They were not ready to go out on a limb and risk everything that they had accomplished.

This was also true with the Netherlands. Even though they too had sufficient wealth, a good transportation system, a fine navy, and technical know-how, they lacked risk-taking along with natural resources. Britain possessed many advantages, which gave it the leg up to become the world’s production country. First of all, it had a labor pool of hard-working, skilled people who could no longer earn a living for their families on the land they owned. Also, large supplies of coal and iron gave the British a long tradition of mining, which obviously worked in their favor.

In the early years of the industrialization period, canals supplemented Britain’s river transportation system and toll roads helped build profit. This role that was played by the entrepreneurs in Britain’s economic development was remarkable and distinctive in the history of the industrialization process. No other country in Europe relied so heavily on entrepreneurs for its development. The British business thrived to favor economic expansion. From laws allowing enclosure of small land to parliament chartering businesses, the freedom of entry into economic activity was astonishing.

Now let’s take a look at what the Industrial Revolution made for changes in technology. When most people think of the Industrial Revolution, they think of the inventions that helped in the transformation from handicraft to machine manufactured products. The early stages of technological advances grew from simple changes, which did not require much capital. Investigation of some key industries indicates how early industrialization took off. First of all, let’s talk about transportation and communication. Major road building took place in the eighteenth century in England and in France.

Both the United States and Britain experienced an explosion in canal construction between 1760 and 1820. These canals were soon outperformed by railroads, which caught the public imagination. Steam-powered locomotives began replacing horse-powered railroads in the 1820’s. Continental governments expended major efforts to develop rail networks, especially where canals and roads were inadequate. These railroads were so successful, that by the nineteenth century, English roads were just paths leading to the station.

Communication changed just as rapidly as transportation. Britain developed the penny post in 1840, making it possible to send a letter to any part of the kingdom for about half an American penny. But, the cost of postage was so high elsewhere that letters were rarely written. Then, when the telegraph was invented, it developed rapidly as businesses demanded a cheap and fast way of communication. Within seven years the first undersea cable was laid under the English Channel, and by 1866, transatlantic cable was in operation.

Now let’s take a look at the Iron Age. First of all, steam power enabled employers to hire the weak to run the machinery that allowed an even broader work force. The steam-powered engines could produce a much larger force than the traditional form, which in turn called for stronger steel that could withstand this force. Producing iron or steam power required coal. Britain’s production of coal kept pace with the demand and with the industrial growth that it fueled. For the most part, humans mainly mined the coal.

Once steam engines were introduced, these coalmines flourished into large-scale production operations. Both the Iron Age and the Transportation/Communication industries had great impacts, but they weren’t the only ones. Cotton textiles made a huge leap forward with the production of John Kay’s flying shuttle. This allowed weavers to produce double the output of previous production rates. Steam power was also a very much-welcomed addition to the industry. Once the price of engines and fuel started to drop, entrepreneurs began to use them and expansion became very rapid.

These advances in technology would not only change the way materials were produced, but also the ways people or resources could be transported. Finance also experienced a big change. From the spread of factories and the extensive application of machinery in agriculture to the expansion of mining and construction in cities, enormous capital was required for investment. Railroad and steamship lines were often so expensive that only governments could finance them. Large capital investments were also needed to fund the steel industry.

In the beginning, family firms dominated the industry. Then, after the First World War, outside investment grew steadily. With low interest rates in Britain, investors and merchants were encouraged to take out loans. Britain was also the major investing country in the Suez Canal and in the first Panama Canal project. The major investor groups, like the Rothschilds of France, England, and Germany, and the Protestant and Jewish bankers of France, fueled European industrialization. Banking, however, was very risky business in the nineteenth century.

Dozens of banks failed in every financial crisis. Lacking insurance for deposits and possessing only limited resources, banks tended to be cautious about risks. They diversified their investments in the hope not to lose everything they had in one industry, resulting in a very limited number of substantial amounts of capital that could be borrowed. Another factor that experienced a very large change was urbanization. Classical civilization had been urban, and medieval cities had been the centers of commerce and government.

Yet in the nineteenth century, cities became places of industry, growing in population and size. Before 1800, about 20 percent of the English population lived in cities; however, halfway through the 1800’s, 52 percent lived in cities. Most of this growth seemed to spring up overnight. Unlike the capital cities of the time, industrial cities in England grew rapidly, without planning or much regulation. In the rest of Europe, where industrialization came later, states were more willing to regulate industrial and urban development.

They also established a bureaucracy for planning and regulation. So much growth with so little planning or control led to cities with very minimal sanitation. Other factors that were affected by this growth spurt were no street lighting, wretched housing, poor transportation, and scant security. The major industrial cities began to develop into social-class sectors. The suburbs belonged to the wealthier residents due to its roomier and the cleaner environment. The inner city housing tended to be small, attached houses with very limited space.

It was implied that the further from the city a person lived, the wealthier they were. No matter where you went though, the cities were described as smelly, filthy, poverty stricken areas with inhumane crowding. This Industrial Revolution modernized Europe. After some time, it formed every aspect of society and even the natural world. Europe in the mid-eighteenth century was dominated by agriculture and the peasants were the most numerous class. Their life centered on the family and the village, which country folk rarely left.

The richest and most powerful class was the aristocracy. The wealth of this class stemmed from the land and other privileges. This Industrial Revolution sped up the pace of modernization. Eventually, agricultural villages and handicraft manufacturing were concealed in importance by cities and their factories. With such advances as dams, canals, roads, railroads, cities, and factories, the very geography of the world changed. Talent or income then judged people, rather than whom their parents were. This industrialization period is just one of a few.

Even though this period has the development of actual mechanical industry from the agricultural industry, we have experienced a few other revolutions in this category. The most recent development period has been within the last fifty years. With new technologies such as home computers, that have capabilities beyond imagination, evolution in the industry is exploding. If it hasn’t already, this technology will one day take over the way we live. With entrepreneurs constantly looking to make life easier, technology will forever be a growing market. As long as we work together as a human race, the sky is the limit.

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