New Products and New Patterns

The first major change in industrial development after 1870 was the substitution of steel for iron. New methods for rolling and shaping steel made it useful in the construction of lighter, smaller, and faster machines and engines as well as for railways, shipbuilding, and armaments. It also paved the way for the building of the first skyscrapers, a development that would eventually transform the shape of the cities of the West. In 1860, Great Britain, France, Germany, and Belgium produced 125,000 tons of steel; by 1913, the total was 32 million tons. Electricity was a major new form of energy that proved to be of great value since it could be easily converted into other forms of energy, such as heat, light, and motion, and moved relatively effortlessly through space by means of transmitting wires. The first commercially practical generators of electric current were not developed until the 1870s. By 1910, hydroelectric power stations and coalfired steam-generating plants enabled entire districts to be tied into a single power distribution system that provided a common source of power for homes, shops, and industrial enterprises. Electricity spawned a whole series of new products. The invention of the incandescent filament lamp opened homes and cities to illumination by electric lights. A revolution in communications ensued when Alexander Graham Bell invented the telephone in 1876 and Guglielmo Marconi sent the first radio waves across the Atlantic in 1901. Although most electricity was initially used for lighting, it was eventually put to use in transportation. By the 1880s, streetcars and subways had appeared in major European cities. Electricity also transformed the factory. Conveyor belts, cranes, machines, and machine tools could all be powered by electricity and located anywhere. The development of the internal combustion engine had a similar effect. The processing of liquid fuels—petroleum and its distilled derivatives—made possible the widespread use of the internal combustion engine as a source of power in transportation. An oil-fired engine was made in 1897, and by 1902, the Hamburg-Amerika Line had switched from coal to oil on its new ocean liners. By the beginning of the twentieth century, some naval fleets had been converted to oil burners as well. The internal combustion engine gave rise to the automobile and the airplane. In 1900, world production stood at 9,000 cars; by 1906, Americans had overtaken the ini- tial lead of the French. It was an American, Henry Ford, who revolutionized the automotive industry with the mass production of the Model T. By 1916, Ford’s factories were producing 735,000 cars a year. In the meantime, air transportation had emerged with the Zeppelin airship in 1900. In 1903, at Kitty Hawk, North Carolina, the Wright brothers made the first flight in a fixed-wing plane powered by a gasoline engine. It took World War I, however, to stimulate the aircraft industry, and it was not until 1919 that the first regular passenger air service was established. The growth of industrial production depended on the development of markets for the sale of manufactured goods. Competition for foreign markets was keen, and by 1870, European countries were increasingly compelled to focus on promoting domestic demand. Between 1850 and 1900, real wages had increased in Britain by two-thirds and in Germany by one-third. A decline in the cost of food combined with lower prices for manufactured goods because of reduced production and transportation costs made it easier for Europeans to buy consumer products. In the cities, new methods for retail distribution—in particular, the department store—were used to expand sales of a whole new range of consumer goods made possible by the development of the steel and electric industries. The desire to own sewing machines, clocks, bicycles, electric lights, and typewriters was rapidly generating a new consumer ethic that has become a crucial part of the modern economy. Meanwhile, increased competition for foreign markets and the growing importance of domestic demand led to a reaction against the free trade that had characterized the European economy between 1820 and 1870. By the 1870s, Europeans were returning to the practice of tariff protection in order to guarantee domestic markets for the products of their own industries. At the same time, cartels were being formed to decrease competition internally. In a cartel, independent enterprises worked together to control prices and fix production quotas, thereby restraining the kind of competition that led to reduced prices. Cartels were especially strong in Germany, where banks moved to protect their investments by eliminating the “anarchy of competition.” Founded in 1893, the Rhenish-Westphalian Coal Syndicate controlled 98 percent of Germany’s coal production by 1904. The formation of cartels was paralleled by a move toward ever-larger manufacturing plants, especially in the iron and steel, machinery, heavy electric equipment, and chemical industries. This growth in the size of industrial plants led to pressure for greater efficiency in factory production at the same time that competition led to de demands for greater economy. The result was a desire to streamline or rationalize production as much as possible. The development of precision tools enabled manufacturers to produce interchangeable parts, which in turn led to the creation of the assembly line for production. In the second half of the nineteenth century, it was primarily used in manufacturing nonmilitary goods, such as sewing machines, typewriters, bicycles, and finally, automobiles. By 1900, much of western and central Europe had entered a new era, characterized by rising industrial production and material prosperity. Another part of Europe, however, the backward and little industrialized area to the south and east, consisting of southern Italy, most of Austria-Hungary, Spain, Portugal, the Balkan kingdoms, and Russia, was still largely agricultural and relegated by industrial countries to the function of providing food and raw materials. The presence of Romanian oil, Greek olive oil, and Serbian pigs and prunes in western Europe served as reminders of an economic division of Europe that continued well into the twentieth century.