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Economic History of the US
Reunification Era, 1860-1920Lecture #5
Peter AllenEcon 120
Gross National Product
(1860 prices)
Average Total Per
($bn.) % growth real Capita
1849-60 $ 3.3 $120
1899-1908 21.8 4.3% pa. 300
Investment Spending rose from 14-15% of GNP prior to
the Civil War to 24-28% of GNP afterward.
Industrialization
million % of labor force
Labor
Pop. Force Ag. Manuf.
1870 39.9 12.9 52.5% 47.5%
1880 50.3 17.4 51.3 48.7
1890 63.1` 23.3 42.7 57.3
1900 76.1 29.1 40.2 59.8
1910 92.4 37.5 31.4 68.6
% change 130% 190%
10 Largest Industries
1860 1910Cotton Goods 6.7%
Lumber 6.6%
Boots and shoes 6.0%
Flour and meal 4.9%
Men's clothing 4.5%
Iron 4.4%
Machinery 4.0%
Woolen Goods 3.1%
Carriages and wagons 2.9%
Leather 2.8%
All manufacturing 100.0%
$816 mm
Machinery 8.1%
Lumber 7.6%
Printing and Publishing 6.3%
Iron and steel 3.9%
Malt liquors 3.3%
Men's clothing 3.2%
Cotton goods 3.0%
Tobacco manufactures 2.8%
Railroad cars 2.5%
Boots and shoes 2.1%
All manufacturing 100.0%
$8,529 mm
11.7% of GDP 35% of GDP
Urbanization
Percent of the population in Towns…
over 2,500 over 100,000
1800 6% 0%
1840 11 3
1860 20 8
1880 28 12
1900 40 19
1910 46 22
1920 >50
Transition to World Power
Protectionism 1865-1913, high protective-tariff
40-50% on many imports
Democrats, Wilson Admin. 1913- “free-traders”…brought
avg. tariff down to 25%
US companies begin to think about export markets
Permanent income tax Act of Congress overturned by Supreme Court, 1894
16th Amendment ratified, 1913
Basis for further reduction of tariffs
Composition of Foreign Trade
US Imperialism
1880s, height of European imperialism
US focuses on continental expansion
US imperialism, 1898-1917 Republican party
1898, Spanish-American War Philippines, Cuba, Puerto Rico, Guam
“Open Door policy,” China
Perpetual lease,
Panama Canal, 1903
“Roosevelt Corollary,” 1904
Theo. Roosevelt
26th President
1901-09
Immigration and the Labor Market
3 waves of immigration bet. 1860 and 1920
Caused labor market to grow faster than population
Industrial Revolution - huge demand for labor in cities
Immigration kept wages lower
Unionization
Population and the Labor Force (in mm), 1870–1920
Immigration Waves and Business Cycles, 1865–1914
Immigration…surge and first-time shift of origin, 1890
1880-1920…23 million immigrants
1880-90: 82% from northern and western Europe,
“old” Britain, Ireland, Germany, Scandinavia Mostly Protestant
1890-1920: 65%+ from southern and eastern Europe,
“new” Italy, Hungary, Poland, Russia, Greece Mostly Catholic, orthodox
First experience with such different cultures
made assimilation difficult, tremendous hostility
NYT, 1854
Irish Immigration
1849-59
Thos. Nast,
1867
Origin of Immigrants, 1820–1920 (%)
Immigration…surge and shift of origin
Ea. Immigrant group perceived as “inferior” in its
period of peak arrivals
Economic effect of each wave of immigration was
similar Increase of supply…
…but held wages down mostly for unskilled workers
Benefit to businesses industrializing
Permitted rapid change, new industries
…b/c workers did not have to move from one industry to another
Impeded unionization
Immigration, Supply and Demand for Labor
Immigration Restrictions
Growing assertiveness of labor unions after Civil War
First restrictions on immigration…
1882, Chinese Exclusion Act
1885, Indenture contracts prohibited
1917, financial test for in migration
1917, literacy test for in migration
Emergency Immigration Act, 1921
3% limit on entry by nationality
1924, limit cut to 2% of 1890 population by nationality
Real Earnings of Nonfarm Workers
Union Movement in the US
Local union membership began to grow with urbanization and industrialization, 1872
Famous incidents, Chicago Haymarket riot, 1886 and Pullman Strike, 1894
Labor unions failed to organize more than a small fraction of the labor force
Unlike Europe
Rising real wages + immigration
Triangle Shirtwaist Fire, 1911
Union Membership Peaked in 1920