The Industrial Revolution (1820-1870) was of great importance to the economic development of the United States. The first Industrial Revolution occurred in Great Britain and Europe during the late eighteenth century.
The Industrial Revolution itself refers to a change from hand and home production to machine and factory. The first industrial revolution was important for the inventions of spinning and weaving machines operated by water power which was eventually replaced by steam. This helped increase America's growth. However, the industrial revolution truly changed American society and economy into a modern urban-industrial state.
The real impetus for America entering the Industrial Revolution was the passage of the Embargo Act of 1807 and the War of 1812. Americans were upset over an incident with the Chesapeake whereby the British opened fire when they were not allowed to search the ship. They also seized four men and hung one for desertion. This resulted in much public outrage and the passage of the Embargo Act which stopped the export of American goods and effectively ended the import of goods from other nations. Eventually, America went to war with Great Britain in 1812. The war made it apparent that America needed a better transportation system and more economic independence. Therefore, manufacturing began to expand.
Industrialization in America involved three important developments. First, transportation was expanded. Second, electricity was effectively harnessed. Third, improvements were made to industrial processes such as improving the refining process and accelerating production. The government helped protect American manufacturers by passing a protective tariff.
The second Industrial Revolution is usually dated between 1870 and 1914, although a number of its characteristic events can be dated to the 1850s. It is, however, clear that the rapid rate of path breaking inventions (macroinventions) slowed down after 1825, and picked up steam again in the last third of the century. This says little about the rate of technological progress as commonly defined in terms of productivity increase and the improvements in product quality, which depends much more on the smaller, cumulative, anonymous changes known as microinventions. Yet the great path breaking inventions in energy, materials, chemicals, and medicine described below were crucial not because they themselves had necessarily a huge impact on production, but because they increased the effectiveness of research and development in micro inventive activity. Eventually such activity like everything else runs into diminishing marginal product, unless a major new breakthrough opens new horizons.
Endowments and Technology
Industrial development in the United States exhibited three major production technologies: artisan shops (1790-1820), factory-assembly (1820-1920), and factory-continuous (1920- ). Prior to the industrial revolution, skilled artisans produced the entire product with the help of apprentices and family members. With the industrial revolution, factories hired numerous unskilled workers who specialized in few tasks based on division of labor and few skilled workers who operated machines and supervised workers. In the first half of the twentieth century, however, the factory-continuous method began to replace the factory-assembly system in a number of industries (Goldin and Katz (1998), ...