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I. New Patterns in an Industrial Economy
- a. Second IR played role in emergence of basic economic patterns that have characterized much of modern European economic life
- i. Recessions and crises still evident
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1873-1895
- 1. 1873-1895: great depression, but Europeans experienced a series of economic crises during those years
- a. Prices fell dramatically
- b. Slumps in business cycle reduced profits
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Differed among countries
- a. France and Britain: 1880s/ Germany and US: recovering in 1870s
- 2. 1895-WWI: Europe experienced economic boom and achieved prosperity that led to title: golden age in European civilization, la belle époque
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German Industrial Leadership
- i. After 1870, Germany replaced Great Britain as industrial leader of Europe
- 1. Evident in new areas of manufacturing, like organic chemicals, and worldwide trade
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Why?
- 1. Britain’s early lead in industrialization gave it established industrial plants and made it more difficult to adapt new techniques of Second IR
- 2. Germany entered late and built the latest and most efficient industrial plants
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Why cont.
British entrepreneurs and GErman Managers
- 1. British entrepreneurs made the situation worse by their suspicion of innovations and reluctance to invest
- 2. German managers accustomed to change and formation of large cartels encouraged German banks to invest a lot of money
- 3. Unlike Germans, Brits didn’t encourage formal scientific/ technical education
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After 1870
- i. After 1870, science and technology grew closer
- 1. Newer fields of industrial activity required more scientific knowledge than the commonsense tinkering employed by amateur inventors
- a. Companies invested in lab equipment for research and hired scientific consultant
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German schools
1. German technical schools were allowed to award doctorate degrees and were turning out 3-4000 graduates a yearà went to industrial firms
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1900: Europe %
- a. 1900: Europe divided into economic zones
- i. Great Britain, Belgium, France, Netherlands, Germany, western Austro-Hungarian empire, n. Italy= advanced industrialized core that had a high standard of living, decent systems of transportation, and relatively healthy and educated populations
- ii. Most of Austria-Hungary, Spain, Portugal, Balkans, Russia: little industrialized and largely agricultural
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Growth of industrial economy
- i. Abundance of grain and lower transportation costs caused prices of farm commodities to plummetà responses
- 1. Some used tariff barriers against lower-priced goods
- 2. Landowners introduced machines for threshing and harvesting
- 3. Specialization in other food products
- a. Denaker: eggs, butter, and cheese
- b. Bohemia and France: sugar beets
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Intro of chem fertilizers
1. Small farmers couldn’t afford ità farm cooperatives that provided capital for making improvements and purchasing equipment and fertilizer
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Spread of Industrialization
- i. Rapid development in Russia and Japan
- 1. In Japan the imperial government led promotion of industry
- a. Financed industries, built railroads, brought foreign experts to train Japanese employees, and created universal educational system based on applied science
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end of 19th
- a. End of 19th: Japan developed key industries in tea, silk, armaments, and shipbuilding
- i. Workers were those who abandoned farms due to severe hardships in countryside and fled to cities, where they provided abundant source of cheap labor
- b. Workers worked long hours in coal mines and textile mills in bad conditions
- c. In Nagasaki, coal miners worked naked and were shot for escaping
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A World Economy
- i. Economic developments and transportation revolutionà world economy
- 1. 1900: Europeans were importing beef and wool from Argentina and Australia, coffee from Brazil, etc.
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European capital
- 1. European capital invested abroad to develop railways, mines, electrical power plants, and banks
- a. High rates of return, such as 11.3% on Latin American banking shares that were floated in London, provided plenty of incentive
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Foreign countries
- 1. Foreign countries also provided markets for the surplus manufactured goods of Europe
- ii. Europe dominated world economy by end of nineteenth
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