Chapter 17 Notes

Chapter 17 Notes - Amelie Turcotte ECON 2200 2/12/11...

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Amelie Turcotte ECON 2200 2/12/11 Reunification Era: The Rise of Big Business (Chap 17) Recall the change in relative positions of agriculture & manufacturing o 1890 US Census: 1 st Census to report $ value of manufacturing output > $ value of agriculture output 1. By 1900, the annual value of manufactures was worth more than twice that of agriculture 2. Between 1869 to 1899, agriculture still expanded but fell relatively to manufacturing because of more rapid increases elsewhere o Note growth in labor force v. growth in output (Tables 17.1 & 17.2) 1. 17.1 – labor ↑ multiple of 5 (significant growth in labor force) 2. 17.2 – productivity in manufacturing multiplies; large output growth 3. Productivity growth is evident in (almost) all listed sectors, but it was most pronounced in manufacturing iron, steel, and RR freights hauling Value added (VA) per worker rising (Table 17.5, including footnote) due to manufacturing o VA measures the total value of output minus material costs; therefore, valued added per worker reflects both labor and capital productivity 1. VA = price – marginal cost o Note particularly the productivity growth in men’s clothing, boots/shoes, and iron/steel 1. Standardized methods of mass production and mechanization 2. Bessemer method vs. Open hearth method 3. Total value output – material costs By 1900, US is world leader in output of manufactured goods o Germany produces 50% less than the US Page 1
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Amelie Turcotte ECON 2200 2/12/11 o Germany is #2 in the world in 1990 By 1915, o US producing 1/3 of world's manufacturing output o Manufacturing is the primary source of income in US (during the 1800s, the US’s primary source of output was agriculture) o Again, note the rapid transition of the US from agriculture-dominated to manufacturing-dominated economy Increased D (both domestic & international) fueled manufacturing growth II. Top Ten Industries by VA (value added) (Table 17.3) Compare “All Manufacturing” figures for 1860 and 1910; note magnitude of VA by manufacturing Machinery to produce factory…? Some goods are not on the list in 1910 Turning cotton into clothes Cotton was #1 manufactured good Changes between 1860 and 1910 reflect the transformation of US economy reflect: o Income elasticity o Technological change o Societal change III. Growth fueled by changes in: (p. 300-307; Econ Insight 17.1) mass standardized interchange Technology (invention & innovation): o Allowed for mass production of manufactured goods 1. Standardized interchange continuous flow of operation Page 2
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Amelie Turcotte ECON 2200 2/12/11 1. Continuous flow production – materials move steadily through the factory where they are steadily transformed into finished products (this distinguishes
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Chapter 17 Notes - Amelie Turcotte ECON 2200 2/12/11...

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