Background to Rise of Big Business--lecture.doc -...

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Background to Rise of Big Business Railroads were probably the single most important factor in the creation of the US as an economic giant. Before the railroad was invented (1820s in England), economic integration of large land masses like the United States and Russia was a difficult process. It was easier in smaller countries because you could use canals and rivers to move products. Most major economic center before this time were ports-- either on the ocean or on a major river like the Mississippi. The railroad allowed a giant country like the United States to become economically integrated. Products that used to be only local could now be introduced into other areas or nationally. Examples of this are meat from Chicago, citrus products from Florida, or even beer from Milwaukee or St Louis. Think of the railroad as a big game of connect the dots. The more cities or regions that are connected, the more the overall economy of the United States grows. The regions that saw the most impact from the railroad was the north and the west. The north had factories and produced finished goods. The west had raw materials such as timber and minerals that were needed in northern factories. So the west could get manufactured goods from the north, which could get raw materials from the west. So they enjoyed a reciprocal relationship. Railroads also produced major economic increases in secondary industries. Iron and steel are needed to make railroad tracks and bridges. Timber is needed for cross ties and eventually telegraph poles. Glass, rubber and other machine parts are also needed to make the trains and engines. So the railroad helped to increase the economic output of these businesses as well.
Because of the economic benefits of railroads, political leaders recognized early on that it would be great to have railroads come through their areas. National politicians also saw the benefits of connecting regions anqd provided generous subsidies to entrepreneurs who had shown that they could build a successful business. So state, local, and the national government provided free land and cash payments to railroad pioneers. The is another reason for their rapid growth. Of course eventually the railways would be connected all the way from the Atlantic to the Pacific. The final (golden) spike on the first transcontinental railroad was driven into the ground on May 10, 1869 in Promontory Summit, Utah. Other transcontinental lines soon followed before the turn of the century.

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