Gilded Age as an Example of Economic Development by Principles Laissez Faire
Finally, in 1854, the US learned to make lighting kerosene, a patent was filed for its use ‘for lighting and other purposes’ and it was from this time that there was a steady demand for oil for its industrial use. The first kerosene plant was built. At the same time, a kerosene lamp was invented in Europe, which, having passed a number of modernizations in America, gradually replaced low-quality coal kerosene from the market. However, the demand for oil grew, there was an urgent need for lubricants for looms and steam industrial machines. Oil began to appreciate. Strong search for ways to extract and extract it from the bowels began.
The period from 1865 to 1914 is the most successful in the economic history of the United States. The gilded century, which lasted from 1870 to 1900 in the United States, gives an example of economic development based on the principles of Laissez Faire. The results were unprecedented: the emergence of new industries, goods, inventions, wage growth, population growth made America the most developed economy in the world, placing it first in the world in industrial production. This period was replaced by the Age of Progressism, which radically revised the fundamental principles of American domestic and foreign policy. In place of the limited state of the Gilded Age came the total state of Wilson.
In 1887, for the first time the volume of industrial production surpassed agriculture. This branch continued to develop, but gave way to the leading positions of industry [Kavtaradze 2005, p. 200]. In 1910, the industrial region of the Northeast (New York State, East Pen- sion) provided 45% of the US industrial output (textile and food industry, publishing, transport engineering, oil industry). To the west of it, near the Great Lakes, 80% of iron ore was mined, and a new industrial area grew up in the center of which was the steel industry of the city of Pittsburgh. In the Midwest, mainly in the livestock breeding area of the United States, industrial processing of meat (Chicago) was carried out on a large scale. California in the Far West stood first in the production of canned fruits and vegetables.
The industrial revolution in the United States has changed the world even more than the industrial revolution in England [Mantu 1937, p. 150- 289]. For the first time a simple person was able not only to get a chance to succeed, despite his background and education, but also received more and more income as an employee and more diverse and cheaper goods as a consumer. The state did not interfere in the economy, and the freedom of entrepreneurship was unlimited (with the exception of foreign trade)
When Vanderbilt established his railroad transportation company, the main means of transportation in the US was a cart – many months were required to get to the right place. But for the construction of railways, steel is needed, which the US imported and which was insanely expensive. The Scottish entrepreneur Andrew Carnegie saw a way of producing steel that made possible the covering of the entire US territory by railroads. USA from the importer turned into the largest producer in the world. Steel has become very cheap10 [Johnson 1997, p. 552], which allowed directing its surplus to the construction of skyscrapers and bridges.
In order for industry to exist, it is necessary to have oil, which Rockefeller learned to extract and process in huge quantities. Its refineries produced kerosene, which made it possible to provide a cheap source of illumination throughout America, and gasoline required by the automotive industry. Morgan invested his capital in the inventions of Edison, who replaced the gas lighting with electric light. The brothers Deere invented a variety of devices for agriculture. Their seeders, winnowers, harvesters and tractors were sold all over America due to the fact that Vanderbilt built railroads.
The quality and quantity of food, including meat, led to a significant increase in the average weight and height of the American. People have become more 10 In 1875, steel cost $ 160 per tonne, and in 1898, almost 10 times less, $ 17 per tonne [Johnson 1997, p. 552]. It is better to dress, buy new housing, use banking services. Thanks to Ford, the luxury car became an affordable product for the average American. The increase in incomes allowed people to spend money on training, traveling abroad, visiting theater and cinema.
Now, oil and natural gas are the backbone of the world’s fuel and energy balance. Products processed oil and combustible gases are widely used in all industries, agriculture, transport and household. It is difficult to list all fields of application of oil and gas, to their role in the life of modern society is multifaceted. For humanity, gold has always been an enduring value. With him are compared all material goods, which have special significance. The first oil well in the USA was drilled in 1859 in the Pre-Pre-Palach Basin, with which the development of oil production in the country began. The United States remained the coal industry.
A turning point occurred in the 20-30-ies. XX century. due to the rapid growth in the use of internal combustion engines. World War II is an even more proven advantage of petroleum products over all other fuels. So oil began to form the basis of the fuel and energy economy of the United States. Its share in the total consumption of primary energy sources in the 1970s. increased to 45%. It is connected with the development of road transport, the oil industry, all over the world not only economic, but also political life of the USA.
in the era of cheap oil, that is, before the global energy crisis of the mid-1970s, the level of oil production in the US was constantly rising, and its import was relatively small and within 13% of total consumption. With the onset of the crisis and in the world of peace. In 1974, Independence, the main task that was undermined in reducing to a minimum the dependence of the United States on oil imports and increase of own production Thus, oil has become a base for fuel and energy. Its close connection with the development of vehicles and politicians.
On November 9, 1885, Emperor Alexander III highly approved the construction of a power plant in the Hermitage complex. In general, the world’s first commercial power plant began working on the project of Thomas Edison in New York on September 4, 1882. Electric light was shocked by its brightness and convenience of contemporaries, electricity prices fell, and as well as massive use of oil was not, except to be a source of lighting kerosene. During this period, a major economic crisis is developing in the world. This led to a period of prolonged decline in oil prices – until 1894.
October 29, 1929, the collapse of the banks of Wall Street began the Great Depression, sweeping the entire Western world. The period of long-term decline in oil prices began. This was facilitated by both the economic recession and the oncoming one on the wave of high prices in East Texas, Oklahoma and California. The decline in oil prices began even before the beginning of the depression – for example, during the period from 1920 to 1926, oil prices fell by 40%, and then, from 1926 to 1931, fell by another 66%, that is to 12 dollars per barrel in modern prices.
Soon, John Davison Rockefeller laid the foundation for large-scale oil refining, opening its ‘kerosene era’ (gasoline was then considered a by-product and was sold, if it could be done, at insignificant prices). Acting very calculatingly and extremely rigidly, Rockefeller realized the process of concentration and centralization of capital in the field of oil refining and created the famous monopoly ‘Standard Oil Company’.
Although he had good connections with the railway companies, which gave him great advantages (especially for transportation tariffs for oil and oil products), he immediately appreciated the historic importance of pipeline oil transportation, which was a major technological breakthrough for that time. Of particular importance here was the geographic location of the country, isolated from the rest of the world by two oceans, which provided it with relative security against possible military encroachments from other great powers and made it possible to concentrate the main efforts on economic development.
The most important factor contributing to the rapid economic development of the country was the presence of the richest reserves of coal, oil, iron, copper and other minerals, which saved American entrepreneurs from the need to import the raw materials needed for industrial production from abroad. It should also be noted that the Americans showed outstanding abilities and business acumen in the field of discoveries and inventions, which were quickly introduced into industrial production. This made it possible to constantly improve the technical level of production.
Six transcontinental railways made the US a single market, the largest free trade zone. An entrepreneur in California could sell his product in all states precisely because of the rapid growth of railways. Imagine that before this alternative to trains were not airplanes or cars, but carts strapped with horses. The speed and cheapness of transportation combined the US economy into a single, well-functioning mechanism.
Particularly impressive successes were achieved by the Americans in the development of new industries of that period, such as automobile, electric, oil, and chemical industries. It is significant that at the end of the XIX century. in the United States, electric locomotives, telephones, electric lamps, trams and other latest inventions were widely used. Railroad construction was developing rapidly. Thus, by 1913, more than 400,000 km of railway lines were built and operated in the country, that is, more than in Germany, France and Russia combined. Therefore, it is not surprising that in 1890, in terms of industrial output, the United States took the first place in the world.
Rapidly developing agriculture. The abolition of slavery and slave-owning economy in the South as a result of the Civil War, the adoption of the homestead law (the so-called land plots in the United States from the state land fund provided by the state to farmers), and other measures irrevocably ensured the capitalist farming path of American agriculture. In other words, in the XX century. The US entered, having every reason for optimism about the prospects for its development.
One of the most important moments of the new oil era was that the basis for the so-called free oil trade between the exporting countries and the consuming countries was the ‘reference price’ established in accordance with the American prices for oil produced in the Gulf of Mexico. Thus, in the long run, world prices were determined by the Texas Railway Commission, which throughout the preceding decades strictly controlled the quotas for production and oil prices in the US itself. She also ensured that imports of cheap ‘foreign’ oil did not cause damage to thousands of American oil producers.
In general, the whole history of the activity of this commission (and similar commissions under other names were created in many other oil-producing states), invariably supported by the federal authorities, finally wipes out the myth of the supposedly completely free and liberal model of the US oil industry that has taken root among our liberals. In fact, the state from the very beginning to the present day has strongly intervened and influenced all the links and stages of development of this strategic industry, pursuing at least two important goals: a) maintaining stability in the industry and the economy as a whole; and b) ‘conservation’ reserves for unforeseen cataclysms.