Industrial Revolution · CHAPTER 8 ·
Second Industrial Revolution
Chapter 8 of The Industrial Revolution, 1750–1914: “The Second Industrial Revolution”
After 1870 steel, chemicals, electricity and the internal combustion engine created a second industrial revolution led by science, big business and Germany. The basic process of 1878 made Lorraine’s phosphoric ores usable, German steel output passed Britain’s in about 1893, and BASF, Bayer, Siemens and AEG led new industries.
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The map above is the world of The Industrial Revolution in Europe, 1913 — Europe on the eve of war.
Part of IB History: The Industrial Revolution →
BRIEF EXPLANATION — THE ESSENTIAL ARGUMENT
A second wave of innovation after 1870 changed the industrial economy again, and this time science, big business and Germany led the way. The new industries were steel, chemicals, electricity and the internal combustion engine, which burns its fuel inside the cylinder, as a car engine does today. The first industrial revolution had been made mostly by practical craftsmen; the second depended on trained scientists, research laboratories and huge firms that could afford them, much as today’s pharmaceutical and technology giants depend on research teams. Cheap steel replaced iron in rails, ships and machines. The chemical firm BASF at Ludwigshafen turned chemistry into dyes and later fertiliser, its rival Bayer turned it into medicines such as aspirin, the electrical firms Siemens and AEG made Berlin the world’s electrical capital, and in 1885–86 the engineers Carl Benz at Mannheim and Gottlieb Daimler at Cannstatt built the first motor cars. Invention had moved from the workshop into the laboratory.
Germany overtook Britain in steel by about 1893 and dominated the chemical industry, making about 85 per cent of the world’s synthetic dyes by the early 1900s. One discovery shows how the new industries reshaped the map. In 1878 the British cousins Sidney Gilchrist Thomas and Percy Gilchrist found a way to make steel from iron ore rich in phosphorus, which turned the ore of Lorraine, around Hayange, into Europe’s largest ore field; the arrow carries that ore to the coal of the Ruhr. On the map Germany, Belgium, Switzerland and finally France turn charcoal, while Italy, Hungary and Russia’s western provinces begin to industrialise. By 1913 the United States and Germany each made more manufactured goods than Britain, whose own output was still growing, so the pioneer of the first industrial revolution had become a follower in the second.
The full story
Steel was the material of the second industrial revolution, and its story shows how new processes redrew the industrial map. The English inventor Henry Bessemer’s converter of 1856 blew air through molten iron to make steel cheaply, and the Siemens–Martin open-hearth furnace of the 1860s made it in larger, more controllable batches, yet both failed with iron ore containing phosphorus, which made the steel brittle. In 1878 two cousins solved the problem: Sidney Gilchrist Thomas, a London police-court clerk who studied chemistry in his spare time, and Percy Gilchrist, chemist at the Blaenavon ironworks in Wales, lined the converter with limestone, which absorbed the phosphorus. Their basic process, named for its chemically basic, or alkaline, lining, turned the phosphoric ores of Lorraine, much of it annexed by Germany in 1871, into Europe’s largest ore field, worked by firms such as the de Wendel family’s ironworks at Hayange. The arrow carries Lorraine ore north to the coal of the Ruhr, where the steelmaker Krupp of Essen employed about 70,000 people by 1912, and German steel output passed Britain’s in about 1893. Ore from one region, coal from another and a chemical discovery tested in Wales together made Germany Europe’s steel power.
Chemistry and electricity were science-based industries, and they rewarded the countries that trained scientists and engineers. German universities and technical colleges produced chemists by the thousand, and firms such as BASF at Ludwigshafen, Bayer and Hoechst built research laboratories where teams developed synthetic dyes from coal by-products. BASF began selling synthetic indigo, a blue dye, in 1897, which ruined the indigo planters of Bengal and Bihar in India, and in 1913 its plant at nearby Oppau began fixing nitrogen from the air, turning it into ammonia, by the Haber–Bosch process, the basis of modern fertilisers and explosives. Electricity grew from the engineer Werner von Siemens’ dynamo of 1866, which turned motion into electric current, and the industrialist Emil Rathenau’s firm, renamed AEG in 1887, built power stations, trams and motors, making Berlin the Elektropolis, or electric city, of Europe. These industries needed huge capital, so giant firms, banks and cartels, agreements among firms to fix prices or output, shaped the German economy.
The second industrial revolution carried industry across Europe, and the colours of the map change accordingly. Engines burning petrol, built in 1885–86 by the engineers Gottlieb Daimler and Wilhelm Maybach at Cannstatt and by Carl Benz at Mannheim, created a new kind of transport. Hydroelectric power from the Alps let northern Italy industrialise with little coal, and the carmaker FIAT, founded at Turin in 1899, joined the textile mills of Lombardy. Russian industry grew about 8 per cent a year in the 1890s under the finance minister Sergei Witte, largely financed by French loans, and the map shades the empire’s western provinces as industrialising. Britain remained rich, yet its share of world manufacturing fell from about 23 per cent in 1880 to about 14 per cent in 1913 as the United States and Germany overtook it. Historians still argue whether that relative decline reflected British failure or the natural catching-up of larger countries.
DEEP EXPLANATION — EVIDENCE & INTERPRETATION
Science, schools and the giant firm
The systematic use of science defined the second industrial revolution, an idea that the economic historian David Landes’s The Unbound Prometheus (1969) made standard. Germany led because it had built the institutions first. The chemist Justus von Liebig’s teaching laboratory at Giessen, founded in the 1820s, trained a generation of chemists, and technical colleges, the Technische Hochschulen, trained engineers in large numbers. The dye firms then made research a department of the company, employing salaried chemists to search for new products and to patent them. The business historian Alfred Chandler argued in Scale and Scope (1990) that the winning firms of this era made a three-pronged investment, in plants big enough to cut costs, in national and international sales networks, and in professional managers, and that German and American firms made it more often than British family firms did. Cartels, agreements among firms to fix prices or share out output, were legal in Germany, and by 1893 the Rhenish-Westphalian Coal Syndicate, a cartel of mine owners, controlled most Ruhr coal sales. Critics note that Chandler’s scheme undervalues the small specialised firms that thrived in Britain and elsewhere, yet the link between research, scale and success in chemicals and electricity is hard to dispute.
Did Britain fail? The climacteric debate
British growth slowed after about 1870, a turning point economists call the climacteric, and historians have argued for half a century about whether this was a failure. One school, from the economic historian David Landes to the historian Martin Wiener’s English Culture and the Decline of the Industrial Spirit (1981), blamed entrepreneurs and culture: family firms content with old methods, an education at elite boarding schools, which the British call public schools, that prized Latin and Greek over science, and capital drawn abroad by the City of London, Britain’s financial district, much like Wall Street today. The economic historian Deirdre McCloskey replied in the 1970s that British managers generally made rational choices given their costs, and that their productivity compared well with American firms in many industries. The case of cotton spinning shows the debate in miniature. British mills kept the mule, an older spinning machine worked by skilled men, after American mills adopted the ring spindle, a simpler machine that less-skilled workers could tend; the economic historian Lars Sandberg argued that the mule suited Britain’s finer yarns and skilled spinners, while the economists William Lazonick and Bernard Elbaum argued that a fragmented industry structure blocked modernisation. Most historians now accept that some relative decline was inevitable, since larger countries with more resources were catching up, while debating whether particular industries could have done better. Pioneers, as the American economist Thorstein Veblen observed in 1915, often pay a penalty for taking the lead.
Synthetic chemistry and the colonial economy
The science-based industries of Europe changed economies on the other side of the world. Natural indigo, a blue dye made from a plant grown by Bengal and Bihar peasants under pressure from European planters, had been one of India’s valuable exports; after the German chemical firm BASF began selling synthetic indigo in 1897, made from coal by-products in Ludwigshafen, the natural dye lost most of its market within about two decades. The Haber–Bosch process, which made ammonia from the nitrogen in air, threatened an even larger trade. Chile’s deserts of nitrate, a nitrogen-rich mineral, seized from Peru and Bolivia in the War of the Pacific (1879–84), were the world’s main source of nitrogen for fertilisers and explosives, and nitrate taxes funded about half of Chilean state revenue; synthetic ammonia, produced at Oppau from 1913, would undermine that trade after the First World War. Demand also worked the other way. Electrical and motor industries needed copper, rubber and oil, drawing new regions such as the Congo, Malaya (now Malaysia) and Persia (now Iran) into the world economy, often by force. Historians use the term commodity frontier for these zones of extraction, and the second industrial revolution moved them constantly, creating and destroying livelihoods far from Europe.
Key places on the map
Why it happened
Science became a source of invention. Science had begun to outrun the workshop: by the 1860s chemistry and physics had produced knowledge, such as the structure of carbon-based molecules and the laws of electromagnetism, that practical tinkering alone could not reach. Firms that employed university-trained researchers, such as BASF, Bayer and Siemens, turned that knowledge into products: synthetic dyes, drugs, the electric generators called dynamos, and electric light. Invention moved from the workshop into the laboratory, and Germany, with more universities and technical colleges than any rival, gained most from the shift.
Cheap steel replaced iron. The English inventor Henry Bessemer’s converter of 1856, which blew air through molten iron, the open-hearth furnace of the 1860s, which made steel in larger batches, and the basic process of 1878, which could use iron ore rich in phosphorus, cut the price of steel so far that it replaced iron in rails, ships, bridges and machines. Steel rails lasted many times longer than iron ones, and steel ships were lighter and larger. Countries with coal and the right ores, above all Germany and the United States, built the largest steel industries, so geology helped decide which nations would lead heavy industry.
Unification, tariffs and banks. The German Empire of 1871 combined the market of the Zollverein, the German customs union of 1834, with a single currency, a dense railway network run by the individual states, and the coal and ore of the Ruhr and Lorraine. From 1879 the chancellor Otto von Bismarck’s tariffs protected German industry and agriculture, and the great banks financed mergers and cartels, agreements among firms to fix prices or output. Large, protected, well-financed firms could invest in research and in plants bigger than any in Britain, although critics then and since argue that they also fixed prices at consumers’ expense.
Followers started with the newest technology. Late industrialisers built their steelworks and power stations with the latest designs, while Britain’s older industries still used machinery and methods from the 1850s. The American economist Thorstein Veblen called this the penalty of taking the lead. Followers also had larger or faster-growing populations, so catching up with Britain, and then passing it in total output, was partly a matter of arithmetic. Being first carried costs as well as advantages.
THE TURNING POINT
The basic process reaches Lorraine, 1878–79. The basic process is the hinge because one chemical change redrew the heavy-industrial map of Europe. It took its name from a chemically basic, or alkaline, furnace lining of burnt dolomite that drew phosphorus, the impurity that made steel brittle, out of molten iron, and was worked out in 1878 by the amateur chemist Sidney Gilchrist Thomas, a London police-court clerk, and his cousin Percy Gilchrist, a works chemist in Wales. Before the process was proved at Middlesbrough in 1879, the phosphoric ores of Lorraine were almost useless for steel; afterwards they became Europe’s largest source of iron ore, and Germany had annexed much of the field in 1871. Ruhr coal and Lorraine ore together built German steel, which passed Britain’s output in about 1893. A laboratory result had made a borderland enormously valuable, which sharpened Franco-German rivalry for decades.
What it changed
An arms race of steel and chemistry. Steel and chemistry made the weapons of the twentieth century: the arms maker Krupp’s guns, steel battleships and explosives made from nitrogen captured from the air. The Haber–Bosch process, which turned that nitrogen into ammonia, freed Germany from imported Chilean nitrate, a nitrogen-rich mineral, and so later let it keep making explosives despite the British blockade of the First World War. Navies and armies now competed through their countries’ factories, so industrial power had become military power.
Commodity frontiers move. Synthetic indigo, a factory-made blue dye, ruined indigo planting in Bengal and Bihar in India, and nitrogen captured from the air would later undermine Chile’s exports of mined nitrate fertiliser, while demand for rubber, copper and oil for the electrical and motor industries drew new regions into the world economy, often by force. Historians call such zones of extraction commodity frontiers, and they ran from the Congo to Persia, today Iran. A discovery in a European laboratory could now make or break an economy on the other side of the world.
America takes the lead. The United States applied the new technologies on a continental scale, with the largest steel industry, the first great electric power systems and mass-produced cars. By 1913 it made about a third of the world’s manufactured goods, more than Germany and Britain combined, and firms such as Carnegie Steel and General Electric matched the German giants in scale. In the new industries, the size of a country’s market had become as important as being first.
DISCUSSION QUESTION — Why did Germany, and not Britain, lead the second industrial revolution?
Three kinds of explanation compete for attention. The first stresses German strengths: universities and technical colleges that trained chemists and engineers by the thousand, banks that financed huge plants, a protected and growing market after 1871, and the coal and ore of the Ruhr and Lorraine. The second stresses British weaknesses, in the tradition of the historians David Landes and Martin Wiener: family firms content with old methods, an education system that prized Latin and Greek, and capital that flowed abroad. The third, argued by the economic historian Deirdre McCloskey and others, doubts that Britain failed at all, since British firms often chose rationally to keep profitable older technologies, and a larger, later starter was bound to catch up. The evidence supports a mixture of all three. In science-based industries such as dyes, Germany’s institutions gave it a real advantage, while in steel and cotton the gap mainly reflected differences in resources, markets and timing. The institutions that win one technological era are seldom the ones best suited to the next.
An interesting fact
The modern electric grid was first shown to the public at a trade fair. In August 1891 visitors to the International Electrotechnical Exhibition in Frankfurt saw a thousand electric lamps and an artificial waterfall powered by electricity generated 175 kilometres away, at a cement works beside the River Neckar at Lauffen. Engineers from the German electrical firm AEG and the Swiss firm Oerlikon, among them Mikhail Dolivo-Dobrovolsky and Charles Brown, sent the power along overhead wires using a new system, three-phase alternating current, in which three linked currents rise and fall in turn, at high voltage. The demonstration settled a fierce argument over how to transmit electricity over long distances, and the same system still carries power in almost every grid on earth.
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