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- a. Growth of industrial production depended on development of markets for the sale of manufactured goods
- b. After 1870, best foreign markets already saturated, forcing Europeans to take renewed look at their domestic markets, which gave possibilities
Dramatic population increases
- a. Dramatic population increases after 1870à steady rise in national incomes
- i. Britain and Germany doubled/ tripled national incomes
- b. 1850-1900: real wages increased by 2/3 in Britain and 1/3 in Germany
- c. Prices of both food and manufactured goods declined due to lower transportation costsà Europeans spend more on consumer products
- i. Businesses saw value of using new techniques of mass marketing to sell consumer goods made possible by the development of the steel and electrical industriesà created the department store
- 1. Desire to own bikes, electric lights, etc. created new consumer ethic
Tariffs and Cartels
- i. Increased competition for foreign markets and the growing importance of domestic demand led to reaction against free trade
- 1. Protective tariffs guaranteed domestic markets for products of their own industries
- i. Cartels being formed to decrease internal competition
- 1. In a cartel, independent enterprises worked together to control prices and fix production quotas, thereby restraining the kind of competition that led to reduced prices
- a. Especially strong in Germany
- a. Cartel formation was paralleled by creation of larger manufacturing plants, especially in iron and steel, machinery, etc.
- i. Most evident in Germany, where workers in factories rose from 205kà879k
Rise in workers in factories in Germany led to what?
- 1. This led to pressure for greater efficiency in factory production at the same time that competition led to demands for greater economy
- a. Result: desire to streamline or rationalize production as much as possible
Ways to streamline/ rationalize production
- i. One way: cut labor costs through mechanization of transport within plants, like using electric cranes
- ii. Another way: development of precision tools enabled manufactures to produce interchangeable partsà creation of assembly line for production
- 1. First used in US, then Europe used for nonmilitary goods, like bikes and automobiles
- a. Scientific management maximized workers’ efficiency
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