The Industrial Revolution: Transport and Economic Shifts

The Railroad and the Steamboat

In Britain and much of Europe, there was a significant improvement in traditional communication methods. In its inception, the railroad was used in mines to transport ore in wagons that moved on rails. Engineers invented a new system of iron rails and wheels with flanges that prevented derailment. The true revolution was the locomotive, which powered the train through a steam engine. The first passenger line joined the cities of Manchester and Liverpool.

Afterward, the steam engine was applied to ferries and steamboats constructed of iron, which replaced the first sailing ships. Steamers began to run, and U.S. ships could cross the Atlantic in 15 days.

Increased Trade

Foreign trade also increased considerably. The theories of free trade argued that free trade between countries encourages economic growth.

Liberalism and Nationalism

A number of British thinkers defended the economic principles of liberalism, which include:

• Personal interest: The pursuit of maximum benefit.
• Market balance: Various interests are balanced in the market through the price mechanism that adapts supply to demand.
• Non-interference: The state should not interfere in the functioning of the economy and should allow free trade.

Under these principles, industrial capitalism emerged as a system where the means of production are privately owned by a small group—the bourgeoisie—while workers without property are employed in factories in exchange for a salary.

Banks and Finance

Banks became a vital institution in the development of capitalism by:

• Supplying capital to firms through loans.
• Acting as direct investors.
• Facilitating payments by checks and letters of exchange.

Corporations also emerged, through which the capital required by a company is split into parts called shares. These can be bought and sold by any individual in a specialized institution: the stock exchange.

The Expansion of Industrial Capitalism

Industrialization spread to countries like France and Belgium, with a greater weight on the textile and iron industries. Russia, Germany, the USA, and Japan also underwent rapid industrialization.