Rail & Steamboat Impact: Britain & Europe 19th Century

Rail and Steamboat in Britain and Europe

Rail and steamboat in Britain and Europe significantly improved traditional communication channels. Initially, railroads were used to transport ore from mines, with cars running on rails. Early improvements included a new system of iron rails and flanged wheels to keep the cars from leaving their lane.

Stephenson's invention of the locomotive enabled steam-powered railroads. The construction of the railway network in Europe greatly benefited the steel industry. Railroads shortened travel times, increased the safety of travel and cargo, and offered greater capacity.

Steam engines were also applied to maritime transport, with steamships replacing sailing vessels. The first steamers came into use in the United States. This increased trade.

The Industrial Revolution and Market Economy

The Industrial Revolution fostered a market economy where goods were produced for sale in larger markets. This change was due to increased production, growth fueled by the rising purchasing power of the population, and improved transportation systems. These advancements facilitated the growth of foreign trade and the creation of a national market.

Foreign trade increased significantly. The theories of liberalism supported free trade between countries, believing it would stimulate economic growth. However, to defend national supremacy, some states imposed protectionism, defending national industries through taxes on imports.

Liberalism and Capitalism

Adam Smith, a key thinker, laid down the principles of liberalism and capitalism:

• The engine of the economy is the pursuit of maximum profit.
• Interests balance by adjusting prices through supply and demand.
• The state should not intervene in the economy and should allow the free development of free trade.

Industrial capitalism is structured as a system where the means of production are privately owned. In capitalism, the lack of planning and increased production led to economic crises. This occurred when supply increased faster than demand, causing companies to accumulate large stocks and potentially go bankrupt. This resulted in worker unemployment.

Banks and Finance

Banks and finance were crucial in capitalism, providing capital to businesses through loans, acting as direct investors by buying shares, and facilitating payments through checks. Banks became intermediaries between savers, who deposited their money, and industrialists, who needed capital to invest.

Anonymous societies were created because companies required large sums of money that a single employer could not provide. These societies had capital divided into shares. Through these shares, values could be acquired and sold by any individual on the stock market.

The Expansion of Industrial Capitalism

Industrialization spread to France and Belgium, with improvements in the steel industry, and to Germany, with a focus on textiles. Russia, the United States, and Japan also industrialized, often with greater state intervention, numerous companies, and foreign capital. Eastern Europe remained largely outside the industrialization process, while Southern Europe saw a mix of industrialized regions and rural areas.