EXAM 3 Chapter 20 - Urbanization o Urbanization after the Civil War changed  Early industrial complexes, which had been tied to primary resources in city hinterlands, shifted to the city.  The railroad and other advances in transportation and communication made factories and cities nearly synonymous by the late 19th century. o Between 1860 and 1910, more than half of new city residents came from overseas. o As cars came into common use after 1910, large towns and cities gained business at the expense of small towns and villages.  By 1920, retailers in urban centers were attracting customers from distances that had been unimaginable just a few years earlier. - Marketing and Selling o Attracting customers was not the main purpose of advertisements; the information conveyed was simple and direct. o Installment buying was known but uncommon until after the turn of the century.  Cyrus McCormick sold his reaper “on time” at 20% down and 4 months to pay. o Most manufacturers sold directly to wholesalers or to commission agents who marketed the wares.  Many wholesalers, in turn, hired “drummers”, traveling salesmen who “drummed up” trade and solicited orders in the towns and countryside. o The reason for the relative decline in wholesaling lay in the structure of emerging large-scale producers. o In 1884, James B. Duke (marketing of cigarettes) installed 2 Bonsack cigarette-making machines in his factory.  Each machine could turn out 120,000 cigarettes/day, compared with the 3,000 that a skilled worker could produce by hand.  Duke’s machines, working continuously, easily could have saturated the cigarette market that existed in 1884.  To create and maintain the market for these cigarettes, and to ensure that his output moved steadily to the consumer, Duke built an extensive sales network that kept an eye on local advertising and worked closely with other departments in the firm to schedule the flow of cigarettes from machine to consumer. - Retailing o At the same time that manufacturers were becoming bigger and more engaged in direct distribution, retailing was also undergoing a revolution. o As cities became bigger and more congested, the convenience of being able to shop for all personal necessities in a single store had an increasing appeal. Response was the department store.  At first, department stores bought merchandise through wholesalers.  However, larger stores such as Macy’s in NY, John Wanamaker’s in Philly, and Marshall Field’s in Chicago, took advantage of their growing size to obtain price reductions by going directly to manufacturers or their selling agents. - Product Differentiation and Advertising o After the Civil War, advertising on a national scale finally became a widely accepted practice. o By 1920, advertising was a billion-dollar industry. In some fields, the increasing size of a firm was an important factor in the growth of its national advertising, but advertising itself helped many firms to attain these large sizes. o Two changes were to loom large in the future of American advertising  Radio – Within a decade it made the job of advertising far more effective than it had ever been done before.  Change in the kind of consumer durables people bought. o After 1910, as first the automobile and then electrical appliances revolutionized American Life, the share of furniture and household furnishings in the output of consumer durables declined rapidly.  Household furnishings could not be differentiated in people’s minds with any remarkable degree of success, although efforts were continually made to do so.  On the other hand, automobiles and household appliances could be readily differentiated, presenting a wonderful challenge to the American advertising account executive. - The First Steps Toward Consumer Protection o The Pure Food and Drug Act and Meat Inspection Act, both passed on June 30, 1906, were dramatic interventions by the federal government into the economy to ensure quality standards of products for unwary customers. o 1906 – Upton Sinclair’s novel The Jungle was published and received the personal attention of President Roosevelt.  Sinclair’s descriptions of unsanitary production facilities for meat and his allegations of occasional processing of diseased animals stirred up sensational media and public reactions. o The Pure Food and Drug Act were initially trivial in effect, calling simply for federal regulation of the content and labeling of certain food and medicinal products. - Foreign Trade o 1900 – The US had become the leading manufacturing country in the world in terms of total production. o The industrial countries – the US, Germany, Great Britain, and later several others – exported manufactured and semi-manufactured products.  In exchange, the less-industrial nations sent an ever-swelling flow of foodstuffs and raw materials to support the growing industrial populations and feed the furnaces and fabricating plants of industry. o Rapid improvement in methods of communication and transportation was the key to this system.  An extremely important improvement was the development of railroads in various parts of the world, making possible a flood of cheap grain from Canada, Australia, Argentina, Russia, and the Danube valley, as well as from the midlands of the US. - Changes in Balance of Trade o Unilateral Transfers – Foreign currencies brought or sent to the US and changed into dollars by immigrants and their families. o The reversal in the international capital flows, though small compared with domestic investment in the US, nevertheless had considerable symbolic value. o The US had become a lender rather than a borrower, a sign of economic maturity. - The Acceptance of Protectionist Doctrines o Setting up ever-higher tariff walls, the Americans sought to control trade with other countries in the interests of national policy. o The national prosperity of the last 15 years before the Civil War seemed to refute protectionists’ argument that a healthy economy required high duties.  Yet by 1864, the trend of nearly 3 decades was reversed sharply to put the US on a high protective-tariff basis for nearly ¾ of a century.o 1865 – The average level of duties was 48%, and protection was granted to nearly any commodity for which it was requested. o The prosperity between 1897 and 1914 made it