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The road to riches

Two world wars destroyed life on
a huge scale
Programme five


1851 AD - 1945 AD

In the second half of the 19th century, Europe and the United States plunged headlong into industrialisation, and science transformed the world. Revolutionary changes in transport and communications opened huge new markets and international trade boomed, leading to a "golden age" of wealth creation. In the first half of the 20th century however, economic tensions were the crucial causes of two world wars which destroyed human life and economic wealth on an unimaginable scale. It was the best of times, and the worst of times.

The first telephone
Science transforms economic life

We think today that we are living through a period of amazing technological change, but the changes which took place in the late 19th century were breathtaking. This period is often called the 2nd Industrial Revolution, when wide-ranging scientific advances were harnessed to industry in a way they never really had been during the 1st Industrial Revolution.

The discovery of electricity led to inventions which transformed business and daily life: inventions such as the light bulb, the telegraph and the telephone, and refrigeration. From the 1870s onwards refrigerated ships brought beef from Argentina. This made meat affordable and meant it could be eaten any day of the week. Other innovations included the bicycles, the typewriter, the sewing machine, and finally the car. Soon life for nearly everyone was changing by the minute.

CLICK HERE to find out more about the 2nd industrial revolution

The Age of Photography

Photography came of age at the end of the 1830s, and was well-established by the second half of the 19th century. It spans the story of 1850-1945 covered in programme five of The Road to Riches. As a result the production team decided to use black and white photos rather than archive film footage, and filmed some of the programme in the Hulton Getty Picture Library, with its 16 million images.

CLICK HERE to find out more on the history of photography

World trade booms

The figures behind this economic explosion are staggering. Between 1860 and 1913 world industrial production increased sevenfold and world trade twelvefold. Much of that trade passed through London.

The Royal Victoria, the Royal Albert and the King George docks were built in the late 19th century and were the world's biggest. Now much of the area has been developed into office blocks and housing, although some original warehouses and other features remain. Thousands of products came through the docks every year brought by a new, fast and reliable network of steam-driven iron ships. Old photos show us the amazing range of goods - ostrich feathers, sugar, spices, new types of tea, and wool.

"By 1914 30,000 ships carried goods from port to port round the world… Thanks to this evolving global infrastructure, the wool of New Zealand, the wheat of Canada, the meat of Argentina, the corn of the United States the rice of Burma, the rubber of Malaya, the cotton of Egypt, the jute of Bengal and the humming factories of western Europe and the United States were all enmeshed and co-ordinated in a dynamic global economy." L.S.Stavrianos, Lifelines from our Past: a New World History

Statue of Liberty
Millions emigrated to the US
America Ascendant

One of the most important developments of the period was the emergence of America as the world's economic superpower. It was built up by immigrants and capital from the old countries of Europe and driven by the expansion of the railway network, from sea to shining sea.

At the end of the 19th century 60 million people left Europe. The majority came from Britain, and most went to the United States. The vast majority were looking for greater economic opportunities and more money.

Railroads were the engine of
American growth
As well as people, Europe also exported capital to America. The money funded the new infrastructure, mines and industry. The largest proportion of investment came from Britain (43%). International banking houses like Barings flourished by selling bonds to raise this finance. In the 1870s Barings handled 30 big issues and in the 1880s it handled 48. The majority were in United States stock with the proceeds of at least 32 of the issues going to American railroads, which had a huge capital requirement.

Between 1865 and 1873 the length of track in the United States doubled to 70,000 miles - helping transport people in and goods - like grain - out. By the turn of the century the railroad was crucial to the American economy.

Andrew Carnegie: The richest
man in the world
Carnegie: the industrial capitalist

The railroads spurred other enterprises and it was this that drew Andrew Carnegie, a Scottish emigrant, into business. Born in Dunfermline he emigrated to the United States in 1843 and started work as a bobbin boy in a textile mill.

He worked his way up through the factory to become a telegraph operator and then got himself a job on the Pennsylvania Railroad. Saving his earnings and reinvesting them he made his first fortune in a sleeping car company whose fortunes soared when the railroads adopted sleeping cars. Then, realising that iron bridges would soon replace wooden bridges, he founded the Keystone Bridge Works, later to become the iron and steel works Carnegie Steel, which brought him the bulk of his fortune.

Carnegie exemplified a new emerging breed - the industrial capitalist running a large corporation which, through its sheer size, was able to operate at levels of efficiency which cut costs to the bone.

"Two pounds of ironstone mined upon Lake Superior and transported 1900 miles to Pittsburgh; one pound and one half of coal, mined manufactured into coke and transported to Pittsburgh; one half pound of lime, mined and transported to Pittsburgh; a small amount of manganese ore mined in Virginia and transported to Pittsburgh - And these four pounds of materials manufactured into one pound of steel, for which the consumer pays one cent." Andrew Carnegie

Carnegie also recognised that the impetus behind every business in this new industrial world had to be 'expand or perish'.

The rewards enormous. When Carnegie sold his steel company to form the United States Steel Corporation in 1901, he made around $450m and became known as the richest man in the world.

Nine million died in the First
World War
Economic origins of war

This era of prosperity was overshadowed by political tensions and rivalries that were to culminate in war. One of the consequences of the drive for economic power was a naval arms race between Britain and Germany.

The First World War saw the destruction not only of nine million people, but also of the economic system that had preceded it. The treaties after the war failed to provide a stable world in which the pre-war system could be re-established. Instead, they set the world on a path which was to lead to the Second World War and the greatest destruction of life and wealth ever seen.

After German unification in 1871, and three short wars with neighbours Denmark, Austria and France, Germany's frontiers were pushed beyond the Rhine. Otto von Bismarck, Germany's leader, launched the country on a course of rapid industrialisation, and in 1896 German steel production exceeded Britain's for the first time. Germany also began acquiring an overseas empire. Germans believed colonies were important for economic survival, and that naval power was essential to protect overseas territories and trade lanes.

Britain was not prepared to be overtaken by Germany. In the first decade of the 20th century, this led to the world's first arms race - in battleships.

Wilhelmshaven: Where many of
Germany's battleships were built
In 1905 Britain gave the arms race a new twist by building HMS Dreadnought, the first of a revolutionary new class of warship to which it gave its name. The Dreadnought was more heavily gunned and armoured than any of its predecessors. Germany responded by building its own version, the Nassau, and the tit-for-tat became ever more expensive.

But even on eve of the First World War it was hard to imagine how a world of such economic activity could be jeopardised.

Norman Angell wrote a best-selling book which argued that war would never happen, because the world's finance and commerce were now so inextricably entwined, crossing all national boundaries, that the price of war between nation states must be so high as to make the prospect inconceivable.

Gemany suffered hyperinflation
after the war
Economics and the rise of the Nazis

The First World War left the German economy in a parlous state, and in 1923 it succumbed to raging hyperinflation. It is widely, though wrongly, believed that the Allies’ imposition of reparations of 132 billion gold marks caused this hyperinflation. In fact, Germany had borrowed the funds to wage war in the first place, and this bill far exceeded any reparations the Allies were actually able to collect. Germany printed money to inflate away her war debts. The importance of the reparations issue in Germany was not economic, but political and psychological.

There is no doubt most Germans believed that reparations and hyperinflation were inextricably linked. Hyperinflation caused widespread hardship - the middle classes were severely affected and many families lost their life savings overnight. It led to bitter resentment against the Allies. Many argue this predisposed large sections of German society towards supporting Hitler a decade later.

But if 1923 didn't fully pave the way for Hitler, it seems the effects of 1929 finished the job. The Wall Street Crash exacerbated the recession which was already under way in Germany, and within 3 years there were 9 million unemployed, two fifths of the working population. Hitler's ideas about economic survival through territorial acquisition found a ready audience.

CLICK HERE to watch Professor Richard Overy, of Kings College, London explain Hitler's economics. The interview takes place at various historic locations in Berlin.

Additional reading:

The North American Railroad, James E Vance Jr John Hopkins university Press1995

British Imperialism, Crisis and Deconstruction 1914-1990, P J Cain & A G Hopkins Longman 1993

Dreadnoughts in Camera, Roger Thomas & Brian patterson Sutton 1998
Dreadnought, Robert Massie, Pimlico 1991

The penguin Historical Atlas of the Third Reich, Richard Overy Penguin 1996

The Pity of War, Niall Ferguson Allen Lane 1998

Origins of the Second World War, AJP Taylor, Scribner 1961

Dockland Life - apictoral History of London's Docks 1860-1970, Chris Ellmers and Alex Werner Mainstream Publishing 1991

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Behind the scenes

BBC Two:
20.10 hrs 13 August 2000


Science Museum
Hulton Getty Photograhic Archive
Andrew Carnegie Birthplace Museum
The 1929 Stock Market Crash

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