Railroads and Conflict in the West

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How did railroads help the growth of business in the early 1900s?

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By the early 1900s, railroads had been fundamental to the American economy (I'm assuming the question is about the United States, but the railroads were important in pretty much every industrialized society in the early 1900s) for more than half a century. There are many reasons why this was the case. For one thing, the railroads were enormous consumers of capital goods. The steel, coal, copper, iron, timber, oil and other resources needed to construct and maintain locomotives and railroads themselves was tremendous, and each of these items had to be produced in factories. It was no coincidence that mining, steel, and oil industries in particular rose to the center of the American economy, fostering enormous economic growth. The railroads drove much of this growth. Another reason the railroads were so important to the growth of business in the early 1900s was that they enabled the flow of goods throughout the nation. Goods could be purchased through catalogs and delivered by rail very quickly. This created a national market for both consumer and capital goods, and was especially crucial for farmers. Finally, the railroads provided an organizational model that many other industries followed in the late nineteenth and early twentieth century. The first large-scale monopolies in the United States were railroad trusts. Thus the railroads helped shape the patterns of economic expansion that continued into the 1900s. So important were railroads that the rise of the automobile, because it led to a decline in the railroad industry, was one of the destabilizing factors that contributed to the outbreak of the Great Depression in the 1930s.

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If we are talking only about the early 1900s, railroads helped business grow by providing a wide network of relatively easy transportation.  This network helped businesses get raw materials and distribute their finished goods.

Before the early 1900s, railroads helped businesses grow in other ways as well.   When the railroads were expanding rapidly, they helped to drive industrialization.  They created a huge demand for steel for rails and rolling stock.  This was instrumental in allowing the United States to industrialize.

By the early 1900s, this era of rapid railroad growth was largely finished.  Now, the main way that railroads could help business was by providing transportation.  Before railroads (and before large trucks and freeways), it was hard to move heavy goods from place to place except where there was navigable water.  This made it so that factories had to be near to sources of raw materials.  It also meant that it was very hard to move heavy goods from a factory to the places where consumers lived.  This made it harder for businesses to get really big.  When the railroad network got to cover the entire country, it came to be much easier for businesses to grow and to provide the goods that people wanted across the country.

Much of the growth in the US economy that was due to railroads happened before 1900. However, the railroads still helped American business grow in the early 1900s by linking businesses to consumers more efficiently. 

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