1. The Second Industrial Revolution:
Chemicals, Electricity, and Steel

2. Second IR
While the First IR ( )centered mostly on steam, coal, and textile
production in Britain, the Second IR ( ) focused primarily on Germany
After the unification of Germany, the new German government invested
heavily into industrializing to catch and surpass Britain in several categories
Prussia had been the most industrially developed of the German states, and
spread its policies and attitude towards industrialization throughout Germany
The state invested in the expansion of railroads, to connect the new German
Empire, and provide transportation for passengers and economic cargo
They also focused heavily on the development of chemicals, like sulfuric acid,
bleaches, petroleum (gas), and developed the Bessemer process for cheaper, solid steel

3. Mechanization
While the British has mechanized the textile industry in the 18th
century, the bulk of manufacturing was still done by human labor
Labor was organized into the factory system—where all steps of production
are done by specialized workers and departments to complete one product
Germany however revolutionized production by harnessing and developing
electricity to mechanize the factory system even further
Larger, more complex equipment reduced or eliminated human
workers, who were limited, and could be unfocused or ineffective
Reduction of human workers cut accidents and costs, and
helped produce more, cheaper goods faster than before

4. Economic Connectivity
By the 1880s and 1890s, Europe looked far different
than it had 100 years ago, even during the First IR
Telegraphs and telephones connected people and businesses,
and made communication and economic transactions far quicker
Railroads made passage around countries faster, cheaper, and safer than before,
helping make costs cheaper, as well as giving militaristic advantages
Germany, for example, showcased this advantage during the Franco-Prussian
War, when superior railroad development allowed better troop and supply movement
Additionally, new concepts like cars and planes began to emerge from Germany and
the United States, and the internal combustion engine was created in the late 19th century
Lastly, steel steam ships would allow large amount of supplies and passengers to cross
the ocean, making the transportation of people and goods far cheaper, faster, and safer

5. Criticisms of Free Trade
While free trade certainly could benefit companies and consumers with
cheaper products, it also created economic crashes and downturns
One of the key components of capitalism was market prices—supply
and demand—rather than gov or guilds controlling prices
However, this also meant prices would rise and fall wildly based on demand,
and with free trade, any drop or increase is prices affected all nations
For example, when the Austria stock market crash caused several Austria banks to fail,
its unemployment rippled and resulted in a massive economic downturn called the Panic of 1873
As a result, the Panic of 1873 caused prices drops and unemployment in the US and Europe for 10 years
This economic drop in prices and wages resulted in large amounts of
unemployment across Europe, and caused countries to question Free Trade

6. Protectionism
After several market failures, crashes, and famines, the governments of
Europe began to abandon laissez-faire policies between one another in the 1870s
Still firm believers in capitalism, they began to focus on protectionism—the
protecting of their own, domestic businesses, rather than volatile (unstable) free trade
This meant the return of many tariffs that had disappeared in the early-mid 19th century,
starting mostly with Bismarck in Germany, and soon including all of Europe but Britain
One example was in Germany in 1879, when Bismarck
and German land owners established the Tariff Agreement of 1879
This tariff was a tax on imported grain to protect German agriculture, as grain
prices on imports from the US and Russia were driving German farms out of business

7. Monopolies
One of the policies held by governments in the mid-19th century was the
support of large monopolies—companies that controlled an entire industry
As governments began to support tariffs in the 1870s to prevent
the negative impact of free trade, so too they begin to support monopolies
Governments and corporations believed that one (or a few) strong,
consistent companies controlling an industry would make it more stable
When economic downturns occurred, smaller businesses went out of
business, and made the problems worse while many large businesses survived
Examples of state-supported monopolies can best be seen in the U.S., with
companies like Standard Oil to control and stabilize oil prices and quantities