At the beginning of the nineteenth century, the United States was similar in economic size to Brazil and Mexico. In fact, Brazil and Mexico may have been more desirable than the United States as destinations for immigrants. However, by the end of the century, the United States had far surpassed Brazil and Mexico. While the US per capita GDP grew six times from 1800 to 1913, Mexico's per capita GDP grew only one and a half times and Brazil's GDP per capita fell. The contrast is even more dramatic in terms of total GDP. Between 1800 and 1900, while the GDP of Mexico and Brazil grew four times, that of the United States grew 45 times (see Figure 11.1). Further, by 1855, in terms of GDP, the United States surpassed the old colonial powers of Europe, including Britain. In 1800, the American industrial output was a sixth of that of Britain. However, it was equal to that of Britain by the late 1880s and 2.3 times that of Britain by 1914. What factors caused the United States’ enormous growth relative to Brazil, Mexico and even Britain?

This chapter argues that innovation in the United States was primarily responsible for the explosive growth in the economy. Innovation permeated all aspects of the economy in every industry. What distinguished American innovation from that in Mexico, Brazil and European countries was the thrust for large- scale standardized production (known as mass production) in multiple industries and services. This period of American innovation is sometimes referred to as the American Industrial Revolution. Indeed, this took the Industrial Revolution of England to a whole new level, propelling the United States past England in terms of innovation, industrialization, growth rate and wealth.

After the American War of Independence from Britain (1775– 83), there were many doubts whether the newly formed United States of America would survive, let alone be a major world power. Indeed, the young nation had little industry and depended on Britain for most of its manufactured products. However, a climate of intense and continuous innovation permeated every sphere of business and industry, powering an American Industrial Revolution.