Iron working can be traced as far back as 3,500 B.C. in Armenia. The Bessemer process, created independently by Henry Bessemer in England and William Kelly in the United States during the 1850s, allowed the mass production of low-cost steel; the open-hearth process, first introduced in the United States in 1888, made it easier to use domestic iron ores. By the 1880s, the growing demand for steel rails made the United States the world's largest producer. The open-hearth process dominated the steel industry between 1910 and 1960, when it converted to the basic-oxygen process, which produces steel faster, and the electric-arc furnace process, which makes it easier to produce alloys such as stainless steel and to recycle scrap steel.

After World War II, the U.S. steel industry faced increased competition from Japanese and European producers, who rebuilt and modernized their industries. Later, many Third World countries, such as Brazil, built their own steel industries, and large U.S. steelmakers faced increased competition from smaller, nonunion mills ("mini-mills") that recycle scrap steel. The U.S. produced about half of the world's steel in 1945; in 1999 it was the second largest producer, with 12% of the world market, behind China and ahead of Japan and Russia.

Since the 1970s, growing competition and the increasing availability of alternative materials, such as plastic, slowed steel industry growth; employment in the U.S. steel industry dropped from 2.5 million in 1974 to to less than a million in 1998. Global production stood at 773 million tons in 1997, down from 786 million tons in 1988. U.S. steel production has remained constant since the 1970s at about 100 million tons, but 50% of that total is now produced by mini-mill companies. An increase in U.S. demand during the 1990s was largely met by imports, which now account for from about a fifth to a quarter of all steel used annually in the United States. The old-line U.S. steelmakers, losing market share and with higher wage, health, and retirement costs, experienced a string of bankruptcies beginning in the late 1990s, leading to industry and union pressure for protective tariffs, which were imposed by President George W. Bush in 2002 on most steel from non-NAFTA industrialized nations. Later reduced, the tariffs were found in 2003 to be illegal under World Trade Organization rules, and President Bush reversed the tariffs.

Early History

Petroleum seeping out of underground reservoirs has been collected and used for light throughout recorded history. In the 4th cent. A.D. the Chinese drilled for oil and natural gas, but in the 1850s, oil was still being recovered by skimming it off the tops of ponds. As whale oil became less abundant, producers looked for new ways to extract oil. Edwin Drake dug the first modern oil well in Titusville, Pa, hitting oil at 69.5 ft (21.2 m), touching off an oil rush in the area. (Most modern wells go down over 4,700 ft (1,432 m).) In 1861 the first oil refinery was set up.

Development of the Modern Industry

During the late 19th cent., many of the modern oil companies were created: John D. Rockefeller invested in a Cleveland oil refinery during the Civil War and in 1870 created Standard Oil, which refined about 95% of the United States' oil in 1880. In 1911, Standard Oil was declared an illegal monopoly and split into 34 companies, including Esso (renamed Exxon in 1972), Mobil, Chevron, Atlantic Richfield (later ARCO), and Amoco. Texaco (founded in 1902), Shell (1907), and British Petroleum (1909) were also established in this period. As the auto industry vastly increased the demand for gasoline refined from oil, oil companies expanded their search for new reserves. In the 1930s oil companies began exploiting a huge E Texas oil field that would eventually produce 4 billion barrels of oil. Chevron, Texaco, Exxon, and Mobil expanded their reserves by purchasing the rights to the extensive Saudi Arabian oil fields for only $50,000. In 1946 oil replaced coal as the world's most popular energy source.

Late-Twentieth-Century and Early-Twenty-First-Century Developments

In 1960 the Organization of Petroleum Exporting Countries (OPEC) was formed. Over the next decade, OPEC required that the major oil companies provide them with a larger percentage of the profits from their fields. After the oil embargo in 1973, OPEC boosted prices to $35 a barrel in 1981. The resulting energy crisis forced many developing countries to pay more for energy, negatively affecting Third World debt; industrialized countries implemented new measures to conserve and develop new sources of energy. Some new oil fields in Alaska and the North Sea were developed, boosting the world's oil reserves from 645.8 billion barrels in 1978 to 1,052.9 billion barrels in 1998. With an abundant supply, oil prices dropped and stayed low through the 1990s, until 1999 when OPEC announced that it would cut production in order to increase oil prices worldwide. With the help of non-OPEC oil-producing nations, the organization was subsequently generally able to maintain prices between $20 and $30 a barrel, and world events and demand have driven prices significantly higher.

Economies dependent on oil production remain subject to the gyrations of the market. The collapse of oil prices in the mid-1980s ruined many independent refiners and helped produce a recession in such states as Texas; it also hurt Mexico, Venezuela, and other oil-producing nations. In contrast, the rise in oil prices since 1999 has been responsible for economic growth in Russia, Venezuela, and other oil producers. Improved recovery methods combined with higher prices that justify more expensive extraction costs have rejuvenated production in some older oil fields, increased the estimates of reserves in existing fields, and made feasible the exploitation of deposits once considered uneconomical.

Many oil-producing nations in the Middle East and Latin America have set up their own refining operations since the 1970s, and state-owned oil companies in OPEC countries are now among the world's largest. Many large oil companies have diversified into chemicals, and oil prices are increasingly set on commodity trading exchanges such as the New York Mercantile Exchange. Beginning in the late 1990s, the industry saw increased consolidation as already large oil companies merged with each other, including Exxon (the largest U.S. oil company) with Mobil (the second largest; forming ExxonMobil), Chevron with Texaco and Unocal as Chevron, British Petroleum with Amoco and ARCO as BP, and Conoco with Phillips Petroleum as ConocoPhillips.

The industry traces its origins to the invention of the two-element electron tube (1904) by John Ambrose Flemming, and the three-element tube (1906) by Lee De Forest. These inventions led to the development of commercial radio in the 1920s, which boosted radio sales to $300 million by the end of the decade. In 1947, the electronics industry made another important advance when John Bardeen, Walter Brattain, and William Shockley invented the transistor. Smaller, lighter, and more durable than the vacuum tubes that had been used in radios, transistors touched off a period of progressive miniaturization of electronic devices. Integrated circuits, which were developed in the 1950s, allowed the integration of several circuits into one circuit, and the introduction of analog devices in the 1960s vastly increased the amount of information that could be stored on a single silicon chip.

Other important sectors that have made great advances since the 1970s include laser and optical electronics, digital electronics, and microwave electronics. Advances in the field of electronics have also played a key role in the development of space technology and satellite communications; inaugurated a revolution in the computer industry that led to the introduction of the personal computer; resulted in the introduction of computer-guided robots in factories; produced systems for storing and transmitting data electronically; greatly expanded the market for popular music and culture; and, in the process, transformed life at home, the office, and the factory. Many of these innovations, such as the transistor, had their origins in military research, which needed increasingly complex electronic devices for modern high-tech warfare.

In the 1960s, the U.S. consumer electronics industry went into decline as manufacturers were unable to compete with the quality and pricing of foreign products, especially the electronic goods produced by Japanese companies such as Sony and Hitachi. By the 1980s, however, U.S. manufacturers became the world leaders in semiconductor development and assembly. In the 1990s semiconductors were essential components of personal computers and most other electronic items (including cellular telephones, televisions, medical equipment, and "smart" appliances). While U.S. companies are still a major presence in the semiconductor industry (representing about 40% of world sales in 1998), the consumer items themselves are mostly made overseas. Worldwide electronic sales were nearly $700 billion in 1997.

The origins of mass communications can be traced to the development of the printing press in 15th-century Europe; it allowed inexpensively produced newspapers and books to spread information to large numbers of people. Between the 16th and 19th cent., improved roads and faster ships allowed news to spread farther and faster, linking Europe with Latin America and Asia. The instantaneous transmission of information became possible with the building of the first telegraph system (1844) and the invention of the telephone (1876). Radio, which got its start when Guglielmo Marconi sent his first wireless message (1895), allowed rapid communication during World War I. The establishment of the first commercial radio station in 1920 and the creation of national radio networks allowed listeners all over a country to hear the same news, music, and entertainment shows simultaneously.

Following the invention of recorded sound in 1877, the popularity of phonographs in the early 20th cent. enabled listeners to enjoy musical performances at home, and the spread of popular music on radio allowed regional musical styles, such as ragtime, to reach mass audiences. Photographs in the 1830s and motion pictures in the 1890s transmitted images around the world, a development that played a key role in popularizing U.S. cultural values globally. Television, which was first demonstrated in the 1920s and developed commercially after World War II, combined all of these technologies into a new medium that could shape mass culture by delivering news, entertainment, and advertising to nearly all U.S. homes by the end of the 20th cent. The Internet, which originated in the late 1960s and grew commercially in the 1990s, provided another vehicle for such an interweaving of technologies.

In the United States and other free market economies, the rise of mass communications also provided a medium for selling and marketing products. The growth of U.S. advertising, which increased from $50 million in 1867 to $3 billion in 1925, to $19.6 billion in 1970, and to $308 billion in 1999, played a key role in financing the growth of new communications technologies, such as cable television and the Internet, and greatly contributed to the spread of existing media. Satellites have been used for long-distance telephone communications since the 1950s, and after the Olympics were broadcast live from Tokyo in 1964 via satellite, media scholars began talking of a global electronic village. However, national cultural tastes have proved to be remarkably resilient, and future advances in communications technology may tend to fragment rather than unite audiences.

Newer technologies have also motivated governments to loosen controls over the communications industries. In the 1980s, many commercial and satellite television stations were established in Europe, breaking the monopoly of government broadcasters, and in the 1990s the flow of information over the Internet made it easier to bypass government restrictions and censorship. Nonetheless, the enormous power of the communications industry remains controversial. The mass media has been widely criticized for its superficial news coverage, its power to affect public opinion, and the economic power it gives to advertisers and governments.

History

Chemical industries can be traced back to Middle Eastern artisans, who refined alkali and limestone for the production of glass as early as 7,000 B.C., to the Phoenicians who produced soap in the 6th cent. B.C., and to the Chinese who developed black powder, a primitive explosive around the 10th cent. A.D. In the Middle Ages, alchemists produced small amounts of chemicals and by 1635 the Pilgrims in Massachusetts were producing saltpeter for gunpowder and chemicals for tanning. But, large-scale chemical industries first developed in 19th cent. In 1823, British entrepreneur James Muspratt started mass producing soda ash (needed for soap and glass) using a process developed by Nicolas Leblanc in 1790. Advances in organic chemistry in the last half of the 19th cent. allowed companies to produce synthetic dyes from coal tar for the textile industry as early as the 1850s.

In the 1890s, German companies began mass producing sulfuric acid and, at about the same time, chemical companies began using the electrolytic method, which required large amounts of electricity and salt, to create caustic soda and chlorine. Man-made fibers changed the textile industry when rayon (made from wood fibers) was introduced in 1914; the introduction of synthetic fertilizers by the American Cyanamid Company in 1909 led to a green revolution in agriculture that dramatically improved crop yields. Advances in the manufacture of plastics led to the invention of celluloid in 1869 and the creation of such products as nylon by Du Pont in 1928. Research in organic chemistry in the 1910s allowed companies in the 1920s and 30s to begin producing chemicals for oil. Today, petrochemicals made from oil are the industry's largest sector. Synthetic rubber came into existence during World War II, when the war cut off supplies of rubber from Asia.

Since the 1950s growing concern about toxic waste produced by chemical industries has led to increased government regulation and the establishment of the Environmental Protection Agency (1972). The leakage of toxic chemicals at the Union Carbide plant in Bhopal, India (1984), was the worst industrial disaster in history and heightened public concern about lax environmental regulations for chemical companies in developing countries. Beginning in the 1980s, U.S. corporations faced expanding competition from foreign producers, including some Third World oil producers who have set up their own oil refining and petrochemical industries. In 1997 the U.S. chemical industry produced about $389 billion worth of products and employed 1,032,000 workers. It exported about $71 billion worth of chemicals.

Industry History

Although ancient Chinese writers described steam-powered vehicles, and both steam- and electric-powered cars competed with gas-powered vehicles in the late 19th cent. Frenchman Jean Joseph Étienne developed the first practical internal-combustion engine (1860), and later in the decade several inventors, most notably Karl Benz and Gottlieb Daimler, produced gas-powered vehicles that ultimately dominated the industry because they were lighter and less expensive to build. French companies set the design of the modern auto by placing the engine over the front axle in the 1890s and U.S. manufacturers made important advances in the mass production of the auto by introducing cars with interchangeable machine-produced parts (one such car was created by Ransom E. Olds in 1901).

In 1914 Henry Ford began to mass produce cars using assembly lines. In addition, his practice of providing loans to consumers to buy cars (1915) made the Model T affordable to the middle class. In the 1920s, General Motors further changed the industry by emphasizing car design. The company introduced new models each year, marketed different lines of cars to different income brackets (the Cadillac for the rich; the Chevrolet for the masses), and created a modern decentralized system of management. U.S. auto sales grew from 4,100 in 1900 to 895,900 in 1915, to 3.7 million in 1925. Sales dropped to only 1.1 million in 1932 and during World War II, the auto factories were converted to wartime production.

The Modern Industry

After 1945, sales once again took off, reaching 6.7 million in 1950 and 9.3 million in 1965. The U.S. auto industry dominated the global market with 83% of all sales, but as Europe and Japan rebuilt their economies, their auto industries grew and the U.S. share dropped to about 25%. Following the OPEC oil embargo in 1973, smaller, fuel-efficient imports increased their share of the U.S. market to 26% by 1980. In the early 1980s, U.S. auto makers cut costs with massive layoffs. Throughout the 1990s, imports—particularly from Japan—took an increasing share of the U.S. market.

Beginning in the early 1980s, Japanese and, later, German companies set up factories in the United States; by 1999, these were capable of producing about 3 million vehicles per year. As a result, the three big U.S. auto makers now produce less than two thirds of the cars sold in America. In the early 1990s, over $140 billion worth of motor vehicles and parts were produced in the United States by companies employing more than 210,000 workers. Complaints about auto pollution, traffic congestion, and auto safety led to the passage of government regulations beginning in the 1970s, forcing auto manufacturers to improve fuel efficiency and safety. Auto companies are now experimenting with cars powered by such alternative energy sources as natural gas, electricity, and solar power.

Ferdinand Graf von Zeppelin set up the first commercial airline in 1912, using a form of the dirigible to transport more than 34,000 passengers before World War I. Early air travel began with balloons (first flown by two Frenchmen in 1783), gliders (first flown in 1809), and ultimately airplanes (a Frenchman Clement Ader, flew his steam-powered plane, the Eole, in 1890). Prior to World War I, the public's interest in flying was peaked by demonstrations and airplane races; during the war, government subsidies and demands for new airplanes vastly improved techniques for designing and building them. Following the war, the first commercial airplane routes were set up in Europe, using wartime pilots and decommissioned war planes—often passengers were seated in chairs set up in old bombers. During the 1920s, European governments heavily subsidized the establishment of such well-known commercial airlines as British Airways, Air France, and KLM.

In the United States, commercial airlines developed more slowly. The U.S. Post Office established an air mail service in 1919 and played an important role in developing air travel by setting up a nationwide system of airports. In 1925 the U.S. government began paying generous subsidies to private carriers to deliver the mail, and some companies began hauling passengers as well. Many well-known U.S. carriers were established during this period, including Pan Am (founded in 1928; now defunct), United Airlines (created in 1931 by a merger between several older mail carrying operations), American Airlines (created in 1930 out of several mail carriers), TWA (1928; now merged with American), and Delta (1929).

Public interest in air travel grew after Charles A. Lindbergh's transatlantic flight (1927). Improved air safety and Boeing's and Lockheed's decision to produce airplanes that were especially designed for commercial airlines helped the number of passengers grow from only a few thousand a year in 1930 to about 2 million in 1939 and 16.7 million in 1949. The introduction of jet airplanes in 1957 and increasingly larger aircraft helped lower the cost of air travel in subsequent years. To regulate the industry, the Civilian Aeronautic Board was established in 1938 with the authority to establish routes, fares, and safety standards.

The Airline Deregulation Act of 1978 allowed airlines to set their own routes and after 1982 let them set their own fares. In 1984 the CAB was abolished; the Federal Aviation Administration now regulates airline safety. Lower fares and greater competition increased the number of passengers from 297 million in 1980 to over 455 million in 1988, producing complaints about congestion and safety. Financial problems in the 1980s after deregulation of the industry led to a period of labor strife. A number of major carriers were either bought by other airlines or forced out of business, and small start-up airlines began serving niche markets.

The industry continued to grow through the 1990s; in 1998, U.S. airlines carried a record 551 million passengers, but the 10 largest carriers now control about 96% of the U.S. market. The 2001 terrorist attacks on the World Trade Center and Pentagon, in which four jetliners were hijacked and intentionally crashed, threw the airline industry into turmoil, especially in the United States, as people avoided flying and new security restrictions made travel more difficult. Tens of thousands of employees were laid off, many flights were dropped, and Congress passed a $15 billion bailout package that ultimately had only a limited effect. Two major airlines, US Airways and United, filed for bankruptcy in 2002, but this was due only in part to the events of Sept., 2001; US Airways, which had emerged from bankruptcy, filed again in 2004. Higher fuel costs and competition from newer airlines contributed to the Sept., 2005, decision by Delta and Northwest airlines to file for bankruptcy, creating a situation in which three of the top four U.S. airlines (by revenue) were in bankruptcy protection. US Airways emerged from bankruptcy the same month and merged with America West; UAL emerged in 2006. The string of bankruptcies ended in 2007, when Delta and Northwest exited bankruptcy.

Industry that provides services rather than goods. Economists divide the products of all economic activity into two broad categories, goods and services. Industries that produce goods (tangible objects) include agriculture, mining, manufacturing, and construction. Service industries include everything else: banking, communications, wholesale and retail trade, all professional services such as engineering and medicine, all consumer services, and all government services. The proportion of the world economy devoted to services rose rapidly in the 20th century. In the U.S. alone, the service sector accounted for more than half the gross domestic product in 1929, two-thirds in 1978, and more than three-quarters in 1993. Worldwide, the service sector accounted for more than three-fifths of global gross domestic product by the early 21st century. As increases in automation facilitate productivity, a smaller workforce is able to produce more goods, and the service functions of distribution, management, finance, and sales become relatively more important.

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Public and private organizations involved in the discovery, development, and manufacture of drugs and medications. Historically, medicines were prepared by physicians and later by apothecaries. Today, drug development relies on the collaboration and effort of highly trained scientists at universities and private companies. The modern era of drug discovery and development originated in the 19th century when scientists learned how to isolate and purify medicinal compounds and developed large-scale manufacturing techniques. As understanding of biology and chemistry improved in the 20th century, the occurrence and severity of such diseases as typhoid fever, poliomyelitis, and syphilis were greatly reduced. While many drugs, such as quinine and morphine, are extracted from plant substances, others are discovered and synthesized by techniques including combinatorial chemistry and recombinant DNA technology. The pharmaceutical industry has greatly aided medical progress, and many new drugs have been discovered and produced in industrial laboratories. Identifying new drug targets, attaining regulatory approval, and refining drug discovery processes are among the challenges that the pharmaceutical industry faces in the continual advancement of control and elimination of disease.

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Group of productive organizations that produce or supply goods, services, or sources of income. In economics, industries are customarily classified as primary, secondary, and tertiary; secondary industries are further classified as heavy and light. Primary industry includes agriculture, forestry, fishing, mining, quarrying, and extracting minerals. Secondary or manufacturing industry processes the raw materials supplied by primary industries into consumer goods, or further processes goods from other secondary industries, or builds capital goods used to manufacture consumer and nonconsumer goods; secondary industry also includes energy-producing industries and the construction industry. Tertiary or service industry includes banking, finance, insurance, investment, and real estate services; wholesale, retail, and resale trade; transportation, information, and communications services; professional, consulting, legal, and personal services; tourism, hotels, restaurants, and entertainment; repair and maintenance services; education and teaching; and health, social welfare, administrative, police, security, and defense services.

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Taking, processing, and marketing of fish and other seafood from oceans, rivers, and lakes. Fishing is one of the primary forms of food production; it ranks with farming and probably predates it. The fishing industry employs more than 5 million people worldwide. The major countries engaged in marine fishing are Japan, China, the U.S., Chile, Peru, India, South Korea, Thailand, and the countries of northern Europe. The aquatic life harvested includes both marine and freshwater species of fish, shellfish, mammals, and seaweed. They are processed into food for human consumption, animal feeds, fertilizers, and ingredients for use in other commercial commodities.

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