E C O N O M I C R E P O R T O F T H E P R E S I D E N T

transformations the Internet and e-commerce, to take only the currentlymost celebrated examples, will eventually bring. In these circumstances weshould remember that we are not the first generation to have to come togrips with rapid technological progress. Notable examples of the rapid adoptionof new innovations include electric power, automobiles, and television.These earlier innovations spread through American households much ashave more recent innovations such as computers and cellular telephones(Chart 3-1). As described below, throughout the 20th century new technologicaldevelopments created new products and new ways for firms to conductbusiness, and so changed the structure of the economy. Those changes,in turn, produced changes in the role of government in competition, regulatory,and technology policy.One example, electricity, is a commonplace fixture in the economy oftoday, but in 1900 the electric power industry was just getting under way. Atthe turn of the century, fewer than 10 percent of homes had electric service,and cities were still being wired for electric transmission grids powered bycentral generating stations. At that time, only about 5 percent of factoriesemployed electricity as a power source; most still used steam or water powerto drive their machines through intricate arrangements of wheels, belts, andshafts. Electricity was initially used to power similar systems, but the shortcomingsof mechanical power distribution systems remained. Once factory100 | Economic Report of the President