|AMERICAN ECONOMIC GROWTH 1820-1860
Copyright © 2016, Henry J. Sage
Part 2: The Impact of the Industrial Revolution on America
The growth of American industry required certain technological advances including the factory system, interchangeable parts, steam power, and the cotton gin. The Bank of the United States provided an important source of credit for financing America’s industrial revolution.
Economic growth in the United States before 1820 was built on agriculture and commerce. The success of the "carrying trade" diverted investment from more risky manufacturing ventures, although some innovations, especially in the textile industry, did appear. American workers reacted to new machines with ambivalence, fearful of reduced wages and loss of independence and status. American shipping enjoyed a spurt of prosperity between 1793 and 1805 but suffered when England and France restricted America's rights as a neutral nation. Cities were closely associated with international trade but still played a marginal role in the life of the rest of the nation. Industrialization and mechanization were just beginning to frighten skilled craftsmen. The growth of American industry required certain technological advances including the factory system, interchangeable parts, steam power, and the cotton gin.
Early America was overwhelmingly agricultural. Most manufacturing of things such as wagons, farm tools, horseshoes leather harnesses, household utensils and so on were manufactured in individual homes or in small shops employing a handful of workers. In 1800 every family farm was a small factory. Farmers and their wives and children manufactured their own tools and clothing, has little cash, and frequently purchased things they needed through barter rather than cash transactions. Virtually all power was provided by human muscle or animals, with some resort to water-power were streams flowed. Many manufactured goods had to be imported from Great Britain or elsewhere in Europe. But as the country grew, especially west of the Appalachians, where the population in 1800 was half a million and by 1860 million, the need for more manufactured goods grew rapidly.
Meanwhile, the industrial revolution, which began in the mid-1700s and lasted about 100 years, produce the most profound social change in 10,000 years. Almost every aspect of daily life was transformed by the proliferation of new goods, tools, and eventually machines. It was said to have brought about a “Complete revolution in domestic life and social manners.” With the increased availability of goods, and increase commerce as a cash economy evolves, the standard of living for the average family began to improve dramatically. The Industrial Revolution also made farming more efficient, which meant that more foodstuffs were available, and farm labor could be converted into the growing industrial workforce. By 1860 5 million horsepower was being produced from inanimate sources.
The Northern Industrial Juggernaut: Yankee ingenuity: Resourcefulness and Experimentation
While the southern economy boomed on the basis of cotton harvested largely by slaves, manufacturing grew rapidly in the North. As the pace of invention advanced, the need for new products was created. Manufactured goods need to be packaged, so and industry grow up around the creation of cans and containers. The sewing machine also fueled growth as people began to purchase manufactured clothing rather than making it all at home. Steam power was critical to the expansion of the factory system and industry was remarkably receptive to technological change. In America, individual freedom encouraged resourcefulness and experimentation, business growth encouraged new techniques, and a labor shortage encouraged the substitution of machinery. Even the British admired American inventiveness.
Industrial expansion created a demand for labor, and available jobs jobs that attracted thousands of immigrants to America. Resident "native" Americans tended to look down on these immigrants, and natives and immigrants alike were unfriendly toward blacks. By 1860 Irish immigrants had largely replaced the New England mill girls as textile workers. The pace of industrialization and economic expansion had a significant impact on society, as the distribution of wealth between successful entrepreneurs and the laboring classes through. Before long, 45% the capital assets in the United States belong to the top 10% of the population. In Boston in 1845 the top 4% of the people owned 65% of the wealth, and in Philadelphia the top 1% owned 50% by 1860. The gap between the wealthier classes in the working classes widened, but living standards for all continue to rise.
Another engine that fueled the rapidly expanding economy was the locomotive. The beginnings of a true white-collar class began to emerge, as railroads needed people to manage schedules, timetables, sell tickets and orders for goods to be shipped and other office jobs, a new phenomenon in American life. In addition, the railroads needed enhance communication, fueled by the need for scheduled departures and arrivals of both passenger and freight trains. The result was that by 1860 the Western Union telegraph Corporation had 50,000 miles of telegraph lines, most of it stretching from the northeast to the northwest. Like the railroads, the telegraph industry also created a need for more white-collar jobs.
Recalling what we said about the gene pool of Americans, people who came from Europe to the New World, which necessarily involved a gamble because of the precarious conditions involved in crossing the Atlantic Ocean, many Americans were willing to try anything. At first they copied inventions created in England, then they began to improve on those inventions and develop new ones of their own. For example, a man named Oliver Evans developed an automated flour mill, enabling him to produce more product faster. A man named Jacob Perkins invented a nail making machine, mass-producing them at a cost that displaced the homemade variety. As Rose were expanded and vehicles became more sophisticated, Charles Goodyear developed methods for producing rubber. A measure of the rate of expansion is shown in the fact that in 1800 forty patents were granted. By e1860 well over four thousand patents were granted for such items as the thresher, reaper, harrow, plow, mowers, hay rakes and other farming equipment. Leaders among this new phase of the agricultural industry were John Deere and Cyrus McCormick, whose inventions facilitated an expansion of farming, which in turn aided the standard of living to people who had to purchase their own food for consumption.
Other inventions that showed Yankee ingenuity included such things as the ice industry. A New England businessman named Frederic Tudor developed the industry starting in 1806 by trying different combinations of materials to aid in the preservation of ice, including things like straw and clay. Ice was harvested from ponds and lakes in winter, cut into the shape of cubes so that it could be stored with very little air circulation, lengthening the time that it could be stored. He perfected his insulating materials to the point that he actually shipped ice to the Caribbean and Europe, even delivering ice to Egypt on one occasion. Ice was also used in refrigerator cards on trains for the shipment of foods that needed to be preserved in cold.
Another American name Samuel Slater was known as the father of the American Industrial Revolution. He studied the British textile industry and brought it to America, improving and enhancing on the designs that the British claimed he had "stolen." His design use water power to run textile machinery. The Boston-Lowell factories emerged from his invention. Since patent laws did not cross the ocean at that time, Americans who could smuggle industrial apparatus out of England to America could produce it here with no fear of being challenged in court.
Alongside the advance of volume production of goods, the household system nevertheless persisted. For example in Danbury, Connecticut, Hatters still made hats in their own homes. The shoe industry was also one in which single workers could pursue a successful career making shoes in their homes or barns.
Another advance of the industrial system was the need for corporations to develop and protect business interests. John Marshall's decisions, including the Dartmouth case, that defined a corporation, helped enhance the development of American capitalism. The creation of those charters required separate government actions in every case, most of them for projects that had some public connection, such as the building of roads and bridges. All of these factors helped fuel the growth of the American economy, an economy that by the end of the 19th was larger than the next few national economies combined. And although the Industrial Revolution and its components produced wealth on an enormous scale unheard of at the turn of the previous century, the gap between the wealthiest and the poorest continue to grow as the century progressed.
THE TRANSPORTATION BOOM 2: CROSSING THE ATLANTIC & CROSSING THE CONTINENT
Like other components of the Industrial Revolution, changes in transportation methods also had a profound effect on economic and social life. The transportation boom altered people's concept of time as it related to travel. People usually measured time by the position of the sun, with or without a sundial. Clocks had existed for hundreds of years, but they didn't necessarily exist in every household or on every farm. For most people, the exact time of day wasn't especially important. Most people traveled only short distances from their home, and the speed of travel was based on the pace at which a horse could could go. But with the advent of steam power, both ships and land-based vehicles, starting with the steam locomotive, could move with much greater speed, which required scheduling and accurate timing.
The first steamship was built in America in 1807 and it traveled from Albany to New York and back. The building of steam powered vessels advanced rapidly both in Europe and America. By the late 1840s, steamships had captured much of the Atlantic freight and passenger traffic. These British-built vessels, stronger and larger than wooden sailing ships, challenged America’s shipbuilding industry. Competition, subsidies, and new technology reduced shipping rates. Bargain rates in steerage enabled tens of thousands of Europeans to immigrate to America. Packet ships which were powered by both steam and sale also cross the Atlantic. Steam power also made it possible for ships to be plated with iron, which made the English ships superior.
Enhanced travel on the oceans stimulated foreign commerce, which drew grammatically in the 1840s and 1850s. Although manufacturing was advancing in the United States, Americans exported mostly raw materials. Southern cotton was the most valuable export. The concept of balance of trade was a factor, and since the value of exported raw materials was less than that of imported manufactured goods, it meant that America's balance tended to be negative. Great Britain was America's primary trading partner, both a consumer of cotton, and a supplier of manufactured products. Regularly scheduled ships left Boston, New York, Baltimore and other large cities, where trade was concentrated. With the construction of the Erie Canal, which opened up commerce between the Western most states and the city, New York soon became both the trading and financial capital of the country. New England traded heavily in lumber and manufactured products and became the top trading area of the country. The New England whaling industry was also an important part of the growing American economy. Speed became important for Atlantic crossings as different companies competed with each other. Fast sailing but expensive clipper ships, both for speed and not necessarily for ample cargo, enjoyed popularity at mid century, being able to sale at 19 knots in a stiff wind.
Another component of the transportation revolution in America was the construction of the Erie Canal, mentioned above. A massive project, it was completed in eighteen twenty-five at the cost of seven million dollars. Although the Erie was the most famous and perhaps most successful of the canals there were others, one was the Delaware and Hudson Canal which connected the two waterways. Even in the West canals were built to facilitate moving goods to the Great Lakes where they could be further transported eastward. Many were built, but not all of them made money. Although most transatlantic shipping carried mostly cargo, the famous black ball line that carried passengers came into existence in 1818. Some of the more successful canals remain in operation to the present time.
The most significant development for land travel was of course the railroads. Once they got started, they expanded rapidly carrying more and more passengers and cargo. Their growth was phenomenal: In 1830, 100 miles of track existed. By 1840 there were 3,500 miles and by 1860 30,600 miles. There was no real national railroad network until after the Civil War, but in east several major lines existed including the New York Central, the Pennsylvania, and the Baltimore & Ohio. Like other mechanical inventions, the railroads required improved technology and engineering, such as iron rails that curved and the swivel truck that allowed railroad wheels to move with curved tracks. Have your engines required better rails, and the iron industry was enhanced enormously by the demands of the growing railroads. Competition for steam engines narrowed down until a standard American engine was developed. Despite advances, early railroad travel was dangerous and uncomfortable. Wood-burning steam engines spewed sparks that started fires. Until Westinghouse improved brakes, stopping fast-moving trains for obstructions could be difficult. The need for speed enhanced the inherent danger of railroads, which only improved engineering could avoid.
Needless to say railroads required enormous amounts of capital, which had to be raised before the lines started hauling passengers and freight for money. For the most part private investors supply the capital, especially when there were advantages to the communities to be gained from building railroads through them. The longer east-west lines usually required some public or government financing, but they are also financed by loans, investments, and tax exemptions granted to railroad builders. The federal government began to assist by granting federal land to the states which could be used to help finance the building of railroads.
Railroads profoundly affected the farmers. The location of the railroad lines helped determine what land could be profitably cultivated. Railroad companies created farms by selling their land grants as farm sites. Prices for farm goods were high, but farm labor was scarce. Farm machinery, described above help to ease the labor shortage. Steel plows and mechanical reapers reduced the labor and time required to plant and harvest. Railroads also affected cities. The growing city of Chicago became the railroad center of the Midwest. Needless to say, the rapid transportation possible for foodstuffs aided the diets of millions of Americans. Farm produce grown in the Midwest could reach eastern cities within a matter of hours, and trains could transport dairy products grown on farms near the cities into the city centers themselves.
Railroads also stimulated other kinds of economic activity. They influenced real estate values, spurred regional concentration of industry, increased the size of business units, and stimulated the growth of investment banking. Railroads also revolutionized business organization and management, and they sharply reduced freight and passenger rates. Finally, railroads revolutionized western agriculture, as the center of wheat production moved westward. The combination of railroads and steam powered ships opened up new markets for Midwestern farmers, not only in the eastern cities but across the world. Thanks to the railroads in the canals Midwestern cities began to boom.
Railroads also affected the relationships between the northern and southern states. Because expansion went Western and the concentration of industry was in the Northeast because of the cotton and slave plantation system in the South, many of the important railroad lines traversed east to west. The South had many navigable rivers that serve to get cotton to ports such as New Orleans or Charleston, but that focused economic development in the South internally. Because of the increasing east-west commerce brought about by railroads, political lines tended to be drawn in the same direction. Agriculture boomed in the old Northwest, the states between Ohio and Minnesota, for example, but in New England the average farm remained small because of larger populations and less arable land. Most women farms averaged about 200 acres and most were self owned and operated. The major agricultural products across the country were corn, wheat, hogs, cattle and sheep. In the south of course the main crop was cotton, which both New England and British textile mills consumed in large quantity, and enhancing the wealth of the South. Thus economic and political lines were drawn, with the north and northeast to being aligned with the Midwest, while Southerners felt more and more distant from their northern brethren, especially if slavery disappeared in the northern states.