American Economic Growth 1800-1860


A person living in 1700 or 1800 or even earlier would not have been overwhelmed by the advances made during the previous century. But imagine Washington or Jefferson looking ahead about 100 years to the automobile, light bulb, telephone, cross-country railroads (200,000 miles by 1900), ocean-going streamships, airplanes, skyscrapers, factories full of heavy machinery and thousands of other advances. Although geniuses like Franklin and Jefferson might have foreseen such developments in their imagination, most people in 1800 could hardly conceive of such things. If one surveys the advance of science and technology over the centuries, it is apparent that for long periods the changes in the lives of working people were incremental. Sometimes, in fact, progress tended to reverse itself; the engineering achievements of the Romans, for example, were not replicated for much of the Middle Ages and Early Modern period. And a person earning a living and in manufacture or farming in 1800 would not have led a life drastically different from the life of a small tradesmen or farmer a thousand years earlier. As many historians have pointed out, it is impossible to underestimate the impact that the growth of technology had on the lives of ordinary people.The rate of change in human society began to pick up in the early 1800s and has been accelerating ever since. Arguably, even the 20th century did not have such a profound impact on the way people lived their lives as the 19th.

Consider the railroad, for example. Prior to the existence of widespread rail networks, the concept of time was one in which approximation was adequate for most purposes. There was little need to know the exact time for anything. True, ship sailings were often timed to the hour, and stagecoach routes might have a set time for departure, and so on. It's not that clocks and timepieces were unheard of. But with the advent of rail travel time had to be regulated much more stringently, as interlocking rail lines needed to be coordinated so that trains could pass each other on shunts or sidings, connections could be made, so that the new mode of transportation could be used efficiently. It was railroad operators who invented the time zones in America. With rapid communication through the telegraph, which necessarily accompanied the expansion of railroads, 8 a.m. in New York had to be adjusted to match the same time of day in California.

Technology improved life in ways we can best appreciate during a storm which knocks out power, and we lose light and perhaps heat. Even if we must huddle in the dark under a blanket or swelter without air conditioning for only a few hours, we feel terribly deprived. But imagine how life was altered when stoves and furnaces replaced fireplaces; when water was delivered through pipes rather than in buckets; when tools became more durable and efficient and could be quickly replaced when broken; when improvements in the manufacturing of all kinds of common goods, from glass to paper to building materials, shoes, overcoats, eyeglasses and medical and dental apparatuses, among hundreds of such common items, made life ever more tolerable and comfortable for the masses. And although progress was uneven, unsteady and unsure, it moved forward inexorably toward the modern age in which we take so many things for granted. Looking back, it sometimes seems harder for us to imagine life in 1700 without all the amenities we enjoy than it might have been for an American colonist to imagine driving an automobile. And the 21st century promises to bring changes that we in out time of accelerating technological change can scarcely imagine.

Historians have analyzed American economic history from various perspectives, sometimes arguing that economic issues dominated American political developments, even to the writing of the Constitution. Those kinds of claims, often made by historians influenced by various Marxist theories, have been to a large extent discredited. There can be no doubt, however, that the economic development of America is in many ways central to our overall evolution as a nation. Although the first steam engine, the first locomotive, and much of the earliest textile machinery first appeared in England, the development of technological advances on a grand scale occurred in America.

Adam SmithIt is an interesting coincidence that Adam Smith’s The Wealth Of Nations, the “bible” of laissez-faire capitalism, was published in 1776, for the United States has clearly been the most successful capitalist nation in history.  Historian Carl Degler wrote in Out of Our Past  that “the Capitalists came in the first ships.”  The Virginia colony was, after all, this formed as an investment company, from which those who ventured their capital hoped to gain profits. It can scarcely be doubted that economic issues were the driving force behind events that brought about the American Revolution.  Although that is not the whole American story, it certainly is an important part of it. The first colonists to cross the Atlantic were certainly looking for more freedom, but it was as much freedom from economic want as from political control.

The Industrial Revolution came slowly and unevenly to America. different sections of the country advanced at different rates for easily understandable reasons. For example, since the Southern economy was based heavily in agriculture, primarily in cotton, the development of industry in the South was relatively slow. The factory system, discussed below, which grew up in the Northeast as part of the revolution in the textile industry, did not stretch fully into the South. Furthermore, the necessary capital investment for in industrial advancement was less likely to be forthcoming in the South because investments in land, cotton and slaves was bound to be profitable, whereas investment in new ventures such as technological innovation was always risky. Economists have determined that the average rate of return on investment in the southern cotton economy averaged around 10% per year, a good return by any measure.

America was something of slow starter in developing manufacturing and small industries. Around 1800 each family farm was, in effect, a small factory, as family members themselves created most of what they needed—from simple tools and nails to clothing and cooking utensils. More substantial items, such as plows, harnesses and so on, were either imported or manufactured locally.  Jefferson’s Embargo and the War of 1812 both demonstrated that the United States could not remain dependent on foreign imports, and Yankee ingenuity soon led to economic progress. Nevertheless, economic growth in the United States before 1820 was built on agriculture and commerce. The success of the “carrying trades”—shipbuilding, for example—diverted investment from more risky manufacturing ventures, although some innovations, especially in the textile industry, did appear.

The first phase of the industrial revolution actually began in Great Britain, starting with the invention of the steam engine by James Watt. The ideas generated and in England dealing with improved manufacturing and production techniques, however, traveled sporadically across the Atlantic. Jealous of competition, the British government attempted to prevent the export of technology in order to protect its own investments. But as so often happens in such cases, ingenuity overcame the law, and in information was either smuggled out of Great Britain or carried in the heads of people with memories strong enough to reproduce those ideas on the other side of Atlantic.

The Industrial Revolution, which began in the 1700s in Great Britain and continued through the 18th and 19th centuries, profoundly altered a social and economic structure that had been more or less stable for centuries. As technology began to introduce mechanical devices to aid manufacture, many of them developed initially in Europe, American workers reacted to the new machines with uncertainty, concerned that wages might fall and that their economic independence and status might be negatively affected (a fear that was realized in the later, post-Civil War industrial era.)  American shipping had enjoyed a period of prosperity between 1793 and 1805 but suffered when England and France restricted America’s rights as a neutral nation. Thus alternative sources of economic development were needed.

The pace of industrial and economic development accelerated throughout the nineteenth century. The Civil War impeded progress on such projects as the building of the transcontinental railroad. At the same time, the demands of that conflict also stimulated invention and development, especially in areas such as medicine and the mass-producing of machinery. Veterans of the war moved west with the railroads, helping both to build it, and to settle with people the developments that grew up alongside the tracks. By the end of the 19th century the United States stood atop the world in terms of industrial progress. New York City would become the financial capital of the world, and the American economy dwarfed all others.

It started with the small factory.

Links to the Section on Economic Development

Economic Growrth Part 1  Birth of the Factory. Transportation Boom. Railroads and Canals. Government and Business
Economic Growth Part 2  The Industrial Revolution in America. Northern Industrial Power. Transportation Boom 2
Economic Growth Part 3  Manufacturing. Corporations and Labor. Immigration and Labor Issues.
Economic Growth Part 4  The Economy of the South. The Plantation System.Cotton and Slavery.
Jeffersonian Home Jacksonian Home Expansion & Manifest Destiny
Sage American Home Antebellum America Updated December 6, 2016