Chp 14: The Market Economy: The North
and West
What is this?
Why is it
important?
• Purpose: to gain an understanding of the distinct economic
and social development of the North and West as opposed to
the South (covered IN CHP 15):
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–
–
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The landmark Missouri Compromise decision
The development of commercial farming
The transformation of transport and infrastructure
Early urbanization
The rise of manufacturing and early industrialization
The impact of immigration
Drawbacks of the new economy
• Timeframe: ca. 1800-1860, with a focus on the 1820s, 30s,
and 40s
1
The Rise of Manufacture;
2
First humans are
The Rise of The MACHINE;
turned into machines...
• With the war of 1812, Northeast
shifts increasingly to
manufacturing.
• Tariffs protected domestic
manufacture.
• Esp. ready-made clothes, shoes,
but also many other things.
• Production techniques include:
– traditional workshops
– the breaking down of one task into
many small ones
– The putting-out system
– Early water- and steam-powered
industrialization.
then they run
the machines
•
•
•
•
•
The Am. System of Manufacturing
revolutionized production.
Developed by Eli Whitney in 1798.
Precision-crafted, interchangeable
parts made the production of guns,
but also locks, watches, etc. much
easier and faster.
Before, parts were hand-crafted for
one individual product only, now
they were machine-tooled and could
easily be assembled.
The Am. System allowed for the
mass production of quality consumer
goods.
3
New England Textile Industry
Eli Whitney, inventor of the American
System of Manufacturing and the cotton4gin
GROWTH OF INDUSTRIALISM
• Defined as:
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•
•
•
•
Textile production was the most
industrialized segment of the
economy before the Civil War.
Concentrated in New England,
massive looms were at first powered
by water, later by steam.
Textile mills concentrated all
production steps under one roof.
Production was efficient, the resulting
clothing was cheap.
The most important example of early
NE textile mills were the mills in
Waltham and Lowell, Mass.
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Workers paid for time worked or goods produced
Managers, not owners, directly in charge
controlled things from top down
Movement toward “economy of scale”
PROFIT is the only goal
• THREE ROUTES TO INDUSTRIALISM
– The Workhouse (England)
– The Artisan Shop
– Household Production/Outwork System/Cottage Industry/
Putting Out System (America)
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6
1
Watch the West grow relative to the other
two. Watch the South lose power
RECORD GROWTH RATES
SOUTH
Total pop-- % of
1816
1865
Urban Population %
07
20
Farm Labor Force %
80
50
Manufacturing Force %
03
15
Population in the East %
80
55
Steamboat Tonnage
1,500 195,000
1810
1820
1840
1860
WEST
Total pop-- % of
NORTHEAST
Total pop-- % of
Total US Pop.
Excluding Terr’s
2,314,000—32%
961,407– 13%
3,939,895– 55%
9,600,783
2,918,000—30%
1,845,863– 20%
4,836,722– 50%
12,820,868
4,749,875—27%
4,960,580– 30%
7,309,186– 43%
17,019,641
25%
11,796,680– 38%
11,393,533– 37%
31,183,744
7,993,000—
7
Early US Industrialism
• England controls patents on Textile Industry inventions
• 1790: Englishman Samuel Slater memorizes plans and escapes to
US
• Dec. 1790: 1st US spinning mill.
– 9 children ages 7-12
• 1800: same mill employs 100 people (still mostly children)
• 1805: 5 more mills open on the Pawtucket R.
• 1820: 66% of workforce still are children—UNRELIABLE
MUST FIND A MORE RELIABLE
WORKFORCE
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8
The Lowell/Waltham System
• Boston Manufacturing
Company chartered in 1813.
Waltham, Massachusetts;
by Francis Cabot Lowell.
• Capitalized at $400,000.
Integrated all steps into a
single process.
• Paid its 1st dividends to
stockholders in 1817:
20% return on
investment.
Exponential Growth:
Why is it growing so fast after
1814?????
SALES
ASSETS
10
From these
1814
1822
$3,000 $300,000
$39,000 $771,000
To this
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12
2
The Problem is STILL the labor force
• 1st you must turn human beings INTO machines
BEFORE they can run the machines. Lowell needs a
workforce he can CONTROL and pay below minimum
wages
– The Lowell/Waltham system is best-known for its main source
of labor: New England farm daughters. 80% of worforce was
female 15-29, from New Hampshire and the eldest daughters.
WHY?:
• 2nd and 3rd daughters can’t marry until the 1st does (pressure to get
married)
• Limited choices in small rural villages
• Clothes
• Dowry
• $$$$
• MRS degree
13
Why would NE farmers allow
daughters to go off to the big city????
14
Clean and Idyllic
• To give factory work
a good reputation,
the women were
subjected to a strict
paternalistic control
by the managers.
2/3 returned home,
1/3 found husbands
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TAKE OFF, COMPETITION, AND END OF PATERNALISM
Demand
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•
•
•
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1828: 5,000 spindles in each mill
1848: 26,000 spindles
Rising competition caused falling prices
Dividends dropped to
– 1836 = 11.4%
– 1847 = 6%
• Worker productivity increased 49% just in
1836, and received a whopping 4% wage
increase. (Panic of 1837-43 stops potential
strikes like those in 1834)
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3
Working Conditions
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•
•
•
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Ways to cut costs as competition increased
12 hours a day
6 days a week
309 days a year (Sundays off)
Could Not quit until 1 year of work
Completely Sex-Segregated
• Cut wages 25%
• Raised the price of mandatory room and board
• Speed up the looms
• Assign additional looms to each girl. During the Panic of
1837-43, the Factory Girls’ Association had accepted
wage cuts, but with prosperity in “44” protests will return
– The few male workers received 85 cents a day
– The female workers received 40 cents a day and had to
pay for room and board out of this. Female
Boardinghouses
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•
•
•
Had to go to church
No drinking
10 p.m. curfew
Huge clock that chimed to tell everyone where to be and what to be
doing!!!!
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1842
1843
1844
# of
Looms
Beats per
Minute
Monthly
Pay
2
4
4
140
100
120
$14.52
$14.52
$16.92
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Steam Power replaces water power
21
From THIS
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To
THIS
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4
Read Women, Work & Protest
• Factory Girls’ association formed in 1834
• Panic of 1837-43
• Protest and strike failures turns to reform:
1840’s Push to force state legislators to pass a
10 hour work day. Already in effect at the
Federal level.
• 1840: Massachusetts STATE Supreme Court
rules labor unions LEGAL in Commonwealth v.
Hunt
• 1845: Return to strikes: Lowell Female Labor
Reform Association formed
25
• 1845: Lowell Offering turned into Voice of
Industry
• 1848: Industry gains control w/ the General
Incorporation Law
• 1849 fifteen Boston families create the Boston
Associates Corporation to reduce wasteful
competition, control prices of production and
sales, and totally control labor
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CHANGE IN LABOR FORCE-AGAIN
• NE dads won’t let their daughters go to
this sort of place, so…
1830
1850
Native-born
61.4
38.2
Irish
29.4
46.9
English
4.9
8.3
Canadian
3.4
4.5
Other
Foreigners
1.0
2.1
1836
1850
Children
workers
3%
6.6%
Older
workers
12.5
%
22.3
%
Men
14%
24%
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The Role of Immigration
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•
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•
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German Immigrants
Between 1820 and 1860, 5 million
immigrants arrived in the United
States, more than the entire
population in 1790.
Immigrants became an integral
part of the Northern economy,
settling land and providing labor
for manufacture.
The two most significant groups
were Irish and Germans.
Immigration was largely
concentrated in the Northeast and
the Mid-West.
• German immigrants were a very diverse group,
from many German states and including many
German Jews.
• They left for economic and political reasons.
• German immigrants were, on the whole, more
skilled and came with more capital.
• Many Germans took to farming in the Mid-West,
many also settled in cities as craftsmen.
• Germans were often regarded as clannish and
ethnocentric.
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30
5
• Irish immigrants came to the
US primarily out of economic
reasons.
• Most were desperately poor.
• Most could not afford to buy
land and stayed in the
Northeastern cities.
• Irish immigrants provided the
labor force for canals and
other infrastructure projects,
as well as industrial labor.
• Irish faced heavy
discrimination, esp. antiCatholicism.
Irish Immigrants
An 1844 anti-Catholic and anti-Irish cartoon
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Transportation Revolution
From this
This further
fueled
southern
slavery
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34
To THIS????
And
then
to
This
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To
This
36
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• With the mid-West growing
into the breadbasket of the
Northeast, the two regions
grew physically closer.
• Originally, transport routes
west of the Appalachians
(waterways) ran west and
south.
• However, agricultural produce
was needed in the more
densely settled, more urban
Northeast.
• To connect existing
waterways, canals were built,
providing a more complete
transport network. Roads also
provided limited transport
capability.
The Transport
Revolution: Canals
To go downstream– close the gate below the
barge–
Then close the one above the barge
Then lower the water, and
Open the gate. Reverse to go upstream.
Canals and Roads, 1820-1850
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38
The Erie Canal—paid for by the state
of New York created…
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New York City 1860
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The South and West--Steamboats
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7
The Transport Revolution: Railroads
• The RR‘s did not „drive“ the
I.R., but it was clearly a catalyst
and a symbol of it.
• Starting in the 1830s and
booming after 1850, railroads
provided efficient transport
independent of waterways.
• Such projects required large
amounts of capital, involving
state governments, foreign and
domestic investors.
• Roads, canals, and railroads
integrated area north of the
Ohio
• Notably less infrastructure
improvement in the South.
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Growth of RR’s
The Growth of the Railroads, 1850-1860
44
The RR’s REAL importance--it helped
• A horse pulling a wagon on a level road can
pull 1,000 lbs.
• A horse pulling a wagon on a set of rails can
pull 15,000 lbs.
• In 1833 the US had a total of 136 miles of
track
• By 1859 28,789 miles of track.
• By 1859 US rails carried 2.6 Billion TONS of
freight, and 1.5 billion passengers
• By 1869 the Transcontinental RR is completed
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Create millionaires
Create monopolistic Big Business practices
Create full-blown capitalism
Create standardization of time
Create a truly unified America. If 3,000 miles of
distance caused the colonies to revolt from
England—how could the US maintain a country that
was 3,000 miles from San Fran to New York?
Answer? The RR
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48
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Wooden cars—coal burning engines--Fire & Smoke
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Challenges to building the RR
1.
2.
3.
4.
5.
•
No single co. could afford the capital outlay
No single co. could afford the cost of land to build it on
No single co. should be able to decide its route
The country is too disorganized
No uniform rail gauges or distances apart
Solutions:
1. Government loans
2. Gov’t gift of right of way and huge acreage as an incentive to
build
3. Unconstitutional??? Do it anyway—thereby
making and breaking towns
Destroying “open range” cattle business
Making huge profits in illegal bribes to build through certain towns
4. Standardize Time and Space
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ACCIDENTS, wanted to build as
cheaply as possible
But who to
pay for it?
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No BRAKES = “Runaway Trains”
“Have you
seen me?
The sad case
of
Runaway
Trains
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60
10
Organization and Big Business force
order on chaos--always
$$$$$$$$$$$$$
• By 1840 both gauge and width of rails is
standardized at 4’4”
• 4 standard time zones created
• Double tracking eliminates waste
• A few co’s like Vanderbilt’s B&O are buying
out the competition
• Rates charged to Big Bidness plummet
• Rates charged to farmers & small bidness rise
61
Time also is
tamed
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• In 1790, practically all
Early
American cities had been
seaports.
• Due to increasing population
and the growing transport
infrastructure, new cities and
towns emerged.
• These cities functioned as
transport centers and
regional markets.
• This urbanization was heavily
concentrated in the North.
Urbanization
63
Economic Dependencies of Farmers
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Farmers and Finished Goods
• Commercial farmers typically
owned their land and took pride in
an independent lifestyle.
• However, they were dependent on
the market economy.
• In order to buy equipment and
seed, they borrowed money
against the next harvest.
• If commodity prices, which were
out of the farmers‘ control,
decreased too much, they stayed
in debt or went bankrupt.
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• Commercial farming was directly
tied to technological innovations,
such as steel plows or the
McCormick reaper.
• Farmers invested money in
advanced tools.
• As the orientation towards a
cash income increased, farmers
also bought ready-made clothes,
shoes and other goods.
• Therefore, commercial farming
was tied to the other key factor of
the market economy:
manufacture.
Cyrus McCormick, inventor of the 66
first
successful mechanical reaper
11
Dangers of the Market Economy
Commercial Farming
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•
•
•
Between 1820-60, the area now
known as the mid-West saw rapid
settlement.
In accordance to the Jeffersonian
ideal, most settlers engaged in
farming.
However, farmers increasingly
shifted from subsistence farming
to cash crops, most importantly
wheat.
As farmers worked towards a
cash income, they became part of
of the growing market economy.
Population Density, 1820-1860
67
• The market economy provided great economic
growth.
• However, periodic depressions led to extreme
economic hardship, esp. 1819-23, 1839-43,
1857.
• The financial basis of the new capitalism was
not well-regulated: financial panics of 1819,
1837.
• Individuals had no control over the causes of
depression. Many who “went west“ left a
shattered economic existence behind.
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Inequality and the Middle Class
• The economic changes of the
market economy widened the
gap between rich and poor.
• This inequality was most
extreme in the cities, with a
definite class structure
emerging.
• A growing middle class began to
distinguish itself from their
poorer contemporaries through
voluntary associations, smaller
families, strict gender roles, and
anti-immigrant nativism.
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• Between 1800 and 1860, the Northeast and mid-West
of the United states grew into an integrated,
specialized, and expanding market economy.
• In general, people came to look towards a cash income
/ wages as the main source of their livelihood, providing
skills, labor, and capital for the market and buying
needed goods from the market.
• Commercial farming, growing industrialization,
improved infrastructure, increasing urbanization, and
massive immigration all were facets of this burgeoning
Northern economy.
• Periodic hard times, labor conflict, economic
dependence, inequality, and ethnic hostility were the
71
downside.
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