Economic
Growth and the Early Industrial Revolution
The transition from an agricultural to anINDUSTRIAL ECONOMY took more
than a century in the United States, but that long development entered its
first phase from the 1790s through the 1830s. TheINDUSTRIAL REVOLUTION had begun in Britain during
the mid-18th century, but the American colonies lagged far behind the mother
country in part because the abundance of land and scarcity of labor in the New
World reduced interest in expensive investments in machine production.
Nevertheless, with the shift from hand-made to machine-made products a new era
of human experience began where increased productivity created a much higher
standard of living than had ever been known in the pre-industrial world.
The start of the American Industrial Revolution is often
attributed to SAMUEL SLATER who
opened the first industrial mill in the United States in 1790 with a design
that borrowed heavily from a British model. Slater's pirated technology greatly
increased the speed with which cotton thread could be spun into yarn. While he introduced
a vital new technology to the United States, the economic takeoff of the
Industrial Revolution required several other elements before it would transform
American life.
Another key to the rapidly changing economy of the early
Industrial Revolution were new organizational strategies to increase
productivity. This had begun with the "OUTWORK SYSTEM" whereby small parts of a larger
production process were carried out in numerous individual homes. This organizational
reform was especially important for shoe and boot making. However, the chief
organizational breakthrough of the Industrial Revolution was the "FACTORY SYSTEM" where work was
performed on a large scale in a single centralized location. Among the early
innovators of this approach were a group of businessmen known as the BOSTON ASSOCIATES who
recruited thousands of New England farm girls to operate the machines in their
new factories.
The most famous of their tightly controlled mill towns
was LOWELL, MASSACHUSETTS,
which opened in 1823. The use of female factory workers brought advantages to
both employer and employee. The Boston Associates preferred female labor
because they paid the young girls less than men. These female workers, often
called "LOWELL GIRLS,"
benefited by experiencing a new kind of independence outside the traditional
male-dominated family farm.
The rise of WAGE
LABOR at the heart of the Industrial Revolution also exploited
working people in new ways. The first strike among textile workers protesting
wage and factory conditions occurred in 1824 and even the model mills of Lowell
faced large STRIKES in
the 1830s.
Dramatically increased production, like that in the New
England's textile mills, were key parts of the Industrial Revolution, but
required at least two more elements for widespread impact. First, an expanded
system of credit was necessary to help entrepreneurs secure the capital needed
for large-scale and risky new ventures. Second, an improved transportation
system was crucial forRAW MATERIALS to
reach the factories and manufactured goods to reach consumers. State
governments played a key role encouraging both new banking institutions and a
vastly increased transportation network. This latter development is often
termed the MARKET REVOLUTION because
of the central importance of creating more efficient ways to transport people,
raw materials, and finished goods.
Alexander Hamilton's Bank of the United States received a
special national charter from the U.S. Congress in 1791. It enjoyed great
success, which led to the opening of BRANCH
OFFICES in eight major cities by 1805. Although economically
successful, a government-chartered national bank remained politically
controversial. As a result, President Madison did not submit the bank's charter
for renewal in 1811. The key legal and governmental support for economic
development in the early 19th century ultimately came at the state, rather than
the national, level. When the national bank closed, state governments responded
by creating over 200 state-chartered banks within five years. Indeed, this
rapid expansion of credit and the banks' often unregulated activities helped to
exacerbate an ECONOMIC COLLAPSE
IN 1819 that resulted in a six-year DEPRESSION. The dynamism of a
capitalist economy creates rapid expansion that also comes with high risks that
include regular periods of sharp economic downturns.
The use of a STATE
CHARTER to provide special benefits for a PRIVATE CORPORATION was a
crucial and controversial innovation in republican America. The idea of
granting special privileges to certain individuals seemed to contradict the
republican ideal of equality before the law. Even more than through rapidly
expanded banking institutions, state support for internal transportation
improvements lay at the heart of the nation's new political economy. Road,
bridge, and especially canal building was an expensive venture, but most state
politicians supported using government-granted legal privileges and funds to help
create the INFRASTRUCTURE that
would stimulate economic development.
The most famous state-led creation of the Market
Revolution was undoubtedly New York's ERIE
CANAL. Begun in 1817, the 364-mile man-made waterway flowed between
Albany on the Hudson River and Buffalo on Lake Erie. The canal connected the
eastern seaboard and the Old Northwest. The great success of the Erie Canal set
off a canal frenzy that, along with the development of the steamboat, created a
new and complete national water transportation network by 1840.
REFERENCE
http://www.ushistory.org/us/22a.asp
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