Economic Development 1800-1860;
1865-1900
Objectives
• Determine the factors that contributed to rapid economic
development in the United States during the pre and post Civil War
era
• Assess the impact the Civil War had on economic development
• Compare/contrast the economic development of the various regions
of the United States
• Assess the impact those varying economic choices had on the
relationship between the regions
Do Now: What factors do you think
contribute to the economic growth of the
US?
What caused all these changes?
1. Abundant natural
resources
2. Rapid population
growth
3. Improvements in
transportation
4. Capital investment
5. Government support
6. Industrialization
Natural Resources
• All this expansion that we learned about
in the last unit provided a good deal of
natural resources to utilize
• Why are natural resources so important
to economic growth?
• They provide the fuel for industryexample would be cotton fueling the
textile mills or water powering factories
• What are some side effects from using
natural resources?
• Of course, the US had an advantage in
that most of the resources that were
needed to fuel industry were home
grown- how does that provide an
advantage?
• Britain had to import all of the cotton for
its textile mills, while the US just grew it
in the South
Population Growth
• Between 1800 and 1860, the
population of the US grew from
around 5 million to over 30 million
• How would this contribute to
economic growth?
• Part of this huge growth can be
contributed to a large influx of
immigration – around 5 million or so
came between 1820-1860
• In 1800 only around 6 percent of
people lived in cities, by 1860 this
had more than doubled- why?
• People flocked to cities for job
opportunities and because it was
easier to travel to them due to
improved transportation like canals,
roads, steamboats, and railroads
Transportation Improvements
• One of the most glaring obstacles to economic growth during the early republic
was a terrible transportation infrastructure
• What do you think were some of the causes for this?
• Some of this was because of the sheer size of the territory within the US, as well as
geographical boundaries like the Appalachian Mountains and Niagara Falls
• It was actually cheaper and easier for a Midwestern farmer to send their goods
down the Mississippi River to New Orleans and then ship them to the East Coast
from there
• Of course, all that changed with a few crucial improvements in regards to
technology and infrastructure
Roads
• Early roads within the US were
plagued by poor conditions and
repairs
• Soon, that changed with private
investment and the creation of roads
called turnpikes
• In addition, the federal government
invested in the first road that would
connect the Ohio River to the
Potomac
• This was called the Cumberland
Road, and soon it was expanded to
the Mississippi River
• Consequently, road travel became
safer and less expensive
Steamboats
• Steam power had been developed in Great
Britain during the late 1700s
• Soon, American inventors, like Robert
Fulton applied this technology to power
boats that could travel upstream with
little difficulty
• How would this improve things?
• It made rivers, such as the Mississippi, two
way highways
• While at first travel was expensive, as the
technology spread, the prices of
transporting goods dropped
• Soon, steam travel dominated the
waterways of the United States
Canals
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For people living in the Great Lakes region, there was no direct water access to the
Atlantic Ocean
That changed with the construction of the Erie Canal in 1825 and others across the
Northeast
It was the most expensive canal built up to that point and quickly changed the
economic prospects of New York State and New York City
New York City soon became the most important port and city in the United States
However, the canal was usually closed from late November through March- why?
At the same time, the West began to send less goods down the Mississippi- how would
this affect the relationship between the West and South?
Railroads
• This was the culmination of
improvements in transportation
• Unlike roads, canals, and
steamboats, trains could operate in
almost any weather scenario
• Like the other improvements, the
railroad was developed in Europe,
but ‘perfected’ in the United States
• In what ways do you think railroads
impacted the United States
positively and negatively?
• Most railroads will be developed in
the North, while the South was slow
to invest in the creation of
railroads- why?
Map of Railroads in 1860
Railroads, Cont’d.
• At first, railroads would only connect
cities to their surrounding area
• However, soon smaller railroads were
bought and formed into bigger ones that
connected far off places like New York
to Chicago
• One of the men that perfected this was
Cornelius Vanderbilt, who owned the
New York Central
• Some of these tycoons controlled the
prices of shipped goods, which hurt
some small businesses
• However, by 1900, there were almost
200,000 miles of railroad track across the
United States, the most of any country in
the world
Capital Investment and Government
Encouragement
• None of this economic growth would have been possible had people not
invested in new technologies
• These entrepreneurs invested in start up companies like textile mills,
railroads, canals, and road construction
• Over ¼ of the money came from European banks
• Of course, the national and state governments also gave contracts for
constructing these things
• The national government alone went from giving out around 40 patents in
1800 to over 4,000 in 1860- how does that help economic growth?
The Role of Banks
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Of course, banks also played a major role in economic development
They provided both loans as well as places for people to deposit funds
As we learned in the previous unit- how could banks be dangerous too?
By the end of the 1800s, banking had become a bit safer than at the
beginning of the century
• Soon, hundreds of banks sprung up across the country, partly to fund new
businesses, but still provided loans to new businesses and land
speculators
Industrialization
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Perhaps the biggest change in the
economy was the advent of
industrialization in the late 1790s
The first aspect of industrialization was
the textile mill- which was what?
Samuel Slater, an immigrant from
Britain, opened the first mill in
Pawtucket, RI in 1793
Another aspect of industrialization was
the introduction of new technologynamely the cotton gin and
interchangeable parts- both credited
with Eli Whitney
Soon, the manufacturing capability of
the United States took off, and with it
the future of the nation
A large portion of this innovation came
from government projects on weaponry
(interchangeable parts, machine tools)
Most of these changes occurred in the
North- why?
Rise of Industry
• Slater brought his ideas from Britain, and
soon things took off
• The North had a geographical advantage in
that there were several rapid rivers with
which to power factories
• They also had an advantage because most
of the banks were in the Northeast
• By 1860, there were over 100,000 factories
of various sorts across the North
• At the same time, industry failed to take off
in the South- they had around 100,000
factory workers total by 1860
• Either way, this led to a market revolution
where products were available across the
country
Northern factories
• Between 1840-1860, the value of manufactured
goods more than quadrupled from around $480
million to $2 billion
• Francis Cabot Lowell introduced the idea of an
integrated factory- where all aspects of making a
product were done in one place
• Lowell was also unique for hiring young women to
work in his factories- which changed the economic
opportunities for women
• Unfortunately, women were mostly denied promotion
opportunities and had to work in horrendous
conditions
• At the same time, it helped them to earn a living by
working for themselves
• Read pages in the FTR book for further insight…
Impact of Growth
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Soon companies across the North began to compete to sell products
This system was/and is known as CAPITALISM- and can be considered to be the driving
force for businesses even today
What could be some bad effects of this?
Obviously, while some companies thrived, others didn’t do so well
Even though this had an overwhelming positive result in the prosperity of the US, it
must be said that not everyone did well on an individual basis
Most factory workers faced terrible working conditions, long hours, and low wages
If you complained, or were not able to do your job, you were replacable
Any opportunities to strike were met with harsh resistance- as was the case in Lowell
Rise of Cities
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Of course, all of this industrial growth, also
led to a greater population density within
cities
Between 1800-1860, the number of people
living within cities more than doubled
Any downsides to this?
Perhaps the biggest dangers were the
spread of diseases and lack of clean
drinking water
However, some cities, like New York,
invested in the creation of reservoir
systems that improved the flow of clean
water- such as the Croton Aqueduct
That and the advent of sewers helped
eradicate many of the cholera, yellow fever,
and other deadly diseases that were
rampant within cities
Cities, cont’d.
Of course, the other downside to the
growth of cities was overcrowding
Neighborhoods, such as the Five Points
(see picture), were notorious for crime,
filth, and poor living conditions
They also offered the few places for which
immigrants could afford to live
Often, they lived in overcrowded
apartment buildings called tenements
Soon, wealthier people moved further
away from the slums, while the cycle of
poverty continued for most city residents
That’s not to say that there weren’t
opportunities for people to advance in
their social standing, but those were more
the exceptions
What about the South?
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While the North industrialized, the South remained committed to
agriculture
With the invention of the cotton gin in 1793, cotton production took off
However, many of the coastal areas had limited land for growing cotton,
so many prospectors moved to the ‘New South’: Alabama, Mississippi,
Louisiana, Texas, and Arkansas
Additionally, coastal regions grew rice and sugar which added to the
prosperity of a select few individuals
King Cotton
- Between 1820 and 1860, the US went from
producing 500,000 bales of cotton a year to 5
million (around 100 million pounds to 1.1
billion)
- At the same time, the slave population
ballooned to over 4 million
-Of course, this had wide reaching
consequences such as?
-By 1840, cotton also represented more than
half of our exports
-By 1860, it was almost 60% of all our exports
-In New York, over 40 cents of every dollar
earned in exports came from cotton
5 Results from Southern Dependence on Agriculture
1.
Increase in slavery from around
750,000 in 1790 to over 4 million by
1860
2.
Spreading of the South’s population so
they had very few major cities
3.
South became overly dependant on
agriculture
4.
Success was limited to a select few
people: around 1/5 of all Southerners
owned any slaves
5.
They failed to construct an effective
transportation network- which left
whole areas completely isolated.
“
1. What conclusions can you draw from this map?
2. Why are there such differences between the North and South in regards to
population centers?
The West: A little bit of everything
- From the beginnings of the
United States, the West offered
prospective settlers a litany of
challenges
- The prairie soil was difficult to
farm, especially on the plains
- The transportation network
lacked efficiency and there was
no direct link to eastern states
- The only links to different parts
of the country lied in rivers such
as the Mississippi
- With westward migration,
adaptability became crucial for
the economic future of the
region
Blending
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Once the Erie Canal and other
transportation improvements were
constructed, the West ceased to be
isolated
Soon, hundreds of thousands of people
migrated west in search of opportunity
One such person, Cyrus McCormick,
introduced a machine to help harvest
the swaths of wheat fields out west
with his mechanical reaper
Another, John Deere, found that iron
plows didn’t cut through the tough
prairie soil, so he used a spare steel
blade and created the steel plow
These inventions opened up the plains
to cultivation and also introduced a
new form of industry to the area
While the Northeast manufactured
textiles and other finished goods, the
West used industry to produce farm
machines to serve their needs
Western Industry
-Of course, farm machines were not the only products manufactured in the
Midwest
- German immigrants introduced breweries to cities like Milwaukee and
Chicago
- Dairy farmers produced cheese and other products, selling them across the
country
-Other cities like Cincinnati, Cleveland, and St. Louis also became
manufacturing centers that produced a variety of goods
Immigration
• Of course, one of the most important effects of these economic
changes was a dramatic rise of immigration
• Between 1820-1860, over 5 million immigrants arrived in the US
• Most of these immigrants were of German and Irish descent
• Considering that there were only around 20-25 million people in
the US, how would this affect the nation?
• In the last two decades, over 15 million immigrants have arrived
• Despite more people, how might that not have as much as an
impact as during the 1800s?
Plight of the Immigrant
• Upon arrival, most
immigrants faced an
uphill battle- why?
• Discrimination was
rampant, and
opportunities were few
• Most Irish remained in
Eastern cities such as
New York, Boston, and
Philadelphia – why?
• Most Germans migrated
to the Midwest – why?
Post Civil War Immigration
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After the Civil War, immigration
once again picked up
Over 10 million immigrants
arrived during the period
between 1865-1900
Unlike before the war, these
immigrants arrived from
Southern/Eastern Europe as well
as Asia
Once again, the discrimination
and oppression continued, but it
was refocused on the newer
immigrant groups as opposed to
the Irish and Germans
Aside from where they came
from, how did these immigrants
compare to the previous ones?
Issues
• Immigrants arrived because of a variety
of reasons
• Some were driven out of their
homelands due to economic, political,
or social reasons
• Others were drawn to the United States
by the apparent availability of jobs and
a future
• These are referred to as push and pull
factors
• In addition, the newer groups had a
difficult time assimilating to the
American culture and tended to stay in
their own ethnic enclaves within major
US cities
• Hence, you got neighborhoods like
Little Italy, Chinatown, and others that
were defined by the groups that lived
within their boundaries
• Eventually, those groups moved out
and were replaced by newer groups in a
cyclical pattern
Prejudice
• Asian immigrants out West faced
perhaps the cruelest prejudice- why?
• In 1882, Congress passed the Chinese
Exclusion Acts, which in essence
ceased Chinese immigration to the
US
• It also prohibited Chinese people
from leaving the US and returning
with their families that might still be
in China
• It also had some property restrictions
that took away people’s homes and
businesses
• As a result, Asian immigration ground
to a halt by the dawn of the 20th
Century
• What messages do you think are
being said in this cartoon?
Chinese Exclusion Act
May 6, 1882
(U. S. Statutes at Large, Vol. XXII, p. 58 ff.)
An act to execute certain treaty stipulations relating to Chinese.
WHEREAS, in the opinion of the Government of the United States the coming of Chinese laborers to this country endangers the good order of certain
localities within the territory thereof: Therefore,
Be it enacted, That from and after the expiration of ninety days next after the passage of this act, and until the expiration of ten years next after the passage
of this act, the coming of Chinese laborers to the Untied States be, . . . suspended; and during such suspension it shall not be lawful for any Chinese laborer to
come, or, having so come after the expiration of said ninety days, to remain within the United States.
SEC. 2. That the master of any vessel who shall knowingly bring within the United States on such vessel, and land or permit to be landed, any Chinese laborer,
from any foreign port or place, shall be deemed guilty of a misdemeanor, and on conviction thereof shall be punished by a fine of not more than five hundred
dollars for each and every such Chinese laborer so brought, and may be also imprisoned for a term not exceeding one year.
SEC. 3. That the two foregoing sections shall not apply to Chinese laborers who were in the United States on the seventeenth day of November, eighteen
hundred and eighty, or who shall have come into the same before the expiration of ninety days next after the passage of this act, . . .
SEC. 6. That in order to the faithful execution of articles one and two of the treaty in this act before mentioned, every Chinese person other than a laborer
who may be entitled by said treaty and this act to come within the United States, and who shall be about to come to the United States, shall be identified as
so entitled by the Chinese Government in each case, such identity to be evidenced by a certificate issued under the authority of said government, which
certificate shall be in the English language or (if not in the English language) accompanied by a translation into English, stating such right to come, and which
certificate shall state the name, title, or official rank, if any, the age, height, and all physical peculiarities former and present occupation or profession and
place of residence in China of the person to whom the certificate is issued and that such person is entitled conformably to the treaty in this act mentioned to
come within the Untied States. . . .
SEC. 12. That no Chinese person shall be permitted to enter the United States by land without producing to the proper office of customs the certificate in this
act required of Chinese persons seeking to land from a vessel. Any any Chinese person found unlawfully within the United States shall be caused to be
removed therefrom to the country from whence he came, by direction of the President of the United States, and at the cost of the United States, after being
brought before some justice, judge, or commissioner of a court of the United States and found to be one not lawfully entitled to be or remain in the United
States.
=
SEC. 14. That hereafter no State court or court of the United States shall admit Chinese to citizenship; and all laws in conflict with this act are hereby
repealed.
SEC. 15. That the words "Chinese laborers," whenever used in this act, shall be construed to mean both skilled and unskilled laborers and Chinese employed
in mining.
Post Civil War Development
• After the Civil War, the United States
emerged as an unquestionable
industrial power capable of almost
anything
• During the war, over 400,000 patents
were issued- more than the 40,000
that were issued in 1860
• This innovation spurred a new
generation of businesses and
technology that was unprecedented
• While businesses thrived, there were
also some serious issues that arose
because of the sheer size of
businesses
New Factors
1. New business models
2. New technology
3. Government
encouragement
4. Investment
5. Natural resources
New Business Models
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The latter part of the 19th Century was
primarily known for the birth of big business
These businesses utilized new models to
trump their competition: horizontal and
vertical integration
Vertical integration was used by Andrew
Carnegie to beat his competitors in the steel
business
It means a company controls every aspect of
making their product, from owning mines for
ore, railroads for transporting that ore, the
steel mills, and the railroads transporting the
finished product.
Horizontal integration was used by John
Rockefeller to defeat his competitors in the oil
business
It simply means that a company buys out and
consolidates its competition
Rockefeller also utilized horizontal integration
in controlling the refining of oil into gasoline
and kerosene
New Inventions/Technology
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The latter part of the 19th Century saw an
enormous amount of new inventions that we
all take for granted today
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Some of these inventors, like Charles
Goodyear, Thomas Edison, Alexander
Graham Bell, and others are icons today and
often their legacies can be seen in the
companies that bear their name or they
founded.
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Edison invented the light bulb in 1879, and
by 1882, New York City had the first electric
power plant in the country.
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Goodyear and Harvey Firestone figured out
how to galvanize rubber, which led to the
development of tires (Goodyear Tires and
Firestone Tires)
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Bell, in case you didn’t know, invented the
telephone, and soon you could actually talk
to someone across the country… he founded
the Atlantic Telephone and Telegraph
Company in 1876 (AT&T)
Reaction to this… Labor Unions
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Because most of these powerful men wanted their
factories to run efficiently, they didn’t want their
employees in the mills and factories to have any
control over their working environments… this
earned them the nickname of Robber Barons.
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Often to cut costs, they hired unskilled laborers,
children, and women to operate and maneuver the
dangerous equipment in factories
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They also never hesitated to fire someone that got
too expensive or complained, because there was
always an immigrant waiting for their job.
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Soon, workers began to strike in response to lower
wages and terrible working conditions… often these
early strikes were extremely violent and unsuccessful.
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Public perception was that these people were
anarchists and extremists, and the first unions
struggled to achieve anything.
The First Unions and their Growing Pains
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One of the early successful unions was the Knights of Labor… but often they were too radical
to achieve anything long term
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The American Federation of Labor (AFL), which exists today, became the most powerful
union because it incorporated a wide variety of skilled laboring jobs like carpentry, etc.
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However, after the Haymarket Affair in Chicago in which an anarchist threw a bomb at police
who were dispersing a crowd of protesters, the AFL had to lay low for awhile
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Another strike, the Homestead Strike at one of Carnegie’s mills in Pittsburgh resulted in
bloodshed between a hired police force and the workers… it had to be dispersed by the National
Guard.