The American Economy
American Free Enterprise-...make your own $ choices
-The U.S. economic system of free enterprise operates by giving consumers
a choice. This forces producers to provide higher quality items at reduced
prices to attract consumers to buy.
-Government involvement is limited to setting rules and acting as a referee
to settle disputes in addition to collecting taxes
Factors that lead to industrialization and
urbanization
• Factors that lead to
industrialization and
urbanization
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Natural Resources
Transportation
Investment capitol ($$$)
New Inventions
Population (immigration &
high birth rates)
• What drives Innovation?
(something new/different)
• The need to make something better----CHANGE
• The Industrial Revolution is the change from
handmade to machine made products.
• As the Industrial Revolution spread, more and
more goods were made in factories. People began
to move to cities (urbanize) and buy more
manufactured goods rather than make everything
themselves.
James Watt:
Steam Engine
Samuel F.B.
Morse: telegraph
and Morse code
Robert Fulton:
Steam boat
Transportation
and
Communication
Transcontinental
Railroad
DeWitt Clinton:
Erie Canal
STEAM ENGINE
•Patented in 1871 by James Watt
•Increased available power across the
country, wherever water and coal or
wood at hand
•Affected transportation,
manufacturing, and agriculture
STEAMBOAT
•Patented in the US by Robert Fulton in
1807
•Two-way river transportation became
much easier
•Affected commercial, private, and
military transportation
ERIE CANAL
•Opened in 1825, promoter Dewitt Clinton
•Thousands of workers were needed for this
project. 25% of these workers were Irish.
•This modification of the environment
allowed the Great Lakes to be connected to
the Hudson river
•This connection made it cheaper and easier
to get Midwestern farm products out to the
ocean for trade and vice versa!
TELEGRAPH
•Patented by Samuel Morse in 1837
•Made long-distance communication
faster and cheaper
COTTON GIN
•Invented by Eli Whitney in the 1790’s
•Made removing seeds from cotton
easier
•Significant impact on the economy of
the South
•Probably prolonged slavery
INTERCHANGEABLE
PARTS
•Eli Whitney standardized parts,
making them interchangeable from
one item to another.
•This made manufacturing easier and
less costly=CHEAPER products for
consumers 
BESSEMER
STEEL PROCESS
•Invented by Henry Bessemer in the 1850’s
•Made possible the manufacture of great
amounts of high quality, less expensive steel
•Contributed to higher quality machinery,
farm implements, and transportation
TEXTILE MILL
•Developed by Francis Lowell in the
1820’s
•Brought the entire manufacturing
process under one roof
•Contributed to urbanization and child
labor practices
Eli Whitney:
Cotton Gin
Agriculture
Cyrus
McCormick:
Mechanical
Reaper
John Deere:
Steel Plow
STEEL PLOW
•Invented by John Deere in 1837
•Allowed faming on tough Midwestern
soils
•“The Plow That Broke the Plains”
MECHANICAL
REAPER
•Invented by Cyrus McCormick in the 1830’s
•Reduced human and animal power needed
to bring in crops
•Increased efficiency- automatically cut,
threshed and bundled grain
IR effects the American
Economy and Society
• America was largely rural in
the 1830’s.
• The rise of industry changes
this.
• 1820-350,000 factory
workers….by 1860 there are
2 MILLION factory workers!
• People develop new work
habits (time clocks,
schedules)
• Women and children enter
the workforce along with
immigrants
• Needed more educated
leaders and managers
• Rapid industrialization
brings increase in
technology as well as
societal problems.