The Development of a Market Economy Industrialization and Transportation in the early 1800s

An increased efficiency in manufacturing and transportation contributed to the development of a market economy in the US. That efficiency and economic growth were the preconditions for territorial expansion.

What is a Market Economy? Production of goods specifically for cash, and purchasing goods one needs. By the 1800s there were more people participating in that type of economy - instead of producing goods for themselves, and bartering goods and services. A LABOR FORCE grows - people work for wages, and are consumers

Boom and Bust Natural tendency of market economies are to expand and contract. Prosperity ( & ), Contraction ( & ) War of 1812 boosted production and increased investment, by 1820 when manufacturing fell, credit slowed = contraction. In 1820s with internal expansion, investment increased again until Panic of 1837

Government Role in Economy Henry Clay’s American system - attempt by govt. to improve business in the US. Govt. also plays a role in regulation of business (Commerce Clause) Gibbons v. Ogden (1824) - limited states rights to grant monopolies

Opposition to American System

Transportation Improvements

Roads, Canals, and Railroads Efficient transportation facilitated economic growth - goods could be sent all over, and costs were cut. Several “turnpikes” were built across states like the National Road Steam engines were put to use by 1810s to travel upstream Canal boom of the s was to utilize rivers for shipment on the interior of the nation. Railroad boom did not begin until the 1830s - but problems with standardization, they mostly just went city to city

Canal Era

Commercial Agriculture America was always agricultural - but with the market economy it became especially regional. Midwest - wheat and corn South - cotton transforms the lower South into the “cotton belt”

American Manufacturing Major manufacturing was first focused on textiles, although there was a spread of many consumer goods - like weapons, shoes, etc. Rise of manufacturing led to a rise in retail in urban areas

Labor Force Manufacturing contributed to a rise in the wage labor force. Industrial wage labor became very hierarchical with little autonomy for workers. Textile mills were largely worked by young women in New England/Midwest - became a very structured, paternalistic system.

Early Labor Unions Led to labor organizations to push for worker rights - as early as the 1820s female mill workers organized labor unions. Commonwealth v. Hunt (1842) - unions were able to organize without committing a criminal conspiracy.

The early 1800s were the very beginnings of our current consumer society - spread by innovations in transportation and manufacturing. These were coupled with the growth of urban areas and the expansion of American territory.