Chapter 8 The Market Revolution Section 1 A Market Economy

An Expanding Economy The way Americans bought and sold goods was called the Market Revolution This was fueled by invention which led to new and better ways to transport goods. Farms spread on the frontier (west) and Manufacturing, the making of products by machines, spread in New England Example: Francis Lowell created a Centralized, all aspects are done in one place, textile (cloth) factory This idea dramatically increased production Manufacturing spread along New England into the Ohio River valley.

An Expanding Economy The Market Revolution were based on a Free Enterprise System, where companies compete for profits. This system, also called capitalism, rewarded companies who could find better, faster, more efficient ways to run their business It encouraged new industries, jobs and wealth For most men in the 1700’s going to work meant working inside the home (make food, clothing & shelter). In the 1800’s the creation of factories increased workers outside the home. People began making $ at their new factory jobs and began buying paintings, silverware and furniture for their homes

Banks Spark Rapid Economic growth Banks became very important because they had Capital, $ to be invested to produce goods and make $ The 1st “real” banks appeared in 1780-1790. They grew to over 100 in 1830. How a bank works: A group of private individuals got a charter from the state to create a bank They would make $ by charging interest for loans they made. The $ was from what customers deposited for safekeeping This generally worked out well, but disasters could and did occur

Banks Spark Rapid Economic growth Today most deposits are insured by the gov’t. Banks are also required to keep a certain amount of $ instead of lending it all out In 1800 these regulations did not exist. Banks gave many bad loans to people who could not pay them back Banks would lack the cash for deposits, customers would panic and try to withdrawal their deposits and banks would go broke. As a result there was times of boom and panic, bank failures and depressions $ was not what it is today. The gov’t didn’t issue $. Many people used specie or gold or silver coins. The most common form was Bank Notes, a piece of paper issued by a bank to pay specie on demand, (kind of like a check).