Section 1 A Market 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.

 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 became very important because they had Capital, $ to be invested to produce goods and make $  The 1 st “real” banks appeared in They grew to over 100 in 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

 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).