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 industry- example 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

• 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

• 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• 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 technology- namely 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

• 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

- 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?

- 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

Agriculture1. 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• 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

- 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 ActMay 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

• 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

• The latter part of the 19th Century saw an enormous amount of new inventions that we all take for granted today

• 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.

• Edison invented the light bulb in 1879, and by 1882, New York City had the first electric power plant in the country.

• Goodyear and Harvey Firestone figured out how to galvanize rubber, which led to the development of tires (Goodyear Tires and Firestone Tires)

• 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

• 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.

• Often to cut costs, they hired unskilled laborers, children, and women to operate and maneuver the dangerous equipment in factories

• They also never hesitated to fire someone that got too expensive or complained, because there was always an immigrant waiting for their job.

• Soon, workers began to strike in response to lower wages and terrible working conditions… often these early strikes were extremely violent and unsuccessful.

• 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

• One of the early successful unions was the Knights of Labor… but often they were too radical to achieve anything long term

• 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.

• 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

• 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.