The Market Revolution (1800-1840)

LESSONS FROM THE WAR OF 1812

  • War Effort Impediments: Insufficient manufacturing, limited transport, and monetary issues severely hampered the American war effort.

  • Bank of the United States: The non-renewal of the First Bank's charter in 1811 exacerbated financial difficulties in funding the war.

CONGRESSIONAL RESPONSE

  • American System: Speaker Henry Clay proposed this post-war recovery plan, including a protective tariff (1816), the Second Bank of the United States (1816), and state aid for infrastructure.

  • Economic Self-Sufficiency: The program aimed for economic independence and industrial growth.

  • Madison's Veto: President Madison vetoed federal funding for state internal improvements, shifting infrastructure responsibility to states.

THE SECOND BANK OF THE UNITED STATES

  • Function: Chartered in 1816, it was privately owned but publicly operated, serving as the federal repository, minting coinage, and printing fiat money, while prohibiting state-issued currency.

  • Opposition: Faced strong political opposition from Jeffersonian Democrats.

NORTH RIVER STEAMBOAT (THE CLAIRMONT)

  • Innovation: Robert Fulton and Robert Livingston launched the first successful steamboat in 1807 on the Hudson River, cutting travel time from New York to Albany from 24 to 8 hours.

  • Expansion: By 1816, steamboats became the primary transport on the Mississippi River.

THE ERIE CANAL

  • Development: Opened in 1825, linking Buffalo to Albany, drastically reducing travel time and lowering agricultural transport costs by approximately 30%.

  • Labor: Primarily constructed by immigrant Irish laborers.

THE BALTIMORE & OHIO RAILROAD (THE B & O)

  • First U.S. Railroad: The first segment began operations in 1830, designed to enhance crop transport and Baltimore's economic standing.

  • Passenger Service: Began carrying passengers in 1831.

ADDITION OF NEW STATES

  • Statehood Balance: Six new states (1815-1821)—Indiana, Illinois, Missouri, Alabama, Mississippi, Maine—entered the Union, balancing slave and free states.

  • Western Migration: Most were west of the Appalachians, emphasizing the need for improved transportation.

MANIFEST DESTINY

  • Population Shift: By 1840, over seven million Americans lived west of the Appalachians, driven by the belief in spreading U.S. freedom and democratic principles across the continent.

  • Impact on African Americans: This expansion led to the forced migration of many African Americans into slavery in the Cotton Kingdom.

AMERICAN COTTON

  • Cotton Gin: Eli Whitney's 1794 invention made short-staple cotton economically viable.

  • Economic Dominance: Cotton rapidly replaced wool, becoming the U.S.'s primary crop and chief export by the 1830s.

AMERICAN COTTON LOWLANDS OF THE GULF STATES

  • Suitability: The Gulf States' fertile soils and favorable climate made them ideal for cotton cultivation.

MANUFACTURING IN NEW YORK (1835)

  • Industrial Capacity: A snapshot revealed substantial industrial activity, including 112 cotton mills, 234 woolen factories, and 293 iron works.

INTERNAL BORDERLAND

  • Cultural Influence: Settlers moving from Kentucky to Ohio, Illinois, and Indiana brought their cultural identities.

  • Pro-Slavery Sentiment: The Cotton Kingdom's expansion fostered pro-slavery views into southern regions of some northern states.

MARKET SOCIETY

  • Southern Economy: Southern cotton production was market-oriented, becoming the leading U.S. export by 1840.

  • Transportation Resistance: The South resisted extensive transport development due to existing river routes and fear of facilitating slave escapes.

  • Northern Shift: Northern farmers transitioned from subsistence farming to market-oriented agriculture, aided by improved transportation.

THE FACTORY SYSTEM

  • Production Shift: Goods transitioned from craft workshops to factories, using unskilled labor for repetitive tasks, reducing the need for skilled apprentices.

  • Cultural Changes: This led to demographic changes, with young men moving to urban centers, contributing to the growth of establishments like taverns.

THE FACTORY SYSTEM – EARLY INDUSTRIALIZATION

  • Slater Mill: Pawtucket, Rhode Island, became the birthplace of American industrialization, utilizing waterpower.

  • New England Advantage: New England's geography and waterpower spurred early industrial growth.

INTERCHANGEABILITY OF PARTS

  • Whitney's Impact: Eli Whitney's 1803 government contract for 10,000 weapons necessitated the development of interchangeable parts, accelerating the factory system's growth through mechanized production of standardized components.

THE MARKET ECONOMY IN THE UNITED STATES (1830)

  • Economic State: Under President Andrew Jackson, the U.S. economy was robust, with a growing population, a well-regulated national bank, and emerging state internal improvements.

  • Jackson's Distrust: Jackson remained skeptical of the national bank, viewing it as serving elite New England interests.

IMMIGRATION

  • Influx: The late 1830s and early 1840s saw significant Irish (due to land displacement) and German (fleeing post-Napoleonic Wars and 1848 revolutions) immigration.

  • Labor Contributions: Irish immigrants were crucial in constructing the Erie Canal and railroads.

NATIVIST REACTION

  • Social Tension: The influx of Irish and German Catholic immigrants sparked nativist reactions from the predominantly Protestant U.S. population.

  • Know-Nothing Party: Formed in the mid-1850s, aiming to restrict immigration, particularly targeting Irish Catholics and Chinese immigrants.

REVISION OF BUSINESS LAW
MCCULLOUGH V MARYLAND

  • Ruling: Chief Justice John C. Marshall ruled that Maryland could not tax the Bank of the United States, establishing the principle of federal supremacy by stating "the power to tax is the power to kill."

GIBBON V OGDEN

  • Ruling: The U.S. Supreme Court ruled that New York's ferry charter could not restrict Gibbon's operations across state lines, upholding federal authority over interstate commerce on rivers.