History 103: US History I

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New agricultural technology revolutionized the North, South and West. In this lesson, learn how that technology ushered in the Market Revolution in America.

The Market Revolution

Suppose you want some bread. Most people in the modern world would consider what kind of bread they'd like and then, where they could purchase it. If you want a very common type of bread, you may think about where you could buy it most conveniently or where it might be less expensive. Even if you want to make it yourself, you'd probably purchase the flour and yeast. All of these considerations are due to the fact that, if you are watching a lesson online, you are living in a market economy.

The first half of the 19th century saw a number of developments that helped push America towards a market economy based on cash, wages and prices. Several key factors were already in place by the end of the War of 1812. Beginning with Jefferson's Embargo of 1807, American investors who had been involved in lucrative trans-Atlantic commerce began placing their money into safer, domestic manufacturing ventures. Since issues with shipping persisted until the Second Barbary War in 1815, capital continued to be transferred from commerce to manufacturing - creating a strong, if small, industrial base. Corporations were protected; state and local banks were well-established; and the national bank was under development. The South was seeking a new cash crop, and Americans were headed west with the help of water transportation. Everything was in place, ready for a few inventions to spark the Market Revolution.

King Cotton

The technology that probably affected the American economy most dramatically was the cotton gin. You may remember that in early America, the main cash crops were tobacco, indigo and rice. But profits were declining from competition, and these demanding crops had leached all of the nutrients out of the now-sterile soil. So, planters either had to pack up and move west, or switch to different crops. George Washington, for example, had switched to wheat. For a time, it seemed that slavery was disappearing with the Chesapeake tobacco plantations.

Then in 1793, a Connecticut man named Eli Whitney invented a device called the cotton gin. Prior to this, planters knew that cotton grew well in poor soil but its seeds were too difficult to remove, making it an impractical cash crop. Thanks to Eli Whitney's cotton gin, separating the seeds from the fiber became as easy as turning a handle. Two people could process 50 pounds of cotton a day! Immediately, this simple device transformed the American landscape, population and economy. Cotton was already in high demand in England's textile mills, and American farmers were all too happy to meet the need. Land was abundant and cheap, and the demand for slaves to work in the fields skyrocketed. Even with the 1808 law outlawing the importation of new slaves into America, by the time Lincoln was inaugurated, there were four times more slaves than in Jefferson's day. Cotton fields stretched across the old southwest from Georgia to Texas, and by 1820, the cotton kingdom accounted for 39% of all American exports. By 1860, the South provided 2/3 of the world's cotton.

The Factory System

Another of Eli Whitney's concepts helped build the factory system in the Northeast, as well. At the turn of the century, the U.S. was concerned about the Napoleonic Wars and looked to produce thousands of new weapons quickly and inexpensively. Eli Whitney convinced Congress that he was the man for the job by demonstrating the concept of interchangeable parts. Rather than each gun being hand built from start to finish with custom parts, Whitney built 10 guns, all containing identical parts and mechanisms. Then, he stood before a transfixed Congress who watched him disassemble the weapons, pile all the parts together in a heap and then rebuild them with the interchangeable parts. Eli Whitney didn't invent the idea, but he was the first to prove its benefits in the U.S. The concept revolutionized manufacturing.

It wasn't long before an American businessman named Francis Lowell returned from London having memorized the workings of the English power loom. He recreated the technology, made some improvements and convinced some other investors to go into business with him. Powered by water mills, the Boston Manufacturing Company was America's first manufacturing plant - converting raw cotton into cloth under one roof. Southern cotton had a new market in New England textile mills. Together with the concept of interchangeable parts, the factory system (sometimes called the American system) was born. Before long, American factories were churning out all kinds of inexpensive, mass-produced, standardized consumer goods. The factory system also trickled down to the craftsman level. Now, a cobbler no longer produced every part of a shoe from start to finish. He might assemble a pair of shoes after first buying the soles and heels from one source, leather from another and so on.

Technology Transforms Western Agriculture

The West also profited from new inventions at this time, making farms a little more like factories and farmers a lot more like businessmen. The 1834 introduction of Cyrus McCormick's mechanical reaper helped one farmer working the machine to harvest as much wheat as five men in the same amount of time. A few years later, John Deere's steel plow allowed farmers to easily break through the thickly matted virgin soil of the American Midwest. More and more land was cleared for farming, and the cities along the eastern seaboard provided a dependable market for staple crops. Many commercial farmers even branched out to foreign markets.

A Revolution in Thinking

All of these innovations wouldn't have changed America so dramatically if the people, themselves, hadn't changed their way of thinking. If western farmers had just viewed the steel plow as a way to reduce the time it took to grow their families' food; or if the gunsmiths had continued to build each gun one by one; or even if Americans had rejected mass produced goods, there would have been no market revolution. But they did. Americans did see the economic value in specialization. Farmers started thinking more like businessmen, calculating the cost-benefit analysis of transporting crops to a more distant market that paid better prices. They liked buying more things with the extra money they were bringing in. It did mean a decline in cottage industry, and a lot of skilled laborers were replaced with unskilled workers who could operate machinery. Even today, we question whether or not society is better off, but the nation as a whole profited financially as a result of the Market Revolution.

Lesson Summary

Let's review. By the end of the War of 1812, many of the factors were in place to spark a Market Revolution, which transformed America's economy. One important, unintended consequence of the Embargo of 1807 had been to shift capital from commerce into manufacturing. Southern planters filled their fields with cotton, thanks to Eli Whitney's cotton gin. Eli Whitney also changed the Northern economy in two ways. First, he promoted the concept of interchangeable parts. Then, with Francis Lowell's innovation, southern cotton was feeding the power looms of American textile mills. Soon, the factory system transformed manufacturing and agriculture wasn't far behind. John Deere's steel plow and Cyrus McCormick's mechanical reaper helped mass produce farm products. Americans adjusted their thinking to become producers and consumers in this new market economy.