Social Change and National Development

22a. Economic Growth and the Early Industrial Revolution

Erie Canal
This drawing depicts men working the lock on a section of the Erie Canal. Find more lyrics like this "I've got a mule, her name is Sal, Fifteen years on the Erie Canal" on this New York State Canals website.

The transition from an agricultural to an industrial economy took more than a century in the United States, but that long development entered its first phase from the 1790s through the 1830s. The Industrial Revolution had begun in Britain during the mid-18th century, but the American colonies lagged far behind the mother country in part because the abundance of land and scarcity of labor in the New World reduced interest in expensive investments in machine production. Nevertheless, with the shift from hand-made to machine-made products a new era of human experience began where increased productivity created a much higher standard of living than had ever been known in the pre-industrial world.

The start of the American Industrial Revolution is often attributed to Samuel Slater who opened the first industrial mill in the United States in 1790 with a design that borrowed heavily from a British model. Slater's pirated technology greatly increased the speed with which cotton thread could be spun into yarn. While he introduced a vital new technology to the United States, the economic takeoff of the Industrial Revolution required several other elements before it would transform American life.

Wedding of the Waters
New York Governor DeWitt Clinton pours a bucketful of Lake Erie into the Atlantic Ocean to mark the opening of the Erie Canal in the autumn of 1825.

Another key to the rapidly changing economy of the early Industrial Revolution were new organizational strategies to increase productivity. This had begun with the "outwork system" whereby small parts of a larger production process were carried out in numerous individual homes. This organizational reform was especially important for shoe and boot making. However, the chief organizational breakthrough of the Industrial Revolution was the "factory system" where work was performed on a large scale in a single centralized location. Among the early innovators of this approach were a group of businessmen known as the Boston Associates who recruited thousands of New England farm girls to operate the machines in their new factories.

The most famous of their tightly controlled mill towns was Lowell, Massachusetts, which opened in 1823. The use of female factory workers brought advantages to both employer and employee. The Boston Associates preferred female labor because they paid the young girls less than men. These female workers, often called "Lowell girls," benefited by experiencing a new kind of independence outside the traditional male-dominated family farm.

The rise of wage labor at the heart of the Industrial Revolution also exploited working people in new ways. The first strike among textile workers protesting wage and factory conditions occurred in 1824 and even the model mills of Lowell faced large strikes in the 1830s.

Dramatically increased production, like that in the New England's textile mills, were key parts of the Industrial Revolution, but required at least two more elements for widespread impact. First, an expanded system of credit was necessary to help entrepreneurs secure the capital needed for large-scale and risky new ventures. Second, an improved transportation system was crucial for raw materials to reach the factories and manufactured goods to reach consumers. State governments played a key role encouraging both new banking institutions and a vastly increased transportation network. This latter development is often termed the Market Revolution because of the central importance of creating more efficient ways to transport people, raw materials, and finished goods.

Alexander Hamilton's Bank of the United States received a special national charter from the U.S. Congress in 1791. It enjoyed great success, which led to the opening of branch offices in eight major cities by 1805. Although economically successful, a government-chartered national bank remained politically controversial. As a result, President Madison did not submit the bank's charter for renewal in 1811. The key legal and governmental support for economic development in the early 19th century ultimately came at the state, rather than the national, level. When the national bank closed, state governments responded by creating over 200 state-chartered banks within five years. Indeed, this rapid expansion of credit and the banks' often unregulated activities helped to exacerbate an economic collapse in 1819 that resulted in a six-year depression. The dynamism of a capitalist economy creates rapid expansion that also comes with high risks that include regular periods of sharp economic downturns.

The use of a state charter to provide special benefits for a private corporation was a crucial and controversial innovation in republican America. The idea of granting special privileges to certain individuals seemed to contradict the republican ideal of equality before the law. Even more than through rapidly expanded banking institutions, state support for internal transportation improvements lay at the heart of the nation's new political economy. Road, bridge, and especially canal building was an expensive venture, but most state politicians supported using government-granted legal privileges and funds to help create the infrastructure that would stimulate economic development.

The most famous state-led creation of the Market Revolution was undoubtedly New York's Erie Canal. Begun in 1817, the 364-mile man-made waterway flowed between Albany on the Hudson River and Buffalo on Lake Erie. The canal connected the eastern seaboard and the Old Northwest. The great success of the Erie Canal set off a canal frenzy that, along with the development of the steamboat, created a new and complete national water transportation network by 1840.

On the Web
Samuel Slater
Englishman Samuel Slater worked as an apprentice at a spinning mill for years before coming to the U.S. Most sources will tell you that he intentionally memorized the design of the mill's spinning machine so he could recreate it in America and strike it rich. Here's a different version of the history of Samuel Slater's mill. According to the University of Houston's Engines of Our Ingenuity series, Slater did not come to America to commit industrial espionage.
Samuel Slater — Father of the American Industrial Revolution
Learn about Samuel Slater's training in England and how he helped develop the American milling industry. This site has pictures of Slater and a millhouse, and a link to a page on the Slatersville Mill Village.
Lowell Mills
Thus thirteen hours per day of close attention and monotonous labor are exacted from the young women in these manufactories. -from "A Description of Factory Life by an Associationist in 1846." This Illinois Labor History Society page of primary documents also has text from Factory Rules from the Handbook to Lowell, 1848, "Massachusetts Investigation into Labor Conditions" and "Boarding House Rules from the Handbook to Lowell, 1848."
The History of the New York State Canal System
Before the Erie Canal was built, Boston, Baltimore, Philadelphia and New Orleans each shipped more than New York City. Just 15 years later, New York shipped more than Boston, Baltimore and New Orleans combined. Goods could be transported between Buffalo and New York City along the 363-mile canal at a tenth of the over-land cost. Visit this New York State Canal System page to read the story of New York's artificial inland water network.
Alan Greenspan Speech on the History of Banking
In this speech to the 1998 Conference of State Bank Supervisors, Chairman of the Federal Reserve Board Alan Greenspan discusses the history of American banks and banking from 1781 to today. Did you know that in 1863 the first Comptroller of the Currency wanted the officers and directors of failed national banks to be "made personally liable for the debts of the bank, and be punished criminally?" The speech is a bit long, but it's very interesting, detailed, and informative.
In what follows, I shall confine myself to a description of factory life in Lowell, Massachusetts, from 1832 to 1848, since, with that phase of Early Factory Labor in New England, I am the most familiar-because I was a part of it. -Harriet H. Robinson
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At the close of twilight we arrived at Schoharie creek. This is the first place of danger I have yet observed. -from The Great Water Highway through New York State, 1829, Author Unknown
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Textile Factories Come to the U.S.
Lowell girls worked 12 to 14 hours a day, six days a week, 309 days a year. They got paid $3.60 a week. That's $187.20 a year. Or up to 5 cents an hour.
In 1809 Mary Kies became the first woman to own a U.S. patent for her method of weaving straw with silk.
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Reverend Ephraim Avery was acquitted in the murder trial of Sarah Cornell, a factory worker who was found hanged, 5 months pregnant. Avery's respected status in the community and Cornell's history of shoplifting and venereal disease helped get him off the hook.
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