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Industrial Revolution in the United States

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Engraving of the Gorham Manufacturing Company's works in Providence, Rhode Island, 1886.
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In the United States from the late 18th and 19th centuries, the Industrial Revolution affected the U.S. economy, progressing it from manual labor, farm labor and handicraft work, to a greater degree of industrialization based on wage labor. There were many improvements in technology and manufacturing fundamentals with results that greatly improved overall production and economic growth in the U.S.

The Industrial Revolution occurred in two distinct phases, the First Industrial Revolution occurred during the later part of the 18th century through the first half of the 19th century and the Second Industrial Revolution advanced following the American Civil War. Among the main contributors to the First Industrial Revolution were Samuel Slater's introduction of British industrial methods in textile manufacturing to the United States, Eli Whitney's invention of the cotton gin, Éleuthère Irénée du Pont's improvements in chemistry and gunpowder making, and other industrial advancements necessitated by the War of 1812, as well as the construction of the Erie Canal, among other developments.[1][2]

History

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Industrialist Samuel Slater, who Andrew Jackson called "the father of the American Industrial Revolution."
Bethlehem Steel in Bethlehem, Pennsylvania was one of the world's leading steel manufacturers for most of the 20th century until 1982 when it discontinued most of its operations. It subsequently declared bankruptcy in 2001 and was dissolved in 2003.
A textile mill in Winooski, Vermont

18th century

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As Western Europe industrialized in the mid-to-late 1700s, the United States remained agrarian with resource processing, gristmills, and sawmills being the main industrial, non-agrarian output. As demand for U.S. resources increased, canals and railroads became important to the economic growth as transportation necessitated and the U.S. population was sparse, especially in areas where resources were being extracted such as the American frontier. This made it necessary to expand technological capabilities, which led to an Industrial Revolution in America as entrepreneurs, businesses competed with and learned from each other to develop better technology, fundamentally altering the U.S. economy. Some technologies that advanced the Industrial Revolution in the U.S. were appropriated from British designs by ambitious British entrepreneurs hoping to use the technology to create successful companies in the U.S.[3][4][5]

Much of the Industrial Revolution in the U.S. originated in the Lehigh Valley region of eastern Pennsylvania, where anthracite coal, iron ore, steel, textile, and industrial sectors experienced breakthroughs and emerged as global manufacturing leaders.[6]

One entrepreneur who is most associated with starting up the textiles industry in the U.S. and who initially brought the textile technology to the U.S. was Samuel Slater. Slater learned that Americans were interested in textile techniques used in England, but since exporting such technical designs were illegal in England, he memorized as much as he could and departed for New York City.

Moses Brown, a leading Rhode Island industrialist, secured the services of Slater, with Slater promising to recreate British textile designs. After an initial investment by Brown to fulfill initial requirements, a mill successfully opened in 1793 being the first water-powered roller spinning textile mill in America. By 1800, Slater's mill had been duplicated by many other entrepreneurs as Slater grew wealthier and his techniques more and more popular with Andrew Jackson calling Slater the "Father of the American Industrial Revolution". But Slater also earned the pejorative "Slater the Traitor" from many in Great Britain who felt he betrayed them in bringing British textile techniques to the Americas.[7][8]

With the invention of the cotton gin by Eli Whitney in 1794, American slaveholders had the means to make cotton production significantly more profitable. The era of King Cotton was underway by the early 1800s to such an extent that by the mid-19th century, southern slave plantations supplied 75% of the world's cotton. The introduction of the cotton gin was as unexpected as it was unprecedented. British textiles had expanded with no change in ginning principles in centuries. For the American planter class, up front costs were higher but productivity improvement among their slaves were clear and Whitney's original 1794 gin design was copied by many and improved upon.[9][10]

The du Pont family emigrated to the United States due to repercussions from the French Revolution, bringing with them expertise in chemistry and gunpowder. E.I. du Pont observed that the quality of American gunpowder was poor, and opened Eleutherian Mills, a gunpowder mill on Brandywine Creek in 1802. The mill served as home for du Pont's family as well as a center of business and social life, with employees living on or near the mill. The company grew rapidly and by the mid-19th century had become the largest supplier of gunpowder to the United States military.[11][12]

In the late 1700s, Robert Fulton of Pennsylvania proposed plans for steam-powered vessels to both the United States and British governments. Having developed significant technical knowledge in both France and Great Britain, Fulton returned to the United States, working with Robert R. Livingston to open the first commercially successful steamboat operating between New York City and Albany. Fulton built a new steamboat sturdy enough to take down the Ohio and Mississippi rivers, he was an early member on a commission to plan the Erie Canal, and Fulton designed the first working muscle-powered submarine, the Nautilus.[13][14]

In the 1780s, the Erie Canal was proposed, then re-proposed in 1807 with a survey being funded in 1808. Construction began in 1817 and the original canal was about 363 miles with 34 numbered locks from Albany to Buffalo. Prior to the Erie Canal, bulk goods were limited to shipping by pack animal, there were no railways and water was the most cost-effective way to ship bulk goods.[15][16] Use of this new canal was faster than using carts pulled by draft animals and cut transport costs by about 95%.

The canal gave New York City's port a significant advantage over all other U.S. port cities and contributed to a growth in population in New York state and regions farther west.[17][18] It inspired canals elsewhere, bringing a canal age.

Legislation

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In response to British aggression against the U.S., Congress passed the Embargo Act of 1807. The embargo was a cumulative addition to the Non-importation Act of 1806 (2 Stat. 379), which was a "Prohibition of the Importation of certain Goods and Merchandise from the Kingdom of Great Britain," the prohibited imported goods being defined where their chief value, which consists of leather, silk, hemp or flax, tin or brass, wool, glass, and paper goods, nails, hats, clothing, and beer.[19]

The prohibition of imports under the Embargo Act resulted in the expansion of new, emerging US domestic industries across the board, particularly the textile industry, and marked the beginning of the manufacturing system in the United States, reducing the nation's dependence upon imported manufactured goods.[20][21]

Labor and finance

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1917 Street Railway Company strike

The early Industrial Revolution, which lasted into the mid-19th century, was marked by shift in labor, from an outwork system of labor towards a factory system of labor. Throughout this period, much of the U.S. population remained in small scale agriculture.[22] Despite a small percentage of the population then working in industry, the U.S. government took action to promote the expansion of U.S. industry. An important example is Alexander Hamilton's proposal of the "American School" ideas which supported high tariffs to protect U.S. industry.[23] This idea was embraced by the Whig Party in the early 19th century with their support for Henry Clay's American System. This plan, proposed shortly after the War of 1812, promoted not only protective tariffs, but also canals and roads to support the movement of manufactured goods around the country.[24] As in Britain, the First Industrial Revolution in the United States revolved heavily around the textile industry. Early U.S. textile plants were located next to rivers and streams as they would use the running water to power the machinery in the plant. Thus, many of the factories of the First Industrial Revolution were in the Northeastern United States[25]

To aid the expansion of industry, Congress chartered the Bank of the United States in 1791, giving loans to help merchants and entrepreneurs secure needed capital. However, Jeffersonians saw this bank as an unconstitutional expansion of federal power, so when its charter expired in 1811, the Jeffersonian-dominated Congress did not renew it.[26] State legislatures were persuaded to charter their own banks to continue helping merchants, artisans, and farmers who needed loans, and, by 1816, there were 246 state-chartered banks. With these banks, states were able to support internal transportation improvements, such as the Erie Canal, which stimulated economic development.[27]

Impact of tariffs in the industrialization of the United States (1789–1947)

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Average tariff rates in France, UK, US
The average US tariff rates, 1821–2016
U.S. trade balance and trade policy, 1895–2015
Real Income Gains in the Global Population[28]
See also: History of tariffs in the United States

Tariffs have historically served a key role in the industrialization of the United States. Their purpose was to generate revenue for the federal government and to allow for import substitution industrialization (industrialization of a nation by replacing imports with domestic production) by acting as a protective barrier around infant industries.[29] They also aimed to reduce the trade deficit and the pressure of foreign competition. Tariffs were one of the pillars of the American System that allowed the rapid development and industrialization of the United States.

After the United States achieved independence in 1783, under the Articles of Confederation, the U.S. federal government, could not collect taxes directly but had to "request" money from each state. The power to levy taxes and tariffs, when proposed by the United States House of Representatives, was granted to the federal government by the United States Constitution after it came into effect in 1789. The new government needed a way to collect taxes from all the states that were easy to enforce and had only a nominal cost to the average citizen. The Tariff of 1789 was the second bill signed by President George Washington imposing a tariff of about 5% on nearly all imports, with a few exceptions. [30] In 1790 the United States Revenue Cutter Service was established to primarily enforce and collect the import tariffs. This service later became the United States Coast Guard.

The United States pursued a protectionist policy from the beginning of the 19th century until the middle of the 20th century. Between 1861 and 1933, they had one of the highest average tariff rates on manufactured imports in the world. The UK was the first country to employ a strategy of promoting emerging industry on a large scale. However, its most fervent supporter was the United States; Paul Bairoch called the U.S., “the mother country and bastion of modern protectionism.”[30]

Many American intellectuals and politicians during the country's catching-up period felt that the free trade theory advocated by British classical economists was not suited to their country. They argued that the country should develop manufacturing industries and use government protection and subsidies for this purpose, as Britain had done before them. Many of the great American economists of the time, until the last quarter of the 19th century, were strong advocates of industrial protection: Daniel Raymond who influenced Friedrich List, Mathew Carey and his son Henry, who was one of Lincoln's economic advisers. The intellectual leader of this movement was Alexander Hamilton, the first Secretary of the Treasury of the United States (1789–1795).[31]

The United States rejected David Ricardo's theory of comparative advantage and protected its industry. The country pursued a protectionist policy from the beginning of the 19th century until the middle of the 20th century, after the Second World War.[32][31]

In Report on Manufactures which is considered the first text to express modern protectionist theory, Alexander Hamilton argued that if a country wished to develop a new activity on its soil, it would have to temporarily protect it. According to him, this protection against foreign producers could take the form of import duties or, in rare cases, prohibition of imports. He called for customs barriers to allow American industrial development and to help protect infant industries, including bounties (subsidies) derived in part from those tariffs. He also believed that duties on raw materials should be generally low.[33] Hamilton argued that despite an initial "increase of price" caused by regulations that control foreign competition, once a "domestic manufacture has attained to perfection... it invariably becomes cheaper".[31]

In this report, Hamilton also proposed export bans on major raw materials, tariff reductions on industrial inputs, pricing and patenting of inventions, regulation of product standards and development of financial and transportation infrastructure. The U.S. Congress adopted the tariffs but refused to grant subsidies to manufactures. Hamilton shaped the pattern of American economic policy until the end of World War II, and his program created the conditions for rapid industrial development.[31]

Alexander Hamilton and Daniel Raymond were among the first theorists to present the infant industry argument. Hamilton was the first to use the term "infant industries" and to introduce it to the forefront of economic thinking. He believed that political independence was predicated upon economic independence. Increasing the domestic supply of manufactured goods, particularly war materials, was seen as an issue of national security. And he feared that Britain's policy towards the colonies would condemn the United States to be only producers of agricultural products and raw materials.[32][31]

Britain initially did not want to industrialize the American colonies, and implemented policies to that effect (for example, banning high value-added manufacturing activities). Under British rule, America was denied the use of tariffs to protect its new industries. Thus, the American Revolution was, to some extent, a war against this policy, in which the commercial elite of the colonies rebelled against being forced to play a lesser role in the emerging Atlantic economy. This explains why, after independence, the Tariff Act of 1789 was the second bill of the Republic signed by President Washington allowing Congress to impose a fixed tariff of 5% on all imports, with a few exceptions.[34]

Between 1792 and the war with Britain in 1812, the average tariff level remained around 12.5%, which was too low to encourage consumers to buy domestic products and thus support emerging American industries. When the Anglo-American War of 1812 broke out, all rates doubled to an average of 25% to account for increased government spending. The war paved the way for new industries by disrupting manufacturing imports from the UK and the rest of Europe. A major policy shift occurred in 1816, when American manufacturers who had benefited from the tariffs lobbied to retain them. New legislation was introduced to keep tariffs at the same levels —especially protected were cotton, woolen, and iron goods.[35] The average rate rose to 35% in 1816. The public agreed, and by 1820, the average rate in the U.S. had risen to 40%. Between 1816 and the end of World War II, the U.S. had one of the highest average import tariffs on manufactured goods in the world.

In the 19th century, statesmen such as Senator Henry Clay continued Hamilton's themes within the Whig Party under the name "American System" which consisted of protecting industries and developing infrastructure in explicit opposition to the "British system" of free trade.[36]

The American Civil War (1861–1865) was partly triggered by the tariff question. Southern agricultural states opposed any form of protection, while northern industrial states wanted to maintain protection. The fledgling Republican Party led by Abraham Lincoln, who called himself a "Henry Clay tariff Whig", strongly opposed free trade. Early in his political career, Lincoln was a member of the protectionist Whig Party and a supporter of Henry Clay. In 1847, he declared: "Give us a protective tariff, and we shall have the greatest nation on earth". He implemented a 44-percent tariff during the Civil War—in part to pay for railroad subsidies and for the war effort, and to protect favored industries.[34] Tariffs remained at this level even after the war, so that the North's victory in the Civil War allowed the U.S. to remain one of the largest users of tariff protection for industry. High tariffs were a policy designed to encourage rapid industrialisation and protect the high American wage rates.[31]

In the early 1860s, Europe and the United States pursued completely different trade policies. The 1860s were a period of growing protectionism in the United States, while the European free trade phase lasted from 1860 to 1892. The tariff average rate on imports of manufactured goods in 1875 was from 40% to 50% in the United States, against 9% to 12% in continental Europe at the height of free trade.[30]

The policy from 1860 to 1933 was usually high protective tariffs (apart from 1913 to 1921). After 1890, the tariff on wool did affect an important industry, but otherwise the tariffs were designed to keep American wages high. The conservative Republican tradition, typified by William McKinley was a high tariff, while the Democrats typically called for a lower tariff to help consumers but they always failed until 1913.[37][38]

From 1871 to 1913, "the average U.S. tariff on dutiable imports never fell below 38 percent [and] gross national product (GNP) grew 4.3 percent annually, twice the pace in free trade Britain and well above the U.S. average in the 20th century," notes Alfred Eckes Jr, chairman of the U.S. International Trade Commission under President Reagan.[39]

After the United States caught up with European industries in the 1890s, the Mckinley Tariff's argument was no longer to protect “infant industries”, but to maintain workers' wages, support agricultural protection and the principle of reciprocity.[30]

In 1896, the GOP pledged platform pledged to "renew and emphasize our allegiance to the policy of protection, as the bulwark of American industrial independence, and the foundation of development and prosperity. This true American policy taxes foreign products and encourages home industry. It puts the burden of revenue on foreign goods; it secures the American market for the American producer. It upholds the American standard of wages for the American workingman".[40]

In 1913, following the electoral victory of the Democrats in 1912, there was a significant reduction in the average tariff on manufactured goods from 44% to 25%. However, the First World War rendered this bill ineffective, and new "emergency" tariff legislation was introduced in 1922, after the Republicans returned to power in 1921.[31]

According to economist Ha-Joon Chang, the protectionist period thus corresponded to the golden age of American industry, when US economic performance outstripped that of the rest of the world. They pursued an interventionist, protectionist policy to promote and protect their industries through tariffs. This would have enabled the United States to enjoy the fastest economic growth in the world throughout the 19th century, right up to the 1920s.[31] It was only after the Second World War that the U.S. liberalized its trade (although not as unequivocally as Britain did in the mid-nineteenth century).

Impact of Industrial Revolution on the United States

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Duplicating lathe
Blanchard lathe, powered by water, for creating stock identical to a pattern
See also: Second Industrial Revolution and Technological and industrial history of the United States

The Industrial Revolution altered the U.S. economy and set the stage for the United States to dominate technological change and growth in the Second Industrial Revolution and the Gilded Age.[41] The Industrial Revolution also saw a decrease in labor shortages which had characterized the U.S. economy through its early years.[42] This was partly due to a transportation revolution happening at the same time, low population density areas of the U.S. were better able to connect to the population centers through the Wilderness Road and the Erie Canal, with steamboats and later rail transport, leading to urbanization and an increased labor force available around larger cities, including Chicago, Philadelphia, and New York City, and labor force shortages elsewhere as workers fled to these highly populated cities. Also, quicker movement of resources and goods around the country drastically increased trade efficiency and output while allowing for an extensive transport base for the U.S. to grow during the Second Industrial Revolution.[43]

Techniques to make interchangeable parts were developed in the U.S., and allowed easy assembly and repair of firearms or other devices, minimizing the time and skill needed to repair or assemble devices. By the beginning of the Civil War, rifles with interchangeable parts had been developed, and after the war, more complex devices such as sewing machines and typewriters were made with interchangeable parts.[44] In 1798, Eli Whitney obtained a government contract to manufacture 10,000 muskets in less than two years.

By 1801, he had failed to produce a single musket and was called to Washington to justify his use of Treasury funds. There, he created a demonstration for Congress in which he assembled muskets from parts chosen randomly from his supply.[45] While this demonstration was later proved to be fake, it popularized the idea of interchangeable parts, and Eli Whitney continued using the concept to allow relatively unskilled laborers to produce and repair weapons quickly and at a low cost. Another important innovator is Thomas Blanchard, who in 1819 invented the Blanchard lathe, which could produce identical copies of wooden gun stocks.[46]

Interchangeable parts made the development of the assembly line possible. In addition to making production faster, the assembly line eliminated the need for skilled craftsmen because each worker would only do one repetitive step instead of the entire process.[47]

The first Industrial Revolution had a profound effect on labor in the U.S. Companies from the era, such as the Boston Associates, would recruit thousands of New England farm girls to work in textile mills. These girls often received much lower wages than men, though the work and pay gave young women a sense of independence that they did not feel working on a farm. The First Industrial Revolution also marked the beginning of the rise of wage labor in the United States. As wage labor grew over the next century, it would go on to profoundly change American society.[48]

References

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