Early American Economic History

A Past in Reflection
By: Jacob H. Murdock 12/9/17

The History of Americas Economic Development began long ago. Perhaps the first seed

to be planted in the wild growth of the Industrial Revolution which began in America was that of

Cotton. No single product has had greater influence on the History of Americas Economics. It is

Cotton that began Industrialization. Cotton is a crop that has been found in use around the world

as far back as 5,500 years ago. Some other very important factors that influenced Economic

Development in America include Transportation advancements, Energy Source development,

Land grants, Big Business, Unions, Tariffs and Anti-Trust Laws, Wars, and Banking. It was a

long process, but one that took considerably short amount of time considering previous

development time of most countries. No one of these is the single reason American Economy

Developed so quickly and successfully, but it was a combination of all the above.

Although America had existed as a growing satellite of England, it was the Revolutionary

War that seemed to kick off the growth. After the Declaration of Independence in 1776, the next

75 years or so would see more growth than the previous 170. The first take-off innovation was

Eli Whitneys Cotton Gin in 1793 which launched the industry of King Cotton. Until that point it

took one slave about 18 months to separate the seeds out of the cotton they picked (about 500

pounds per slave). The Cotton Gin cut that by 50 times and further development cut it by over

120 times! This was definitely the launch into industrialization and economic boom of America.

But one has to ask if Cotton wasnt chosen as the major export/commodity of America would it

have doomed the growing country? Im not so sure that it wouldve made that big of a
difference. We have plenty of other resources, but you used Cotton because its opportunity cost

vs. return on investment was the best to employ efforts towards.

It was the Louisiana Purchase of 1804 that lead to a westward expansion which sparked a

greater interest in transportation issues (for people yes but mainly for product; what good would

expanding the country be if it wasnt connected at all?). This westward movement eventually

lead to development of water powered energy sources and water delegation/rights which allowed

for further development in the West. In the early to mid 19th Century, the U.S. relied heavily on

waterways as the means of transportation and break in bulk where there wasnt water passages

available added to the already high cost of transportation. The Interweaving of Canals into the

transportation system certainly did a lot to provide greater expansion and economic advances

throughout the country, most notably, of course, the Erie Canal which opened in 1825. With a

boom that was very noticeable after the opening of the Erie in the nations GDP output, a focus

on improving transportation became huge! Railroads received millions of acres of grants from

the federal government to encourage improved transportation, and while it started out as a

bloody competitive industry, eventually the government intervened, but perhaps not enough, and

that might just be why the railroads died out.

Perhaps the single greatest contributor to Economic Growth in America over all aspects,

product, growth, expansion, adaptation, international trade, etcetera, was the Constitution. The

Wonder of the Constitution is that it was set up to allow for incredible flexibility and growth

without falling apart when pressure came and with power to step in where and only when it

needed to. This ingenious Free-Market Economy was the first of its kind in the world, and

competition drove expansion and advancement. When that competition was threatened with big

business and the age of the robber-barons, the Constitution provided a check, the Supreme Court
passed the Anti-Trust Laws. And Unions were formed and supported to ensure a positive

working environment.

One cant talk about the American Economic History without mentioning the Civil War.

Surely no single war in all of known world history was as devastating and bloody. But what price

can you really put on the freedom of mankind? The country suffered greatly after the Civil War

but it made it out on top eventually (perhaps thanks to the Robber Barons, most notably and

definitely Perhaps JP Morgan who stopped the crash of Americas Economy by backing the

federal Government when the stock Market crashed).

Of course, all good things cant last forever, Americas immense and unprecedented

growth was met with the effects of the stock market crashes, and World Wars of the early

1900s. Where once America had been a free-market economy, the Federal Government had to

take over for the Wars only after the Second World War there was no President Wilson to

abolish the Command-Economy that had been established.

Surely it is wonderous to think that a country who hit so many brick walls along the way,

and expectedly so with such inexperience and fast-paced growth, did not halt in its progress, but

in way it did didnt it? We lead the world second to only one in debt even though we are part of

NAFTA, the worlds single greatest trade cooberations and definitely most successful coalition

financially. Our Government is unchecked in its spending, and thanks to tariffs on imports that

were never done away with, we dont have a free market to fight it any more.

So what can be done to get back to prosperity? Theres a lot. But it all starts with learning about

our History.

The End
 BIBLIOGRAPHY:

1. Jonathan Hughes, Louis P. Cain. American Economic History. Pearson Education Inc.,

2007, 7th Edition.

2. https://www.youtube.com/watch?time_continue=2&v=N7ZJL34OY5w