14. The Market Economy
• Purpose: to gain an understanding of key political and economic
developments in early 19th century America, specifically:
• Political achievements and decisions that allowed the US to focus on
domestic growth and expansion
• Indian Removal
• The development of commercial agriculture
• Key advances in transportation, infrastructure, and urbanization
• The rise of American manufacture
• Timeframe: ca. 1790-1860
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1.1 Foreign Policy Achievements
• John Quincy Adams served as James
Monroe’s secretary of state.
• He negotiated a settlement and a
demilitarization of the Canadian border
with Great Britain, and joint occupation of
the Oregon territory.
• In the Adams-Onis treaty of 1819, Adams
gained the cession of Spanish Florida to
the United States and negotiated a clear
western boundary of Louisiana.
• For the first time, the US had clear
borders and no major conflicts with any
The Adams-Onis Treaty Line of 1819
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1.2 The Monroe Doctrine
• 1808 to 1822, most Spanish colonies in
Latin America became independent by
revolution. In 1822, the US recognized the
new governments, including Mexico.
• US and Great Britain feared that France
and Spain might seek to re-colonize Latin
America, while Russia might expand its
holdings beyond Alaska.
• Great Britain wanted a joint US-British
declaration, but Adams insisted on US
independence in foreign policy.
• Instead, the Monroe Doctrine was written
in 1823: The United States would accept
no new European colonies in Western
hemisphere, and the US would stay out of
European politics. John Quincy Adams (1767-1848)
author of the Monroe Doctrine
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1.3 Settling the West and the Missouri Compromise
• After the Revolution new states were
created: VT, KY, TN, OH (1791-1803); LA
(1812); IN, MS, IL, AL, ME, MO (1816-
1821), AK, MI (1836-37). Conflicts
between squatters and speculators were
• Rapid western expansion necessitated
decisions about slavery.
• In 1819, there were 11 slave and 11 free
states (Senate balance). The Missouri
territory applied for admission as slave • In 1820 a compromise by Henry Clay was
state. engineered: Missouri as slave state, Maine as
• A heated debate about the morality of free state at the same time. No other slave state
slavery was the consequence. should be built north of Missouri’s southern
border (36’30’’ Missouri Compromise line).
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2.1 The Concept of Indian Removal
• With expansion, white demands for Indian
lands became massive in the 1820s.
• Concept of Indian Removal west of the
• Indians are in the way of expansion
and progress. They cannot survive
the onslaught of white civilization.
• Civilization Policy, defended by
Quakers and other missionaries.
• Reservations: remnants of Native
American nations lived on small
territories surrounded by whites. James Monroe (1758-1831) first officially
proposed the removal of eastern Indians to the
west of the Mississippi river
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2.2 Native Americans and “Civilization”
• Native Americans reacted in a variety of • A minority of mixed-bloods heeded
ways to the pressures of white society: missionaries’ call to embrace Christianity.
• angry rejection, violence, alcoholism. • Cherokees practiced agriculture, also
• Seneca Iroquois accepted federal aid and looms, mills, even slave ownership.
European gender division of labor, but • Cherokee leader Sequoyah devised a
tried to preserve as much autonomy and written alphabet for the Cherokee
traditional culture as possible. language.
• The so-called “5 Civilized Tribes” • Native Americans were interested in
(Cherokees, Creeks, Choctaws, keeping their ancestral lands. This led to
Chickasaws, Seminoles) had extensive conflicts with some of the mixed-bloods.
commercial dealings with non-Indians, • Creek chief William McIntosh sold much
also substantial intermarriage. territory in Georgia and Alabama in 1825
and was executed him for that deed.
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2.3 Indian Removal
• The 1830 Indian Removal Act granted
presidents authority to remove Indians by
force if necessary.
• Southern states insisted on Indian removal.
• 1830 and 1832 treaties achieved removal
of Choctaws and Chickasaws.
• In 1836, Georgia militia attacked Creeks
remaining in the state. 15,000 Creeks were
deported and resettled West of Mississippi.
• A number of Seminoles successfully
resisted removal in Second Seminole War
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2.4 The Cherokee and the Trail of Tears
• The Cherokee turned to the federal courts to
defend their claims against Georgia.
• In Cherokee Nation v. Georgia (1831) chief
justice John Marshall declared that the
Cherokee had no standing in federal court, but
certainly a right to their land. President
Jackson ignored the decision.
• Cherokees were split into a pro-removal and
an anti-removal faction.
• Minority pro-removal leaders exchanged
traditional territory for new lands in the Treaty
of New Echota in 1835.
• Most Cherokee refused to move in 1838, but
President Martin van Buren sent federal
• The Trail of Tears to present-day Oklahoma
killed about a quarter of deported Cherokees.
John Ross (1790-1866), leading Cherokee chief
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3.1 Commercial Agriculture in the United States
• The War of 1812 created a high demand
for agricultural products in eastern US
• Wheat became the cash crop of the
northern part of the West. In the
Northeast, dairy cattle, fruit and vegetable
• Farmers increasingly worked for a cash
income and sold their goods to national
and international markets.
• The South, too, experienced a boom of
commercial farming. The cotton gin made
cotton production feasible, the growing
English textile industry made it highly
• US South became the world’s largest
producer of cotton. It was tied to slavery,
and resembled colonial systems. US economy 1850. Wheat (orange), cotton (yellow),
dairy (blue), tobacco (purple), rice and sugar (green)
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3.2 The Mechanization of Agriculture
• The US became the first agricultural
economy to mechanize on a large scale.
• Modern tools like the steel plow greatly
increased efficiency. Cyrus McCormick’s
reaper was invented in 1831.
• Mechanization tied agriculture strongly to
manufacture and banks, because it was
also capital intensive.
• Mechanization was best suited to large-
scale wheat production such as in the
Midwest. The South continued largely
relying on slave labor to plant and pick
Steel plow, McCormick reaper, cotton gin,
advertisement for late 19th century harvester
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3.3 Transport Revolution and Urbanization
• The changing US economy necessitated
the development of a new infrastructure:
national and Coastal Roads, Canals and
• Erie Canal was completed in 1825.
Railroads provided efficient transport
independent of waterways. These
“Internal improvements” required large
amounts of capital.
• In 1790, practically all American cities had
been seaports. Due to increasing
population and the growing transport
infrastructure, new cities and towns
• This urbanization was heavily
concentrated in the North. The majority of Roads and Canals, 1825-1860
Americans lived in agricultural regions.
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3.4 Government, Infrastructure, and Banking
Government played an important role in The market economy also needed a credit
the development of infrastructure: infrastructure in form of banking.
• Expansion of federal post offices; first • While all banks needed a state or federal
telegraph (Washington-Baltimore) in charter, there was little regulation. State
1844. banks often overextended credit, e.g. to
• Also state governments invested much in speculators; banks crashed around 1819.
infrastructure projects. • In 1816, Congress had chartered the
• State and federal courts repeatedly tried Second Bank of the United States, which
to rule against privileges and monopolies also provided loans to businesses.
in transportation and commerce and in • During the Panic of 1819, the Second
favor of competition. Bank cut back on loans, aggravating the
crisis and angering many.
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3.5 The American System of Manufacturing
• The disruptions of the War of 1812
fostered domestic manufacture. It was
aided by federal protective tariff of 1815.
• Production techniques included traditional
workshops, the putting-out system, early
water- and steam-powered
industrialization, ready-made products
• The American System of Manufacturing
revolutionized production. Developed by
Eli Whitney in 1798, it allowed for the
Interchangeable parts of a rifle
mass production of quality consumer
goods at lower prices.
• Precision-crafted, interchangeable parts
made the production of guns, locks,
watches, etc. much easier and faster.
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3.6 The New England Textile Industry
• Textile production was the most industrialized
segment of the economy before the Civil War.
• Concentrated in New England, massive looms
were at first powered by water, later by steam.
• The most important example of early New England
textile mills were the mills in Waltham and Lowell,
(Mass). It is known for its main source of labor:
New England farm daughters.
• The women were subjected to a strict paternalistic
control by the managers; however, work conditions
and pay were very bad.
• In 1834 and 36, workers organized strikes and
unions to protest wage reductions unsuccessfully.
• After 1850, male immigrants increasingly replaced
native-born women as the main source of labor.
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American System of Manufacturing
Pioneered by Eli Whitney in 1798, the Am. System of Manufacturing replaced hand-
crafted parts with machine-tooled, interchangeable parts. It allowed the faster and more
reliable production of guns, locks, watches and other mechanical consumer goods and
played a crucial role in the development of American manufacture and early
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