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									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
  European power.
                                                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.
• Alternatives:
    • 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
  and Europe.
• Wheat became the cash crop of the
  northern part of the West. In the
  Northeast, dairy cattle, fruit and vegetable
  production predominated.
• 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
  (clothes, shoes)
• 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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Sample Keyword

   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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