Earliest known photograph of slaves and cotton, around 1850 Brigit Katz, Smithsonian Magazine, December 6, 2019

A New Nation, America from 1789 to 1860

If you study American history from 1789 to 1860 (just before the start of the Civil War), the political history is very complicated. But remember what caused most of these political conflicts and uneasy compromises – the dynamic changes in the underlying economy. Two in particular – the spectacular increase in slave-produced cotton and the beginning of the Industrial Revolution. They were related.

What is the Industrial Revolution? At its heart it is power-driven metal machinery producing huge quantities of goods. At first, the power was supplied by steam engines and water wheels. Later, in the 20^th century, electricity. All of this used huge amounts of fossil fuels – first coal, later oil and natural gas were added. America had huge quantities of all three.

A trend that continued from colonial times was the rapid population growth of America. This is part of demographics, the study of populations. America has had spectacular population growth throughout its history, from 4 million people in 1790 to 30 million in 1860 to over 330 million today. Two reasons for this growth were high birth rates, and open immigration until 1924. Also, Americans tended to be healthier than the people in other countries, mostly because of plentiful food. This is an important part of the American story, as discussed in the essay on colonial history. 

There are lots of numbers when you talk about demographics, economic growth, and the Industrial Revolution. I’ll try to keep them to a minimum, hopefully just the more important ones. I also round up numbers to make them easier to read.

The New Government, 1789-1798 

After the Constitution was ratified and the structure of the new government was established, Americans voted in their first elected representatives in 1789. George Washington was elected president. He appointed Thomas Jefferson as Secretary of State (in charge of foreign affairs) and Alexander Hamilton as Secretary of the Treasury (financial affairs). James Madison, who wrote the first draft of the Constitution, became Speaker of the House of Representatives and established the structure and procedures in the House that are still used today.

The government faced many of the problems left over from the Revolution. Because of the fight with the British army, Americans did not want a large standing (permanent) army.  They saw a permanent army as a threat to their liberties. America could do this because there was no serious threat on the American continent. Also, they didn’t want to get involved in European wars and political conflicts. “No entangling alliances” as Washington said. This foreign policy was possible because America was separated from Europe by the 3,000 miles of the Atlantic Ocean. 

This was not to be. What happened in Europe during this period would have a profound impact on American history.

The same year the U.S. government began, the French Revolution broke out. The French revolutionaries used similar ideas as the Americans. They wanted to destroy the power of the French king and the aristocracy. In 1793, they beheaded the king and queen of France and thousands of others. The other countries of Europe – all with kings or queens – were appalled. They declared war on France. One of the countries was England. England would fight France, off and on, until 1815.

France was taken over by Napoleon. He would fight until he eventually lost in 1815. Wars are expensive and Napoleon needed money. France had laid claim to part of America. But Napoleon, fighting large wars in Europe, knew he could not defend the land from west-moving Americans. In 1803, he offered the land to America. President Jefferson bought it for $11 million. It was called the Louisiana Purchase. It was the land between the Mississippi River and the Rockies. It doubled the size of the United States. 

After Jefferson bought the Louisiana Purchase, he established the Corps of Discovery to find out the geography of what he bought. The Corps first leaders were Meriwether Lewis (Jefferson’s secretary) and William Clark. Their famous expedition of 1804-06 traveled through the northern part of the new territory, including exploring the Missouri River. This was important for the future. America had more miles of navigable rivers than any other country. With the invention of the steamship, America had a vast internal transportation system that would help join the regional economies of the country together. Unfortunately, one of the region’s economy was based on slavery.

Hamilton and Financing the Government 

All governments must raise money to pay for government activities. But the U.S. government was limited in how it could raise money. The Constitution said the government could not tax American exports. No income taxes. The attempt to put a tax on goods, especially whiskey, led to riots and demonstrations that threatened the new government. What was left? Some revenue came in from land sales but not enough. Hamilton was given the task to solve this problem.

He was ready. He started life as a teenager working for a merchant in the Caribbean. After the Revolution, he spent years studying the history and workings of government finance. His options were limited but he came up with a brilliant (and controversial) plan. He would tax imports.

There was a larger problem. The currency issued during the Revolution (called Continentals) was worthless. The new government had to establish creditability which included faith in any new currency. Hamilton’s idea was to buy back the Continentals at face value. In exchange, the government would issue government bonds that paid interest and could be redeemed (sold back to the government) in the future. The bonds could also be traded like money. How to pay for them? From the revenue that came from taxing imports. Hamilton figured that tariffs on imports would cover government expenses and the cost of redeeming the bonds. He was right.

I believe this was part of a larger plan he had. Hamilton saw the beginnings of the Industrial Revolution. He believed that manufacturing would be part of an economically strong country, as was beginning to happen in England.

In 1791, Hamilton helped found the Society for Establishing Useful Manufactures (S.U.M.), to harness the waterfall energy of the the Great Falls of the Passaic River. The society founded Paterson, New Jersey, which became an early site of the industrial revolution in America. The Great Falls would provide tremendous energy to drive many large water wheels that powered machinery. Paterson was America’s first industrial city and would be a major manufacturing center for over 150 years.

Hamilton’s grand plan:

·      Tax imports to raise revenue for the American government.

·      Develop domestic manufacturing to produce substitutes for English manufactured goods exported to America.

·      Use manufacturing to drive American economic development and growth in addition to agriculture.

·      Develop a class of manufacturers, bankers, and merchants.

Hamilton’s vision was bitterly opposed by Jefferson and most Americans who thought about America’s future. Jefferson, when he was ambassador to France, saw the negative side of the beginnings of the Industrial Revolution in France and England. Dirty, crowded cities. Pollution. A degraded industrial labor force. Banking and finance. He saw all of this as a threat to a democracy based on independent, land-owning farmers.

These two different visions of the future would be the basis of later bitter political conflicts.

Slavery and Cotton

The issue of slavery was mostly ignored at the national level in the early years. It was left to the individual states.

Some people like Jefferson hoped that slavery would be unprofitable and wither away. This was not entirely wishful thinking.

Importing slaves became illegal at the end of 1807. The Virginia and Maryland tobacco industry, the largest user of slaves, was in permanent decline after the American Revolution. Planters turned to diversified agriculture, including grain crops like wheat and fruit orchards. It was not obvious that the same number of slaves were needed or that owning and supporting slaves was profitable in the new environment. All this changed with the English demand for cotton. The deep south had a huge area of some of the best cotton land in the world. Many Virginia and Maryland tobacco planters, who owned half the slaves in America in 1790, moved to the deep south, bringing their slaves with them. Other slave owners sold some of their slaves, who were transported down the Mississippi River and sold to the cotton growers. This is where the phrase “sold down the river” came from. 

It is one of the great ironies of history that the beginning of the Industrial Revolution in England was responsible for the survival and expansion of slavery in America. The first large industry in England was the power-driven mechanical production of cotton cloth. This created a huge and growing demand for cotton. Production of cotton cloth exploded after the war with French ended in 1815. It turned out that the largest and best growing area for the type of cotton that was best for machine production was in the American South.

Cotton Production, 1790-1860

Small amounts of cotton had been planted and cultivated in the United States since before the American Revolution, mostly in the islands off the coast of South Carolina and Georgia. But there was a bottleneck to the rapid expansion of cotton growing. After the cotton was picked, the fibers had to be separated from the seeds. This was done by hand. Only about one pound of clean cotton could be produced per day. But, in 1793, a Connecticut mechanic name Eli Whitney was invited by a Yale classmate to visit his mother, Nathanael Greene’s widow in Georgia. He listened to the complaints of the local cotton growers. After tinkering for a few weeks, he invented an improved cotton gin. This was a fairly simple, hand-operated machine that could produce about seven pounds of cotton per day. Further improvements increased output to about 50 pounds per day. By 1860, there were large power-driven cotton ginning factories.

Cotton planting expanded to the west very dramatically after 1815—all the way to Texas. Planters, growers, and slaves moved from the Eastern Seaboard throughout the South and then to the Mississippi River region. Planters who owned slaves took them with them, thus avoiding the largest cost of starting a large cotton plantation. 

The growth in cotton production was spectacular. Only about 1.5 million pounds were produced in 1790. Then, after the invention of Whitney’s cotton gin, output increased to 85 million pounds in 1810. By 1840, output rose to 830 million pounds, 10 times that of 1810. In 1860, the South produced the largest crop ever – over 2 billion pounds. 

It was by far the nation’s main export, accounting for about 60% of the value of total American exports. Cotton exports helped pay for the imports of machinery and iron rails. 

The South was producing about 2/3 of the world’s supply of cotton. 

What led to an expansion of slavery was the unexpected huge increase in demand for cotton, first in England and then in the cotton mills of New England. Cotton was grown elsewhere but nowhere could a growing region produce the large and rapidly increasing amount of the type of cotton that manufactures demanded. This was made possible by the large increase in the slave population through natural increase, even after importing slaves was banned. By 1860, a very high percent of the slave population was growing, processing, and distributing cotton.

Railroads, 1830-1860

Starting in the 1830s, America built a large railroad network.

America began building railroads in the 1830s, right after England built the first general-purpose railroad in 1830. By 1850, there was 8,600 miles of track. Then came a railroad-building boom. By 1860, there was 30,800 miles of track. America had by far more miles of track than any other country. New York had the most miles of track, followed by Ohio, Illinois, Pennsylvania, and Indiana. The southern states had about 1/3 of the total trackage.

Railroad locomotives and tracks were a huge spur to iron production and manufacturing. Railroads were able to move large quantities of output (and people) from one region to another. 

The Key to America’s Early Industrial Success

America had abundant natural resources and aggressive “go-ahead” entrepreneurs. America also had poor immigrants who would form part of the new industrial work force. But what really drove industrialization was a new way to manufacture output.

Thomas Jefferson was ambassador to France where he learned about an experiment to manufacture interchangeable parts to produce guns. He brought this idea to America and it was developed in America’s two armories at Springfield, Mass and Harper’s Ferry, Virginia.  It took thirty years to perfect the system.

Interchangeable parts means that all produced units of a part are almost exactly alike. If a part of the firing mechanism of a gun had to be replaced, any substitute part would fit in without the former necessity of filing it down, fitting it, and repeating the process until it fit. This also meant that a factory could produce large numbers of all the parts and assemble the final product from any one of the parts. This system was be used to revolutionize the production of sewing machines, clocks, other metal products, and later bicycles and autos.

The Economic Integration of the Three Regions

The three regions of the American economy were becoming economically integrated but politically divided over the issue of slavery. America’s first large industry was also cotton cloth production in New England, with its own demand for Southern cotton. About 75% of Southern cotton was exported and 25% went to New England mills. Much of the cotton cloth output was used to make cheap clothing for slaves. The shoe factories of New England made most of the shoes worn by slaves. Southern families bought home furnishings from Northern factories. In addition, much of the cotton trade was financed by Northern bankers. Most exports went through New York. Southern planters borrowed large amounts of money from Northern bankers to expand production by buying more land and more slaves.

Politicians and commentators debated the future of America. What no one foresaw was that these three parts of the economy of America were going to be connected.

What would tie the three regions together was the transportation revolution, based on high pressure steam engines that drove railroad locomotives and steamboats. Steamboats exploited the largest system of navigable rivers in the world.

Southern railroads and steamships brought cotton to Southern ports. By 1860, there were about 800 steamboats on the Mississippi River. Ships, first sailing ships, later supplemented by steam ships, carried the cotton to New York. Transatlantic ships carried the cotton to England, mostly to Liverpool.

Northern farm families streamed into Ohio, Indiana, and Illinois in search of new farmland. These states had the biggest increase in population between 1850 and 1860. These farmers produced food for the increased population of Eastern cities and for exports. Produce went to market first through canals and then mostly by rail. Beside moving cotton to market, the greatly increase speed and capacity of railroad brought Western grain east and manufactured goods west. The new Western farms also supplied corn and pork to the Southern plantations, much of it sent south on Mississippi steamboats.

By 1860, America had three sources of economic growth:

Expansion of agriculture based on population growth, unlimited land for independent farmers, and westward expansion. 

Expansion of slave-based cotton production. By 1860, Mississippi produced the most cotton, followed by Alabama and Louisiana.

By 1860, the Industrial Revolution in Americas was well on its way. More money was invested in cotton mills than in any other industry. The second largest manufacturing industry was the iron industry.

To the Civil War 

The issue of slavery was the main cause of most of the political battles during this period, including the annexation of Texas and the war with Mexico to make Texas a slave state. There was a rise of anti-slavery sentiment in the North and West. Arguments were increasingly made for the abolition of slavery. There was effective propaganda, like Harriet Beecher Stowe’s book Uncle Tom’s Cabin. In response, the Southern defense of slavery became fierce – no compromises. Slave ownership and cotton production became the basis of the economy, political power, society, and culture of the South. 

There was a danger to the expansion of cotton production and slavery as more new states in the future would be “free soil” (no slavery) states than new slave states. The South would lose political power in the national government and might be threatened with the abolition of slavery. Arguments on both sides became very emotional. When Abraham Lincoln was elected president in 1860, the South saw him as a threat to the survival of slavery. Although he hated slavery, he did not advocate its elimination. He wanted to stop it spreading to new states. Southern planters believed they needed new land as old cotton lands wore out and produced less cotton per acre. The Civil War – the South’s attempt to leave the union – started even before Lincoln was inaugurated. 

The 1860 Census – the United States on the Eve of the Civil War 

Total population – 31.4 million

White population – just under 27 million (86%)

Slave population – just under 4 million (13%)

Free blacks – just under 500,000 (1.6%)

       Does not exactly equal 100% because of rounding

Number of whites in the South – 5,800,000. This is the number of whites in the South in states that left the United States in the Civil War.

Number of whites in the North – 21,200,000. This includes slave states that did not leave the Union in the Civil War.

By 1860, despite continuing immigration, most Americans were native-born. Of the 27 million whites, about 4 million were foreign-born. Just under 75% of the immigrants during this period came from Ireland (because of the famine) and the German States (Germany did not become a unified country until 1871). Of the black Americans, almost all were native-born since the Constitution prohibited importing slaves after 1807. 

Remember there were about 700,000 slaves in 1790. Most of the increase came from the high birth rates in the number of slaves.

There were more slaves than whites in Mississippi and South Carolina. Slaves made up at least 40% of the total population in Alabama, Georgia, and Louisiana (almost 50%).

Almost 400,000 white families owned slaves. But most of them were owned by a small percent of the slave-owners. About 280,000 whites owned fewer than 10 slaves. At the other end, about 11,000 whites owned 50 slaves or more; 14 of them owned 500 slaves or more.

At the beginning of this period, slavery was legal in all 13 colonies. But the ideals of the American Revolution motivated some Americans to think about abolishing slavery. By the end of this period, all northern and western states had outlawed slavery. The arguments for and against slavery became more shrill. Some attempts at compromise, as advocated by Abraham Lincoln, were rejected by the south. The essay cited below argues that the Civil War, unlike the American Revolution, was inevitable. 

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For two essays on earlier periods of American history, see

American Colonial History, 1607-1775

Revolution and the New Country:  American History, 1775-1790

For an analysis of:  Was the Civil War inevitable?, see 

The American Civil War

For an example of the transition from using hand tools to power-driven machinery for production, see

Adam Smith’s Pin Factory

For an essay focused on the industrialization of America in the same period, see

The Beginning of the Industrial Revolution in America

For an analysis of:  Was the Civil War inevitable?, see The American Civil War

For a list of all essays on this blog, with links, see 

List of Posts by Topic

There are more posts on American History and American Economic History. Also essays on Rome and the period surrounding World War I.

Essays on information, innovation, and how markets work. 

Essays on business, finance and economics. 

A series of essays on demographics, population projections, and speculations on how decreasing and aging populations will interact with the economics of individual countries and the global economy.