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14. The Market Economy

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  1. 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 14. The Market Economy

  2. 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 14. The Market Economy

  3. 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 14. The Market Economy

  4. 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 frequent. • 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 state. • A heated debate about the morality of slavery was the consequence. • In 1820 a compromise by Henry Clay was engineered: Missouri as slave state, Maine as free state at the same time. No other slave state should be built north of Missouri’s southern border (36’30’’ Missouri Compromise line). 14. The Market Economy

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  6. 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 Mississippi: • 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 14. The Market Economy

  7. Native Americans reacted in a variety of ways to the pressures of white society: angry rejection, violence, alcoholism. Seneca Iroquois accepted federal aid and European gender division of labor, but tried to preserve as much autonomy and traditional culture as possible. The so-called “5 Civilized Tribes” (Cherokees, Creeks, Choctaws, Chickasaws, Seminoles) had extensive commercial dealings with non-Indians, also substantial intermarriage. A minority of mixed-bloods heeded missionaries’ call to embrace Christianity. Cherokees practiced agriculture, also looms, mills, even slave ownership. Cherokee leader Sequoyah devised a written alphabet for the Cherokee language. Native Americans were interested in keeping their ancestral lands. This led to conflicts with some of the mixed-bloods. Creek chief William McIntosh sold much territory in Georgia and Alabama in 1825 and was executed him for that deed. 2.2 Native Americans and “Civilization” 14. The Market Economy

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  9. 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 (1835-42). 14. The Market Economy

  10. 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 troops. • The Trail of Tears to present-day Oklahoma killed about a quarter of deported Cherokees. John Ross (1790-1866), leading Cherokee chief 14. The Market Economy

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  12. 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 profitable. • 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) 14. The Market Economy

  13. 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 cotton. Steel plow, McCormick reaper, cotton gin, advertisement for late 19th century harvester 14. The Market Economy

  14. 3.3 Transport Revolution and Urbanization • The changing US economy necessitated the development of a new infrastructure: national and Coastal Roads, Canals and Railroads. • 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 emerged. • This urbanization was heavily concentrated in the North. The majority of Americans lived in agricultural regions. Roads and Canals, 1825-1860 14. The Market Economy

  15. Government played an important role in the development of infrastructure: Expansion of federal post offices; first telegraph (Washington-Baltimore) in 1844. Also state governments invested much in infrastructure projects. State and federal courts repeatedly tried to rule against privileges and monopolies in transportation and commerce and in favor of competition. The market economy also needed a credit infrastructure in form of banking. While all banks needed a state or federal charter, there was little regulation. State banks often overextended credit, e.g. to speculators; banks crashed around 1819. In 1816, Congress had chartered the Second Bank of the United States, which also provided loans to businesses. During the Panic of 1819, the Second Bank cut back on loans, aggravating the crisis and angering many. 3.4 Government, Infrastructure, and Banking 14. The Market Economy

  16. 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 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. Interchangeable parts of a rifle 14. The Market Economy

  17. 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. 14. The Market Economy

  18. 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 industrialization. Sample Keyword 14. The Market Economy