Chapter XII
Economic Growth Early in the 19th Century
The states to the northeast of New York are called the New England states. They were full of tall trees from which good ships could be built. American ships began to trade with China and Europe. Soon, American ships carried cargo between China, Europe, Africa, and America. This created many jobs for people in New England. There was work for sailors, shipbuilders, business people and storekeepers. At that time, England had more ships than any other country. The United States was in second place. Between 1789 and 1810, the total tonnage of American ships rose from less than 125,000 to nearly one million. In addition, many American ships began to catch whales. At that time, lamps burned oil made from the blubber of whales.
The American ships needed so many sailors that they began to pay higher wages than the British. Many British sailors ran away from British ships to work on American ships. The British government did not like this and began to stop American ships on the ocean and take away British sailors that had run away. The American government protested and this led to a war in 1812. The Indians helped the British, but they were defeated. After that, the Indians east of the Mississippi were very weak. During the war, in 1814, the British captured Washington D.C. and burned the White House. The Americans had to rebuild the White House. Neither side had a clear victory in the war. But the war showed that the United States was strong enough to defend itself. It was during this war that Francis Scott Key wrote the song that was to become the American national anthem. Key wrote the song after watching the British ships bombarding Fort McHenry, which guarded the city of Baltimore. The British ships bombarded all night. Key wondered whether the American flag would still be flying the next morning. In the words of the song:
"Oh say, does, that Star Spangled Banner yet wave?
O'er the land of the free!
And the home of the brave!"
In 1807, an American, Robert Fulton, invented the steamship. Soon, steamships began regular travel on the Hudson and Mississippi rivers. Steam ships were much faster than wind blown sailing ships.
In New York State, they began building the Erie Canal in 1817 and it was finished in 1825. The canal connected the Hudson River to Lake Erie. The canal was 580 kilometers long. Mules walking alongside the canal pulled the boats. The mules were able to go about three or four kilometers per hour. Boats could go from New York City to Lake Erie. From there, the ships could sail to all of the Great Lakes. This made it much easier for settlers to go to live on the lands west of the mountains and many thousands of people traveled on the Erie Canal to build new homes in the west. It also made it easy for the farmers of the west to send their grain and meat to the markets of the East. For the next fifteen years, the Erie Canal was the most important route for sending goods between the East and the Great Lakes region. Earlier, Boston, New York, and Philadelphia had been important ports. Because of the Erie Canal, New York City served a much larger area with many more people. The Erie Canal made New York City more important than the other cities, so New York began to grow the fastest. The Erie Canal speeded up the settlement of the west.
This was the period when the Industrial Revolution was beginning in England. In England, machines were invented that were powered by steam. One machine could spin the cotton into thread. Another kind of machine could weave the threads into cloth. England began to build many factories to make cloth. English cloth was of a high quality and people in many countries began buying it. English cloth was cheaper and better than any other cloth. England needed very much cotton and began paying a high price for it. People in the southern states became very rich by growing cotton. In the South, thousands of new cotton plantations were started.
In the first third of the nineteenth century, enough settlers went to live in the territories so that Ohio, Louisiana, Indiana, Mississippi, Illinois, Alabama, Maine, and Missouri became states.
The textile industry began to grow in New England. The South grew cotton, but it did not have any textile factories. The South sold its cotton to England and to New England. The textile factories in New England bought steam powered machinery made of iron. Much of this machinery was made in Pennsylvania in regions where coal and iron ore were found in the ground. However, at that time the Americans did not know how to make machinery as good as the British machinery. British textiles were better.
When the Erie Canal was built, many other states wanted to dig canals. But after railroads were invented, few canals were dug. The first railroad was built in England in 1825. American railroads appeared before 1830. They needed much more iron to make the rails and the steam engines, so there was a great growth in the iron industry in Pennsylvania.
They needed a lot of money to build the coal mines, the iron factories, and the railroads. The easiest way to get money was to sell stock. Businesses were organized as corporations and sold stock on the New York Stock Exchange. Many banks were opened in New York City. New York became the banking center for America. Many of the banks were built on a street named Wall Street. Today, there are many large banks on Wall Street. People in Europe began to buy stock in American corporations. By 1860, one-fourth of all stock was owned by people in Europe, mostly in England. During this same period, workers began to organize into labor unions. America changed very rapidly.