American Industrialization: Factory System and Market Revolution

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  • 0:10 The Market Revolution
  • 1:38 King Cotton
  • 3:28 The Factory System
  • 5:26 Technology's Effects
  • 6:06 Revolution in Thinking
  • 7:07 Lesson Summary
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Lesson Transcript
Instructor: Alexandra Lutz

Alexandra has taught students at every age level from pre-school through adult. She has a BSEd in English Education.

New agricultural technology revolutionized the North, South and West. In this lesson, learn how that technology ushered in the Market Revolution in America.

The Market Revolution

Suppose you want some bread. Most people in the modern world would consider what kind of bread they'd like and then, where they could purchase it. If you want a very common type of bread, you may think about where you could buy it most conveniently or where it might be less expensive. Even if you want to make it yourself, you'd probably purchase the flour and yeast. All of these considerations are due to the fact that, if you are watching a lesson online, you are living in a market economy.

Eli Whitney invented the cotton gin in 1793
Eli Whitney Image

The first half of the 19th century saw a number of developments that helped push America towards a market economy based on cash, wages and prices. Several key factors were already in place by the end of the War of 1812. Beginning with Jefferson's Embargo of 1807, American investors who had been involved in lucrative trans-Atlantic commerce began placing their money into safer, domestic manufacturing ventures. Since issues with shipping persisted until the Second Barbary War in 1815, capital continued to be transferred from commerce to manufacturing - creating a strong, if small, industrial base. Corporations were protected; state and local banks were well-established; and the national bank was under development. The South was seeking a new cash crop, and Americans were headed west with the help of water transportation. Everything was in place, ready for a few inventions to spark the Market Revolution.

King Cotton

The technology that probably affected the American economy most dramatically was the cotton gin. You may remember that in early America, the main cash crops were tobacco, indigo and rice. But profits were declining from competition, and these demanding crops had leached all of the nutrients out of the now-sterile soil. So, planters either had to pack up and move west, or switch to different crops. George Washington, for example, had switched to wheat. For a time, it seemed that slavery was disappearing with the Chesapeake tobacco plantations.

Then in 1793, a Connecticut man named Eli Whitney invented a device called the cotton gin. Prior to this, planters knew that cotton grew well in poor soil but its seeds were too difficult to remove, making it an impractical cash crop. Thanks to Eli Whitney's cotton gin, separating the seeds from the fiber became as easy as turning a handle. Two people could process 50 pounds of cotton a day! Immediately, this simple device transformed the American landscape, population and economy. Cotton was already in high demand in England's textile mills, and American farmers were all too happy to meet the need. Land was abundant and cheap, and the demand for slaves to work in the fields skyrocketed. Even with the 1808 law outlawing the importation of new slaves into America, by the time Lincoln was inaugurated, there were four times more slaves than in Jefferson's day. Cotton fields stretched across the old southwest from Georgia to Texas, and by 1820, the cotton kingdom accounted for 39% of all American exports. By 1860, the South provided 2/3 of the world's cotton.

The cotton gin transformed the American economy in the 1800s
Cotton Gin Photo

The Factory System

Another of Eli Whitney's concepts helped build the factory system in the Northeast, as well. At the turn of the century, the U.S. was concerned about the Napoleonic Wars and looked to produce thousands of new weapons quickly and inexpensively. Eli Whitney convinced Congress that he was the man for the job by demonstrating the concept of interchangeable parts. Rather than each gun being hand built from start to finish with custom parts, Whitney built 10 guns, all containing identical parts and mechanisms. Then, he stood before a transfixed Congress who watched him disassemble the weapons, pile all the parts together in a heap and then rebuild them with the interchangeable parts. Eli Whitney didn't invent the idea, but he was the first to prove its benefits in the U.S. The concept revolutionized manufacturing.

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