my favorite subjects: economics. Mr. Green, Mr. Green, I don’t want to brag,

but economics is actually my best subject. Like, I got the bronze medal at the state

academic decathlon tournament...among C-students. Yeah, I remember, Me from the Past. By the

way, thanks for getting that picture into our show. It just goes to show you: aptitude

is not destiny. Anyway, economics is about much more than,

like, supply and demand curves. Ultimately, it’s about the decisions people make and

how those decisions shape their lives and the world.

So today we’re going to turn to one of the least studied but most interesting periods

in American history: the Market Revolution. There weren’t any fancy wars, or politically

charged debates, but this discussion shaped the way that most Americans actually live

their lives and think about work on a daily basis. Like, if you, or someone you know,

GOES TO work, well…then, you have the market revolution to thank, or possibly to curse.

Intro The Market Revolution, like the Industrial

Revolution, was more of a process than an event; it happened in the first half the 19th

century, basically the period before the Civil War.

This was the so-called “Era of Good Feelings” because between 1812 and 1836 there was really

only one political party, making American politics, you know, much less contentious,

also more boring. The Market Revolution saw many Americans move

away from producing stuff largely for themselves on independent farms—that Jeffersonian ideal—and

toward producing goods for sale to others, often others who were very far away, with

prices set by competition with other producers. This was closer to Hamilton’s American dream.

In the end, buddy, you didn’t get to be president, but you did win.

In many ways this was the beginning of the modern commercial/industrial economy, not

just in the United States, but in the world. The first thing that enabled this massive

economic shift was new technology, specifically in transportation and communication.

Like, in the 18th century, it was very difficult to bring goods to markets, and that meant

that markets were local and small. Most trade was overland and transporting goods

30 miles overland in the United States literally cost as much as shipping them to England.

So to get something from Cincinnati to New York, for instance, the most efficient way

was to go down the Mississippi River, through the Gulf of Mexico, around Florida, and then

up the Atlantic Coast, which took three months. But that was still less time, and less money,

than more direct overland routes. But new transportation changed this. First

came better roads, which were largely financed by tolls.

Even the federal government got in on the act, building the so called National Road,

which reached all the way from the massive city of Cumberland, Maryland across our great

nation to the equally metropolitan Wheeling, West Virginia.

Mr. Green, Mr. Green, Mr. Green-- I know, Me From The Past, West Virginia did

not yet exist. AH shut up! More important than roads were canals, which

made transport much cheaper and more efficient, and which wouldn’t have been possible without

the steamboat. Robert Fulton’s steamboat Clermont first sailed from New York to Albany

in 1807, demonstrating the potential of steam powered commerce. And by 1811 there were steamboats

on the Mississippi. The introduction of steamboats set off a mania

for canal building. Between 1800 and the depression of 1837, which put a halt to most construction,

more than 3000 miles of canals were built. And no state was more instrumental in the

canal boom than New York, which in 1825 completed the 363 mile long Erie Canal linking the Great

Lakes with the Hudson River, which made New York the nation’s premier port

Other cities like Buffalo, Rochester, and Syracuse grew up along the canal, so much

so that Nathaniel Hawthorne once said that canal is like fertilizer, causing cities to

spring up alongside it. That’s such a good simile, Nathaniel Hawthorne.

It’s almost like the United States didn’t have any good writers until Mark Twain. But,

we need to read somebody from the early 19th century, so I guess it’s you.

But from a long-term perspective, the most important new transportation: railroads.

The first commercial railroad, the Baltimore and Ohio, was begun in 1828 and by 1860 there

were more than 30,000 miles of rails in the United States.

And on the communication side, we got the telegraph, so no longer would Andrew Jackson

fight battles two weeks after the end of a war.

Telegraphs allowed merchants to know when to expect their shipments and how much they

could expect to sell them for. And then, as now, more information, meant more robust markets.

But perhaps the most important innovation of the time was the factory. Now, when you

think of factories, you might think of, like, Chinese political prisoners making smartphones,

but early factories looked like this. More than just a technological development,

the factory was an organizational innovation. Like, factories gathered workers together

in one place and split up tasks among them, making production much faster and also more

efficient. The first factories relied on water power,

which is the reason they were all east of the “fall line,” the geographic reason

why there are so many waterfalls and rapids on the east coast.

But after 1840, steam power was introduced, so factories could be located in other places,

especially near the large cities that were sprouting up in what we now know as the midwest.

So the American system of manufacture, which centered on mass production of interchangeable

parts, grew up primarily in New England, but then it moved to the Midwest, where it spent

its adolescence and its adulthood and now its tottering decline into senility.

So all these new economic features, roads, canals, railroads, telegraphs, factories,

they all required massive upfront capital investment.

Like, you just can’t build a canal in stages as it pays for itself, so without more modern

banking systems and people willing to take risks, none of this would have happened.

Some of these investments were facilitated by new business organizations, especially

the limited liability corporation which enabled investors to finance business ventures without

being personally responsible for losses other than their own. In other words, corporations

can fail without, like, ruining their stockholders and directors.

People don’t always like that, by the way, but it’s been very good for economic growth

in the last 180 years or so. So having angered a bunch of people by talking

about the important role that big businesses played in growing the American economy in

the 19th century, I will now anger the rest of you by talking about the important role

that the state played. In the 1830s states began passing general

incorporation laws which made it easier to create corporations, and the Supreme Court

upheld them and protected them from further interference in cases like Gibbons v.s Ogden,

which struck down a monopoly that New York had granted to one steamboat company. And

the Charles River Bridge case which said that building a second bridge over the Charles

River did not infringe upon the charter of the first bridge.

In both those cases, the court was using its power to encourage competition.

And this brings up something really important about the growth of American capitalism: Government

helped. The Federal government built roads and canals

and its highest court protected businesses. And states issued bonds to build canals and

offered sweetheart deals to companies that built railroads.

And despite what we may believe about the heroic, risk taking entrepreneurs building

the American economy through solitary efforts, without the government protecting their interests,

they wouldn’t have been able to do much. Alright, let’s go to the Thought Bubble.

The market revolution changed the landscape of work, which for most of the prior two hundred

years happened at home. Small-scale production of clothes and other goods had been done in

the home, largely by women, and initially this is how industrial production worked as

well. Factory owners would produce some of the products,

like patterns for shoes, and then farm the finishing out to people working in their houses.

Eventually they realized that it would be more efficient to gather the workers together

in one place. Although the older “putting out” system continued in some industries,

especially in big cities, after the Market Revolution more and more Americans went to

work instead of working from home. The Market Revolution also changed the way

we imagined work and leisure time. Like, on farms, the seasons and hours of daylight regulated

the time for work, but in factories, work is regulated by the clock, which by the way

was one of the first products to be manufactured using the American System of manufacturing.

Railroads and shipping timetables further required the standardization of time.

Factories also made it possible for more people to do industrial work. At first this meant

women. The workers in the early textile mills at Lowell, Massachusetts, for instance, were

primarily young New England farm girls who worked for a few years in the mills before

returning home to get married. Women were cheaper to employ, because it was

assumed that they would not be a family’s sole bread-winner. At least this was the excuse

for not paying them more at the time. I can’t remember what excuse we have now, but I’m

sure it’s a great one. Anyway, all of this meant that the nature of work had changed.

In colonial America, artisans worked for what they called their “price” which was linked

to what they produced. In a factory however, workers were paid a “wage” according to

the number of hours they worked regardless of how much they produced. This may not sound

like a big deal, but working for wages, with one’s livelihood defined by a clock and

the whims of an employer was a huge change and it undermined the idea of freedom that

was supposedly the basis of America. Thomas Jefferson had worried that men working

in factories, dependent upon their employers were inherently unfree and that this would

make them unfit to be proper American citizens. And as it happens, many factory workers agreed

with him. Thanks, Thought Bubble. So one reaction to

the restrictions of the wage-worker was to engage in the great American pastime of lighting

out for the territories. With less and less farmland available in New

England, young men had been migrating west for decades and after the War of 1812 this

flood of migration continued and even grew. Between 1790 and 1840, 4.5 million people

crossed over the Appalachian mountains and six new states were created between 1815 and

1821. Ohio’s population grew from 231,000 in 1810

to over 2 million by 1850. People even took up the motto “Malaria Isn’t Going to Catch

Itself” and moved to Florida, after we purchased it from Spain in 1819.

Moving out west was a key aspect of American freedom and the first half of the 19th century

became the age of “manifest destiny” the idea that it was a god given right of Americans

to spread out over the North American continent. The term was coined by a New York journalist,

John L. O’Sullivan, who wrote that the people living out west, i.e. the Native Americans

must succumb to “our manifest destiny to overspread and to possess the whole of the

continent which providence has given us for the development of the great experiment in

liberty.” Stan, he actually wrote “overspread”!

One thing I love about Providence is it has, like, a one hundred percent rate of givething

unto us and takething away from them. One of the results of this migration was that

it was really difficult for factory owners to find men who could work in their factories.

First they looked to Yankee women to fill the factories, but increasingly those jobs

were filled by immigrants. Fortunately, the U.S. had lots of immigrants,

like the more than one million Irish people who came here fleeing poverty, especially

after the potato famine of 1845-1851. Lastly, let’s turn to the intellectual responses

to the market revolution. Oh, it’s time for the mystery document? The rules here are

simple. If I fail to guess the author of the mystery

document, I get shocked with the shock pen. And yes, this is a real shock pen! Lots of

people are commenting saying I am faking the shocks. I am not faking the shocks! I am in

the business of teaching you history, not in the business of faking pain.

Alright, let’s do this thing. “They do not yet see, and thousands of young

men as hopeful now crowding to the barriers of the career, do not yet see, that if the

single man plant himself indomitably on his instincts, and there abide, the huge world

will come round to him. Patience – patience; -- with the shades of all the good and great

for company; and for solace the perspective of your own infinite life; and for work, the

study and the communication of principles, the making those instincts prevalent, the

conversion of the world. Is it not the chief disgrace in the world,

not to be an unit; -- not to be reckoned one character; -- not to yield that peculiar fruit

which each man was created to bear, but to be--”

Oh God, Stan, I can’t bear it anymore. It’s Emerson. It’s definitely Emerson, it is

unreadably Emerson. Indeed, the most linguistically convoluted

of the transcendentalists, which is really saying something. Anyway, I don’t get punished,

but I did kind of get half-punished because I had to read that.

The transcendentalists, like Margaret Fuller, Henry David Thoreau, Walt Whitman, were trying

to redefine freedom in a changing world. Work was increasingly regimented, factory

workers were as interchangeable as the parts that they made, but the Transcendentalists

argued that freedom resided in an individual’s power to re-make oneself, and maybe even the

world. But, there would be a reaction to this in

American literature as it became clear that escaping drudgery to reinvent yourself was

no easy task for wage workers. So, the early 19th century saw a series of

booms and busts sometimes called business cycles, and with those business cycles came

a growing disparity in wealth. To protect their interests, workers began

forming political organizations called Workingman’s Parties that eventually morphed into unions

calling for higher wages and better working conditions.

And we’ll have more to say about that in coming weeks, but for now it’s important

to remember that as America grew more prosperous, many people –-women and especially slaves,

but also free wage working men--recognized that the Market Revolution left them with