Market Revolution in the United States

Market Revolution in the United States
Market Revolution in the United States

Market revolution is a term many American historians use to describe the intensive growth in trade between the end of the War of 1812 and the beginning of the American Civil War.

While no definitive or complete data are available for the whole range of the economy—exports alone increased sixfold between 1820 and 1860—the number of American households involved in the market economy clearly rose dramatically in those years, and their dependence upon the marketplace for a wider range of goods also increased.

The market revolution has been characterized as a shift from an economy in which most Americans organized their economic activity around their household (household economy) to one in which they organized their economic activity around markets.

In the household economy the primary purpose of work is to produce goods to be consumed by the household itself. Two goals, one immediate and one long-term, characterize the household economy.

The first is to achieve a basic level of comfort for the household, a level generally considerably above mere subsistence. The second goal is to accumulate sufficient property to establish the children in their own household economies.

Surpluses are traded locally for other necessities and on national and international marketplaces for those small luxuries that provided basic comfort and for the cash necessary to accumulate property.

Such an economy is focused mainly on farmers, who made up the vast majority of independent householders in the early American republic, but historians generally lump most artisan households into the category of the household economy as well, because they were primarily involved in localized economies: Few artisans sold their wares beyond their local community.

Goods for Sale

In the market economy, the primary aim of work is to produce goods for sale, generally on national and international markets, and to use the proceeds of those sales to purchase necessities and luxuries. Market economies are generally characterized by specialization and large-scale production, and prices vary little from community to community; there are no localized economies.

The market economy existed alongside the household economy from the beginning of European settlement in North America. Indeed, the household economy requires an active market economy to meet its two goals of basic comfort and property for the children.

From the early Virginia tobacco plantations forward, a small percentage of American colonists had looked to the international market to secure their economic well-being, but most Americans placed their trust in their own production and that of their neighbors.

By the mid-18th century, Great Britain’s Industrial Revolution had begun to entice Americans with a new array of affordable luxuries. The boycotts of the 1760s and 1770s, the subsequent embargoes of war, followed by the celebration of American simplicity, all worked to limit American purchases of British manufactured goods.

With the end of the War of 1812, however, two key developments—the transportation revolution and the cotton boom—would play a significant role in easing many Americans toward greater involvement in the market economy.

The term transportation revolution is used to describe dramatic innovations in transportation methods and increased public and private investment in transportation systems in this same period. Steamboats, canals, and eventually railroads would significantly reduce the costs of transportation, thus encouraging trade.

For the household economy, a raft on a river was enough: moving surpluses into the marketplace was primarily a one-way venture, with money and small luxuries the only items needing to make the return trip. But the steamboat and subsequent innovations permitted a vast array of necessities and luxuries to be brought into the interior of the nation.

Most notable among these goods were cotton textiles. The cotton boom that occurred in the wake of the development of the cotton gin also played a key role in the market revolution. The spread of shortstaple cotton production throughout the South drew some southerners directly into market production, and cotton itself became the economy’s most important commodity, creating market economy jobs in shipping, finance, and manufacturing.

Moreover, cheap and durable cotton textiles, both imported and domestic, had vast appeal in the marketplace, drawing large numbers of Americans, especially in the North, more clearly into dependence on distant markets for necessities.

Cotton Textiles

The production of cotton textiles was the first major element in the Industrial Revolution in the United States. High labor costs forced American manufacturers to depend on machinery, leading to a first-rate machine tool industry, which by late in the market revolution was able to supply Americans with an increasing array of luxuries, now priced as consumer goods.

Americans’ notions of what basic comfort entailed grew to include a larger and larger basket of consumer goods. Farmers in the northeast began to concentrate on producing perishable farm items for growing urban centers to provide cash to buy both necessities and luxuries, while midwestern farmers depended on the fertility of their soil to provide dependable surpluses whose sale would provide luxuries.

Many farm women in the north would seek income, often through butter and eggs, so they could purchase cotton cloth rather than manufacture textiles themselves.

All were brought into the market economy, together with growing numbers of men employed in the emerging white-collar jobs of the market economy and with the men and women, often immigrants, who worked in the new manufacturing concerns. Rural southerners were less likely to make the transition, though clearly most slaveholders were by definition involved in the market economy.

While the full transition to a market economy would not be complete until the household economy was dealt twin blows by the Great Depression and the New Deal, the period of the most dramatic change occurred between 1815 and 1860.