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Hi, I'm John Green, this is Crash Course US
History and today we return to one of my favorite
subjects: economics.
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Mr. Green, Mr. Green, I don't wanna brag,
but economics is actually my best subject.
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Like, I got the bronze medal at the state
academic decathlon tournament...among C students.
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Yeah, I remember, Me from the Past.
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By the way, thanks for getting that picture
into our show.
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It just goes to show you: aptitude is not
destiny.
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Anyway, economics is about much more than,
like, supply and demand curves.
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Ultimately, it's about the decisions people make and
how those decisions shape their lives and the world.
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So today we're going to turn to one of the
least-studied but most interesting periods in
American history: the Market Revolution.
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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.
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Like, if you or someone you know goes to work,
well, then you have the Market Revolution
to thank, or possibly to curse.
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[Theme Music]
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The Market Revolution, like the Industrial
Revolution, was more of a process than an event.
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It happened in the first half of the 19th century,
basically, the period before the Civil War.
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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.
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Also, more boring.
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The Market Revolution saw many Americans move
away from producing stuff largely for themselves on
independent farms – that Jeffersonian
ideal –
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and toward producing goods for sale to others,
often others who were very far away, with prices
set by competition with other producers.
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This was closer to Hamilton's American dream.
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In the end, buddy, you didn't get to be president,
but you did win.
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In many ways, this was the beginning of the
modern commercial industrial economy, not
just in the United States, but in the world.
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The first thing that enabled this massive
economic shift was new technology, specifically
in transportation and communication.
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Like, in the 18th century, it was very difficult
to bring goods to markets, and that meant
that markets were local and small.
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Most trade was over land, and transporting
goods 30 miles over land in the United States literally
cost as much as shipping them to England.
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So, to get something from Cincinnati to New
York, for instance,
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the most efficient way was to go down the
Mississippi River, through the Gulf of Mexico,
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around Florida, and then up the Atlantic coast,
which took three months,
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but that was still less time and less money
than more direct overland routes.
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But new transportation changed this.
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First came better roads, which were largely
financed by tolls.
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Even the federal government got in on the
act, building the so-called National Road,
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which reached all the way from the massive city
of Cumberland, Maryland, across our great nation to
the equally metropolitan Wheeling, West Virginia.
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Mr. Green! Mr – Mr. Green, Mr. Green!
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I know, Me from the Past, West Virginia did
not yet exist, argh, shut up!
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More important than roads were canals, which
made transport much cheaper and more efficient,
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and which wouldn't have been possible without
the steam boat.
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Robert Fulton's steam boat Clermont first
sailed from New York to Albany in 1807, demonstrating
the potential of steam-powered commerce.
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And by 1811, there were steam boats on the
Mississippi.
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The introduction of steam boats set off a
mania for canal building.
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Between 1800 and the depression of 1837,
which put a halt to most construction,
more than 3,000 miles of canals were built.
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And no state was more instrumental in the
canal boom than New York,
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which in 1825 completed the 363-mile-long Eerie
Canal, linking the Great Lakes with the Hudson River,
which made New York the nation's premier port.
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Other cities like Buffalo, Rochester, and
Syracuse grew up along the canals.
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So much so that Nathaniel Hawthorne once said,
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"The canal is like fertilizer, causing cities
to spring up alongside it."
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That's such a good simile, Nathaniel Hawthorne.
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It's almost like the United States didn't
have any good writers until Mark Twain,
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but we need to read somebody from the early
19th century, so I guess it's you.
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But from a long-term perspective, the most
important new transportation? Railroads.
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The first commercial railroad, the Baltimore & Ohio,
was begun in 1828 and by 1860, there were more than
30,000 miles of rails in the United States.
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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.
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Telegraphs allowed merchants to know when
to expect their shipments and how much they
could expect to sell them for.
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And then, as now, more information meant more
robust markets.
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But perhaps the most important innovation
of the time was the factory.
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Now, when you think of factories, you might think of,
like, Chinese political prisoners making smartphones,
but early factories looked like this.
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More than just a technological development,
the factory was an organizational innovation.
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Like, factories gathered workers together in one
place and split up tasks among them, making
production much faster and also more efficient.
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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.
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But after 1840, steam power was introduced,
so factories could be located in other places,
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especially near the large cities that were
sprouting up in what we now know as the Midwest.
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So the American system of manufacturing, which
centered on mass-production of interchangeable parts,
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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.
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So, all these new economic features – roads, canals, railroads, telegraphs, factories – they all required massive up-front capital investment.
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Like, you just can't build a canal in stages
as it pays for itself.
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So, without more modern banking systems
and people willing to take risks, none of this
would have happened.
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Some of these investments were facilitated
by new business organizations, especially
the Limited Liability Corporation,
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which enabled investors to finance business
ventures without being personally responsible
for losses other than their own.
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In other words, corporations can fail without,
like, ruining their stockholders and directors.
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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.
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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,
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I will now anger the rest of you by talking
about the important role that the state played.
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In the 1830s, states began passing general incorporation laws, which made it easier to create corporations,
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and the Supreme Court upheld them and protected them from further interference in cases like Gibbons vs. Ogden, which struck down a monopoly that New York had granted to one steamboat company.
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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.
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In both those cases, the court was using its
power to encourage competition.
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And this brings up something really important about
the growth of American capitalism: government helped.
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The federal government built roads and canals
and its highest court protected businesses.
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And states issued bonds to build canals and
offered sweetheart deals to companies that
built railroads.
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And despite what we may believe about the
heroic risk-taking entrepreneurs building the
American economy through solitary efforts,
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without the government protecting their interests,
they wouldn't have been able to do much.
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All right, let's go to the Thought Bubble.
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The Market Revolution changed the landscape
of work, which, for most of the prior 200 years,
happened at home.
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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.
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Factory owners would produce some of the products,
like patterns for shoes, and then farm the finishing
out to people working in their houses.
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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.
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After the Market Revolution, more and more Americans
went to work instead of working from home.
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The Market Revolution also changed the way
we imagined work and leisure time.
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Like, on farms, the seasons and hours of daylight
regulated the time for work, but in factories,
work is regulated by the clock.
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Which, by the way, was one of the first products
to be manufactured using the American system
of manufacturing.
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Railroads and shipping timetables further
required the standardization of time.
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Factories also made it possible for more people
to do industrial work.
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At first, this meant women.
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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.
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Women were cheaper to employ, because it was
assumed that they would not be a family's sole
breadwinner.
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At least, this was the excuse for not paying
them more at the time.
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I can't remember what excuse we have now,
but I'm sure it's a great one.
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Anyway, all of this meant that the nature
of work had changed.
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In colonial America, artisans worked for what they
called their "price," which was linked to what they
produced.
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In a factory, however, workers were paid a
wage according to the number of hours they worked,
regardless of how much they produced.
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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,
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and it undermined the idea of freedom that
was supposedly the basis of America.
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Thomas Jefferson had worried that men working in factories, dependent upon their employers, were inherently un-free, and that this would make them unfit to be proper American citizens.
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And as it happens, many factory workers agreed
with him.
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Thanks, Thought Bubble.
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So, one reaction to the restrictions of the
wage worker was to engage in the great American
pastime of lighting out for the territories.
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With less and less farmland available in New England,
young men had been migrating west for decades.
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And, after the War of 1812, this flood of
migration continued and even grew.
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Between 1790 and 1840, 4.5 million people crossed
over the Appalachian Mountains, and six new states
were created between 1815 and 1821.
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Ohio's population grew from 231,000 in 1810
to over 2 million by 1850.
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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.
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Moving out West was a key aspect of American
freedom, and the first half of the 19th century
became the age of "manifest destiny":
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the idea that it was a God-given right of Americans
to spread out over the North American continent.
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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 quote,
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"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."
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Stan, he actually wrote "overspread"!
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One thing I love about providence is that
it has like a 100% rate of giveth-ing unto
us and taketh-ing away from them.
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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.
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First, they looked to Yankee women to fill
the factories, but increasingly, those jobs
were filled by immigrants.
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Fortunately, the US had lots of immigrants, like the more than one million Irish people that came here fleeing poverty, especially after the potato famine of 1845 to 1851.
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Lastly, let's turn to the intellectual responses
to the Market Revolution.
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Oh, it's time for the Mystery Document?
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The rules here are simple.
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If I fail to guess the author of the Mystery
Document, I get shocked with the shock pen.
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And yes, this is a real shock pen!
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Lots of people are commenting, saying I am
faking the shocks.
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I am not faking the shocks!
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I am in the business of teaching you history,
not in the business of faking pain!
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All right, let's do this thing.
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"They do not yet see, and thousands of young
men as hopeful now crowding to the barriers
of the career, do not yet see,
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that if the single man plant himself indomitably
on his instincts, and there abide, the huge
world will come round to him.
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Patience - patience; - with the shades of
all the good and great for company;
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and for solace the perspectives of your own
infinite life;
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and for work, the study and the communication
of principles, the making those instincts
prevalent, the conversion of the world.
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Is it not the chief disgrace in the world,
not to be a unit; - not to be reckoned one character;
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- not to yield that peculiar fruit which each
man was created to bear, but to be – "
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Oh, god, Stan, I can't bear it anymore.
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It's Emerson. [dinging noise] It's definitely
Emerson. It is unreadably Emerson.
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Indeed, the most linguistically convoluted of the
Transcendentalists, which is really saying something.
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Anyway, I don't get punished, but I did kind
of get half punished, because I had to read that.
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The Transcendentalists – like Margaret Fuller, Henry
David Thoreau, Walt Whitman – were trying to
redefine freedom in a changing world.
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Work was increasingly regimented.
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Factory workers were as interchangeable as
the parts that they made.
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But the Transcendentalists argued that freedom
resided in an individual's power to remake
oneself, and maybe even the world.
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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.
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So, the early 19th century saw a series of booms
and busts, sometimes called business cycles.
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And with those business cycles came a growing
disparity in wealth.
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To protect their interests, workers began forming political organizations called Working Man's Parties, that eventually morphed into unions, calling for higher wages and better working conditions.
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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
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– women and especially slaves, but also
free, wage-working men –
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recognized that the Market Revolution left them with much less freedom than they might have enjoyed 50 or 100 years earlier.
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My favorite commentary on the Market Revolution
actually comes from the author Herman Melville
in his short story "Bartleby the Scrivener."
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Melville worked at the customs house in New
York, so he knew all about world markets first-hand.
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In "Bartleby," he tells the story of a young
clerk who works for a lawyer in New York City.
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Now, when you're a farmer, your work has an
intrinsic meaning.
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When you work, you have food, and when you
don't work, you don't.
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But when you're a copyist like Bartleby, it's difficult
to find meaning in what you do every day.
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You know that anyone else could do it, and
you suspect that if your work doesn't get done,
it won't actually matter very much.
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And in light of this, Bartleby just stops
working, saying, "I prefer not" when asked,
well, pretty much anything.
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Seeing his boss and society's reaction to
someone who simply doesn't buy into the market
economy is comic, and then ultimately tragic.
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And it tells us a lot about the Market Revolution
beyond the famous people and inventions and
heroic individualism.
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Now, most people read "Bartleby" as an existentialist
narrative, and it definitely is that, but, for me, the story's subtitle proves that it's also about the market economy.
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The full title of the story is, "Bartleby
the Scrivener: A Story of Wall Street."
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I'll see you next week.
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Crash Course is produced and directed by Stan
Muller.
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The script supervisor is Meredith Danko.
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Our associate producer is Danica Johnson.
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The show is written by my high school history
teacher Raoul Meyer and myself.
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And our graphics team is Thought Cafe.
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If you have questions about today's video,
please ask them in comments, where they'll
be answered by our team of historians.
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Also, suggest Libertage captions.
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Thanks for watching Crash Course World History.
00:13:52
If you enjoy Crash Course, make sure you're
subscribed, and as they say in my hometown,
don't forget to be awesome.
00:13:58
Just kidding, thanks for watching Crash Course
US History! DFTBA!
