economic history of the us - napa valley college · mexican-american war, 1846-48 over us...
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Economic History of the US
Revolution to Civil War, 1776-1860Lecture #2
Peter AllenEcon 120
Map 8.1 US Land Expansion
Early Western Migrations
Population at independence (in thousands)
Total White African
1700 260 239 2
(92%) (8%)
1780 2,728 2,159 569
(79%) (21%)
Early Western Migrations
Population in the “west” (thousands)
Total West1790 3,929 250
(6%)
1812 7,200 1,000(14%)
1860 31,400 13,000(41%)
Early Western Land Settlement
Gov. Land Policy, 1776-1860
At independence, 13 state plus large
unorganized territory
How to administer and privatize?
Settlers wanted to buy…
…how to establish market and sell?
At first, government set prices too high…
…vast surplus (S>D) caused it to drop until…
1862: gov. set price at zero
Northwest Ordinances
First land policies of Confederation
Northwest Territory, unsettled land north of Ohio River
Ordinance of 1785 (OH, IL, ID, WN, MI, Min part)
1. Inventory: Land survey, base lines and principal meridians Lot/section = one square mile (640 acres)
Township = 36 square miles, or 23,040 acres
2. Land to be sold at auction in large tracts Minimum price (p), set at $1 per acre
Minimum quantity, set at 1 lot ($640)
Fast and easy, Cash cow
Effect…Little land sold… What was the market price?
Avg. worker’s income, ≈$300 per year, 2.13 years income
Beyond the means of most who wanted to settle, New Englanders
The Problem…price control well
above market equilibrium…
Price of
Land
0
Supply
Demand
Surplus
Quantity of
Land
4
$1.00
10
0.25
7
NW Ordinance of 1787
Process for bringing NW territory into the “confederation”
1. Federal Territory …once 5,000 male inhabitants, territorial legislature elected • administered by a fed. governor appointed by Congress
• One representative (nonvoting) sent to Congress
2. New State…when pop. reached 60,000• …equality with existing states
NW territory to be divided into 3-5 states
Land policy evolves to vast Surplus
Land Acts, 1800, 1804, 1820, 1832
min. parcel lowered to 320, 160, 80, and finally 40 acres
Min. price lowered to $1.25 per acre
1832, migrant could get a 40 acre parcel for $50, equiv. 2 months wages
Still a vast excess supply, gov. “controlled price” still too high, “squatting”
Homestead Act, 1860
160 acres for processing fees, i.e. P = Ø
Opposed by southern states, vetoed by P. Buchanan
Signed by A. Lincoln in 1862
Migration to NW Territory
Migrants from NE and Mid-Atlantic states
Favored northern parts of Ohio, Indiana, Illinois
Another try at agriculture…copy the South?
Productivity, economies of scale
“Midwest” specialized in hogs, corn, wheat
Profit first hampered by high transportation cost
Econ. incentive to find a way to get products to Eastern markets
Migration to NW Territory
Later route: Cumberland
Gap into Kentucky,
southern Ohio, Indiana,
Illinois and Tennessee
People from Mid-Atlantic
and southern states
Same motives
Profit, productivity, better
ag. land
Mid-west and upper
south
Table 8.1 Population in the Trans-Appalachian Statesa
Figure 8.1: Pop. Distribution by Region, 1810–1860
Southern Migration
Economy of 5 southern states hurt most by:
Independence, loss of export market in England
Esp. tobacco, indigo, rice
Little chance to recover
Jefferson’s effort to stay out of Napoleonic Wars
Plantation system revived by…
1. Cotton…after 1794
2. Better land and climate conditions as wealthy planters
moved westward into…Alabama, Mississippi,
Louisiana, W. Texas
3. Entrenchment of Slavery
Cotton gin, patented March 1794
Eli Whitney
Huge increase in productivity…
One worker…
55 lbs./day
Instead of
1 lb.
5,400%
Southern Migration
Western plantations – Cotton…
…became central to southern agriculture…
As export and also NE textile manufacturing
By 1860… Cotton was ½ of all merchandise exports
10X larger than second largest export, wheat
cotton goods/fabric was #1 manufactured export
Map 8.4 Shifts in Cotton Cultivation
Missouri Compromise, 1820
New England, first move to
specialize in manufacturing…
Being forced out of the ag.
Competition from west, poor conditions for ag.
Capital and labor force into manufacturing
Temp. opening of overseas markets
Napoleonic wars Concentration of initial investments….
“scale” in textiles, like England
England no longer trying to suppress
Dairy farming
Far Western Migration
California
Mexican Territory until
Gold discovered, Jan. 1848 in Sacramento…
…Sutter’s fort
Technically Mexican territory
“Gold Rush”…population (non-native)…
1848…15,000
1849…40,000 Easterners in SF
1852…260,000
Bear Flag revolt, 1846
US Territory, Feb. 1848 – Sep. 1850
Admitted as a free state, Sept. 1850
Mexican-American War, 1846-48
Over US annexation of Texas, March 1845 (Pres. Tyler)
Border, Nueces or Rio Grande
Treaty of Guadalupe Hidalgo, Feb. 1848
Cession of Alta California, and part of Nuevo México to US
Terms dictated by US
Paid Mexico $15 mm $313 mm, 2008$)
Organization of Western Settlement
Three ways for a country to expand territory…1. Treaty
2. Purchase
3. Conquest
First territory of US acquired by Treaty or Purchase…
1. Territories ceded by Britain (1783) - Atlantic to the Mississippi
2. Louisiana (1803) - purchased from France• Ffr 60mm. + Ffr18mm of debt =
• $11.25 + 3.75 mm. = $15 million, nom. 3¢/acre
• $213 million in 2008 $, 43¢/acre
3. Florida (1819) – purchased from Spain (no cost, $5 million of claims against Spanish Gov.)
Organization of Western Settlement
Later acquisitions made by conquest
US gov assumed European “right of conquest”… …from England and other colonial powers
based on, superior force, Christianity, “verdict” of advancement
Right of subjugation of indigenous Americans
Texas annexation, 1845
Oregon Country, 1846
Mexico Cession, 1848 ($15mm., $369mm today)
Gadsen Purchase, 1853 ($10mm, $255mm today)
Alaska Purchase, 1867, ($7.2mm, $110mm today)
Hawaii Annexation, 1898
Pre-Civil War, southern leaders had designs on Mexico and Cuba
