NOWHERE IS JOHN DONNE’S DICTUM that we are all a part of the continent more true than in the world economy. It is built, by definition, upon an endless exchange of goods between individuals, industries, and nations, the most intricate net in the human universe. When a change happens anywhere in that economy, that change ripples through the whole. And when two separate developments happen to interact in a major way, it can produce an economic synergy that is both great and terrible.
No better example of this can be found than in what happened when a young New Englander’s simple, bright idea to help depressed southern agriculture interacted with the aborning Industrial Revolution in the Midlands of faraway England. Besides producing the most successful cash crop in American history, it also revived the rapidly decaying institution of bondage labor, and nearly destroyed the United States.
AMONG THE MAJOR economic casualties of the American Revolution was the indigo trade of South Carolina and Georgia. Indigofera tinctoria, a plant native to central Asia and north Africa, produces a blue dye that was in wide demand in the British cloth industry. The best indigo came from Spanish and French sources, but imperial preference gave the British market, by far the world’s largest, to Georgia and South Carolina. At the end of the colonial era, about 10 percent of the slave labor in the American colonies was used in producing indigo.
With American independence, however, Britain turned to India for its indigo supply and, without the British market, the indigo industry in South Carolina and Georgia quickly collapsed. Rice, the mainstay of Carolina plantation agriculture, continued to be profitable but was now dependent for any growth on the small American market. If the Deep South was to flourish in a postimperial economy, it needed a new cash crop.
One possibility was cotton, then grown mainly on the Sea Islands that line that part of the Atlantic coast. But this long-staple cotton (today it is often called Egyptian cotton) could not be grown inland any distance because it requires an exceptionally long growing season and sandy soil. Indeed, so little was grown that when a bale was exported to England in 1784, the first instance of cotton as an American export, it ran afoul of British navigation laws. These laws required that raw products arrive in British ports either in British ships or in ships of the country of origin. Customs officials simply refused to believe that there was such a thing as American cotton, and the bale was left to rot on the docks of Liverpool.
Short-staple cotton, or upland cotton, required only a two-hundred-day growing season and was not fussy about soil conditions, although it preferred a rich loam. It could be grown easily in upland South Carolina and Georgia. But there was a big problem. Unlike Sea Island cotton, the seeds of this upland cotton are sticky and cling tenaciously to the fibers that surround them. Separating the seeds from the lint, as the cotton fibers are called, was an immensely time-consuming task. While a field hand could pick as much as fifty pounds of cotton bolls in a day, it took twenty-five man-days to remove the seeds from that much cotton by hand, a process called ginning.
As so often happens in the history of the American economy, Yankee ingenuity solved the problem. Eli Whitney was born in Westboro, Massachusetts, in 1765, the son of a farmer who had a small manufacturing enterprise on the side, making things other farmers needed but weren’t handy enough to supply themselves. Eli soon proved to have a marked aptitude for mechanics and a keen sense of what the market was looking for. While still a boy during the Revolution, when nails were in short supply, he talked his father into building a forge so he could manufacture them. The enterprise did well enough that he was soon talking about hiring an assistant.
After graduating from Yale in 1793, Whitney accepted a post as a tutor in South Carolina. En route, he visited a friend, Phineas Miller, who managed a plantation in Georgia, owned by the widow of General Nathaniel Greene. There Whitney saw cotton growing for the first time. He soon wrote his father that “I have…heard much said of the extreme difficulty of ginning cotton…. There were a number of respectable Gentlemen at Mrs. Greene’s who all agreed that if a machine could be invented which would clean the cotton with expedition, it would be a great thing both to the country and the inventor…. I involuntarily happened to be thinking on the subject and struck out a plan for a machine in my mind.”
The machine was simplicity itself. Whitney studded a roller with nails, set half an inch apart. When the roller was turned, the nails passed through a grid, pulling the cotton lint from below through the grid, but leaving the seeds behind. A rotating brush swept the lint off the nails into a compartment while the seeds fell into a separate compartment.
With Whitney’s cotton gin, a laborer could do in a single day what had taken twenty-five laborers to do in that amount of time before. Its economic utility was so obvious that Whitney’s first model was stolen, but he received a patent on a new, improved model the following year and, in partnership with Phineas Miller, set up a factory to manufacture cotton gins near New Haven, Connecticut.
Unfortunately for Whitney and Miller, the concept of the cotton gin is so simple that any competent carpenter could make one in an afternoon, and it proved impossible to enforce the patent as the idea spread throughout the parts of the South where cotton could be grown, and production began to soar. Whitney spent years fighting expensive patent-infringement cases, and it was only in 1807 that his rights were secured, not long before the patent itself expired.
Altogether Whitney would realize only about $100,000—to be sure, that was a good-size fortune by the standards of the early nineteenth century—from an invention that quite literally changed the world. Most of that came not from royalties, however, but from grateful state governments. South Carolina voted Whitney $50,000 from the state treasury to cover patent infringements, and North Carolina put a tax on cotton for five years to compensate him, yielding him about $30,000. Tennessee chipped in $10,000.
The effect of the cotton gin on the economy of the South and thus of the United States as a whole was enormous. In 1793 the United States produced about five million pounds of cotton, almost all of it of the Sea Island variety. That was less than 1 percent of the world’s total cotton crop, most of which was then grown in India. By the first decade of the nineteenth century, thanks to the cotton gin, American production had increased eightfold to forty million pounds. And annual American exports of cotton to Britain had grown to about fifty thousand bales.
Each decade thereafter, American cotton production doubled on average, reaching two billion pounds by 1860. By 1830 the United States was producing about half the world’s cotton. Two decades later the percentage had risen to nearly 70 percent, three-quarters of which was exported.
The Deep South turned out to be the best place in the world to grow cotton. While it could be grown very profitably in the Piedmont region of South Carolina and Georgia (the setting for Gone With the Wind ), the Cotton Kingdom really came into its own in the rich soil of Alabama’s black belt and the deep, alluvial soils of the Mississippi Delta, where cotton thrived as nowhere else on earth.
As these new areas opened up, the locus of American cotton production moved ever westward. South Carolina was the leading cotton state until the 1820s, when Georgia took over, only to be replaced in turn by Mississippi and Alabama a decade later. Louisiana also soon became a major cotton producer, and these five states were producing three-fourths of American cotton by the time of the Civil War. It is by no means a coincidence that they, along with the cotton-producing states of Florida and Texas, were the first states to secede from the Union after the election of 1860.
Although the price of cotton, thanks to the cotton gin, had fallen low enough to reach a mass market, it remained a labor-intensive crop. It required about 70 percent more labor per acre to produce a crop than did corn. One reason for this is that cotton is very susceptible to weed infestation and must be hoed regularly. Chopping cotton, as it is called, was backbreaking toil in the fierce heat of a southern summer. But there was a large pool of involuntary labor available to do it: the slaves. As we have seen, slavery was on the decline in the late eighteenth century, as world opinion shifted ever more firmly against it.
Shortly after the Revolution began, so too did the abolition of slavery. Not surprisingly, the areas with the least economic stake in slavery were the first to abolish it. Vermont, in declaring its own independence from Britain in 1777, also abolished slavery, becoming the first place in the Western Hemisphere to make the practice illegal. Other northern states soon followed. Even New York, with nineteen thousand slaves in 1790, about 5.5 percent of the population, began gradual emancipation in 1799 and had freed all its slaves by 1827. The Northwest Ordinance of 1787 forbade slavery north of the Ohio River.
In the South, manumission became fashionable, and many planters, George Washington among them, freed their slaves upon their own deaths. The Constitutional Convention, in 1787, found it necessary, in order to reach agreement, not only to forbid outlawing the slave trade prior to 1808, but to make that clause unamendable. But by 1808 public opinion, even in the South, had swung so against the trade that Congress abolished it as soon as it legally could do so, on January 1 of that year. (Abolishing the slave trade and actually suppressing it, of course, were two different matters. It would be the primary task of the navy for most of the next fifty years.) The price of slaves had been declining through most of the late eighteenth century.
Cotton changed all that. After 1793 the price of a slave ratcheted upward. A slave who would have sold for $300 before the cotton gin was selling for $2,000 and more by 1860. The slave holders, possessed of an increasingly valuable asset, were less and less inclined to part with what became, in the early decades of the nineteenth century, an enormous capital investment. Even the parts of the South outside the cotton-growing area became deeply involved economically with continuing what came to be called the South’s “peculiar institution.” As tobacco became less and less important to the economy of such states as Virginia and Maryland, they began selling their surplus slaves to the new cotton states. Between 1790 and 1860, some 835,000 slaves were “sold south.”
While slavery was found throughout the South, it was not widely spread among the population. In 1860, while the white population of the South was more than eight million, there were only 383,637 slaveowners among them. And only 2,292 held more than a hundred slaves. But slavery had become bound up with the very identity of the South and its way of life. The South remained largely an exporter of raw materials, while the North’s economy grew ever more diversified. Even the South’s cotton was largely brokered through New York. And because of slavery, skilled immigrants gravitated to the North, where opportunities were much greater, while the North’s native-born, and free, human capital acquired skills needed in the new industrial world that was coming into being in the advanced countries. The South remained a largely agricultural economy and an exporter of raw materials to ever more advanced economies elsewhere.
COTTON PRODUCTION in the Deep South could grow so quickly only because demand for cotton was growing so quickly across the Atlantic Ocean. The weaving of cloth, a home task since time immemorial, became in the late eighteenth century the first great industry of the Industrial Revolution. In the early eighteenth century cotton had been a luxury fabric because producing it had been very labor-intensive. Cotton fiber has a natural twist that makes it much more difficult to spin into thread by hand than wool, linen, or even silk. It required as much as twenty days for a woman (those who spun thread were almost always women—it’s the origin of the word spinster) to spin a pound of cotton into thread.
This spinning was done at home under the putting-out system. An entrepreneur would give workers the necessary materials and then pay them by the piece for completed work. It took, on average, four spinners to supply one loom. But John Kay’s invention of the flying shuttle in 1733 upset the balance because it made weaving much faster. Either more spinners or a faster way of doing the spinning was needed.
In 1764 James Hargreaves introduced the spinning jenny, which could spin eight threads at a time, and five years later James Arkwright improved on it with the water frame, so called because it was powered by a waterwheel. This mechanization made thread abundant, and, now to speed up the weaving, the Reverend Edmund Cartwright developed the power loom in 1785. The new machinery required a shift from home production by the putting-out method to factory production by labor paid hourly wages.
Cotton cloth production increased dramatically. In 1765 about five hundred thousand pounds of cotton was spun into thread in Britain, almost all of it at home. Twenty years later sixteen million pounds were spun, mostly in factories. And the price of cotton cloth had dropped precipitously, causing an upsurge in demand for it. This caused the price of raw cotton to surge until Whitney’s invention solved the problem of ginning and made upland cotton cheap to produce. Now American cotton production and British cloth production could surge together.
By the end of the antebellum period, cotton dominated both the British and southern economies, and the two economies were, it seemed, inextricably linked. “Let any great social or physical convulsion visit the United States,” wrote the British magazine The Economist in 1855, “and England would feel the shock from Lands End to John O’Groats. The lives of nearly two millions of our countrymen are dependent upon the cotton crops of America; their destiny may be said, without any kind of hyperbole, to hang upon a thread. Should any dire calamity befall the land of cotton, a thousand of our merchant ships would rot idly in dock; ten thousand mills must stop their busy looms; two thousand thousand mouths would starve, for lack of food to feed them.”
The South meanwhile was equally dependent on the British market but increasingly felt itself to be in a position of strength, especially in the 1850s, when cotton prices were rising. “What would happen if no cotton was furnished for three years?” asked James Henry Hammond, senator from South Carolina. “I will not stop to depict what every one can imagine, but this is certain: England would topple headlong and carry the whole civilized world with her, save the South. No, you dare not make war on cotton. No power on earth dares to make war upon it. Cotton is king. Until lately the Bank of England was king; but she tried to put her screws as usual, the fall before last, upon the cotton crop, and was utterly vanquished. The last power has been conquered. Who can doubt, that has looked at recent events, that cotton is supreme?”
THE IMPORTANCE OF COTTON EXPORTS to the southern economy and the need to import most manufactured goods made the South the natural opponent of high tariffs, the principal source of federal revenue in the nineteenth century. But precisely because of cotton, the North, especially New England, became the natural exponent of a high tariff. The tariff would prove to be the thin edge of the wedge that eventually drove the two sections of the union apart.
When George Washington was inaugurated as president on April 30, 1789, he wore a simple brown suit with silver buttons, white stockings, and shoes with silver buckles. But he had taken care that the cloth was American made, woven in Hartford, Connecticut. Conscious of symbolism, as politicians always are, Washington wanted to encourage American manufactures, as industrial goods were then called, and virtually all cloth of good quality at that time had to be imported from England.
But the industrialization of the British cloth industry in recent decades had given Britain an insuperable competitive advantage, and Britain was determined to keep it. The export of textile machinery was strictly forbidden. If the United States was to develop a textile industry of its own, therefore, it had only two choices. It could reinvent what was then high technology on its own, or it could steal it. The former was not very likely as the United States then lacked people familiar with the intricacies of textile manufacture.
So it had to be stolen. Although British newspapers were forbidden to print them, clandestine advertisements—a sort of early capitalist samizdat—circulated by hand in the textile areas of the Midlands, offering big rewards to anyone willing and able to set up working textile machinery in the United States. One person who undoubtedly was aware of these enticements was Samuel Slater, who had been born in Belper, Derbyshire, in 1768, in the heart of the burgeoning textile manufacturing area. Slater was apprenticed in 1782 to Jedidiah Strutts, the owner of a textile mill in Belper and one of the first to make a fortune out of the new technology.
Slater was fascinated by machinery and would often spend his Sundays at the factory studying the machines and figuring out how they worked. While still a teenager, he invented a means of winding the newly spun yarn evenly on the spindles, and Strutts rewarded him with a guinea, the better part of a year’s wages for an apprentice. Slater also showed a talent for management and was soon overseeing the mill and repairing and building machinery.
When his apprenticeship ended in 1789, Slater wanted to emulate his former master and become a mill owner in his own right. But lacking capital, he knew that he would have a much better chance of achieving his goal in the United States, where his skills would be in very high demand, than in his native country. His self-interest commanded him to head across the Atlantic Ocean. The problem was how to get there. Besides forbidding the export of textile machinery or even drawings of it, Britain also did not allow those with expertise in the textile industry to emigrate.
But Slater laid his plans carefully and, before leaving Strutts’s employ, carefully memorized every detail of the machinery he had been supervising. Aware of the vigilance of the British customs, he kept his intentions so secret that he did not even tell his mother what he was doing until he mailed her a letter from London, a few hours before he sailed for New York, listed on the manifest as a farm laborer.
He arrived in the New World on November 11, 1789, and soon heard that Moses Brown, a Quaker of Providence, Rhode Island (Brown University was named after his family in 1804), had some spinning machines that he could not get to work. He wrote Brown offering his services. Brown was only too happy to accept. “We are destitute of a person acquainted with water frame spinning…. If thy present situation does not come up to what thou wishest…come and work [with] ours and have the credit as well as the advantage of perfecting the first watermill in America.” He offered Slater all the profits over and above interest on the capital and depreciation, a deal Slater could never have made in Derbyshire.
When Slater arrived in Providence, he was disappointed to find that Brown’s spinning machines were beyond hope. He offered, however, to build new ones from scratch. Over the next twelve months, Slater slowly built the machinery needed for a spinning mill. With American carpenters and mechanics wholly unfamiliar with textile equipment, it was a struggle, and at one point Slater almost gave up when a carding machine refused to work. But on December 20, 1790, the first cotton spinning mill in the United States opened for business, and the American Industrial Revolution began.
Brown wrote to Secretary of the Treasury Alexander Hamilton, who would submit his “Report on Manufactures” to Congress a year later, that “Mills and machines may be erected in different places, in one year, to make all the cotton yarn that may be wanted in the United States.” This was, of course, a rather considerable exaggeration. But cotton mills quickly began to spread in New England, whose many clear, swift-flowing rivers provided ready power. Brown and Slater (and Brown’s cousin William Almy) became partners when the first building designed as a spinning mill was erected in 1793, and Slater became a wealthy man. He also married William Almy’s daughter, Hannah, who became the first woman to receive a U.S. patent, for an improved means of spinning thread. By the time of Slater’s death in 1835, New England was the center of the second largest cloth industry in the world.
Two years earlier, Slater had been visited by President Andrew Jackson on a tour of New England, and Jackson bestowed on Slater the title “Father of American Manufactures.”
NEW ENGLAND, besides having many of the swift-flowing rivers needed to turn the waterwheels that powered the new mills, had one other comparative advantage at the turn of the nineteenth century: a source of ready, cheap, and willing labor. New England had always been marginal farming country, with thin and often sandy soil and an unforgiving climate. But as long as most food had to be produced locally, because of transportation costs, local farming was a necessity.
Increasingly, however, sons of New England farmers were emigrating west, into New York State and then beyond. Once the Erie Canal was built, they would begin to pour into the lush farmlands of the old Northwest in what is known as the New England diaspora. But the unmarried sisters of these emigrants were stuck at home, with ever decreasing prospects for marriage as they got older. Thus the mills that began springing up along New England rivers at this time were a welcome means of escape from the dreariness and loneliness of New England farm life that would be so brilliantly evoked by Edith Wharton in her novel Ethan Frome.
The mills hired these young, single women in increasingly large numbers, housing them in dormitories under the strict supervision of matrons. Church was compulsory and classes in various subjects were offered as well. Many of the women who became teachers, librarians, and social reformers in nineteenth-century New England began their formal education as mill workers. And of course, despite the ever-vigilant matrons, many more found husbands and went on to establish families.
Samuel Slater’s factory on the Pawtucket River in Rhode Island turned cotton fiber into thread. The thread was then turned over to home weavers to be made into cloth. Even in England, spinning and weaving were done in separate factories. But in 1814 Francis Cabot Lowell went one step further and built a factory in Waltham, Massachusetts, that began with bales of cotton and turned them into finished cloth, with even dyeing being done in the same building. It was the first fully integrated cloth manufacturing enterprise in the world.
It was not, however, entirely without precedent. Oliver Evans, one of the country’s first great inventors, had developed an integrated flour mill, a stunningly new concept. Flour mills had used water power since the Middle Ages. But only the grinding was powered by the waterwheel. Everything else, the spreading, bolting, and packing, was done by human effort. Evans designed a series of conveyances, using bucket elevators and screw conveyors, all powered by the waterwheel, that moved the grain, meal, and flour, from one process to another. In effect, Evans turned the flour mill into a machine: grain was poured in one end and barrels of flour came out the other. Except for adjusting, maintaining, and monitoring, the whole process needed hardly any human labor.
While requiring far more human labor, the cotton mill built by Francis Cabot Lowell was in the same mold. Born in Newburyport, Massachusetts, to one of the state’s well-established families, Lowell entered Harvard at the age of fourteen, and after graduation, like so many New Englanders of his day, he went into the trading business.
Trade had been the source of most early American great fortunes since the founding of the colonies, and this remained true in the 1790s. Elias Derby of Salem, Massachusetts, a major ship owner, became the country’s first millionaire in that decade, trading as far away as China. John Jacob Astor also began trading with China—a rich market for furs—often making a profit of $50,000 on a single voyage.
As noted, the outbreak of the Wars of the French Revolution in Europe in 1793 had proved a bonanza for American foreign trade. But as the European war deepened, each side attempted to disrupt the trade of the other, placed increasing restrictions on neutral shipping, and seized an increasing number of ships deemed in violation. Between 1803 and 1807 Britain seized 528 American ships and France seized another 389. In addition, the Royal Navy, ever in need of trained seamen, frequently boarded American vessels and impressed any sailors declared to be British subjects.
In hopes of forcing France and Britain to respect neutral rights, President Jefferson rammed through Congress the Embargo Act, which he signed on December 22, 1807. It was one of the most remarkable acts of statecraft in American history. Indeed it is nearly without precedent in the history of any country. The Embargo Act forbade American ships from dealing in foreign commerce, and the American navy was deployed to enforce it. In effect, to put pressure on Britain and France, the United States went to war with itself and blockaded its own shipping.
The Embargo Act devastated New England, still so heavily dependent on maritime commerce. Legal exports fell from $48 million in 1807 to $9 million in 1808, while an epidemic of smuggling erupted along the Canadian border. In fact, it became so rife on Lake Champlain, which straddles the border, that President Jefferson declared the area to be in a state of insurrection.
The reaction against the Embargo Act in all the seaboard cities was so intense that it lasted only fourteen months, but the Nonintercourse Act, which replaced it, forbade commerce with both Britain and France, our largest trading partners, and American foreign commerce stayed in deep depression.
With his trading business in a shambles, Francis Cabot Lowell went to England in 1810 and visited cotton mills in Lancashire. He was deeply impressed. He committed to memory as many details of layout and design as he could, planning to build a mill on his return to the United States. Like Samuel Slater before him, Lowell was engaging in what today is called industrial espionage, and like Slater, he smuggled the fruits of it out of England. But he also improved the machinery with the aide of a mechanic named Paul Moody.
By the time he did return to the United States, in 1813, the War of 1812 had broken out and had ended what remained of American foreign commerce and New England was economically prostrate. Lowell established the Boston Manufacturing Company, capitalized at a then huge $300,000, a sum that was soon doubled.
The disruption of trade, while throwing New England into deeper depression, also created a national shortage of cloth in the United States, and Lowell’s company was soon operating very profitably. But with the return of peace in 1815 came the return of British goods, especially cheap cotton cloth from the vast mills of Lancashire. The New England textile industry had expanded rapidly in the years before and during the War of 1812, when the Embargo Act and the British blockade had served the same function as a protective tariff. Now, confronted with renewed British competition (and, in fact, British dumping of cheap cotton cloth on the American market), the textile manufacturers, led by Francis Cabot Lowell, went to Washington for relief.
What they wanted was an actual protective tariff. They were the first of what would become an endless parade, one that continues to this day, of American manufacturers seeking protection from foreign competitors who, due to their comparative advantages, can sell in the American market for less than domestic manufacturers and still make a profit.
A protective tariff always has a surface plausibility that makes it attractive to politicians: a protective tariff saves jobs and protects profits in the short term, which is what always most concerns politicians—who are usually up for reelection in the near future. Even Alexander Hamilton recommended one in his “Report on Manufactures.” But the arguments against it, laid out at length in The Wealth of Nations, are economically persuasive.
Most important, a tariff is not paid by foreign producers; it is paid by domestic consumers, to whom the cost is passed along. And consumers not only pay higher prices for foreign goods, they also pay higher prices for domestic goods as well, for local producers will invariably take advantage of any opportunity to raise their own prices. And a protective tariff partially insulates domestic producers from competition, the engine of innovation and cost cutting in a capitalist economy.
Opposing the idea of a protective tariff were the New England shipping interests and the South. But Lowell and the other textile manufacturers succeeded in getting Congress to place a 25-cent-a-yard duty on cotton cloth, the first protective tariff in American history, in 1816.
By this point the shipping interests were losing their clout in Congress, as New England manufacturing began surpassing them in influence with local legislators. The South, however, was united behind the idea of low tariffs. Ever more dependent on the export of cotton to Britain, and, increasingly, France, for its prosperity, the South feared retaliatory tariffs. As a large importer of manufactured goods, it regarded a high tariff as little more than a means for northern industrialists to gouge southern customers.
But northern pressure kept the tariff rising until in 1828 Congress passed what the South—always a major exporter of catchy political phrases—called the Tariff of Abominations. This led directly to the Nullification Crisis of 1832, when South Carolina declared that states had the power to rule federal laws unconstitutional. President Andrew Jackson made it clear that he would use force to see them upheld. The threat of secession was ended when a new tariff bill, calling for gradually lowered rates, was passed.
FRANCIS CABOT LOWELL, long in precarious health, died in 1817, but his enterprise flourished, and in 1823 it moved to a site on the Merrimack River north of Boston, where more water power was available. When the area was incorporated as a town in 1826, it was named for Lowell. But Lowell’s company was hardly the only American manufacturer to prosper at this time. By 1824 there were two million people employed in manufacturing. That was ten times the number only five years earlier (and fully two-thirds of the total population of the United State at the time of the American Revolution fifty years earlier).
The United States was becoming an industrial power second only to Britain.