1800-1860: Business and the Economy: Overview

Westward Migration. Following the American Revolution, Americans swarmed to the West. Kentucky and Tennessee provided the beachhead for the vanguard of land-hungry settlers. After the War of 1812 subsequent waves of pioneers flowed into the Ohio River valley, the Great Lake states, the Gulf Plain, and the Mississippi River valley. Still more moved to Oregon and California in the 1840s and into Kansas by the 1850s. By the Civil War much of the territory between the Mississippi River and the Atlantic, as well as areas along the Pacific coast and in the Southwest, had been settled by the descendants of Europeans.

Economic Revolutions. This mass migration produced a series of economic revolutions. The Trans-Appalachian West contained hundreds of Indian nations, each with their own economies based on the local geography. Even before large numbers of Americans settled the West, the economic structures of the native peoples changed. The trade in furs and hides with the whites and the arrival of Old World animals (such as the horse) drove Indians to accommodate and take advantage of the new opportunities before them; but sooner or later, opportunities turned into conquest. Already weakened by European diseases, many native nations found themselves unable to resist the economic and military power of the invaders.

Land and Agriculture. When most American settlers entered a new area, they sought land. Whether for cotton, wheat, or livestock, land ownership often determined one’s economic standing. Although commercial and industrial wealth assumed a growing importance in the first six decades of the nineteenth century, the United States remained an agricultural nation. Individuals such as John Jacob Astor were able to make a fortune from the fur trade, and other merchants grew rich from selling different commodities in the West. Nevertheless, the soil remained fundamental.

The Market Revolution. Despite the continued dominance of agriculture, far-reaching changes made the United States of 1860 different from the nation of 1800. Some historians have described the development of long-distance domestic trade as a market revolution, in which thousands of Americans participated in the rapidly expanding cash economy. Growing crops or producing goods for the market became increasingly common. Although colonists before the Revolution sold commodities to merchants in exchange for cash or goods, the early nineteenth century had fewer self-sufficient farmers. Tools fashioned by the local blacksmith and hand-spun clothing increasingly gave way to factory-made farm equipment and cloth. Americans reoriented their businesses and farms in order to acquire manufactured goods of all kinds.

Transportation Revolution. Still, though the economy grew and became more diverse, especially as a result of industrialization, most early settlers in the Trans-Appalachian West initially had limited access to profitable markets. Another revolution, this time in transportation, served as a catalyst for the new economic landscape. The construction of paved roads, new canals, and railroads allowed, or forced, more Americans into the larger economy. East and West, and to a lesser extent North and South, were joined by transportation routes that carried commodities to national and foreign markets. These paths of commerce accelerated American settlement by spurring migration to new lands.

Gateway Cities. From 1800 to 1860 men and women moved into western cities to find new opportunities and new profits. Exchanging raw materials such as crops, minerals, and animal skins for manufactured goods, or providing services to outlying communities, became the primary economic roles of these urban areas. The early nineteenth century saw the birth of new cities when trading posts or small towns blossomed into Cincinnati, St. Louis, Chicago, and San Francisco. These cities functioned as gateways between the rural hinterland and markets on the East coast or in Europe.

Economic Instability. U.S. cities during the first half of the nineteenth century also became banking centers that financed the commercial development of the West. Although New York remained the principal financial center for the nation, capital flowed in and out of every city. As a result the number of banks multiplied spectacularly. An inconsistent federal banking policy generated many shaky banks and periods of intense inflation. Land speculation, a longtime staple of American business, further fueled chronic instability, even when the federal government directed its course. Panics that produced economic depressions occurred in 1819, 1837, and 1857. The West was far from immune to these economic slumps; in fact, with land speculation and poor banking, the region helped produce them.

Hispanic Influences. When the United States expanded westward, it encountered the Spanish Empire, and, later, the Republic of Mexico. The Spanish had established colonies within the present boundaries of the United States before the English even gained their weak foothold in Virginia in 1607. In 1598 Spaniards led by Juan de Onate formed the colony of New Mexico. Although it never possessed a large population or a dynamic economy (by European standards at least), New Mexico, and later Texas and California, developed distinct economies based on livestock production. Aided by the American penetration of Mexican markets in the 1820s through the 1840s, most of what is now the Southwest came under American control by 1848. As with the Indians, the Hispanics of New Mexico witnessed an economic revolution. Anglos came to legally and illegally acquire much of their land, and more Mexican-Americans entered the cash economy.

The Western Economy. From Kentucky corn fields to California gold mines, the United States expanded its boundaries and its economy over much of the American West before 1860. Americans brought themselves, their animals, their seeds, and their tools to transform the landscape beyond the Appalachian Mountains. By the time of the Civil War, they had accomplished much of their goal east of the Missouri River and had tendrils into the Great Plains and along the Pacific Ocean. Although during the fifty years after 1860 there was further expansion into the West, the economic revolutions from 1800 to 1860 established patterns of commerce that would remain influential for generations to come.