B005HFI0X2 EBOK (10 page)

Whales like the right whale, the bowhead, the humpback, and the gray that remained near the shore were soon decimated in the Northern Hemisphere. Whalers began undertaking longer voyages into the South Atlantic and Pacific to target sperm whales. American whalers stopped in Hawaii for sex and alcohol, and San Francisco became a major port for them.

One whaler, Charles Melville Scammon, used “bomb lances” to decimate the nurseries of gray whales along the West Coast. Following his retirement from whaling, in 1874, Scammon published
The Marine Mammals of the North-Western Coast of North America
, writing without irony: “The mammoth bones of the California Gray lie bleaching on the shores of these silvery waters, and are scattered along the broken coasts, from Siberia to the Gulf of California; and ere long it may be questioned whether this mammal will not be numbered among the extinct species of the Pacific.”
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By the 1840s, whale oil was being pushed out of the market by less expensive lard oil made from the fat of hogs, which were nicknamed “prairie whales.”
⁵⁵
Whale oil faced competition as well from camphene, distilled from alcohol and turpentine, and from “town gas,” hydrogen derived from coal. Toward the end of the 1840s, a Canadian geologist named Abraham Gesner distilled kerosene from asphalt and bituminous tar. By the time the Civil War erupted in 1861, even before Edwin Drake successfully drilled for oil in Titusville, Pennsylvania, in 1859, Americans spent more on coal gas and kerosene than on whale oil.
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A shrunken American whaling industry survived for at time, supplying baleen (erroneously called “whale-bone”), a supple material used in women’s corsets. But the development of pliant steel and plastics and changes in women’s fashion eliminated the market for baleen as well. The American whaling fleet shrank from 735 ships at its height in 1854 to only 32 in 1914.
⁵⁷
A cartoon in
Vanity Fair
in 1861 depicted a party in a ballroom filled with whales in fancy dress. Beneath festive banners that read “Oils Well That Ends Well” and “We Wail No More For Our Blubber,” the jubilant whales raised the glasses they held in their flippers in a toast. The cartoon’s caption read: “Grand Ball Given by the Whales in Honor of the Discovery of the Oil Wells in Pennsylvania.”
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THE AMERICAN REVOLUTION AND THE INDUSTRIAL REVOLUTION

The United States may have been the first modern republic, but it inherited a premodern economy. In the gap between the political revolution of 1776 and the industrial revolution, which only got under way on a large scale in the United States in the 1830s, negative views of large-scale capitalism took root in American culture and endured, even after premodern capitalism gave way to far more productive, less exploitative industrial capitalism.

The characteristics of premodern commerce, manufacturing, and corporations naturally led Jefferson, Madison, and other American agrarians to equate an industrial, urban economy with one in which a miserable, landless urban proletariat labored in sweatshops making trinkets for the rich, to the benefit of monopolists with government connections. In the zero-sum economy of the agrarian era, it was usually the case that the wealth of the elite and middlemen came at the expense of the majority. Like Adam Smith, who feared the crippling effects of premodern factory labor on the bodies and minds and souls of workers, Jefferson preferred a society in which as many people as possible were independent yeoman farmers.
⁵⁹

Adam Smith, David Ricardo, and other classical economists, including Thomas Malthus and J. S. Mill, did not expect industrial technology to produce radical improvements in the human condition. The measures that they advocated—eliminating parasitic government-sponsored monopolies, increasing the division of labor in labor-intensive production (as in Smith’s famous pin factory), free trade, and specialization among countries along the lines of absolute advantage (Smith) or comparative advantage (Ricardo)—were intended to squeeze a little more efficiency out of an agrarian economy. In the twentieth century, the economist Joseph Schumpeter observed that Ricardo and Malthus “lived at the threshold of the most spectacular economic development ever witnessed . . . [yet] saw nothing but cramped economies, struggling with ever-decreasing success for their daily bread.”
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They believed that diminishing returns and declining profits were the norm in every industry. Ricardo predicted that in the long run landlords would prevail over both capitalists and starving workers. Malthus argued that any temporary improvements in human well-being caused by economic growth would be neutralized quickly by the breeding of the poor. The labor theory of value, which held that capitalists could grow rich only by stealing surplus labor value from workers, was combined with the pessimistic prediction of inevitably diminishing profits and opportunities for investment in the philosophy of Karl Marx, which, in spite of its idealization of the industrial worker, is a patchwork of preindustrial economic doctrines.

If there had been no industrial revolution, if the American and world economies had continued to be constrained by the amount of energy produced by firewood, wind, water, and human and animal muscle, the producerist political economy of Jefferson and the “system of natural liberty” of Smith would have remained relevant. By a striking coincidence, however, James Watt and his business partner Matthew Boulton produced their first commercial steam engine in 1776, the year in which
The Wealth of Nations
by Smith and the American Declaration of Independence drafted by Jefferson were both published. The industrial revolution begun by Watt quickly rendered the economics of Smith and the politics of Jefferson obsolete. But a lingering Jeffersonian distrust of large-scale enterprise, finance, and government would continue to shape American political culture, with sometimes damaging effects for America’s industrializing, modern economy, from the nineteenth century to the twenty-first.

THE ARGUMENT

T
he first industrial revolution was based on the steam engine, which James Watt transformed into a revolutionary source of power that could be used in factories, locomotives, and steamships. During the first industrial era, knowledge and skills flowed from the modernizing British economy to the less developed United States and other countries that struggled to make the new technologies their own.

Like Alexander Hamilton, Henry Clay understood the potential of machine-based technology to transform the American economy. Clay’s American System was a comprehensive plan by which the federal government would sponsor industrial capitalism in the United States, permitting the country to catch up with and surpass Britain, the first industrial nation. But Andrew Jackson and his allies, invoking the rhetoric of Jeffersonianism, thwarted Clay’s plan for national development by destroying the Bank of the United States and blocking plans for federally financed infrastructure.

In the aftermath of Jackson’s victory, the industrialization of the United States caused the North and the South to grow apart. The southern economy became a specialized adjunct of the British industrial economy, exporting cotton to the textile mills of the British Midlands. Threatened by the success of the antislavery Republican Party led by Abraham Lincoln, the southern slaveowner elite tried to form its own smaller union, the Confederate States of America. But when Britain did not intervene, both the South’s bid for independence and the institution of slavery were doomed.

The period between the Civil War and Reconstruction and the 1890s witnessed the maturation of the steam-based technological system of the first industrial revolution. Until the end of the nineteenth century, the railroad companies dwarfed all other private businesses and rivaled the state and federal governments in their scale and revenues. The disruption of older ways of living and working by the railroads and steam-powered machinery inspired protests by farmers and strikes by industrial workers that were frequently and violently suppressed by the government.

But even as steam-age America took shape, it was doomed by new technologies—the electric motor and the internal combustion engine—that began emerging in the 1860s in the next wave of innovation in the laboratories of Britain, continental Europe, and the United States.

Soon shall thy arm
,
UNCONQUER’D steam
! afar

Drag the slow barge, or drive the rapid car . . .

—Erasmus Darwin, 1781
¹

America is the country of the future. It is a country of beginnings, of projects, of vast designs and expectations.

—
Ralph Waldo Emerson, 1844
²

I
n 1851, the first world’s fair, the Great Exhibition, opened in London. The industrial supremacy of Britain was demonstrated by the British products on display and symbolized by the Crystal Palace, a vast structure of cast iron and glass designed by the gardener and architect Joseph Paxton. Dominating global industry, leading the world in the transition from agrarian civilization to urban, industrial society, Victorian Britain was the center of the world economy. Other countries had the option of finding a place in an economic order centered on Britain—or competing with the first industrial nation on its own terms.

Developed at first in Britain by Thomas Newcomen and James Watt to pump water out of coal mines, steam power was soon applied to manufacturing and to transportation, in the form of steamboats and steamships and then locomotives. The steam engine marked a radical advance in civilization. No longer would societies be dependent in doing work on the muscle power of humans and animals or diffuse sources of energy like water, wind, or fires stoked by wood and other kinds of biomass. Machines powered by coal, oil, natural gas, and other fossil fuels, and later by nuclear energy, would free most human beings from farm labor to live in cities and suburbs and work in a proliferating variety of occupations that did not require constant, heavy labor.

The geographic and institutional scale of societies, too, would be transformed. Industrial transportation and communication infrastructures—first railroads and telegraph lines, then automobiles, planes, telephones, and radios, and then computer networks like the Internet, satellites, and massive container ships—would shatter old methods of production and enable the growth of vast enterprises in national and global markets. The struggles of societies to adapt to the forces unleashed by the new technologies would topple empires and dynasties in the Old World and contribute to civil war in the New.

The United Kingdom led the way, as the richest and most technologically advanced country in the world. The loss of its American colonies was more than compensated for by its status as the first industrialized nation. Britain led the world in the adoption of steam-powered manufacturing, railroads, and the shift of its population from agriculture to industry. In the early nineteenth century, British manufacturing equaled the combined output of Russia and France.
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Britain pioneered not only industrialization but also the productivity-driven shift of workers and jobs out of agriculture. In 1800, only 36 percent of the population of England was employed in agriculture, as a result of the industrial revolution. As late as 1815, according to the first census, 95 percent of Americans were rural, living on farms or in small towns. British industrial supremacy was reinforced by global naval supremacy and by the centrality of the City of London in global finance.

The story of American technology in the first industrial revolution was for the most part one of American adoption and adaptation of technologies invented in Britain and continental Europe.

INDUSTRIAL ESPIONAGE AND THE AMERICAN MILL INDUSTRY

Britain tried to preserve its lead in industry in the late eighteenth and early nineteenth centuries by banning the emigration of skilled mechanics and the transfer of intellectual property to other countries. Just as later-developing nations would pirate American intellectual property, the early United States built up its industrial capacity in part by encouraging skilled emigration in defiance of British law and the theft of British industrial designs.

The most important immigrant to bring British technology to the United States was Samuel Slater. Slater spent six years apprenticed to a British textile manufacturer, then emigrated to the United States in 1789. He went into business with two Rhode Island merchants, William Almy and Moses Brown, and, relying on his memory, constructed water frames in their factory in Pawtucket. He and his partners hired children between the ages of seven and twelve and provided jobs as construction workers and guards for their fathers, who considered factory work degrading. As his business expanded, Slater continued his paternalist approach, building cottages and churches for his employees.

By the early 1800s, Slater had his own firm, Samuel Slater and Company. He developed a number of small mill towns or “Arkwright Villages” at small waterpower sites, including one named Slatersville. At Amoskeag Falls on the Merrimac River, Slater established an integrated factory complex which grew into Manchester, New Hampshire, a leading manufacturing city named for Britain’s major industrial center.
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During a visit to England in 1810, Francis Cabot Lowell, a thirty-six-year-old member of a Boston Brahman dynasty that would produce a Harvard University president, Abbott Lawrence Lowell, and a famous poet, Robert Lowell, arranged to be taken on a tour of a British textile mill. He memorized the details of the machinery and reproduced them back home in Waltham, Massachusetts. Lowell formed the Boston Manufacturing Company with other investors and hired a mechanic to build an imitation of the mill he had seen. The company made history with its adaptation of mechanized technology. The company also pioneered the practice of raising money by selling shares.

Lowell proved to be an astute, able political entrepreneur. Following the end of the War of 1812, his firm and others in the infant American textile industry were threatened by British imports. Textile manufacturers like Lowell wanted a protective tariff, but they knew that a high tariff would be opposed by southern planters who sold cotton to the mills of the British Midlands. Lowell’s solution was ingenious. Because the primitive technology in his mill could only produce coarse cloth, there would be a higher tariff on coarse cotton goods, which Britain made with cotton from British India, and a lower tariff on finer cloth, much of it made from American cotton. Lowell himself drafted the relevant provisions of the Tariff of 1816.

At one stroke Lowell had appeased the South, sacrificing the high-end luxury market while monopolizing the low-end American textile market for American firms. In the twentieth century, Japan, the “Little Tigers” of East Asia, and China followed a similar strategy, using nontariff barriers or currency manipulation to protect low-end industries. Benefiting from a strategy of “learning by doing,” with government backing the native firms would then gradually move up the chain of added value.
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Like Samuel Slater and his associates, Lowell experimented with a paternalistic form of welfare capitalism, employing young women in decent conditions. In time, as immigrants poured into the country from Ireland, Germany, and other countries, a low-wage workforce replaced children and young women. Following Lowell’s death in 1817, the company purchased land along the Merrimack River. The new mill town of Lowell became one of the leading centers of large-scale manufacturing in the United States.

Only gradually did the steam engine displace the waterwheel in mechanized manufacturing in textile manufacturing and other industries. As late as 1869, water provided 48.2 percent of the overall energy and steam power only 51.8 percent.
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Technological innovations also spurred productivity in American agriculture. In 1834, Cyrus McCormick invented the McCormick reaper, a horse-drawn machine that radically reduced the time needed for harvesting.
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In 1837, John Deere invented a steel plow that was stronger and more durable than cast-iron plows, founding a company that continues to flourish in the twenty-first century.
⁸

STEAM NAVIGATION IN AMERICA

Some of the delegates to the Constitutional Convention held in Philadelphia in the summer of 1787 witnessed a demonstration of an early steamboat by John Fitch. The early history of this technology in the United States revolves around another inventor, Robert Fulton, and the investor Robert Livingston.

Livingston, known as Chancellor Livingston, was one of the rich patroons of the Hudson River valley. He held the highest judicial office in New York for a quarter of a century, and it was in that capacity that he administered the presidential oath of office to George Washington in 1789 in New York, then the temporary national capital. Livingston served his country as part of the five-member committee that drafted the Declaration of Independence, as secretary of foreign affairs under the Articles of Confederation, and as US minister to France, where on behalf of the Jefferson administration he negotiated the Louisiana Purchase of 1803.

When Livingston arrived in 1801 in France as US minister, he met the inventor Robert Fulton, who had been given a twenty-year monopoly on steamboat navigation on New York rivers by the state legislature, on condition that he provide working steamboats, versions of which already existed in Western Europe and the United States. Fulton’s monopoly had expired, but after funding experiments on the Seine, Livingston went into business with Fulton. They renewed the monopoly on August 17, 1807, when Fulton’s steamboat, later named the
Clermont
, traveled from New York City to Albany in around thirty hours and back in about the same amount of time.

In 1809 Fulton and Livingston, hoping to expand their monopoly over steamboat navigation in New York State to the continental interior, hired their fellow New Yorker Nicholas Roosevelt, the great-uncle of Theodore Roosevelt, to visit the Mississippi. When Roosevelt returned from a trip he undertook with his wife with encouraging reports, Fulton, Livingston, and other investors, including DeWitt Clinton, one of the champions of the Erie Canal, formed the Ohio-Steamboat Navigation Company. Roosevelt then supervised the construction of a steamboat called the
New Orleans
in Pittsburgh. With his pregnant wife on board, Roosevelt took the
New Orleans
down the Ohio River to Cincinnati and then from Louisville to New Orleans, where the party arrived on January 10, 1812. Their adventures included experiencing the effects of the 1811 earthquake in the vicinity of New Madrid, a Mississippi river town in what would later be Missouri. A wall of water covered the island to which the boat was moored and nearly sank it.

Their monopoly meant that steamboat operators anywhere in New York had to pay Livingston and Fulton for licenses. In 1811, Livingston and Fulton received a monopoly from the Louisiana legislature as well. They now controlled the access of the hinterlands to the ports of New York and New Orleans.

One of their licensees in New York, Aaron Ogden, sued a former business partner, Thomas Gibbons, who became a competitor in the ferry business between New York and New Jersey. Gibbons claimed that the Federal Coastal Licensing Act of 1793 trumped the New York statute that provided Livingston and Fulton and their licensees with a monopoly. Lower courts ruled against Gibbons, but the US Supreme Court sided with him in
Gibbons v. Ogden
(1824). Chief Justice John Marshall, who shared the nationalism of his cousin George Washington, argued that the Commerce Clause of the federal constitution gave Congress power to preempt state and local laws affecting interstate commerce. In the twentieth century, Congress and the courts relied on the Commerce Clause to justify federal regulation of the economy and federal enforcement of civil rights, in the interest of creating a national market without the kind of internal barriers imposed by would-be monopolists like Livingston.

Although Fulton and Livingston had been granted a monopoly of steamboat navigation by the Louisiana legislature, in the South as in New York, their privilege was successfully contested in the courts and soon a number of steamboat companies were competing for the traffic of the Mississippi. Their ability to travel upstream against the current permitted the extension of plantation agriculture much farther inland than had been possible in the days of keelboats and flatboats. The geographic extension of cotton agriculture westward into Texas accelerated the forcible dispossession of the Indians and, by increasing the demand for slaves, entrenched the “peculiar institution” even more deeply into the economy and society of the South.

In the Midwest and the South, steamboats became the main carriers of staple crops. The steamboat dramatically reduced costs on journeys up as well as down the Mississippi. The average steamboat freight rate for the upstream journey from New Orleans to Nashville plunged from five dollars before 1820 to twenty-five cents in 1850–1859. The downstream savings in the same period were less striking but still important—from one dollar to 32.5 cents.
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THE COMMODORE

One rags-to-riches tycoon of the first industrial era in America was Cornelius Vanderbilt. “Corneel” started out as a Staten Island ferryman. With his ally Thomas Collins, Vanderbilt battled the Fulton-Livingston steamboat monopoly on the Hudson. The battle anticipated later ones, with bribes to legislators, judges, and officials and appeals to public opinion. When the Supreme Court’s decision in
Gibbons v. Ogden
in 1824 struck down the Livingston-Fulton monopoly, the race to dominate the new steamboat industry began.

Vanderbilt and Collins flourished, dominating passenger transportation between New York City and Albany. Striking out on his own, Vanderbilt threatened the Hudson River Steamboat Association, America’s largest, and received a handsome reward in greenmail, the purchase of his stock by his competitors.

Transatlantic steamboat travel was also initially organized in Britain as a government-chartered monopoly, by Canadian-born Samuel Cunard. Vanderbilt’s former partner Collins persuaded Congress to subsidize his American alternative to the Cunard steamship line. Vanderbilt now declared war on Collins, creating his own transatlantic service. After Congress cut off the subsidies to Collins in 1858, Collins was bankrupted and Vanderbilt dominated American steamships.