Components of American Economic Growth between 1820-1860 Essay

Despite the thrust of the Jeffersonians towards agrarian reliance and its expansion, by 1820 however, the American economy was moving more towards industry and technology. American economic growth was â€Å"linked to and influenced by events elsewhere in the world particularly in Great Britain which was the home of the Industrial Revolution. † The advance of industrialization fueled economic growth. There were the technological innovations that allowed for the increase in production. With the factory system, we see for the first time that goods were produced faster than the population could grow. It was fortunate that the United States has abundant supply of natural resources or raw materials necessary for the production of goods. Moreover, with increasing European migration to the Americas, the demand for additional workers necessary for economic expansion was met. There were other factors that contributed to this continued development. Improved transportation played a key role. There was a time that the Federalists and anti-Federalists were arguing against the viability and management of a continued expansion. This has now been rendered moot as canal-building projects in the 1820’s and 1830’s and the construction of the railroads which dramatically transformed this situation. Moreover, it was also instrumental in bringing about economic and geographic expansion. â€Å"Canals and railroads provided farmers, merchants and manufacturers with cheap and reliable access to markets and goods and encouraged Americans to settle the frontier and cultivate virgin lands. † Before the canals, the freight rates were prohibitive and it was not financially viable to produce more that the local market. Then, seeing Britain’s success with the steam-powered railways, the U. S. followed suit with the construction of its railroads which does not freeze over unlike canals. With railroad expansion, the U. S. experiences faster economic growth. â€Å"Goods, people, commercial information flowed even more predictably, rapidly and cheaply. † As well, improved transportation â€Å"stimulated agricultural expansion and regional specialization. † Rather than produce diverse products for local consumption, they can just import staples from other regions and focus instead on producing products that are high yield and suitable to their soil and climate. Hence, by the late 1830’s â€Å"the old Northwest had become the country’s granary while New England farmers turned to dairy products. † Then there was the infusion of capital from foreign investors and from the fast-growing merchant class. There were new investments and the rise of new enterprise. While cities had the major share of factory concentration which led to urbanization, there were one or two factories as well which located in the smaller towns. Local and state governments did their share in encouraging entrepreneurship by passing laws of incorporation, granting tax breaks or monopolistic control, underwriting bonds for improvement projects and provision of loans. Judicial decisions also created ownership and concept of property rights and the binding nature of contracts. There was also the rapid spread of education that fostered innovation, productivity, discipline and skills development. Then, there were the intangible factors. The Americans in this era were simply thinking differently. The entrepreneurial outlook was present and there was a constant drive for change and improvement. Work Cited â€Å"Economic Transformations in the Northeast and the Old Northwest. † Name of Book. XXX ed. Year Published.