Question

In what way did the American System of manufacturing change the traditional patterns of U.S. foreign trade?

Answer 1

The Market Revolution (1793–1909) in the United States was a drastic change in the manual-labor system originating in the South (and soon moving to the North) and later spreading to the entire world. Traditional commerce was made obsolete by improvements in transportation, communication, and industry. With the growth of large-scale domestic manufacturing, trade within the United States increased, and dependence on foreign imports declined. The dramatic changes in labor and production at this time included a great increase in wage labor. The agricultural explosion in the South and West and the textile boom in the North strengthened the economy in complementary ways.The importance of the federal government also grew during this period. Congressman Henry Clay introduced the American System to develop internal improvements, protect U.S. industry through tariffs, and create a national bank. Federal and local governments, as well as private individuals, invested in roads, canals, and railroads. The 1825 completion of the Erie Canal was a tremendous engineering feat and opened the West for trade with markets on the east coast.In recent years, the shirking U.S. trade balance has drawn a good deal of attention and caused some concern here and abroad. The balance on merchandise trade reached a peak of $6.8 billion in 1964, and then shrank to about $650 million in 1968 and 1969. This reduction was due to some extent to the excess demand in the United States in 1966-68, and the ensuing inflation. But, as some observers have pointed out, the inflationary boom could explain only part of the story.' They suggested that the deterioration was the result mainly of longer-term trends in the basic U.S. competitive position. This view has gained more prominence as the increase in the U.S. trade surplus to $2.1 billion in 1970 was followed by a deficit in the first half of 1971 despite the slowdown in domestic economic activity. Thus, the recession has not been accompanied by an improvement in the trade balane. Theses changes were the direct result of the American industrial revolution that was founded on rising investment, employment, and productivity in the manufacturing sector. In 1880, when the agricultural frontier had largely disappeared, almost one-half of the American workers were still farmers and only one in seven workers (less than 15%) worked in manufacturing of any sort. The industrial sector, as late as 1870, consisted primarily of small firms and workshops that relied on artisan technology to produce tools, furniture, building materials, and other goods for local markets . Many small industries, such as grain mills and sawmills, were often located in rural areas close to flowing rivers in order to power machinery. Following the technological revolutions of the early industrial age, workshops and small foundries were supplemented by large factories engaged in mass production. The development of commercial electricity at the end of the 19^th century allowed industries to take advantage of the labor supply in large cities. The scale of change is illustrated by the rise in the share of manufacturing horsepower generated by electrical motors from 23% in 1909 to 77% in 1929.There is a long list of potential factors variables or conditions that might have caused the American industrial revolution, including the discovery or adoption of new technologies, the availability and mobility of capital, the expansion of markets as a result of new transportation systems, added demand from a growing population and the expansion of trade, increasing entrepreneurship, stable political and institutional systems that foster cheaper credit and the enforcement of contracts, improvements in human capital and meritocratic social mobility of talent, the increasing division of labor in production, and the specialization of enterprises . This list, which is neither exhaustive nor mutually exclusive, does not specify which factors are exogenous nor does it address the question of which factors are absolutely necessary and which may simply facilitate economic growth and industrialization.Exports and related services accounted for about one-sixth of income in the decade before revolution. Just before the revolution, tobacco was about a quarter of the value of exports. Also at the time of the revolution the colonies produced about 15% of world iron, although the value of exported iron was small compared to grains and tobacco. The mined American iron ores at that time were not large deposits and were not all of high quality; however, the huge forests provided adequate wood for making charcoal. Wood in Britain was becoming scarce and coke was beginning to be substituted for charcoal; however, coke made inferior iron. Britain encouraged colonial production of pig and bar iron, but banned construction of new colonial iron fabrication shops in 1750, but the ban was mostly ignored by the colonists