Economic Systems

Fred Taylor  
Frederick Taylor
Two ways the United States changed between 1800 and 1860 were size and population.

Year Size
(square miles)
1800 828,000 3,100,000
1860 3,000,000 15,158,522

Factors of the economy and reasons the North grew so quickly:

      1904 Tools and equipment
      1907 Transportation
      1908 Money and credit
      1909 Demand
    1910 Profit


The Labor Factor

1840 8% of U.S. population lived in cities of 8,000 or more.
1860 16% of population...
1900 33% of population...


Immigrants from Europe were the largest group of people to move to the Northern cities. Immigrants in the 1880's were different from earlier immigrants because they were uneducated and had few skills. They looked for factory, construction, and railroad jobs.

The Transportation Factor: Regional and National Transportation

  • Before Civil War: Barges moved wheat and corn across canals, lakes, and rivers.
  • After Civil War: Railroads replaced barges, ships became most important form of transportation.
1860 35,000 miles of railroad tracks
1890 200,000 miles of railroad tracks

  • City transportation systems were needed in the cities to move workers to and from work. Street cars allowed office workers, managers, and professionals to move to quiet, less crowded urban areas.
Starting in 1800's: Horses pulled wagons slow, inefficient, created sanitary problems.
  Elevated Trains were dirty and noisy.
  Cable cars had limited driving range.
Later in the 1880's: Street cars were quick, efficient, "inter-urban" and ran between cities.


The Money and Credit Factor: Private Banks

  • Largest private banks were in New York, & Philadelphia.
  • J.P. Morgan: Wealthy banker. Owned banks that had connections with London and Paris.
  • Private banks helped government and big businesses obtain loans for business.
  • Bankers could own railroads because the railroad owner would take out a loan and not be able to pay it back, so the bankers began to own their railroads.


The Demand Factor: Demand for consumer goods

Products in demand after Civil war:

  • Rails and railroad cars
  • Factory machinery
  • The name of the mass-produced, standard-sized clothing company was "ready-to-wear" men's clothing.

Demand for Services.

  • City people demanded indoor plumbing, electricity for home usage, gas for lighting, public parks, amusements.


The Profit Factor

Businesses in the North were in a position to make large profits after the Civil War because of a large supply of cheap labor, good transportation that provided access to natural resources and markets, and large companies that could get money and credit to buy good equipment and tools. Demand for products was great.