Economic History of the US
Revolution to Civil War, 1776-1860
Lecture #2
Peter Allen
Econ 120
Map 8.1 US Land Expansion
Early Western Migrations
 Population at independence (in
thousands)
1700
1780
Total
260
2,728
White
239
(92%)
2,159
(79%)
African
2
(8%)
569
(21%)
Early Western Migrations
 Population in the “west” (thousands)
Total
West
1790
3,929
250
(6%)
1812
7,200
1,000
(14%)
1860
31,400
13,000
(41%)
Early Western Land Settlement
 Gov. Land Policy, 1776-1860
 At independence, 13 state plus large
unorganized territory
 How to administer and privatize?
 Settlers wanted to buy…
 …how to establish market and sell?
 At first, government set prices too high…
 …vast surplus (S>D) caused it to drop until…
 1862: gov. set price at zero
Northwest Ordinances
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1.
First land policies of Confederation
Northwest Territory, unsettled land north of Ohio River
Ordinance of 1785 (OH, IL, ID, WN, MI, Min part)
Inventory: Land survey, base lines and principal meridians


Lot/section = one square mile (640 acres)
Township = 36 square miles, or 23,040 acres
2. Land to be sold at auction in large tracts



Minimum price (p), set at $1 per acre
Minimum quantity, set at 1 lot ($640)
Fast and easy, Cash cow
 Effect…Little land sold…



What was the market price?
Avg. worker’s income, ≈$300 per year, 2.13 years income
Beyond the means of most who wanted to settle, New Englanders
The Problem…price control well
above market equilibrium…
Price of
Land
Supply
Surplus
$1.00
0.25
Demand
0
4
7
10
Quantity of
Land
NW Ordinance of 1787
 Process for bringing NW territory into the
“confederation”
1. Federal Territory …once 5,000 male
inhabitants, territorial legislature elected
•
•
administered by a fed. governor appointed by Congress
One representative (nonvoting) sent to Congress
2. New State…when pop. reached 60,000
•
…equality with existing states
 NW territory to be divided into 3-5 states
Land policy evolves to vast Surplus
 Land Acts, 1800, 1804, 1820, 1832

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min. parcel lowered to 320, 160, 80, and finally 40 acres
Min. price lowered to $1.25 per acre
1832, migrant could get a 40 acre parcel for $50, equiv. 2
months wages
 Still a vast excess supply, gov. “controlled price” still too
high, “squatting”
 Homestead Act, 1860



160 acres for processing fees, i.e. P = Ø
Opposed by southern states, vetoed by P. Buchanan
Signed by A. Lincoln in 1862
Migration to NW Territory
 Migrants from NE and Mid-Atlantic states
 Favored northern parts of Ohio, Indiana,
Illinois
 Another try at agriculture…copy the South?
 Productivity, economies of scale
 “Midwest” specialized in hogs, corn, wheat
 Profit first hampered by high transportation
cost
 Econ. incentive to find a way to get
products to Eastern markets
Migration to NW Territory
 Later route: Cumberland
Gap into Kentucky,
southern Ohio, Indiana,
Illinois and Tennessee
 People from Mid-Atlantic
and southern states
 Same motives
 Profit, productivity, better
ag. land
 Mid-west and upper
south
Table 8.1 Population in the
Trans-Appalachian Statesa
Figure 8.1: Pop. Distribution by
Region, 1810–1860
Southern Migration
 Economy of 5 southern states hurt most by:




Independence, loss of export market in England
Esp. tobacco, indigo, rice
Little chance to recover
Jefferson’s effort to stay out of Napoleonic Wars
 Plantation system revived by…
1. Cotton…after 1794
2. Better land and climate conditions as wealthy planters
moved westward into…Alabama, Mississippi,
Louisiana, W. Texas
3. Entrenchment of Slavery
Cotton gin, patented March 1794
 Eli Whitney
 Huge increase in
productivity…
 One worker…
 55 lbs./day
 Instead of
 1 lb.
 5,400%
Southern Migration
 Western plantations – Cotton…
 …became central to southern
agriculture…
 As export and also NE textile
manufacturing
 By 1860…
 Cotton was ½ of all merchandise exports
 10X larger than second largest export, wheat
 cotton goods/fabric was #1 manufactured export
Map 8.4 Shifts in Cotton
Cultivation
Missouri Compromise, 1820
New England, first move to
specialize in manufacturing…



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Being forced out of the ag.
Competition from west, poor conditions for ag.
Capital and labor force into manufacturing
Temp. opening of overseas markets
Napoleonic wars
 Concentration of initial investments….
 “scale” in textiles, like England
 England no longer trying to suppress
 Dairy farming
Far Western Migration






California
Mexican Territory until
Gold discovered, Jan. 1848 in Sacramento…
…Sutter’s fort
Technically Mexican territory
“Gold Rush”…population (non-native)…




1848…15,000
1849…40,000 Easterners in SF
1852…260,000
Bear Flag revolt, 1846
 US Territory, Feb. 1848 – Sep. 1850
 Admitted as a free state, Sept. 1850
Mexican-American War, 1846-48
 Over US annexation of
Texas, March 1845 (Pres.
Tyler)
 Border, Nueces or Rio
Grande
 Treaty of Guadalupe
Hidalgo, Feb. 1848
 Cession of Alta California,
and part of Nuevo México
to US
 Terms dictated by US
 Paid Mexico $15 mm
$313 mm, 2008$)
Organization of Western Settlement
 Three ways for a country to expand territory…
1.
2.
3.
Treaty
Purchase
Conquest
 First territory of US acquired by Treaty or
Purchase…
1.
Territories ceded by Britain (1783) - Atlantic to the
Mississippi
Louisiana (1803) - purchased from France
2.
•
•
•
3.
Ffr 60mm. + Ffr18mm of debt =
$11.25 + 3.75 mm. = $15 million, nom. 3¢/acre
$213 million in 2008 $, 43¢/acre
Florida (1819) – purchased from Spain (no cost, $5
million of claims against Spanish Gov.)
Organization of Western Settlement
 Later acquisitions made by conquest
 US gov assumed European “right of conquest”…


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





…from England and other colonial powers
based on, superior force, Christianity, “verdict” of advancement
Right of subjugation of indigenous Americans
Texas annexation, 1845
Oregon Country, 1846
Mexico Cession, 1848 ($15mm., $369mm today)
Gadsen Purchase, 1853 ($10mm, $255mm today)
Alaska Purchase, 1867, ($7.2mm, $110mm today)
Hawaii Annexation, 1898
 Pre-Civil War, southern leaders had designs on
Mexico and Cuba
US in 1819