Economic Power, Part IV
The last few weeks we've been exploring
the origins of America's economic power and, using
John Steele Gordon's book "An Empire of Wealth" as
our guide, about now I would be looking into the importance
of cotton and Eli Whitney. But it just so happens
four years ago I did a series on both and it made
sense to revisit these pieces, incorporating some
of Gordon's own thoughts into the material, including
the following broad analysis.
is John Donne's dictum that we are all a part of the
continent more true than in the world economy. It
is built, by definition, upon an endless exchange
of goods between individuals, industries, and nations,
the most intricate net in the human universe. When
a change happens anywhere in that economy, that change
ripples through the whole. And when two separate developments
happen to interact in a major way, it can produce
an economic synergy that is both great and terrible.
better example of this can be found than in what happened
when a young New Englander's simple, bright idea to
help depressed southern agriculture interacted with
the aborning Industrial Revolution in the Midlands
of faraway England. Besides producing the most successful
cash crop in American history, it also revived the
rapidly decaying institution of bondage labor, and
nearly destroyed the United States."
the end of the 18th century, the human race wore miserable
clothing. We had garments that were difficult to wash,
thus they, and we, were filthy. Cotton was different.
It was easy to clean, could be worn next to the skin
and, in warmer climes, it was the primary garment,
while in colder countries it was still worn next to
to produce a pound of cotton thread it took about
12-14 man days. Compare this to other textiles at
the time; six for silk, 2-5 for linen and 1-2 for
wool. It was only a matter of time before the clever
people, who make life easier for those of us who aren't,
came up with some solutions to make cotton more viable.
the Britain of the late 18th century, a number of
inventions were spawned. First you had the Hargreaves
spinning jenny (1764), then the Arkwright "water frame"
(1769), and Samuel Crompton's spinning mule (1779).
Arkwright's invention was a water-powered machine
that twisted carded cotton into thread, while the
spinning mule did the work of 200 spinners. Whereas
in 1765 half a million pounds of cotton had been spun
in England, all of it by hand, by 1784 the total was
12 million, all by machine. And in 1785 the Boulton
& Watt steam engine was introduced to power these
contraptions. Some label this last development the
first Big Bang of the Industrial Revolution.
an aside it's interesting to note that Britain carefully
guarded the secrets of the inventions; forbidding
the export or descriptions of them while preventing
the departure of informed mechanics. Compare that
to today and our porous borders for all things technical.]
first American cotton bale arrived in Liverpool in
1784 and soon thereafter Eli Whitney transformed the
was born in 1765 on a farm in Massachusetts. Back
then you had to pretty much produce what you needed
in the way of crude implements, shoes, and clothing,
but it was in the little workshops where the spirit
of invention often flourished. As a boy Eli Whitney
was an inventive sort, setting up a forge to make
nails for his father.
worked his way through Yale as an engineer and upon
his graduation in 1792 he headed down to South Carolina
where he was to take a job as a tutor. On the way
he decided to visit fellow grad Phineas Miller, overseer
of Mulberry Hill near Savannah, Georgia. The plantation
was owned by Mrs. Nathaniel Greene, widow of the Revolutionary
the mid-1780s in coastal Georgia and South Carolina,
a long- fiber "Sea Island cotton" was being grown
commercially that could easily be separated from its
shiny black seeds by squeezing it through rollers.
But this particular kind of cotton had little chance
of making it in the soil and climate found elsewhere
in the South. The green seed in these other regions
clung to the lint so that the rollers crushed it and
spoiled the fiber. One person could barely separate
a pound by hand over the course of a day.
with this as background, upon Eli's arrival Catharine
Greene noticed that he had quite an aptitude for all
things mechanical and she suggested he devise a mechanism
for removing the seed from the cotton. He did so in
10 days. Historian Paul Johnson relates how Whitney
was able to do it.
a cat claw a chicken and end up with clawfuls of mere
feathers, he produced a solid wooden cylinder with
headless nails and a grid to keep out the seeds, while
the lint was pulled through by spikes, a revolving
brush cleaning them. The supreme virtue of this simple
but brilliant idea was that the machine was so cheap
to make and easy to operate."
invention, the "cotton gin" ('gin' being short for
engine) was unfortunately "absurdly simple." A simple
description was all any skilled worker needed to rip
it off and by the time a patent was secured (1794)
a number of copies were already in use. [Phineas Miller
was a party to the patent as well.] Whitney ended
up earning no more than $100,000, mere peanuts, for
an invention that would help change the course of
the invention of the cotton gin was not a good thing
for those who would become slaves. One working on
a plantation using the gadget could produce 50 pounds
of cotton a day instead of one.
Whitney wasn't finished. A driven, Puritan type, he
was a lifelong bachelor interested only in his job.
Eli lived in a simple farmhouse with a few workshops
near New Haven, Connecticut. He always seemed to be
short of money and Congress denied his attempt to
renew his patent.
got so bad that during the War of 1812 he directly
petitioned President Madison for funds, though earlier
he had received money from various states, including
South Carolina which gave Whitney $50,000 to cover
1798 Eli built a firearms factory and it was during
this phase that he came up with the "American System,"
the theory behind mass production. Whitney grasped
"that the way to produce machinery or products in
vast quantities at low prices was to achieve interchangeability
of parts, uniformity, standardization, on a scale
never before imagined." [Paul Johnson] Whitney was
creating some of the first machine tools.
the British and French scoffed at his ideas because
it took away the craftsman's "individuality." But
labor costs were so high it was often unfeasible to
keep a craftsman on the books. Whitney was looking
for a process whereby marginally skilled men could
be easily trained and his work pool ended up being
a largely immigrant one. It would take decades before
the superior Europeans (ahem) understood that America's
labor- saving machinery was far better than anything
to cotton, unfortunately the labor used to harvest
the cotton crop was of a slave nature and it's because
of this that cotton played a paramount role in the
genesis of the American Civil War. John Steele Gordon
1793 the price of a slave ratcheted upward. A slave
who would have sold for $300 before the cotton gin
was selling for $2,000 and more by 1860. The slave
holders, possessed of an increasingly valuable asset,
were less and less inclined to part with what became,
in the early decades of the nineteenth century, an
enormous capital investment. Even the parts of the
South outside the cotton-growing area became deeply
involved economically with continuing what came to
be called the South's 'peculiar institution.' As tobacco
became less and less important to the economy of such
states as Virginia and Maryland, they began selling
their surplus slaves to the new cotton states. Between
1790 and 1860, some 835,000 slaves were 'sold south.'"
the early 1800s, Europe, particularly Britain, had
a ravenous appetite for cotton and the American South
was far and away the leading exporter. In 1810 the
South was supplying Britain with 48% of its needs.
By 1830 that percentage would rise to 70% and hold
that level up to 1860.
the end of the War of 1812 annual cotton production
in the South was less than 150,000 bales. By 1860
that total would rise to 3.8 million (almost two billion
pounds). Not only was cotton America's largest export
(as it would remain until the 1930s), it was also
the biggest single source of the country's growing
improvements in harvesting techniques the price of
cotton yarn fell drastically to the benefit of all.
Historian Paul Johnson notes that by the early 1860s
the price of cotton cloth was about one percent of
what it had been in 1784.
is no instance in world history of the price of a
product in potentially universal demand coming down
so fast. As a result, hundreds of millions of people,
all over the world, were able to dress comfortably
and cleanly at last."
again, there was a price and it was the slaves who
paid it. Ironically, were it not for cotton various
religious movements across the land may have swept
the slave practice away. Cotton, instead, turned slaveholding
into a powerful political force.
cotton also played a leading role in some of the financial
disasters that plagued America in the first half of
the 19th century, particularly the Panics of 1819
the former, the source of the turmoil was a sudden
collapse in cotton prices in the English market. In
1818 American cotton had temporarily soared to 32.5
cents a pound. The high price forced British textile
manufacturers to turn away from this source and look
to cheaper ones from the East Indies, so that by 1819
the price had fallen to 14 cents.
Panic of 1837 was the result of declining British
demand for cotton, mostly due to existing stockpiles,
which set off bank runs in the U.S. Then in 1839 a
bumper cotton crop led to a new collapse in prices,
setting off a depression.
price subsequently fell to, and remained below, 10
cents a pound through most of the 1840s and into the
1850s, when it finally poked back above that level
in 1855, reaching 15 cents in 1857.]
1850 in America, the slave states comprised 42% of
the population but only 18% of the manufacturing capacity.
And the vast majority of new immigration was finding
its way to the North. As for cotton, 70% was exported,
5% stayed in the South and the other 25% went to northern
mills; where the value added by manufacturers equaled
the price that raw cotton brought the South, which
in turn imported two-thirds of its clothing and other
manufactured goods from the North or abroad. And a
final hook was that the very ships that carried cotton
from the South and returned with manufactured goods
were almost exclusively owned by northern or British
with cotton prices firming after the plunge of the
late 1830s / 1840s, and with bumper crops, many planters
began to think twice about secession as the movement
gained ground. But there was still this issue of manufacturing
capacity. The rallying cry in the South became "Bring
the spindles to the cotton." Wrote one newspaper of
the time, addressing the slave issue, "Why should
all our cotton make so long a journey to the North,
to be manufactured there, and come back to us at so
high a price? It is because all spare cash is sunk
here in purchasing Negroes." Because of slavery, a
cotton plantation could be laid out and in full production
in two years and it was even possible to harvest a
crop in one year.
the census report of 1860 the government said, "The
growth of the culture and manufacture of cotton in
the U.S. constitutes the most striking feature of
the industrial history of the last 50 years."
1860, while the image of the South's economy was still
poor the average per capita income of $103 was good,
about the same as Switzerland and exceeded only by
the North, Great Britain, and Australia. And as the
secessionist cries picked up in the slave states it
was South Carolina Senator James Hammond who proclaimed,
"You dare not make war upon our cotton. No power on
earth dares make war on it. Cotton is King." King
Vicksburg newspaper editorialized in 1860, "(The South),
safely entrenched behind her cotton bags, can defy
the world - for the civilized world depends on the
cotton of the South."
it was largely for this reason that the South had
the illusion that "King Cotton" would lure military
aid and political sympathy around the world, especially
from those like Britain and France who appeared to
be so dependent on the fiber. At one point before
the war started, the Confederates imposed a voluntary
embargo on shipments as a way of showing the Europeans
just how important the South was, but the overseas
textile manufacturers were able to subsist on the
record crops of 1859 and 1860. The British manufacturers,
in particular, welcomed the opportunity to diversify
away from America so, by the time they needed more
cotton, it had become available from new sources in
Egypt, India, and elsewhere.
after Jefferson Davis became president of the Confederate
States he hued to the line that Europe could not survive
without the South and its exports. Plus, Davis just
knew that when the Europeans saw that northern oppression
was endangering their cotton supply, they would come
running to the aid of the South.
course you all know the rest of the story. Without
cotton there may not have been an American Civil War.
of the American Republic," Morison, Commager, Leuchtenburg
"A Great Civil War," Russell Weigley
"A History of the American People," Paul Johnson
"America: A Narrative History," Tindall and Shi
"Battle Cry of Freedom," James McPherson
"An Empire of Wealth," John Steele Gordon
going to take a break from this series next week as
we instead look at the worst six months of the year
for the market, historically.May through October.