The Growth of the Early U.S. Economy in the West

A Brief History of American Economic Growth in the West

Gold rush prospectors
Gold rush prospectors. Hulton Archive/Getty Images

Cotton, at first a small-scale crop in the American South, boomed following Eli Whitney's invention of the cotton gin in 1793, the machine that separated raw cotton from the seeds and other waste. The production of the crop for use had historically relied on arduous manual separation, but this machine revolutionized the industry and in turn, the local economy that eventually came to rely on it. Planters in the South bought land from small farmers who frequently moved farther west.

Soon, large southern plantations supported by slave labor made some American families very wealthy.

Early Americans Move West

It wasn't just small southern farmers who were moving west. Whole villages in the eastern colonies sometimes uprooted and established new settlements looking for new opportunity in the more fertile farmland of the Midwest. While western settlers are often depicted as fiercely independent and strongly opposed to any kind of government control or interference, these first settlers actually received quite a bit of government support, both directly and indirectly. For example, the American government began investing in infrastructure out west including government-funded national roads and waterways, such as the Cumberland Pike (1818) and the Erie Canal (1825). These government projects ultimately helped new settlers migrate west and later helped move their western farm produce to market in the eastern states.

President Andrew Jackson's Economic Influence

Many Americans, both rich and poor, idealized Andrew Jackson, who became president in 1829, because he had started life in a log cabin in American frontier territory. President Jackson (1829-1837) opposed the successor to Hamilton's National Bank, who he believed favored the entrenched interests of the eastern states against the west.

When he was elected for a second term, Jackson opposed renewing the bank's charter and Congress supported him. These actions shook confidence in the nation's financial system, and business panics occurred in both 1834 and 1837.

American 19th Century Economic Growth in the West

But these periodic economic dislocations did not curtail rapid U.S. economic growth during the 19th century. New inventions and capital investment led to the creation of new industries and economic growth. As transportation improved, new markets continuously opened to take advantage. The steamboat made river traffic faster and cheaper, but the development of railroads had an even greater effect, opening up vast stretches of new territory for development. Like canals and roads, railroads received large amounts of government assistance in their early building years in the form of land grants. But unlike other forms of transportation, railroads also attracted a good deal of domestic and European private investment.

In these heady days, get-rich-quick schemes abounded. Financial manipulators made fortunes overnight while much more lost their entire savings. Nevertheless, a combination of vision and foreign investment, combined with the discovery of gold and a major commitment of America's public and private wealth, enabled the nation to develop a large-scale railroad system, establishing the base for the country's industrialization and expansion into the west.

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