The Emergence of a National Economy: 1790 and 1920

In 1790, the population of the US was 3.979 million, slightly less than the 1996 population of the Washington, D.C. metropolitan area and more than the population of Connecticut. The American people were living predominantly in rural areas - 95%; young - 49% of the population under 16; living in large families - average family size of 5.7; living east of the Appalachian mountains - only 1.6% living in TN and KY; and evenly split between the North and South. It was also primarily White - 81%; and of English origin - 83.5%.

From the very outset the colonists had demonstrated a tendency to settle in central places for defense, trade, government, and worship. Charles Town, SC, Philadelphia, Boston, New York City, Baltimore, and Newport remained the dominant cities throughout the colonial period - although they remained quite small. They were still walking cities which could be traversed in an hour.  In 1790, at the time of the first US Census, there was no dominant city and there were only 12 cities having a population exceeding 5,000. The largest was NYC with a population of nearly 33,000 in what is now Manhattan and a total of nearly 45,000 in the five boroughs. Four others had populations above 13,000 [Philadelphia, Litchfield, CN, Boston, and Baltimore].

By international standards, the nation's cities were quite small.  As early as 1800 we were already seeing in Europe the spatial impact of the industrial revolution. The industrial cities of Birmingham, Manchester, Glasgow, and Liverpool in England, which were on the leading edge of the industrial revolution, were taking their place among the western world's major cities which at that time were all national capitals, seats of political power. In 1800, London was the largest city in the western world with a population of nearly 900,000, more than 11 times the size of NYC.

The state of the nation's transportation and communications network was primitive and its industry was in its infancy. As late as 1800 it took more than 1 week to get from NYC to Buffalo, 2 weeks to get to Cincinnati, more than 3 weeks to reach Detroit and Atlanta, 5 weeks to reach St. Louis, and 6 weeks to reach Chicago. It should come as no surprise that it is reported to have taken 3 weeks for news of Washington's death to get from Virginia to Boston or that the cost of transporting goods 9 miles inland was about the same as shipping it to England during colonial times.  It was no accident tha the largest cities were on the coast where there were good natural harbors.

While agriculture was the dominant industry in all colonies throughout the colonial period, we were just beginning to see small scale factories appearing in the late 18th century. At the outset of the period, manufacturing activity was centered in the Middle Atlantic and New England regions. These regions accounted for less than half of the nation's population, but more than two-thirds of the value of manufacturing output. Within the region, PA, NY, and MA were the largest producers of manufactured products. PA alone produced nearly 20 percent of the value of the nation's manufacturing output, while the three states together accounted for nearly 50 percent of the value of output.

Within the manufacturing sector, the primary industries were producing consumer goods. The country's first textile mill, was established in Pawtucket, RI in 1790 and by 1810, the goods manufactured by loom accounted for nearly 1/3 of the value of all manufactured goods in the country. Adding to textiles the production of hats and leather, we have accounted for nearly 40 percent of the nation's output in 1810. The first big industry was clothing.

Manufacturing Output: 1810

The United States emerged from W.W.I in 1920 firmly entrenched as one of the world's leading industrial powers. The nation's population stood at 106 million, having grown at an average yearly rate of 2.5 percent since 1790. Nearly 1 of every 5 people over the age of 25 was foreign-born - the result of high rates of immigration in the pre war years. New York City was the primary port of entry for the flow of immigrants entering the US which produced pronounced regional differences. In the South, foreign-born Whites and natives of foreign parents represented less than 6 percent of the population while in Northeast, foreign-born represented approximately 25 percent of the White population and another 25 percent were natives with foreign parents. Stated somewhat differently, in New England and Middle Atlantic about 50 percent of the population had foreign parents while in the South the figure was closer to 5 percent. Furthermore, in the large cities in the North the percentage of the population with foreign parents was even higher, 68.7 percent in NYC, 63.7 percent in Boston, 62.7 percent in Chicago, 61 percent in Cleveland, 72.6 percent in Fall River, and 70.2 percent in New Bedford.

The population was now almost evenly divided between urban and rural and the center of the population was definitely moving west.  Population growth in the South Atlantic and New England regions had consistently lagged that of the nation so that by 1920 their share of the nation's population declined to 13 percent and 7 percent.  In the Middle Atlantic and East North Central regions, meanwhile, the growth rates had been substantially lower than the US average, but the absolute increase had been quite large, accounting for a full 40 percent of the growth over this period.  In the West, the share of the population in the Pacific, and Mountain regions increased from 2 percent to 9 percent and the West North Central's share more than doubled.

Those living in urban areas were now more likely to be living in the larger cities. In 1920 there were three cities, NYC, Chicago, Philadelphia, with populations exceeding 1 million and nine others with a population above 500,000. The largest city was still NYC with a population of 5.6 million. Detroit, Cleveland, and Los Angeles had joined the list of the nation's 10 largest cities, replacing New Orleans, Cincinnati, and Buffalo.   By 1920 more than one of every four people lived in the 68 cities with a population greater than 100,000 and nearly one of every ten people lived in the three cities with populations greater than 1 million.

Significant regional differentials in the rate of urbanization also existed in 1920, although the differentials were smaller than they were in 1860. The extent of urbanization was highest in New England (79.2 percent) and lowest in the East South Central (22 percent) and the West South Central (29 percent). Within the Northeast, the highest urban concentrations could be found in RI (97 percent), MA (95 percent), and NY (83 percent). In the South and West, meanwhile, there were 8 states that had less than 20 percent of their population in urban places, MS(13.4), ND(13.6), SD(16), AK(16.6), SC(17.5), NM(18), NC(19.2), and NV(19.7).

By 1920, the factory was an established feature of the American landscape. Of those engaged in gainful occupations, 30.8 percent were working in manufacturing, 26 percent in agriculture, 10.2 percent in trade, and 8.2 percent in domestic and personal service. In the service sector, 29 percent of the workers were employed in transportation and utilities, 27 percent in trade, and 16 percent in government. At that time 21 percent of the male workers and 39 percent of the female workers were classified as white collar and 6.6 percent were classified as managers. The working conditions at that time were quite bad by modern standards. In 1920 only 1 of 6 workers worked less than 48 hours and 2 of 6 worked 48 hours, while 1 of 8 worked at least 60 hours. As bad as that may seem it was a substantial improvement over the situation only ten years earlier. At that time only 1 of 12 worker 48 hours or less while 4 of 10 worked at least 60 hours. The average work week for production workers in that year was 47.4 hours and the average weekly wage was $26.02.

Working conditions also varied significantly across regions. In New England, 58 percent of workers worked no more than 48 hours a week, while in the East South Central and South Atlantic 23 percent and 28 percent of workers, respectively, worked no more than 48 hours. Clearly the worst conditions were in MS and AK where about 2 of 3 workers worked at least 60 hours. As for child labor, in 1910 the entire South (South Atlantic, East South Central and West South Central regions,) with the exception of OK, WV, and MD, had more than 50 percent of males between the ages of 14 and 15 working. In the New England, Middle Atlantic, and East North Central regions, meanwhile, all the states but PA and IN had less than 35 percent of these children employed. The participation rates among 10-13 year olds were lower, but there were still clearly defined regional patterns. In the New England, Middle Atlantic, and East North Central regions less than 5 percent of these children were employed while in MS, AL, and SC more than 50 percent were employed. The participation rates in all regions dropped sharply by 1920 although significant regional variations remained.

Within the manufacturing sector, the largest industries, in terms of value added, were the foundry & machinery, iron & steel, and lumber & timber industries. New to the list of top ten industries were printing and publishing, steel & iron, automobiles, electrical machinery, and railroad cars. Dropping from the list were flour, woolen goods, leather, carriages, and wagons.  Factories were also much larger, with 25 percent of the workers working in establishments employing more than 1000 workers and another 12 percent employed in establishments with more than 500 employees. They were also more highly concentrated in the nation's large cities, with NYC alone accounting for more than 1 of every 8 dollars worth of value added in manufacturing.  Chicago accounted for 62 percent of Illinois' manufacturing jobs while the share of the state totals for NYC, St. Louis, Detroit, and Baltimore were 52 percent, 55 percent, 35 percent, and 70 percent respectively.  Looked at a bit differently, we find that 41.8 percent of the wage earners and 46 percent of the value added was accounted for by cities with a population above 100,000, while they accounted for only 25.9 percent of the population.

As you would expect, there were substantial regional differentials in employment structure. The shares of regional employment in each of the three basic / export sectors (agriculture, manufacturing, and mining) sectors are presented in the table below. In New England, 7 of every 8 workers employed in these sectors was employed in manufacturing while in the West South Central 4 of every 5 were employed in agriculture. In ND, SD, MS, and AK more than 90 percent of employment was in agriculture while in RI, MA, NJ, and CT manufacturing accounted for more than 90 percent of the jobs. WV was the national leader in mining , with more than 1 of every 3 workers employed in this sector, and in NV, AZ, and WY more than 1 of 5 was employed in mining.

Share of Combined Employment: 1920

Finally, the fundamental regional differentials in economic structure were reflected in substantial disparities in average income. The high income regions were New England, Middle Atlantic and Pacific where per capita income continued to exceed the national average by more than 20 percent. The south remained the low income region with a per capita income 2/3 of the national average, and in the lowest of the low, the East South Central, income, per capita was barely 1/2 of the national average. The situation was also evident in the labor income figures. MI, OH, and IL all had per capita labor income figures above $1,500 while in GA and SC per capita labor income was below $700 and in the entire region bounded on the west by AK and LA and on the north by NC and TN, average incomes were below $1,000.