Economic Conditions in 1789.


Before entering upon an account of the financial measures of the new government a brief estimate should be made of the economic conditions of the country. The population in 1790 was nearly 4,000,000, of which about one-sixth was colored, for the most part slaves. It was scattered as a fringe along the Atlantic seaboard from the south of Georgia to the north of Maine; in no latitude did it extend into the interior as far as 500 miles,  Albany was a frontier town and Pittsburgh a pioneer settlement. The population was still largely rural; there were but six cities of 7500 or more inhabitants, and the largest of these, New York, had only 33,000 people. Work and industry were the rule of life throughout the country. Agriculture busied nine families out of ten; land was cheap and bought on easy credit, for there were unlimited unsettled tracts stretching out to the West, partly in State lands, partly in the national domain. The value of property employed in agriculture was far greater than that devoted to manufactures or commerce. Excepting the slave plantations of the South, the farm-holdings were small, and the cultivation of each was carried on by members of the family with little hired labor. This developed throughout the North a general equality of political and social interests, if not of economic welfare.

Little change had come about in agricultural products since the colonial period. In the South, particularly in Georgia and the Carolinas, rice of a superior quality was raised in large quantities and formed an important export; the same States also produced indigo for foreign shipment as well as for domestic use. Tobacco was a staple product throughout the South from the borders of Pennsylvania, and contributed a generous share of the exports. The wheat country extended from Virginia to the western end of New England, and American flour had an established reputation in the West Indies. Hemp and flax were raised in large quantities and formed the basis of important manufactures. Sheep for their wool, cattle, and dairy products also contributed to the prosperity of the farmer. The export of salt provisions was increasing. One of the most important economic resources was still the forests; the naval supplies, especially the tar, pitch, and turpentine of North Carolina, showed no exhaustion; and lumber and timber products were shipped from almost all the States. The clearing of the forests also yielded a by-product of pot and pearl ashes, the sale of which frequently tided the pioneer over the earlier months of privation.

Although agriculture was everywhere the principal occupation, the rapid expansion of settlement caused an increasing demand for mechanics to build the houses, barns, and workshops ; and progress was making in some lines of manufactures. The growth of manufactures was especially marked after the establishment of peace; it is estimated that in 1787 the importation of manufactures into Massachusetts was only one-half what it was twenty years before. As soon as the restrictions of the colonial system were removed, the genius of the American people was displayed in every department of mechanical activity then known,  witness the concise description given by Hamilton in his memorable Report on Manufactures in 1791, as well as the equally authoritative papers of Tench Coxe, in which the capacities of the new republic are defended from the aspersions of English critics, who looked for an easy industrial subjugation, even if political supremacy were lost.

Hamilton's investigations showed that there were seventeen distinct branches of manufactures which were carried on as regular trades and which had attained a considerable degree of maturity. Naturally these industries were closely related to raw materials which the country then afforded. As examples may be mentioned the following: manufactures of leather, trunks, gloves, parchment, and glue; tanneries were numerous, and foreign competition was hardly to be feared. From iron came bar and sheet iron, rods and nails, stoves, household utensils, and implements of husbandry, some edged tools and hollow ware. There was an abundant supply of charcoal, and iron ore of almost every quality was abundant; one-half of the steel consumed in the United States was home-made. Of copper there were manufactures of wire, utensils for distillers, sugar refiners, and brewers, and articles for household use. Timber was the raw material of ships, an industry which had been carried to a high point of perfection; there were also manufactures of cabinet and coopers' wares. From grain came flour, and also the important products of ardent spirits and malt liquors; the rum distilleries of Massachusetts were dependent for their raw material upon the molasses of the West Indies, but in the Middle States stills were common for the distillation of the home grains and fruits ; the largest part of the malt liquors consumed was the product of domestic breweries. From flax and hemp were .produced cables, sail-cloth, cordage, and twine, and though the manufactures were not large, there was a promising beginning. Manufactures of paper were well advanced, and entirely " adequate to national supply." Different manufactories of glass were on foot, and among the extensive and prosperous domestic manufactures were those of refined sugars and chocolates. In addition there were manufactures of bricks and pottery, hats, oils of animals and seeds, tin-ware, carriages, snuff, starch, painters' colors, and gunpowder. The variety of these manufactures was no more striking than the resourcefulness in household manufacture ; industry as a whole was in the handicraft stage ; cloths of wool, cotton, and flax were thus produced in the greatest variety; and in some districts from two-thirds to four-fifths of all the clothing of the inhabitants was made in the home. Woolen manufactures were only beginning to take a place as a factory industry, while the establishment of cotton mills was not much more than a prophecy.

The means of internal communication were undeveloped. The Hudson River was navigable 180 miles from the ocean; the Delaware 160; and the Potomac 300 miles above the falls near Georgetown. A few short and narrow canals had been constructed. Roads were everywhere poor and transportation was slow. In 1790 there were but 75 post-offices; mails were infrequent, as, for example, but three per week between New York and Boston, requiring in the best of weather five days on the road. These impediments to travel and intercourse constituted an important element of friction which needs to be thoroughly appreciated as a partial explanation of the difficulty of imposing internal taxes which would be acceptable to the whole country.

The foreign trade can be described more definitely. The Americans had long enjoyed an economic advantage in the building of ships, and the enterprise of those engaged in the fisheries had developed a skilful and daring race of sailors. The country exported its surplus products of agriculture and forestry, and with the proceeds bought freely of luxuries and manufactures which were not available at home. The value of the exports at this time was about $20,000,000, and that of the imports probably about the same. Trade returns are, however, too incomplete to present a satisfactory analysis of foreign commerce, particularly of imports. As in the colonial period, exports to the West Indies provided funds with which to pay for imports from Europe.

A general survey of economic conditions must also take into ; account the growth of sectional interests. Slavery in the South was developing an economy of its own ; New York and the New England cities were strongly inclined to commercial undertakings ; Pennsylvania was awakening to the possibility of manufactures. These several interests were to furnish storm-centers in the debates and govern the discussion of economic questions.


Website: The History
Article Name: Economic Conditions in 1789
Researcher/Transcriber Miriam Medina


BIBLIOGRAPHY: Financial history of the United States by Davis Rich Dewey, PH.D., LL.D., Fourth Edition; Longmans, Green, and Co. 1912
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