Today’s guest post is from Lindsay Schakenbach, a Ph.D. candidate in history at Brown University. Her dissertation, “Manufacturing Advantage: War, the State, and the Origins of American Industry 1790-1840,” explores the development of the arms and textile industries in the context of national security, diplomacy, and territorial expansion.
Look through any opinion section of The Wall Street Journal and you’ll almost certainly find condemnations of government intervention in business or a lambasting of the inefficiencies of bureaucratic meddling. Too much government, these commentators say, is bad for the economy. A reexamination of America’s origins as an industrial superpower, however, suggests a different mantra. Take the founding of Lowell, Massachusetts, for example. Even if we debate the birthplace of the American Industrial Revolution–Pawtucket, Rhode Island?, Patterson, New Jersey?–the fact remains that Lowell was the site of the first large-scale integrated factory system in the United States and stands as a symbol of the birth of industrial capitalism. And its rise to prominence depended on federal meddling.
While excellent scholarship has focused on the entrepreneurial visions and cultural mores of Lowell’s capitalists, the labor they employed, the machines they used, and the slave-produced cotton they purchased to spin, weave, and dye raw cotton into finished consumer goods, no one has fully considered the role of the measly early national federal executive. Yet, in the early republic, public officials were, alongside factory owners and power loom weavers, central players in the emergence of domestic industry. Indeed, factories were sites where federal politics and international relations converged with individuals’ labor and ingenuity.
Three years before the group of Boston merchant/investors-turned-manufacturers known as the Boston Associates broke ground at Lowell, U.S. Secretary of State John Quincy Adams negotiated with Spain for the acquisition of the Floridas and the extension of the United States’ southern boundary to the Pacific coast. Adams included in the 1819 treaty the stipulation that the United States would assume $5 million of American citizens’ claims against the Spanish government, which stemmed from commercial losses sustained under Spanish jurisdiction. Adams capped U.S. liability at $5 million, which meant that only some claimants would be recompensed. A core group of Associates, who had recently pivoted from commerce to manufacturing with a factory at Waltham, Mass., received $1 million of the claims paid nationwide.
This source of capital coincided perfectly with the incorporation of the Merrimack Manufacturing Company in the area that would be named Lowell several years later. The claims payments the Associates received are important both because they reveal the allocation of federal power for business development, and because they represent a source of industrial capital that has been neglected by scholars who point to the private commercial wealth that enabled these textile investments. In fact, if we examine the disbursement of funds for claims as subsidies, the picture of federal intervention in the development of large-scale textile manufacturing in New England becomes clearer. Adams, long a supporter of industrialization and national development projects, built into the 1819 treaty the opportunity for northern merchant-industrialists to reap financial gain.
The federal executive not only supplied capital; it also improved demand overseas. As production at the Associates’ mills expanded, they sought new markets for their wares, which U.S. diplomats helped to manage, particularly in newly independent Latin America. In 1824, Nathan Appleton, one of the proprietors of the Merrimack Manufacturing Company, sent cloth samples to William Tudor, a Bostonian who had been appointed consul to Lima, Peru, a year earlier. Tudor tested out these samples with various shopkeepers and sent back marketing advice to Appleton on which cloths would sell best among which classes of consumers. Each of the Associates’ new mills specialized in different types of cloth, and this information enabled the directors at Lowell to make calculated production decision about export destinations.
Their relationship with Tudor was more than just a marketing boon, however. Following independence, the Peruvian government sought to bolster its own domestic industry with protective tariffs. Recognizing that the 80% duty on certain cloths produced in America threatened to hamper U.S. trade, Tudor wrote letters to the State Department insisting that something be done. He contemplated letting manufacturers overcome the trade barrier themselves, but quickly reconsidered. Diplomatic negotiations would have to make “free” market competition possible. Assertively, Tudor suggested that the Peruvian minister reconsider the nation’s tariff policy, reminding him that half of all the foreign duties that Peru’s treasury received came from American trade, lest the minister forget Peru’s most important trading partner. Tudor’s polite threats worked. The Peruvian government complied by lowering the tariff, and Peruvian cloth, which had had the upper hand in Peruvian markets since at least the early 1820s, lost out to U.S. imports.
The federal executive, then, had the power to shape industrial development in a way that individual entrepreneurs, workers, and other governing bodies did not. While tariff legislation and support of internal improvements were often hamstrung by legislative hurdles in Congress, the executive branch doled out public monies and conducted business with foreign governments. Accountable to Congress, but unencumbered by voting constituents, executive officials had the ability to determine who received support beyond what national tariff legislation could provide. When we step back and view Francis Cabot Lowell’s famous industrial namesake in its larger geopolitical context, we see the hand of the government working with a select section of the private sector to determine the course of industrialization in America.