10 Moments That Made American Business


As Whitney recollected, he immediately “struck out a plan of a machine in my mind.” The machine was simplicity itself. Whitney took a wooden roller and studded it with nails. As the roller was turned, the nails picked up the cotton fiber from a compartment above and, when they passed through a comb, pulled the fibers through it, leaving the seeds behind. A rotating brush then swept the cotton off the nails into another compartment.

Whitney’s first crude gin immediately allowed a single laborer to do in one day what had previously taken him 50 days. In other words, it reduced the cost of ginning cotton by 98 percent.

The economic utility of this device was so obvious that the first gin Whitney built was stolen. And while he patented an improved model the next year, he was not able to enforce the patent, as any competent carpenter could build a cotton gin in an afternoon out of readily available materials. Whitney would realize only a few thousand dollars from his epochal invention.

The gamble paid off even beyond the dreams of DeWitt Clinton. His canal put the Empire in the Empire State.

But if the effect of the cotton gin on Whitney’s personal finances was relatively modest, its effect on the economy of the country can hardly be overstated. In 1793 the United States exported only about 488,000 pounds of cotton, less than one percent of total world production. The next year the total more than tripled to 1.6 million pounds and by 1801 exports reached almost 21 million pounds. Southern cotton soon began supplying New England’s rapidly growing textile industry as well, greatly fueling this country’s nascent Industrial Revolution.

The Deep South, especially in Alabama’s Black Belt and the rich alluvial soils of the Mississippi Delta, turned out to be an ideal place in which to grow cotton. Production doubled on average in every succeeding decade, as more and more land was devoted to the highly profitable crop, until it reached two billion pounds in 1860. By 1830 the United States was producing half the world’s cotton; 20 years later it was 70 percent. Cotton would be the single most valuable export of the United States until the 1930s.

But while Whitney’s invention made ginning much less labor-intensive, cotton was still a highly demanding crop, requiring about 70 percent more labor than corn to produce a good yield. Fortunately there was a ready supply of low-cost laborers; unfortunately they were slaves.

Slavery had been on the wane in the United States since the middle of the eighteenth century, as the idea that it was morally wrong began to spread. Vermont had been the first place in the Western Hemisphere to outlaw it, and most Northern states quickly followed suit. In 1787 the Northwest Ordinance forbade slavery north of the Ohio River. In the South, while there was little political push to abolish slavery, manumission became fashionable. George Washington freed his slaves in his will, as did many other planters of his generation.

But with the birth of the “Cotton Kingdom,” the demand for slaves increased sharply, and the price of a good field hand with it. The slaveholders, who made up about 5 percent of the Southern population but had disproportionate political power, found themselves possessed of an ever more valuable capital asset in their slaves. As a consequence they became more and more resistant to abolition in any form.

Slaveholding areas that were too far north to grow cotton, such as Virginia and Maryland, began to supply the burgeoning demand for slaves in newly opened areas in the Deep South. Between 1790 and 1860, 835,000 slaves were “sold south,” at an incalculable cost in human misery as families were broken up.

While cotton enriched the country economically, it greatly deepened the political divide between North and South. Had Eli Whitney invented the cotton gin only a decade later than he did, the quickly growing abolitionist movement might have had enough time to gain irresistible momentum. In that case, the curse of slavery could have been lifted from the land decades earlier than it was and the most terrible war in American history avoided. But, of course, we can never know that.

The Emancipation Proclamation of the American Economy (1824)

The steam engine designed in england by Thomas Newcomen in the early eighteenth century and greatly improved by James Watt in the 1760s was the first new source of work-doing energy since the windmill, invented a thousand years earlier. In 1807 Robert Fulton, financed by his partner Robert Livingston, built the world’s first practical steamboat, remembered as the Clermont .

Livingston was a member of one of New York’s most politically influential families, and he had persuaded the New York state legislature to grant him and Fulton a monopoly on steamboat navigation in New York waters—provided they built a boat capable of traveling four miles an hour. When the Clermont averaged four and a half miles on its first trip from New York City to Albany, the monopoly was theirs. By 1812 they had six boats plying New York waters, which the state defined as running up to the high-tide mark in neighboring states.