The economic growth of the United States in the nineteenth century was strategically influenced by the spread of a market economy, by the shifting of resources from lowervalued (subsistence) to higher-valued uses (production for market), and by the growth of specialization and divisions of labor in production. As Adam Smith and early nineteenth-century contemporaries knew, levels of productivity were vitally dependent on the size of the market, especially in manufacturing. Of course, market size was limited by the costs of moving goods and negotiating exchanges. In this early era, transportation costs were the most important component of these costs. For these many reasons, special concentration on transportation, mode by mode, is warranted and, indeed, is vital to our understanding of long-term economic growth and the location of people and economic activity. A viable transportation system was key to forming a national market (as discussed in Economic Insight 9.1, on page 164). In combination, the improvements in transportation from 1800 to 1860 were so striking as to merit the description “a transportation revolution.” The effects of this revolution are seen in the falling costs of obtaining information and moving people and goods, in settlement and production patterns, and in the forging of a national economy. There are many parallels between the transportation revolution of the nineteenth century and the information revolution we are observing today.
World History
