For example, McPherson describes the momentous "transportation revolution" of the first half of the 19th century, which began with overland travel limited to muddy wagon tracks and rivers, followed by a massive network of railroads and canals enabling fast shipping from the western frontier to the coast. Communication that had been limited to the postal service and couriers on horseback was revolutionized by a telegraph network that allowed the instantaneous nationwide communication of prices, allowing price disparities in distant parts of the country to by arbitraged away by traders. So...
The transportation revolution refashioned the economy. As late as 1815, Americans produced on their farms or in their homes most of the things they consumed, used, or wore. Most clothing was sewn by mothers and daughters, made from cloth that in many cases they had spun and woven themselves by the light of candles they had dipped or by natural light coming in through windows in houses built of local materials from a nearby sawmill or brickyard by local carpenters or masons or by the male members of the household. Shoes were made by members of the family or by the village cordwainer from leather cured at a local tannery. Blacksmiths forged the tools and farm implements used in the community. Even firearms were built with handicraft skill and pride by a nearby craftsman. In larger towns and cities, master tailors or shoemakers or cabinetmakers or wheelwrights presided over small shops where they worked with a few journeymen and an apprentice or two who turned out fine custom or "bespoke" goods for wealthier purchasers. In an age of slow and expensive overland transport, few of these items were sold more than twenty miles from where they were made.Several explanations have been proposed for the unique, capital-intensive, mechanized pattern of development in the United States, McPherson explains: the scarcity of labor, which made laborers open to invention and mechanization, the sheer wealth of capital available in the form of natural resources, and high levels of education. (17-18)
This pre-industrial world could not survive the transportation revolution, which made possible a division of labor and specialization of production for ever larger and more distant markets. More and more farmers specialized in crops for which their soil and climate were most suitable. With all the cash from sale of these crops they bought food and clothing and hardware previously made locally or by themselves but now grown, processed, or manufactured elsewhere and shipped in by canal or rail. To sow and reap these specialized crops, farmers bought newly invented seed drills, cultivators, mowers, and reapers that burgeoning farm machinery industry turned out in ever-increasing numbers.
In towns and cities, entrepreneurs who became known as "merchant capitalists" or "industrialists" reorganized or standardized the production of a variety of goods for large-volume sale in regional and eventually national markets. Some of these new entrepreneurs came from the ranks of master craftsmen who now planned and directed the work of employees to whom they paid wages by the day or by the piece instead of sharing with the work of fabricating a product and the proceeds of its sale. Other merchant capitalists and industrialists had little or not prior connection with the "trade" (shoemaking, tailoring, etc.). They were businessmen who provided capital and organizing skills to restructure an enterprise in a more efficient manner. This restructuring took various forms, but had one dominant feature in common: The process of making a product (shoes or furniture, for example), which had previously been performed by one or a few skilled craftsmen, was broken down into numerous steps each requiring limited skills and performed by a separate worker. Sometimes the worker did his task with hand tools, but increasingly with the aid of power-driven machinery.
...Whatever the precise mixture of power machinery and hand tools, of central shop and putting out, the main characteristics of production were division and specialization of labor, standardization of product, greater discipline of the labor force, improved efficiency, higher volume, and lower costs. These factors reduced wholesale commodity prices by 45 percent from 1815 to 1860. During the same years consumer prices declined even more, by an estimated 50 percent.
By 1860 the nascent outline of the modern American economy of mass consumption, mass production, and capital-intensive agriculture was visible. Its development had been uneven across different regions and industries. It was far from complete even in the most advanced sections of the country like New England, where many village blacksmiths and old-time shoemakers could still be found. On the frontier west of the Mississippi and on many internal frontiers in the older sections where the transportation revolution had not yet penetrated–the upland and piney woods regions of the South, for example, or the forests of Maine and the Adirondacks–it had scarcely begun. Many Americans still lived in a nearly self-sufficient handicraft, premarket economy not much different from what their grandparents had known. But the advanced sectors of the economy had already given the United States the world's highest standard of living and the second-highest industrial output, closing in fast on their British counsins despite the latter's half-century head start in the industrial revolution. (13-15)
Later, McPherson notes that the "South's defensive-aggressive temper in the 1850s stemmed in part from a sense of economic subordination to the North", since the North's economy appeared to be developing much faster than the South's (91):
Contemporaries and historians have advanced several explanations for this "failure of industrialization in the slave economy," as the subtitle of a recent study has termed it. ...Other accounts of southern industrialization have focused not on deficiencies of labor or of demand but on a lack of capital. Capital was abundant in the South, to be sure: in 1860, according to the census measure of wealth (real and personal property), the average southern white male was nearly twice as wealthy as the average northern white man. The problem was that most of this wealth was invested in land and slaves. ...A northerner described the investment cycle of the Southern economy: "To sell cotton in order to buy negroes–to make more cotton to buy more negroes, 'ad infinitum,' is the aim and direct tendency of all operations of the thorough going cotton planter." (95-97)