The War of 1812 helped to lay the groundwork for economic expansion in the years after the war.
Before the war, American industry was just getting started. Francis Cabot Lowell had started building a textile industry in the United States. The war helped this industry and others to get on their feet. It did this by shutting off trade with Great Britain for a couple of years. During that time, American manufacturers were able to get their industries well established. This meant that, after the war, they were in better competition to compete with foreign companies. One further impact of the war was to increase nationalism in the US. This helped to increase demand for domestic products as Americans felt greater pride in their nation.
In these ways, the War of 1812 helped create a situation in which the US economy could grow after the war.
The War of 1812 affected economic development in the postwar period in three significant ways:
1. Agriculture boost
Certain agricultural products received a boost after the War of 1812. There was an increased demand for cotton and tobacco as American citizens’ standard of living rose and the scarcity of goods was coming to an end because of the ending of the War. Citizens began to look for more luxury offerings as well. For example, silk goods were often sought after over cotton, although cotton was still popular, as it is today. The wine makers experienced growth also, as people sought expensive wines over whiskey.
2. Transportation improvements
After the War of 1812, demand increased for better roads and canals to expedite goods smoothly across the nation. For example, the Southern States required food, essentially from the Western States. Additionally, the Northeast required cotton from the South and the Southern and Western States overall required manufactured goods. This increase in the need for manufactured goods spurred factory growth as to be explained in point three below.
3. Factory system growth
The principal reasons for the growth of the United States’ factory system was the Embargo Act and the War of 1812. With the Embargo Act competition from factories in England and France were halted. President Thomas Jefferson through Congress instituted the Embargo Act in 1807, before the War.
President Jefferson came to the conclusion that if the United States ceased all trade with Britain and France, these nations would be forced by economic necessity to respect American neutral rights. The Americans looked upon the governments of Britain and France as confrontational. This act was repealed in 1809 because of the substantial loss of European commerce. However, the factory sector in America experienced an upsurge because imported products were replaced with American made ones. This extended later as well after the War of 1812.
The War of 1812 was a benefit to the domestic factories as well. After the War there was a more plentiful labor supply as not as many soldiers were required. They could return to the labor force and contribute to greater factory production. With peace, New England became a textile mill center. In addition, the Lowell or Waltham system brought young women and girls to factories for a few years.
This system was a term used considerably during the period from 1814 to 1830 in association with the manufacture of cotton and woolen goods. Young women and farm girls came to work at the textile factory. They were put up in supervised dormitories. Before the War of 1812, the procedures of carding, spinning, weaving, as well as fulling, took place in separate facilities using diverse business owners. In 1813, due to the inventions of Francis Cabot Lowell, the Boston manufacturing company could coalesce all of these processes and procedures in their facility at Waltham.
However, after the War, Britain did not go down without a fight, they pumped goods into America, undercutting the prices of homemade goods. This subsequently hurt factories in America as Britain sought to get back their market share.