Changes in manufacturing arose from the nation’s land-rich, labor-poor economy. In Europe’s land-poor, labor-rich economies, meager opportunities in agriculture supplied plenty of factory workers and kept wages low. In the United States, western expansion and government land policies buoyed agriculture, keeping millions of people on the farm—80 percent of the nation’s 31 million people lived in rural areas in 1860—and thereby limiting the supply of workers for manufacturing and elevating wages. Because of this relative shortage of workers, American manufacturers searched constantly for ways to save labor.

Mechanization allowed manufacturers to produce more with less labor. In general, factory workers produced twice as much (per unit of labor) as agricultural workers. The practice of manufacturing and then assembling interchangeable parts spread from gun making to other industries and became known as the American system. Standardized parts produced by machine allowed manufacturers to employ unskilled workers, who were much cheaper than highly trained craftsmen. A visitor to a Springfield, Massachusetts, gun factory noted in 1842, for example, that standardized parts made the trained gunsmith’s “skill of the eye and hand, [previously] acquired by practice alone, . . . no longer indispensable.” Factories remained small, however. Even in heavily mechanized industries, factories seldom employed more than twenty or thirty workers.

Manufacturing and agriculture meshed into a dynamic national economy. New England led the nation in manufacturing, shipping goods such as guns, clocks, plows, and axes west and south, while southern and western states sent commodities such as wheat, pork, whiskey, tobacco, and cotton north and east. Between 1840 and 1860, coal production in Pennsylvania, Ohio, and elsewhere multiplied eightfold, cutting prices in half and powering innumerable coal-fired steam engines. Even so, by 1860 coal accounted for less than a fifth of the nation’s energy consumption, and, even in manufacturing, muscles provided thirty times more energy than steam did.

American manufacturers specialized in producing for the gigantic domestic market rather than for export. British goods dominated the international market and usually were cheaper and better than American-made products. U.S. manufacturers supported tariffs to minimize British competition, but their best protection from British competitors was to please their American customers, most of them farmers. The burgeoning national economy was accelerated by the growth of railroads, which linked farmers and factories in new ways.