History of the American Economy

Before the colonization of North America, Native Americans lived as hunter/gathers and farmers, with some trade among tribes. The colonists who came later operated primarily as an agricultural economy. People were self-sufficient and produced everything they needed at home, including food, clothing, and furniture. Abundant natural resources and a moderate climate nourished industries such as farming, fishing, shipping, and fur trading. A few manufactured goods and money for the colonies' burgeoning industries came from England and other countries.

As the nation expanded slowly toward the West, people found natural resources such as coal, copper, and iron ore and used them to produce goods such as horseshoes, farm implements, and kitchen utensils. Farm families who produced surplus goods sold or traded them for them for things they could not produce themselves, such as fine furniture and window glass. Some families also spent time turning raw materials into clothes and household goods. Because these goods were produced at home, this system was called the domestic system.

The 19^th century and the Industrial Revolution brought the development of new technology and factories. The factory brought together all the resources needed to make a product-materials, machines, and workers. Work in factories became more specialized as workers focused on one or two tasks. As work became more efficient, productivity increased, making more goods available at lower prices. Railroads brought major changes, allowing farmers to send their surplus crops and goods all over the nation for barter or for sale.