The Dawn of Innovation (7 page)

But second thoughts abounded. Prevost complained in October that outfitting the
St. Lawrence
had “absorbed almost the whole of the Summer Transport Service from Montreal,”
⁴¹
superseding far more pressing supply issues. And even Jones pleaded to Madison for a rethink of what had “become a warfare of Dockyards.” “We are at War with the most potent Naval power in the world,” whose global network of supplies and ordnance meant it could easily meet any demand “in less time and at one fourth the expense” as the Americans. Jones estimated that the next summer's lake fleet would require 7,000 seamen, which he saw no possibility of supplying.
⁴²

More practically, the American government was broke. Lake seamen and troops had not been paid for six months or more, and the militias,
Chauncey wrote, “desert by companies.”
⁴³
Eckford and the Browns had signed personal notes for $110,000 to cover payments to critical suppliers. In early February, the three of them wrote that they were bearing a weekly expense of $8,000 and would “certainly be oblig'd to stop the whole business in ten or twelve days if we are not Supply'd with money.”
⁴⁴

The British were making their own calculations. The cabinet guessed that winning the war would cost another £10 million. The commercial community was strongly opposed to further taxes. They were moaning over the loss of their American markets and beginning to grasp how the war and years of blockades had been force-feeding American manufacturing.

American and British negotiators had been meeting desultorily at Ghent since August. Each side had come to the meetings with lists of non-negotiable items, with the British especially obdurate and supercilious. After months of whittling away at each other's demands, they finally agreed on Christmas Eve to drop all preconditions, cease hostilities, and refer any outstanding issues to commissions—in effect, to forget the whole thing.

The climactic battles of New Orleans were fought in mid-January, and news of the great victory spread throughout the country within weeks. When news of the peace finally arrived on February 14, the public naturally assumed that New Orleans forced the British to quit, so the war ended on a high note. Across the Atlantic, the new disaster just reinforced the wisdom of getting out. Great Britain had spent two decades more or less continuously at war. The fulminations of the
Times
notwithstanding, a war of attrition against a major trading partner on a point of honor made no sense.

By the time of the peace announcement, Chauncey had launched the
New Orleans
, even bigger than the
St. Lawrence
, although it was still being masted. A yet-unnamed companion first-rater was also being readied for the spring thaw, and the keel was laid down for another big frigate. Across the lake, Yeo was determinedly keeping pace, building another first-rater and apparently a third-rater (74).

News of the peace also brought notice of Yeo's recall. Since American roads were in decent shape, he decided to cross the lake and embark from
New York. Chauncey invited him to stop over at Sackets, and they spent more than a week together. One imagines they had much in common, including shared grievances on interservice rivalries.

The dismantling of the lake's naval establishments was underway by the end of February. The Americans sold off most of their gunboats and transport craft to commercial shippers, and both the
Oneida
and the
Sylph
had long careers as merchant vessels. Most of the rest of the warships were sold as scrap, and some were just left to rot. The hulk of the
St. Lawrence
was sold in 1832 for £25, on condition that it be removed from the lake. The
New Orleans
was planked over to preserve it and it sat on the beach until 1880, when it collapsed and was carted away.

The controversies over the performance of the two lake commanders melted away with the war. With Europe at peace, British commands were scarce, but Yeo was given an independent command interdicting slavers; he died of yellow fever in 1818. Chauncey was appointed commodore of America's second saltwater ship of the line, the USS
Washington
(74), and assumed command of the squadron in the Mediterranean. He spent another twenty-five years in the naval service.

T
HE SHIPBUILDERS' WAR IS A MOSTLY FORGOTTEN SUBPLOT OF A NEARLY forgotten war. But it cast a long shadow. The apparent victory, as Americans saw it, was a huge boost for national morale. More substantively, the war effort and the associated British trade embargo were robust stimuli to the still-fledgling native textile and iron industries. Military uniforms, tents, and the like created a New England textile boom, while foundries turning out cannon and cannon balls, shot, ship ballast, and wagon and ship fittings proliferated in a ring from Pittsburgh through upper New York State and western Connecticut. Military procurement accelerated the commercialization of agriculture, and the war broke the British-Indian alliances in the old Northwest territories, hastening the pace of settlement.

The war resolved a long-standing division over the importance of industry to the country's safety and success. Even Thomas Jefferson repudiated his former distaste for industrial-scale manufacturing, forthrightly conceding that he was wrong to hope that sheer distance was sufficient defense against outsiders. The debacles in military procurement throughout the war spurred some serious rethinking among the professional military and were a factor in the determination to increase the use of machinery in military procurement.

Most important, the war and its outcome helped banish the remnants of a colonial mind-set among Americans. Theirs was a free and independent nation with a glorious future. British power was still overwhelming, especially after the victories over Napoleon. But Americans contemplating the continent lying open before them, and the energy and prosperity in so much of the country, might foresee a day when the two countries would measure themselves against each other.

B
EFORE TRACING THE PATH OF AMERICAN DEVELOPMENT, WE WILL FIRST examine industrialized Great Britain, the day's “hyperpower” and the only nation that had reached the heights America aspired to. The British development story differed in important ways from the one that evolved in America, and those differences highlight certain British dispositions that would serve them poorly in the inevitable economic contest with the United States.

T
WO FULL DAYS ELAPSED AFTER NAPOLEON'S SURRENDER AT WATERLOO before Major Henry Percy, one of Wellington's attachés, careened through a wildly cheering crowd in a post-chaise and four, dashed into a London ball, and knelt before the Prince Regent, announcing “Victory! Sir! Victory!” Legend has it that Nathan Rothschild made a fortune by trading on the advance notice brought by his carrier pigeon networks from Europe. It's almost true. Rothschild's couriers—they weren't pigeons—did get him early word of the victory. But Rothschild didn't quite make a killing; instead, he prevented a total family disaster by unloading part of the bullion mountain he'd amassed in expectation of a prolonged war.
¹

The victory at Waterloo, and the American treaty ratified just months before, left England finally at peace and in surprisingly good financial shape. British growth in the period 1800–1830, if slow by late-nineteenth-century standards, was markedly faster than in any previous period. Despite the immense financial drains of the late wars, Great Britain still had a surplus of capital and was exporting capital to the world. The Rothschilds and the Barings rode that wave to new pinnacles of finance. As Byron put it in
Don Juan
:

The sources of the growth are not readily explicable by changes in standard inputs like labor and capital, which suggests that much of it was driven by new technology. In other words, “Ingenuity, not accumulation, drove economic growth in this period.”
³

In his famous account of the pin factory in the
Wealth of Nations
, Adam Smith explained how the division of labor so greatly increased labor output: “One man draws out the wire, another straights it, a third cuts it, a fourth points it, [etc. through eighteen steps].... Each person, therefore, making a tenth part of forty-eight thousand pins, might be considered as making four thousand eight hundred pins in a day. But if they had all wrought separately and independently, and without any of them have been educated to this peculiar business, they certainly could not each of them have made twenty, perhaps not one pin in a day.”
⁴
Smith gives the impression that this is a firsthand account, but sharp-eyed scholars noticed that it matched, process for process, the description of a French pin factory in Diderot's
Encyclopédie.
The dead giveaway is that in Smith's factory the workers were still making pins by hand, while contemporary English factories were water-powered. British plants used far fewer workers than their French counterparts, and the work was laid out to accommodate the mechanization. Although the French plant cited by Diderot was next to a river, it did not even have a waterwheel.

The French preference for manual over mechanized processes was not irrational. Labor was very cheap in France, and capital was scarce, so pins were best made by people. In Great Britain, it was labor that was expensive, while capital was readily available and energy, in the form of coal, was very cheap. That's the reason a profit-driven British pin maker chose to use a big, and quite inefficient, Newcomen steam engine to recirculate his water to steady its flow rate, and by extension, that's why the Industrial Revolution happened in Great Britain and not in France.
⁵
But that just shifts the question: Why was British labor expensive?

In 1500, about three-quarters of the populations of most European countries, including Great Britain, worked in agriculture. The most advanced trading countries, Netherlands and Belgium, were more urbanized than most, as to a lesser extent were Italy and Spain. By 1800, however, Great Britain had only about a third of its population in agriculture, far less than any other state, with the remainder either urbanized or working in rural industries.

Large-scale social changes were obviously afoot. Here is one plausible narrative: The Black Death (mid to late 1300s) depopulated England's countryside, freeing much high quality land for pasture. With better forage, the quality of English wool improved markedly, and England's wool trade expanded, displacing Flemish and Italian cloth. Cottage-based weaving grew apace, along with related manufacturing—spinning wheels, containers, wagons, and ships. Port cities invested heavily in harbors and dockyards, while trade deepened banking, insurance, and other services, which increased the returns from literacy and numeracy. Crucially, as their forests shrank, Britons learned how to use coal as their primary energy source, a process that took a full century.