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AF 603 Massachusetts Economy up to 1899. Class 1. What is the Massachusetts Economy? Well here are some things that it is NOT. Natural resources Agriculture Heavy Industry Cheap. What the Massachusetts economy is; A Thinking Economy -- Educated Persistent Innovation Traditional

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slide2

What is the Massachusetts Economy?

  • Well here are some things that it is NOT.
  • Natural resources
  • Agriculture
  • Heavy Industry
  • Cheap
slide3

What the Massachusetts economy is;

  • A Thinking Economy -- Educated
  • Persistent Innovation
  • Traditional
  • But we are not good at keeping the companies we develop. Only 5 of the NASDAQ 100 are in MA (Biogen Idec, Genzyme (Acquired by Sanofi in 2011), Hologic, Staples, & Vertex Pharma). We have 16 in the Fortune 500
slide4

There have been hundreds of inventions come from here, some major, some not.

    • The telephone,
    • the guidance system for Apollo at Draper Labs at MIT
    • The Internet was born here (BBN started a Government network called ARPANET),
    • The first e-mail.
slide5

The sewing machine,

    • Manufacturing processes,
    • Medicines, Anesthesia,
    • Education,
    • Cranberry juice,
    • The universal light bulb socket,
    • the first Spreadsheet (Visicalc) which was later perfected by Lotus Development in Cambridge.
    • The Ponzi Scheme,
slide6

From Worcester alone

  • First Beatles song played in the USA on WORC-AM in 1961
  • America’s first Nobel Prize to Albert Michelson of Clark U. for measuring the speed of light
  • Monkey wrench invented
  • Typewriter & Ball point Pen
  • Man-drawn Lorry = Rickshaw
  • Shredded Wheat
  • Boston-Worc. RR was the first to charge fees in 1833
slide7

We are a major exporter. The USA does over 50% of its exports with the 7 countries it has Free Trade agreements with. $28.7 B in 2010 10% of that to China. Most US Exports are manufactured goods and MA is not a Manufacturing state.

slide8

Massachusetts has had a very well known economy in the past. But in recent years our sports teams have gotten us the most attention.

  • We have a huge education sector.
  • We have big names in Manufacturing, Finance, Health Care and more.
slide9

We are a state of innovation, a state of small industry, not one dominant industry even though some are the biggest in their industry.

  • We are among the biggest per capita consumers of Ice Cream in the world.
  • Think of some of the companies that call MA home…
slide10

Zildjian Cymbals

  • EMC – The largest computer storage company in the world.
  • Raytheon one of the largest Defense contractors
  • Erving Industries—turns waste paper to recycled products
  • Boston Scientific
slide11

St Pierre – the leading maker of horseshoes in the world.

  • Genzyme (New Name)
  • Biogen-Idec
  • Staples – Largest Office supplier in USA
  • WB Mason the #4 Office supplier.
  • Smith & Wesson
  • LoJack
  • Friendly Ice Cream in Wilbraham
slide12

Sam Adams Beer

  • Iron Mountain World’s largest Records Storage Co.
  • Clean Harbors
  • Butterick Patterns
  • State Street Corp. – The largest securities trustee in the world with

> $1.8 Trillion

  • Draper Labs
slide13

Polar Beverages – in Worcester that also makes Nantucket Nectars

  • Quabaug Corp. that makes Vibram soles for shoes
  • A growing Robotic industry
  • We are leaders in Medical Instruments
  • A large and growing Biotech and Pharmaceutical industry.
  • TJX
slide14

We used to be home The Mini Computer Industry, of Gillette, John Hancock Ins., First National Bank of Boston and many more, but so many have been bought, we are not HQ state anymore.

slide15

Much of the early history information was gained from James McWilliams book, “Building the Bay Colony”. Mr. McWilliams teaches at Texas Tech of all places.

slide17

There were explorers who saw and touched Massachusetts as far back as the mid 1500’s. But they passed by. They wanted warmer climates to hunt in.

slide18

But by the early 1600’s more and more Europeans were disgruntled and wanted out and were making the dangerous decision to leave the mother country.

slide19

It was a 3 month Voyage across the North Atlantic. Dangerous. Uncomfortable. And who knew exactly what you would find.

slide20

They were shopkeepers, tradesmen, farmers and religious leaders and they were unhappy

  • And their elders wanted to get rid of them.
slide21

Do you know why the Pilgrims stopped here? They were heading for Virginia, you know. They ran out of ?????

slide22

That is what they drank on ships then. Water could not be kept pure, wine was too expensive, but beer was just the thing.

slide23

When they got here, they found the farming to be very difficult because of the poor soil. In many ways we have our economy the way it is because of bad dirt.

slide24

Explorers who had come to America before the Pilgrims had found the waters rich with fish, big stands of timber, and lots of fur animals.

slide25

To survive in the early years, the settlers were forced to grow what they could, and also to work other crafts, and work together to keep the community alive.

slide26

They did not have the luxury of having a good growing conditions and a high profit staple crop like they had down south with Tobacco in MD, VA & NC, Rice in SC and cotton in the deep South.

slide27

These settlers were smart enough to work together because they knew if they did not they would die.

slide28

The early settlers came here to start a new life. They probably did not recognize the hardships that they would encounter when they got here.

  • The voyages were funded by investors who had paid for the boats and provisions that were needed to come to the new world.
slide29

The investors recognized that they were leaving England to find religious freedom but they wanted the colony to provide a return on the investment.

slide30

After all, that is what a colony was supposed to do, increase the riches of the mother country.

  • The settlers knew they had to produce a return too or risk not getting more provisions.
slide31

The Pilgrims of Plymouth and Puritans of Boston were soon joined by other settlers in coastal areas who were sent to do business. They were fishermen, merchants, trappers, and woodsmen.

slide32

Towns such as Salem, Gloucester, and Portsmouth, NH, which was part of Massachusetts in the early days and others all up and down the coast were settled for this purpose.

slide33

In the early years, the settlers barely produced enough food to survive, and still needed a lot from Europe, so they were constantly waiting for the next vessel to arrive with more food and tools etc.

slide34

After being there a while the settlers sent for more men to fish, more men to cut trees and cut them into boards to export and barrels in which they could send back more fish.

slide35

However, frequently in the 1620’s, 30’s and 40’s the returning ships came back empty or next to empty. The colonists, and their own expanding population often required all of what could be produced. The investors did about the only thing they could do from 4000 miles away…complain.

slide36

The newcomers brought little except the cash they had brought from England and now had to buy the goods and timber they needed from established settlers. So a nice little arrangement started now. The folks who were here got cash and could buy things from England. They did not export goods or raw materials but cash.

slide37

This allowed them to buy goods from others and from England. They now became traders and merchants. The English merchants liked this arrangement too because they got cash back for their goods.

slide38

What they did do was build an infrastructure that would help them into the future. They raised livestock, built homes, made roads and transportation, and basically made a stable local economy from a wilderness.

slide39

But what the early colonists did have was raw materials that England needed. They had lots of fish, but needed salt to preserve it and boats to bring it back to England.

slide40

The investors in England could sell the fish to people in England or other countries. There was never an over-abundance of food in Europe.

slide41

The settlers had trees. England’s population was expanding and they needed wood to build houses, shops and barns.

  • The colonists had what England wanted.
slide42

The third valuable asset of the early economy was fur. Trappers went west and in addition to their own pelts bought more from Indian trappers. They even made agreements with the natives to buy more pelts.

slide44

But still, there were few if any exports of goods.

  • During the 1630’s and 40’s the demand for food and timber must have been huge in the colony.
  • They had to build homes, barns, fences to keep livestock in, boats, etc. all from wood.
slide45

As abundant as the fish crop was, it takes time to fish and the demand for that was huge too. Then the fish had to be salted to be preserved.

slide46

The men who went to sea did not go far rarely leaving sight of shore. They never went out more than a day at a time. They seldom went two days in a row.

  • Why?....
slide47

They had to return promptly to tend to their farms. Most everyone had two jobs, one of which was farming.

  • They were lucky to be able to find abundant schools of fish close to shore. The boats were not made well enough for rougher deep water.
slide48

Consuming fish became part of the diet along with the produce of the gardens everyone had. According to one observer, fish left the adults, “sweetly satisfied”, while rendering the children “cheerful, fat and lusty”.

  • Fish was needed for food but also for fertilizing fields.
slide49

In 1640’s started to look to the West Indies as a trade partner. The voyage was a lot easier to go down the coast than across the North Atlantic.

slide50

Among the cargos were timber, and fish, but also wine, sugar and salt that had been obtained in trade. Slaves were a regular cargo. This was because there were labor shortages in Massachusetts.

slide51

There were times they even exported Pequot Indians they had captured in exchange for “Africoes”. Trading slave for slave.

slide52

Between 1650 and 1800 nearly 300K slaves were brought to America by this route. More people than came on their own during that time.

slide53

Even though some towns were quick to develop new ideas, some surprisingly, did not have basics like sawmills, wharfs, or salt-houses until late in the century.

slide54

The Lynn Iron Works were founded in the 1650’s and employed dozens of men to not only make iron pieces but to supply the factory with wood to fuel the furnaces.

slide55

They still had significant limitations on how much they could export because their population was growing significantly and they had very few ships that could travel across the Atlantic. There were not that many skilled shipwrights, or skilled captains or sailors. The record of the first large ship built here was in the 1650’s.

slide57

Ships back then might seem simple by today’s standards but they needed a lot of materials and manpower to build. They needed lifts to hoist the masts into place, they needed a way to launch, they needed the inner timbers and more.

slide58

New Englanders were an industrious lot.

  • Whaling grew out of fishing.
  • Experience with wood, timber and Iron contributed to shipbuilding.
slide59

Logically, New England industry served the maritime industries. Items to be exported like iron, and rum were the leading items of manufacture.

slide60

Because of commerce and industry, and hampered by poor soil and climate, New Englanders relied very little on agriculture.

slide61

Trading became an industry. Massachusetts ships carried good for other colonies. Then they needed affiliated businesses like warehousing and insurance.

slide62

New England and Mass. in particular made a very complex productive economy. Other regions which had a dominant crop fell into relying on that crop to their detriment, and failed to develop other industries.

slide63

In new England, over time, specialization grew and people could do what they were best at. Furniture, weavers, etc…but on a limited scale.

slide64

By the mid-18th Century shipbuilding was a major industry. Ships, made in Massachusetts port towns were themselves sold to other colonies and to England.

  • By the time of the Revolution 40% of English shipping was made with Colonial Wood.
slide65

The other factors that contributed to the economy for the past century were still pretty much in tact, with much more export abroad than before. As well as expanded exports to other colonies of Iron, furs and hard lumber and cloth.

slide66

During the late 17th and 18th century, New England vessels were all over the globe. The "triangular trade" evolved between New England, Africa, and the West Indies. Rum, made in New England was carried to Africa and exchanged for slaves, who were taken to the West Indies and traded for molasses & sugar.

slide68

The molasses was in turn was taken home and made into rum.

  • There was a Sugar Tax and Molasses Tax in the colonies
  • The reason Boston Baked Beans are the way they are is because we had molasses and they simmered it into the beans. But you can not find them anywhere else.
slide69

By the time of the revolution England NEEDED the colonies. 30% of everything England exported went to America and a lot of their tax revenue came from the colonies.

  • The wharves of the major cities were crowded with commerce coming and going. War was NOT what the King and England wanted.
slide70

During the Revolution trade continued with the West Indies and elsewhere, just not England.

  • Many of the merchant ships were commandeered by the British Navy but trade continued but was slowed.
slide71

After the Revolution, trade with England and the rest of Europe and between the States was sluggish until the Constitution was enacted in 1789.

slide72

During 1780’s and 1790’s though there was a change in the culture. Increased specialization started. Cloth was made by only those best at it, not by everyone. Same for furniture, clocks and many other staples. It was the beginning of industry.

slide73

Francis Cabot Lowell.

  • He started as a merchant, a successful one.
  • Business was disrupted during the Napoleonic wars.
  • He went to Europe with some colleagues and he got to see the power looms being used, and was able to memorize the technology.
  • He came home and with the backing of some investors set up a textile mill. Soon a second followed, and a third.
slide74

After he started to produce the War of 1812 struck and cut into his business.

  • Afterward Lowell got Congress to pass a tariff to protect himself and other textile makers from imports from England and Asia.
slide75

Lowell’s was one of the first companies in America financed by a sale of stock.

  • Textiles were a primary industry for most of the next 150 years in MA.
slide76

Another significant business that sprung up at this time was machinery. They were in direct support of the textile firms and manufactured items that would be used to make power looms and items to support it.

  • Machine shops that were started to build for one mill soon went on their own to manufacture for others.
slide77

Machine tools also were needed to make the tools and dyes for the machining companies.

  • These two industries combined to create a system of making exact interchangeable parts so a person could assemble the parts rather than create the machine from scratch.
slide78

One industry this was big was armaments. The US Government encouraged any company that made munitions to make the info about their manufacture available to all others. So companies who wanted could use the same “interchangeable parts” technology to improve production and standardize their business.

slide79

This was the beginning of industry clusters. One main industry supported by complementary industries making items for or performing services for the dominant industry. We will see this over and over again right up to the present day.

slide80

The new Technology changed people’s lives. It made it possible to have one worker produce much more that before and make more $$$ because their output was much higher.

  • 1840’s Pistol
slide81

As the 19th century went on, especially after the Civil War, the region’s second largest employer was Shoemaking. This was made possible by steam powered sewing equipment that was used in a factory.

slide82

Early New England shoemaking was a trade based upon one craftsman making a pair a day in one room cottages (called "ten footers").

  • Beginning in 1850 a series of inventions led to mechanized stitching and lasting. Companies that used this technology became the New England shoe industry.
slide84

The productivity gains over the traditional shoemaker were on the order of 500 - 700%, and the new methods also led to an extraordinary improvement in both quality and consistency. Over 300 MM pair were produced for domestic and international export at the peak of the industry around the beginning of WW1

slide85

The decline of the industry started in the early part of the 20th Century. Hides were becoming more plentiful in the West and South. Labor was cheaper in those areas and did not need to be skilled to start. It only made sense for many manufacturers to move there. Over 40% of the shoes made in the USA came from New England in the early 20th Century

slide86

Whaling was a big industry out of New Bedford, and fishing continued to be a huge industry.

  • Whaling was begun in the colony in the early 1640’s. The “Drift”whales were cut up for food, and the blubber was boiled down to make oil for lamps.
slide87

As time went on the boats got better and whole communities went out within sight of land to harpoon whales. Later, as herds got thinner near land, they ventured out further. They speared whales and the harpoons were attached to a hollow wooden float. When the whale would get tired from pulling the float, the whalers would move in for the kill.

slide88

Still later, 18th century, they went out in sailing ships and lowered “long boats” with crews of a dozen or so and harpooned the whales up close.

  • The boat acted as the float. This was the beginning of the term Nantucket Sleigh Ride.
slide91

They were after Sperm Whales for two reasons. The oil from their blubber burned cleaner and was a better lubricant that that of other whales and…

slide92

The SPERMACETIfound in the head of the sperm whale was used in the manufacture of high grade of candles, and exports of candles to England was very profitable.

  • Occasionally their innards contained AMBERGRIS which was used to make perfume. It was worth as much as gold.
slide94

Later on larger ships they put in devices to boil down the blubber at sea so it did not rot while they were at sea for up to 4 years!!

  • Whaling made NB one of the wealthiest towns in the USA.
  • The fleet was nearly 330 ships just before the Civil War and employed>10K men.
slide95

A new need arose just prior to the Civil War for Baleen. The baleen is the stuff that looks like hair in the mouths of some whales like the Humpback. When dried it is stiff and was used for decades to make the forms for ladies hoop skirts.

slide96

After the Civil War the demand for whale oil diminished as petroleum was discovered in PA and demand continued to decline.

  • In the beginning of the 20th century the wide use of electric lamps and spring steel for hoop skirts (even though they were going away) further diminished demand.
slide98

Firearms – Fire arms were made in Mass early as the 1650’s at the Lynn Ironworks.

  • The small manufacturers of iron parts continued to make guns for the next couple of centuries but there were no large companies because the process was very precise and time consuming and typically was like shoes where one person manufactured one gun and then moved on to the next.
slide99

Many of these gun makers were in the Springfield /Hartford area.

  • In 1852 Smith & Wesson and Colt were founded and joined numerous other manufactures around Springfield, MA.
slide100

During the next decade, they worked together reluctantly due to the ruling from the federal government that said they had to share ideas to improve designs and create new weapons.

  • With the Civil War starting in 1861 the demand was huge and these companies and their owners made huge fortunes.
slide101

The research was also intense to find new weapons. The Colt Repeating Rifle, along with models made by Spencer of Springfield, and Henry of Brooklyn (used to work for Colt), revolutionized war. Samuel Colt was one of the richest men in America when he died.

slide102

After the war Colt concentrated on the domestic market and Smith & Wesson concentrated more on the international market. They sold to Japan, France, England and sold over 200,000 revolvers to Russia. During WW1 and WWII both companies sold millions of guns to the US and its allies.

slide103

Smith & Wesson became the market leader in handguns, but foreign competition cut into sales

  • Colt is not among the leading gun manufacturers and has struggled since the 1990’s.
slide104

Start here Ship building had a great impact on the region because of all the water trade done from and to the region. Because of this craft, when war came in the 1860’s 1910’s and 1940’s New England and MA put up huge ship yards in in a big hurry.

slide105

During WWII there were some 20 major yards turning out ships in as little as 54 days. There were more than 150,000 employed making ships and subs during this time 24 hours a day.

  • These ships were built for the USA and its allies.
slide107

Fur – this was a major revenue source through the 18th century. By the time of the revolution the fur industry had shifted west and needs were less for necessity and more for fashion.

slide108

Textiles--15% workers in the state in 1885 was in some part of the textile process. Either making cloth, garments, shipping them…something. Most of these textiles stayed onshore but many were exported.

slide110

Iron and metal production led directly to the machinery industry. The infrastructure was in place to make metal tools and implements so when the industrial revolution came along in the early 19th century the craftsmen were available to start making the machinery for the textile and other industries.

clipper ships
Clipper ships
  • In the mid 1840’s, a treaty opened several Chinese ports to American vessels, and tea and luxury products became available for American traders at prices compatible with those enjoyed by other nations already trading with China.
slide112

This trade greatly rewarded speed. The first vessels to arrive in port would get the highest profit margins. Speed also protected the tea and expensive textiles from mold, and guaranteed a faster turnaround of a merchant's capital.

slide113

Shipwrights in England and America engaged in the conception of faster ships, even if about 1/3 of cargo capacity had to be sacrificed. The result was the clipper ship, a fast three-masted, square-rigged ship, capable of making the voyage between New York and San Francisco in 110 days or less. Very fast, clippers carried heavier spars and larger sails, manned by crews of 100 seamen.

slide114

The best known American shipwright is Donald McKay, who built the FLYING CLOUD, which sailed New York - San Francisco in 89 days,

  • These vessels were extremely tough on their crews, and captains are known for badly mistreating their sailors. But if you put up with it you got paid well.
slide115

The depression of the 1850s lowered profits to levels that were not profitable for the small capacity Clippers, and they disappeared soon afterwards. The Museum of the American-China Trade is in Milton, MA

  • After this the capacity of the sailing merchants increased enormously at the cost of speed.
slide117

The growing Railroad industry created demand for more manufactured goods and spread the population westward.

  • They ran telegraph and later telephone wires along the railroad tracks and right-of-ways. The RR’s were granted millions of acres for tracks.
  • In the late part of the century the beginnings of the telephone, invented in MA, again revolutionized communication.
slide119

Other events which effected the Mass economy in the late 19th century were Medicine, Plumbing, Pro Sports.

  • Shipbuilding continued to be a big part of the economy as well as sea trade. As the ships changed to steam power and then to Iron-clad during and after the Civil War New England shipbuilding kept up.
slide120

A huge change came about because of an increased need for women in the workforce. Partly because of the textile and shoe industry needed people skilled with needle & thread, and partly because many New Englanders had gone west. The new immigrant labor tended to be less skilled and could not do the new jobs.

slide122

More people moved to the city to be near work in the factories, and because of this infection spread more. Life expectancy was actually lower in the mid 19th century than the mid 18th.

slide123

Progress during the 19th Century had been brought better technology, transportation, medicines, and a whole host of items that had not been dreamed of in 1800. And there was more to come with the advent of the new century.