Technological Disruption in the 19th Century United States

This study investigates three distinct examples of technological innovation during the 19th century United States. I first examine the long-run impacts of a deskilling technology on workers and their children. The McKay stitcher dramatically changed shoe production in the late 19th century by replacing skilled artisans with machines and less-skilled workers. It was licensed in only a few counties and impacted workers across counties unevenly through the transportation network. More-exposed shoemakers and their children faced long-run losses in the face of this displacement. During the same era, the railroad network of the US expanded rapidly, changing the organization of firms in manufacturing. Expanding market access pushed establishments to specialize production on fewer products. Manufacturing plants specialized on specific steps in the production process, shortening the production chain within establishments. Together these imply that the ingredients for Smithian growth arose in response to technologically driven market integration. Towards the end of the century, a new method of market integration began to take hold. The introduction of the first telephone exchange in Chicago in 1878 enabled faster communication between businesses throughout the city. This study connects the increase in communication speed to prices in Chicago commodity markets. The telephone lowered dispersion in both spot and futures markets at the Chicago Board of Trade. Further, connected markets (one- and two-month futures for the same commodity) experienced price convergence.