Capitalism in the nineteenth century

A Civil War and the Suez Peninsula

Throughout the early decades of the nineteenth century, capitalism as a financial phenomenon was becoming intertwined with the new methods of manufacturing, especially of textiles.

This intertwining was aided by Eli Whitney's invention of the cotton gin in 1793. During the Orleanist period in France, the financial and manufacturing methods pioneeed in England were enthusiastically adopted in France.

It came as a great shock to mercantile circles within both of those countries, then, when civil war began in the United States in 1861, and President Abraham Lincoln closed the ports of the U.S. within the area of the rebellion to international commerce, a closure that he (somewhat inaccurately) described as a "blockade."

The textile industries in Britain and France shifted to reliance upon cotton from Africa and Asia during the course of the U.S. civil war, and this fact created pressure for an Anglo-French controlled canal through the Suez peninsula. That canal opened a little more than four years after the war ended, November 17, 1869. Intriguingly, it was also in 1869 that a railway finally spanned the North American continent, as the Union Pacific work crew met that of the Central Pacific in Utah. Capitalism and the engine of profit was making the globe a smaller place.

Also, older innovations were made routine, even mechanical, parts of financial life during this century. For example, the Bank of England had first issued bank notes during the seventeenth century, yet those notes were hand written. After 1725 they were partially printed, but cashiers still had to sign each note and make them payable to a named person. But in 1844 parliament passed the Bank Charter Act tying these notes to gold reserves, effectively creating the institution of central banking and monetary policy. The notes have been fully printed since 1855.