Lesson 6: The Transportation Revolution and Formation of the National Economy


1.   A key to understanding people’s behavior is figuring out the incentives they face.

2.  Economic freedom, rule of law, and well-defined property rights promote growth and prosperity.

5,  Entrepreneurship, business, and the pursuit of profit create opportunities and economic growth.

6.  Government is the arena of competition among interest groups.

ECONOMIC CONCEPTS that support the historical analysis:


Opportunity cost


Voluntary trade creates wealth

Supply and demand

Expected benefits v. expected costs


History Standards (from National Standards for History by the National Center for History in the Schools)

Era 4 – 1:  The student understands United States territorial expansion between 1801 and 1861, and how it affected relations with external powers and Native Americans

Era 4 – 2:  The student understands how the industrial revolution, increasing immigration, the rapid expansion of slavery, and the westward movement changed the lives of Americans and led toward regional tensions

Economics Standards (from Voluntary National Content Standards in Economics)

Standard 6:  When individuals, regions, and nations specialize in what they can produce at the lowest cost and then trade with others, both production and consumption increase.

Standard 14:  Entrepreneurs are people who take the risks of organizing productive resources to make goods and services. Profit is an important incentive that leads entrepreneurs to accept the risks of business failure.

Standard 15:  Investment in factories, machinery, new technology, and the health, education, and training of people can raise future standards of living.

Standard 17:  Costs of government policies sometimes exceed benefits. This may occur because of incentives facing voters, government officials, and government employees, because of actions by special interest groups that can impose costs on the general public, or because social goals other than economic efficiency are being pursued.


  • The transportation revolution that took place in the first half of the 19th century dramatically reduced transportation costs.
  • This decline in transportation costs knit the disparate geographies of America into a unified economic market, helping to raise the wealth of Americans in all regions and at all points in the economic spectrum.
  • By making disparate regions of the country more economically dependent on one another, the transportation revolution also helped knit the country together politically.
  • Despite the huge increase in our wealth that resulted from this revolution, it also had implications for the distribution of wealth among different groups. The interplay between the wealth-enhancing forces and the wealth-redistributing forces yields into the role of governments in enhancing or impeding economic progress.
  • The key to the transportation revolution was an ongoing series of technological changes (not just a one-time invention of canals, or steamboats, or railroads).  Institutional and legal accommodations played an important role in these technological changes.

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