Putting-out System

Definition

The putting-out system, also known as the domestic system or the workshop system, was an early form of industrial organization that emerged during the transition from a predominantly agricultural economy to an industrial one. It involved the distribution of raw materials by a merchant to workers, who would then produce finished goods in their homes or small workshops before returning the products to the merchant for sale.

5 Must Know Facts For Your Next Test

1. The putting-out system allowed merchants to maintain control over the production process without the need to invest in expensive machinery or facilities.
2. This system enabled the production of goods in a decentralized manner, as workers could manufacture products in their homes or small workshops, rather than in centralized factories.
3. The putting-out system facilitated the transition from a rural, agrarian economy to an urban, industrial one by providing a flexible and cost-effective means of production.
4. The system often exploited workers, who were paid low wages and had limited bargaining power, as they were dependent on the merchant capitalists for raw materials and access to markets.
5. The putting-out system laid the groundwork for the later development of the factory system, which would eventually replace it as the dominant mode of industrial organization.

Review Questions

• Explain how the putting-out system facilitated the transition from an agrarian to an industrial economy in the Northeast.
  • The putting-out system allowed merchants to gradually shift production from a rural, decentralized model to a more organized, urban-based industrial system. By providing raw materials to workers in their homes or small workshops, merchants could maintain control over the production process without the need to invest in expensive machinery or facilities. This flexible and cost-effective approach enabled the transition from a predominantly agricultural economy to one focused on manufacturing and industry, laying the groundwork for the eventual development of the factory system.
• Describe the role of merchant capitalists in the putting-out system and how this system exploited workers.
  • Merchant capitalists were central to the putting-out system, as they provided raw materials to workers and then sold the finished products, often profiting from the difference between the cost of production and the selling price. This system allowed merchants to maintain control over the production process without having to invest in expensive machinery or facilities. However, the putting-out system often exploited workers, who were paid low wages and had limited bargaining power, as they were dependent on the merchant capitalists for raw materials and access to markets. The workers' lack of control over the production process and their vulnerability to the whims of the merchant capitalists were key features of the exploitation inherent in the putting-out system.
• Analyze how the transition from the putting-out system to the factory system impacted the lives of workers in the Northeast during the early stages of industrialization.
  • The transition from the putting-out system to the factory system had significant impacts on the lives of workers in the Northeast during the early stages of industrialization. Under the putting-out system, workers were able to maintain a degree of autonomy and flexibility by producing goods in their homes or small workshops. However, the factory system introduced a more centralized and regimented approach to production, with workers concentrated in large, often crowded and unsafe facilities. This shift led to a loss of worker autonomy and increased exploitation, as factory owners could more easily monitor and control the workforce. The transition also disrupted traditional family and community structures, as workers were separated from their homes and communities and forced to adapt to the demanding schedules and harsh conditions of the factory environment. This upheaval in the lives of workers was a key feature of the early industrialization process in the Northeast.

Related terms

Cottage Industry: A small-scale industry, often home-based, where family members produce goods for sale, typically in pre-industrial economies.

Merchant Capitalist: A merchant who provided raw materials to workers and then sold the finished products, often profiting from the difference between the cost of production and the selling price.

Industrialization: The process of transforming an economy from a primarily agricultural base to one focused on manufacturing and industry, often involving the use of machines and the concentration of workers in factories.