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The First Factories. The factory system was a new way of organizing labor made necessary by the development of machines, which were too large to house in a worker's cottage and too expensive to be owned by the worker, who now labored long hours and lived under hazardous conditions in fledgling cities.

The first factory established in the United States dates back to 1790 when Samuel Slater came from England and constructed a factory to produce yarn. Towards the end of the 18th century, the idea of interchangeable parts was introduced by Eli Whitney.