The analysis of the Colonial period focuses on the threat of competition from prison production and the suppression of imprisonment. The period of 1800-1815, which featured American mercantilism, is discussed in terms of New York State's interest in prison production. Issues featured in the discussion of the 1815-21 period are depression, prison manufacture, and punishment. An analysis of the Auburn prison focuses on solitary confinement and the transition to laissez-faire capitalism. This study documents the essential relationship between political-economic development and the initiation of imprisonment as the dominant method of punishment in New York State. It indicates, however, that the relationship between imprisonment and the model of production is not dependent upon the industrial nature of imprisonment. Rusche and Kirshheimer's projection that prisons would disappear in postindustrial capitalism as a consequence of unprofitable prison manufacture erroneously assumes that prisons were constructed to exploit scarce labor through prison manufacture rather than as an important part of the State's more general role regarding political-economic development. 38 references.