Produced by Frank van Drogen and the Online Distributed
Proofreading Team at https://www.pgdp.net (This book was
produced from scanned images of public domain material
from the Google Print project.)






An Outline of the Development

OF THE

Internal Commerce of the United States


1789-1900



By T. W. VAN METRE

Thesis presented to the Faculty of the Graduate School
of the University of Pennsylvania in partial
fulfilment of the requirements for
the degree of Ph.D.



BALTIMORE
WILLIAMS & WILKINS CO.
1913




AN OUTLINE OF THE DEVELOPMENT OF THE
INTERNAL COMMERCE OF THE
UNITED STATES, 1789-1900[1]

      [1] In this paper, which is a brief abstract of a work to be
      published later, an attempt is made to outline the history of the
      development of the internal commerce of the United States after
      the formation of the Union in 1789. The term "internal commerce,"
      though in its fullest signification embracing every purchase,
      sale, and exchange of commodities between the individuals of a
      country together with the business of transmitting intelligence
      and of transporting persons and things from place to place, is
      here used primarily as applying to the interchanges of
      commodities among the various sections of the United States
      carried on over interior lines of transportation--the rivers,
      highways, canals, lakes and railroads.




I

1789-1830


At the beginning of the national era the internal commerce of the
United States gave small promise of the tremendous development it was
to undergo during the ensuing century. There was as yet too little
differentiation of occupation to give rise to a large interstate trade
in native products, and the proximity of the greater part of the
population to the seacoast made it cheaper and more convenient to carry
on the small interstate trade that did exist by means of small sailing
vessels plying along the coast. Practically all the internal trade was
devoted to bringing the surplus agricultural produce of the interior to
the seaport towns where it was exchanged for imported wares that could
not be produced by the inhabitants of the inland region.

As is usual in a new country, the settlers who had first pushed into
the interior had founded their new homes close to the rivers, and these
natural highways had always been and still were the most important
means of transportation to and from the seacoast. At the mouths of the
larger streams flowing into the Atlantic Ocean were to be found large
and wealthy cities, where enterprising men were laying the foundations
of large fortunes in a rapidly growing trade in the agricultural and
forest products floated down from the interior.

Living close along the ocean where numerous excellent harbors and long
stretches of sheltered water gave ample facilities for the little
inter-colonial trade that existed, and where rivers afforded natural
means of transportation from the interior to towns on the coast, the
people of early colonial days had not found it necessary to give much
time to the construction of roads. The gradual inland movement of the
population had finally compelled them, however, to give some attention
to the means of land transportation and many rude earth roads were
built to replace the old Indian trails. These roads were unspeakably
poor, sloughs of mire during the thaws of winter and spring and thick
with dust in the summer, but bad as they were they carried considerable
traffic and their use was constantly growing. Inland towns were
beginning to grow up at the focusing points of the country roads, and
the owners of general stores at such places derived large profits out
of their position as middlemen between the farmers of the interior and
the merchants at the nearest seaports. Three great roads had been built
into the western country, one up the Mohawk Valley into western New
York, and two across the Alleghany Mountains, the Pennsylvania Road
from Philadelphia to Pittsburgh, and the Wilderness Road over which the
early settlers of Kentucky had threaded their way up the Shenandoah
Valley and through Cumberland Gap to the southern banks of the Ohio
River.

The transportation facilities of the times were, however, entirely
inadequate to the needs of the country, and the lack of better means of
getting products to market was a serious impediment to internal
development. Tench Coxe wrote in 1792: "To a nation inhabiting a great
continent not yet traversed by artificial roads and canals, the rivers
of which above their natural navigation have hitherto been very little
improved, many of whose people are at this moment closely settled upon
lands, which actually sink from one-fifth to one-half of the value of
their crops in the mere charges of transporting them to seaport towns,
and others, of whose inhabitants cannot at present send their produce
to a seaport for its _whole_ value, _a thorough sense of the truth of
the position_ is a matter of _unequalled_ magnitude and importance."

Especially was communication between the Ohio Valley and the outside
world difficult and expensive. The natural outlet for the surplus of
this valley was the Mississippi River. During the Revolutionary War,
the Spanish government had given the people of the colonies the right
of free navigation of the river and a brisk trade had sprung up between
the western settlements and New Orleans, but in 1784 Spain had put an
end to this trade by withdrawing the right of free navigation. The
people of the West, enraged at being deprived of what they considered
their natural right, protested furiously and appealed to Congress for
protection, but their appeals were unavailing and the river remained
closed for more than a decade. The only market left to the western
farmers was the cities on the eastern coast. Peltry, ginseng and
whiskey were almost the only products that would pay their cost of
transportation to Philadelphia, and the proceeds derived from the sale
of these were sufficient to purchase only a few things of prime
necessity such as salt, gunpowder, and some indispensable articles of
iron. Even this small trade of the West was crippled when the new
government placed an excise tax on whiskey, and the resentment felt
against the federal authorities for their apparent disregard of the
economic interests of the western people blazed forth in open
rebellion.

The commercial isolation of the Ohio Valley ended, however, in 1795,
when the national government, spurred to action by the threats of
secession and clamor for protection coming from the western farmers,
secured a treaty with Spain opening the Mississippi River to
navigation. The successful conclusion of the negotiations was hailed
with great rejoicing in Tennessee, Kentucky, Pennsylvania and Ohio.
Fleets of flat-boats loaded with tobacco, pork, flour, grain and
whiskey began to move down the river. In 1799, more than a million
dollars worth of goods were received at New Orleans from the country up
the Mississippi. In October, 1802, the Spanish Intendant at New
Orleans, acting on his own responsibility, suddenly withdrew the "right
of deposit" at the city, and contrary to the provisions of the treaty,
he refused to assign an equivalent establishment at any other place on
the banks of the river. The western people were wild with rage. It was
necessary to send troops to Kentucky to prevent an armed expedition
against the Spanish province. Fortunately, the Spanish government
disavowed the action of the Intendant and in April, 1803, the river
trade was again restored. Desirous of avoiding such difficulties in the
future, Jefferson pushed the negotiations already begun with Napoleon,
to whom Spain had ceded her claims to Louisiana, for the purchase of
New Orleans and the territory through which the river flowed from the
possessions of the United States to the Gulf of Mexico. The
negotiations ended in October, 1803, with a wholly unexpected
result--the purchase of the entire Louisiana province. In December, the
United States took possession of the newly acquired territory and the
undisputed control of the Mississippi was secured forever.

The opening of the Mississippi marked the beginning of an active
internal commerce within the United States. The farmers of the Ohio
Valley, which was now being rapidly settled, found an outlet for their
heavy agricultural produce, and consequently secured a purchasing
power, enabling them to buy manufactured goods and merchandise, which,
notwithstanding the distance and the inferior roads, could be carried
to them in wagons from the East. Though the produce of the western
farmers was shipped down the Mississippi, very few of their supplies
were brought up the river, because of the difficulty of urging a
flat-boat against the powerful current of the stream. This triangular
trade of the Ohio Valley grew rapidly. The receipts at New Orleans, in
1807, including the cotton, sugar and molasses of Louisiana, which made
up a third of the total, amounted to $5,370,555. The money for which
the products of the West were exchanged at New Orleans was almost
invariably spent for manufactured and imported wares from eastern
cities. Large Conestoga freighters made regular trips from Philadelphia
to Pittsburgh bringing loads of hats, boots, powder, lead and clothing
which were distributed from the "Gateway of the West" among the towns
and villages down the river. Baltimore and New York also shared in the
western trade.

The internal commerce of the country in 1810, as in 1790, was greatly
handicapped by the high costs of transportation. Taking the country
over, the charges for transporting merchandise were $10 per ton per 100
miles and articles that could not stand this rate were shut from
market. Grain and flour could not bear transportation by wagon more
than 150 miles. The lack of commerce intercourse caused many sections
to develop local economic and political interests which endangered the
unity of the nation. "The question of the hour was plainly how to
counteract this tendency by a system of interstate commerce which
should unite them by a firm bond of self interest."[2] Gallatin's
report on internal improvements in 1808 reflects the plans and
ambitions that were in the minds of the commercial and political
leaders of the country, but unfortunately the foreign controversies in
which the United States became involved at that time prevented any
attempt to carry out his proposals.

      [2] B. McMaster, _A History of the People of the United States_,
      vol. iii, p. 465.

The war of 1812 brought a period of unsettled commercial conditions.
Domestic industry and trade were stimulated for a time, but a sharp
financial panic in 1814 caused a year of general depression. The return
of peace early in 1815 was followed by a quick revival of business, and
the next three years brought an era of prosperity to nearly everyone
except the manufacturers along the eastern coast, many of whom were
ruined on account of a deluge of importations from Europe.

Immigration to the West set in with renewed vigor after the close of
the war. The fertile soil of the Ohio Valley contributed an enormous
product of grain, tobacco, fruit and hemp which continued to find an
outlet down the Mississippi, and the farmers increased their purchases
of imports which flowed into Pittsburgh from the East. In 1811 Fulton's
invention was introduced in western waters, and in 1817 the first
steamboat voyage was made from New Orleans to Louisville. The effect of
this new engine of commerce on the Mississippi trade was almost
magical. In 1818-19, the first year after the steamboat became an
assured success, the receipts at New Orleans rose to 136,300 tons,
valued at $16,778,000, and the volume of exports of domestic products
from the southern port was greater than that from any other port of the
country.

But even more important to the commercial prosperity of the West than
the introduction of the steamboat was the spread of cotton culture into
the Southern States west of the Appalachian highland. Cotton culture
had been found exceedingly profitable in Georgia and South Carolina,
and when it was discovered that the rich bottom lands of Alabama,
Mississippi and Louisiana produced even better cotton than the upland
districts of South Carolina, there was a rush of settlers to the river
valleys of the new region. In 1811, fifteen-sixteenths of the cotton
raised in the United States was grown in Virginia, North Carolina,
South Carolina, and Georgia; in 1820, one-third of the total crop of
600,000 bales was raised in Alabama, Louisiana, Mississippi and
Tennessee. In the western part of the cotton belt, as in the eastern,
the planters directed practically all their capital and labor to the
production of cotton, relying on the region north of them for
provisions and live stock. The market for the grain, pork and flour of
the Ohio Valley was greatly enlarged. Flat-boat men disposed of their
cargoes of food products at the wharves of the plantations along the
Mississippi River; flat-boat stores peddled clothing, boots and shoes,
household furniture and agricultural implements from village to village
and from plantation to plantation; great droves of horses and mules
were driven into the Southern States in response to the demand for
draught animals for use in the cultivation of cotton.

As the western farmers enlarged the volume of their sales to the
southern planters they increased their purchases from eastern
merchants. A large part of the foreign imports of the United States,
which in 1816 reached the unprecedented amount of $155,000,000, was
sold in the West. Attracted by the cheapness of the goods offered and
full of confidence in their ability to meet all debts with the proceeds
of the lucrative southern trade, the people indulged in extravagant
overtrading. Purchases far exceeded sales and the specie coming from
the South was drained away as fast as it was received, but dozens of
banks furnished a supply of currency by means of copious issues of
paper money, and the career of extravagance proceeded. The internal
trade of the country had never been so prosperous.

The era of good times came to a sudden end in 1819 when the nation was
visited by a disastrous money panic. Nearly all the specie had been
shipped abroad, and large sums of paper money had been issued, much of
it on credit of a questionable nature. The general commercial expansion
following the war had led to extensive speculation all over the
country. When the new United States Bank suddenly began a vicious and
relentless campaign against all other banks of issue in an ill-advised
effort to force them immediately to a specie basis, loans were called
in everywhere, the circulation was greatly contracted, prices fell,
manufacturers and merchants were unable to meet their obligations,
factories shut down, mercantile firms went into bankruptcy, banks
closed their doors, and business everywhere was completely prostrated.
To make matters worse, the export price of the great "money crop,"
cotton, fell from 32 cents in 1818 to 17-1/2 cents in 1820. The
provision market of the western farmers was greatly injured and thus
planter, farmer, merchant, manufacturer and banker all succumbed before
the general catastrophe.

The panic gave a sharp check to extravagance and speculation,
importations declined, prices were readjusted and business soon began
to recover. By 1823, the country seemed to have been restored to its
former prosperous state and manufacturing in particular was more active
than it had been at any time since the war.

Notwithstanding the revival of manufacturing and domestic trade, the
farmers of the grain states found themselves in distressing
circumstances. The Ohio Valley was yielding a product far in excess of
the demands that existed and each year found a large amount of
unmarketable grain left in the fields and granaries. Many foreign
nations refused admittance to American food products and though the
grain-growing capacity of the United States had increased sixfold since
1790, the annual exports of grain, meat and flour were but little more
than the average for the five years from 1790 to 1795. The plantations
of the South were drawing much of their subsistence from the northern
farms, but they were unable to absorb more than a small fraction of the
tremendous surplus that was seeking a market.

Agricultural interests sought urgently for relief. Since there was no
foreign market for their surplus, they resolved to _create_ a home
market. If England would not buy food products from the United States,
the United States must refuse to buy manufactures from England, and
must, by the establishment of manufacturing industries at home, give
rise to a non-agricultural population that would consume the redundant
supplies of meat and grain. The problem of attracting capital to
manufacturing enterprises, the farmers proposed to solve by the
creation of a system of protective tariffs that would check
importations and encourage investment in mills and factories at home.
Manufacturing industries already in existence were in no apparent need
of protection and the shipping interests of Boston and New York and the
cotton planters of the South strenuously opposed the protective policy.
But the agricultural interests were not to be denied. Under the
leadership of Henry Clay, the tariff of 1824 was enacted and the
"American System" was inaugurated. In 1828, in response to an appeal,
emanating from the woolen manufacturers and seconded by the
agricultural interests, still further encouragement was given to home
manufactures.

While the country was being agitated by the tariff controversy and
exceptionally bitter political contests, the New York canals were
opened for traffic throughout their entire length (October, 1825). No
other single work in the United States has ever had a more beneficial
effect on the prosperity of internal trade. The opening of the canals
brought to an end what had been the bane of internal commerce for half
a century--the excessive cost of freight transportation. Freight rates
between Albany and Buffalo were at once reduced 90 per cent and the day
of the freighter on the Genesee road was ended. The new canal wrought a
complete change in all the rural districts of western New York. Lumber,
staves, ashes, grain and vegetables, hitherto unmarketable, were now
shipped to the markets of the East; farm values doubted and quadrupled;
a stream of people poured into the fertile farming regions around Lake
Erie. Not less valuable was the new waterway to the district at its
eastern terminus. The laboring population of the growing manufacturing
towns reaped immense benefits from the cheaper and better means of
subsistence they could now secure, while the shipments of merchandise
westward on the canal exceeded in value the receipts of raw produce at
tide-water. New York had achieved economic unity at a single stroke.

The success of the Erie Canal and the rapid growth of internal trade
which followed the adoption of the "American System" caused a demand
everywhere for more roads and canals and a widespread agitation in
favor of government aid to internal improvements. The federal
government gave extensive aid to private and state enterprises in the
way of land grants and stock subscriptions, though it did not engage
directly in the construction of commercial highways. The individual
states embarked in schemes of canal and turnpike building which
involved them in debts of millions of dollars. Ohio and Indiana began
to construct canals joining the Ohio River to Lake Erie in order to
secure the advantage of the new outlet to the East. Pennsylvania,
awakened to the danger of the total loss of western trade through the
state by the fact that shipments of merchandise to the West were
abandoning the wagon roads from Philadelphia, Baltimore, and New York
in favor of the cheaper route by way of the Erie Canal, began, in 1826,
an extensive system of canals to connect the Delaware River with the
Ohio River and the Great Lakes. Not to be outdone by their rival
states, Maryland and Virginia agreed upon the construction of a canal
from Chesapeake Bay to the Ohio River, and on July 4, 1828, President
Adams dug the first spadeful of earth to signalize the beginning of the
undertaking. Some financiers of Baltimore, dubious of the success of an
effort to build a waterway over the difficult route adopted by the
promoters of the Chesapeake and Ohio Canal, withdrew their support from
that enterprise, and putting their confidence in a new and almost
untried transportation device, which they believed would prove superior
to canals, just as canals had proved superior to turnpikes, they boldly
inaugurated the plan of a railroad from their city across the mountains
to the Ohio, and Charles Carroll, of Carrollton, placed the stone that
commemorated the beginning of its construction on the same day that
President Adams officiated at the rival celebration that marked the
beginning of the canal.

Thus by 1830, the future of the internal commerce of the United States
was assured. The adoption of the "American System" could have but one
result--a tremendous expansion of domestic trade. That this expansion
had already commenced was evident from the fact that notwithstanding
the vast growth in wealth and population from 1820 to 1830, the imports
of the United States had exhibited but little increase. "The nation was
building an empire of its own with sections which took the place of
kingdoms."[3] New England, New York and Pennsylvania were manufacturing
the clothing and iron utensils for the West and South. The people of
the South were absorbed in cotton raising. They relied upon the West
for much of their food and live stock; they bought their clothing and
machinery from the North Atlantic States; and their exports brought in
the specie which facilitated the commerce of all sections. The West was
becoming a vast granary. Its new factories were drawing artisans from
the East and taking laborers from the country to swell the demand for
flour and grain that had recently been seeking in vain for a market.
The volume of shipments of food and merchandise down the Mississippi
was larger than ever and the manufacturing population of the East,
already too large to be fed by the agricultural produce of New England,
New York and Pennsylvania, was beginning to draw subsistence from the
western farms.

      [3] F. J. Turner, _Rise of the New West_, p. 297.

Means of cheap transportation, the lack of which had been so great an
obstacle to internal development, had been or were being supplied to
meet the requirements of the new conditions. The steamboat arrivals at
New Orleans numbered a thousand each year. Water communication between
the Atlantic Ocean and the very center of the United States was
established when the Erie Canal connected the Hudson River to the
waterway afforded by the series of great inland seas. There were 1,343
miles of canals in operation in all the United States, and 1,828 miles
more were in the process of construction. Louisville was rejoicing in
the completion of a canal around the falls of the Ohio; Ohio and
Indiana were rapidly pushing the work on the canals that were to tap
the regions hitherto tributary only to the Mississippi; the
construction of the Pennsylvania Canal was being hurried forward to
enable Philadelphia to recover the trade lost to the Erie; Maryland and
Virginia were persistently going on with the building of the waterway
westward from Chesapeake Bay. And meanwhile 44 miles of railway had
been completed and were in operation, and to show that confidence in
the new device was not lacking, 422 miles were in the process of
construction and 697 miles more were already projected.




II

1830-1860


The years between 1830 and 1860 witnessed a remarkable expansion of the
United States in area, population and wealth. By the annexation of
Texas and by treaties with England and Mexico, nearly a million square
miles of territory were added to the national domain and the western
boundary was pushed to the Pacific Ocean. The total number of people
increased in the thirty years from 12,866,020 to 31,443,321; the total
wealth from about $2,000,000,000 to more than $16,000,000,000. It was a
period of great prosperity for all branches of industry. As the tide of
settlers swept over the fertile lands drained by the Mississippi River
and Great Lakes, the agricultural production of the country increased
with amazing rapidity. The production of corn in 1859 was almost
1,000,000,000 bushels; of wheat and oats 175,000,000 bushels each, and
of cotton 4,300,000 bales, while the live stock of the country that
year, including, among other animals, 25,000,000 cattle, 22,000,000
sheep and 33,000,000 swine, was valued at $1,000,000,000. The
exploitation of the mineral resources of the nation was carried on more
rapidly. From 300,000 tons of coal mined in 1830, the quantity grew to
13,000,000 tons in 1860; the iron mines turned out 1,000,000 tons of
ore in 1860, the copper mines 7,000 tons and the lead mines 15,000
tons, while the production of gold in the far West, which began in
1849, averaged $55,000,000 annually during the following ten years.
Manufacturing likewise grew in importance, the value of its products
rising to nearly $2,000,000,000 in 1859. The tendency toward a
territorial division of industry was accentuated during this period.
Cotton cultivation became more than ever the dominant industry of the
entire South; most of the manufacturing was done in the New England and
Middle Atlantic States; the Northern Central States were devoted
primarily to the production of grain and live stock.

The development of the country was accompanied by the construction of
transportation facilities to care for the expanding trade. A large
number of important canals were completed; the Ohio River was joined to
Lake Erie; Pittsburgh and Philadelphia were connected by a rail and
water line; the Illinois River was connected with Lake Michigan at
Chicago; the St. Mary's Falls Canal was built to aid the navigation of
the Great Lakes, and many other waterways of lesser importance were
constructed. Railroads grew rapidly in favor and as time went on they
were built in increasing numbers and the construction of canals was
practically abandoned. Before 1840 over 2,800 miles of track were laid
and by 1850 the mileage amounted to 9,000. The decade from 1850 to 1860
was a period of extensive railway construction, especially in the
Northern Central States, where more than 10,000 miles were built. Early
in the decade the trunk lines of the Eastern States were pushed across
the mountains and through railway connection was established between
the Mississippi Valley and the Atlantic Ocean. New York was connected
with Chicago by a direct rail route in 1853, and with St. Louis in
1855, and in 1858 a railroad reached the Missouri River. In the South,
roads were built into the interior from all the important cities on the
Atlantic and Gulf coasts. In 1860 there was a total of 30,626 miles of
railroad in the entire country.

With the growth of population and wealth, the diversification of
industry and the development of canals and railroads, there was a great
increase in internal commerce. The trade of this period consisted of a
few well-defined currents flowing between certain sections. A large
volume of products, mainly agricultural, went from the Central States
to the East, and a traffic of less volume but of greater value moved in
the reverse direction. There was a heavy internal movement from the
Northern to the Southern States and a light movement from the South to
the North. Aside from these movements, there was an over-land trade by
pack-horse and wagon with the Far West which became of particular
importance after the discovery of gold. For the sake of greater
clearness, these different currents of trade will be considered
separately in the order named.


1. TRADE BETWEEN THE EASTERN AND CENTRAL STATES

One of the notable features of the internal commerce following 1830 was
the rise of the trade on the Great Lakes. After the opening of the Erie
Canal there was a large migration to the lands around the lakes; in a
few years thousands of acres of land were cleared and put under
cultivation; the center of cereal production shifted westward; and
hundreds of shiploads of grain were borne over the lakes toward eastern
markets. Ohio was the first state west of New York to ship grain over
the lakes. By 1835, Indiana and Michigan were sending grain eastward
over Lake Erie; in 1836 the first shipment from Lake Michigan was
recorded; in 1838 a shipment of 78 bushels of wheat from Chicago marked
the beginning of the cereal trade of that city, and in 1841 the first
exportation of Wisconsin wheat left the harbor of Milwaukee.

The growth of the lake grain trade was exceedingly rapid. As soon as
the Ohio Canal was completed (1832) there was a diversion of traffic
from the Mississippi River to Lake Erie, and as early as 1838, the
receipts of western wheat and flour at Buffalo were larger than the
receipts at New Orleans. The repeal of the English Corn Laws in 1846
gave a great stimulus to cereal production in the United States. As the
population of the Central States increased and as canals and railroads
were built to connect all parts of the cereal belt with the lake
cities, the lake grain trade constantly swelled in volume. In 1860 the
receipts of grain by lake at Buffalo, Oswego, Dunkirk, Ogdensburg and
Cape Vincent amounted to 62,000,000 bushels. The shipment from Lake
Michigan ports that year were 43,000,000 bushels, half of which came
from Chicago alone.

Though grain and flour constituted the most important part of the
eastbound lake traffic, there was at the same time a considerable trade
in other commodities. Large quantities of pork, bacon, beef, lard, and
other provisions were sent to Buffalo for distribution eastward; hides,
wool, whiskey and live stock formed an important part of the traffic.
Millions of feet of lumber were transported annually from Michigan and
Wisconsin to all the other lake states; the shipment of copper from
Lake Superior began in 1845, and the iron ore traffic began ten years
later.

The westbound shipments over the lakes were also large and valuable. In
1836, $9,000,000 worth of merchandise was sent to western states over
the Erie Canal and the lakes, and by 1854 the amount reached
$94,000,000. After the latter year there was a rapid decline in the
merchandise traffic over the canal and lake route because of railway
competition. The shipments to the West consisted mainly of dry goods,
clothing, machinery, railroad iron, drugs, imported foodstuffs,
household furniture, salt and coal.

The trade over the Great Lakes and Erie Canal was without doubt the
most important feature of the commerce between the Atlantic States and
the interior of the country between 1830 and 1860, but this route by no
means absorbed all the traffic. The Main Line of the Pennsylvania canal
system, completed in 1832, made it possible for Philadelphia and
Baltimore to retain some of their trade with the cities of the Ohio
Valley, but this trade, like the wagon trade preceding it, was largely
one-sided, the westbound movement of light merchandise exceeding the
eastbound movement of agricultural produce. The inclined planes which
carried the traffic across the mountains proved to be an expensive and
cumbersome device, and because of a lack of better transportation
facilities, the trade of Philadelphia and Baltimore suffered constant
losses, and for a time it seemed that New York was destined to
monopolize the entire commerce between the Atlantic coast and the
trans-Appalachian region.

In 1841, however, this situation was modified by the entrance of a new
factor--the Western Railroad, the completion of which gave through rail
connection between Boston and Albany. Because of its isolated position
Boston had not shared in the direct trade with the Central States, but
had been compelled to buy and sell through the merchants of New York
and Philadelphia. The new railroad completely altered the position of
Boston and brought an era of great prosperity to the city, at the same
time demonstrating the practicability of the steam road as a carrier of
nearly all kinds of freight.

The immediate success of this road was a signal for the beginning of
more extensive railway construction, and the decade from 1850 to 1860
witnessed the entrance of the trunk line roads as competitors with the
canals for traffic between the East and the West. The failure of the
Pennsylvania Canal and the growing prosperity of Boston incited the
people of Pennsylvania to take decisive steps to win back some of the
trade lost by Philadelphia and in 1846 the Pennsylvania Railroad
Company was chartered for the purpose of completing steam railway
connection between Philadelphia and Pittsburgh. By 1854, this line, the
Erie, the New York Central and the Baltimore and Ohio all reached the
Ohio River or Lake Erie. During the next six years these four lines
took over two-thirds of the flour traffic and practically all the
merchandise and live-stock traffic between the eastern cities and the
trans-Alleghany region, leaving to the Erie Canal the forest products
and grain. In addition to capturing a large share of the canal freight
the railroads easily secured most of the traffic that was accustomed to
go from the cities along the Ohio River to the eastern coast and to
Europe by way of New Orleans. The lakes and canals had previously made
some inroad on the commerce down the Mississippi, but notwithstanding
their influence the river cities of Ohio and Kentucky continued to send
the largest part of their exports southward until the railroads gave
them a through route to the East. After 1855 the shipments down the
river from Cincinnati and other important ports on the Ohio shrunk
rapidly in volume and even before the war broke out their commerce with
the East was much larger than their river trade to the South.

While the railroads in the North were making such marked changes in the
course of internal trade, a similar transformation was occurring in the
South. Trade between the eastern and western sections of the cotton
states before 1849, aside from some traffic in slaves, was almost
negligible. In 1849 when the Western Atlantic Railroad began to run
trains from Chattanooga to the Atlantic coast, the planters of Northern
Alabama and Tennessee, who had always sent their cotton to New Orleans
and Mobile, turned to the markets at Charleston and Savannah. The
cotton receipts at those two ports doubled in a single year, while the
receipts at New Orleans fell off nearly 100,000 bales. The shifting of
the center of cotton production farther westward enabled New Orleans to
make up for its losses, but the South Atlantic ports easily maintained
and increased their trade. They also competed with New Orleans and the
cities on the Ohio River for the merchandise trade of Alabama,
Mississippi and Tennessee, and the provisions for Georgia and South
Carolina began to enter the states overland from the West, the coasting
trade on the Atlantic seaboard both gaining and losing by the changes.


2. TRADE BETWEEN THE NORTH AND SOUTH

The general character of the internal commerce between the North and
South, between 1830 and 1860, differed but little from what it had been
before the former year. There were no through rail connections between
the two sections until near the close of the period, and consequently
almost the entire commerce, aside from that in slaves and live stock,
consisted of the trade on the waters of the Mississippi River system.

This was the golden age of the river trade. Each year it grew steadily
in volume, reaching a point of prosperity in 1860 never equalled before
or since. Until the railroads began to divert the traffic in flour and
provisions after 1850, the cities on the Ohio River sent most of the
produce collected at their markets to New Orleans to be shipped to
Europe and the Eastern States or to be sold to the planters of the
cotton belt. After 1850, as the surplus agricultural produce of the
Ohio Valley was diverted from the river, its place was taken by that
coming from the fertile region around St. Louis, where thousands of
immigrants were settling in new homes. Moreover, the loss of traffic in
agricultural produce from Pennsylvania, Ohio and Kentucky was
compensated for by the increasing volume of manufactured goods and coal
coming down from Cincinnati, Louisville and Pittsburgh. Thus the
downstream traffic from the Northern States, though suffering a heavy
relative loss, made an absolute gain, and with the enormous amounts of
cotton shipped down the river added to this traffic, the Mississippi
carried considerably more produce to the sea than either the Hudson
River or the eastern roads. As before 1830, the trade up the river
failed to keep pace with the movement downstream. Of the shipments
upstream, 75 per cent consisted of articles previously sent down and
resold to planters of Mississippi, Louisiana and Arkansas. The district
north of these states bought some sugar and coffee of New Orleans, but
drew practically all its manufactures and other imported goods from the
East.

The value of the receipts of produce at New Orleans advanced from
$22,000,000 in 1830 to $185,000,000 in 1860. The largest part of the
increase resulted from the growth of the cotton trade. The receipts of
"Western produce," which in 1820 formed 58 per cent of the commodities
entering New Orleans, constituted only 23 per cent of the total
receipts in 1860. But though showing a relative decline, the receipts
of foodstuffs and merchandise had a steady aggregate increase. As a
cotton market, New Orleans had no close rival. Its receipts of this
great staple in 1860 amounted to $109,000,000.

St. Louis was the city of next importance on the Mississippi. Until
after 1855, St. Louis remained strictly a river city, almost entirely
dependent upon the Mississippi and its tributaries for both the
importation and exportation of the flour, grain, meat, tobacco, lead
and other goods that entered and left its busy markets. After the city
secured railway connection with the East in 1855 a large part of the
traffic entering from that direction was transferred to the railroads,
and some of the traffic leaving the city was diverted from the southern
river route to the eastern railway route. However, the volume of trade
taken from the Mississippi was not large at first and the movement of
commodities southward showed no marked decline until the outbreak of
the Civil War.

Next to the river trade, the trade in live stock and slaves was the
most important element in the internal commerce between the North and
the South. Each year large droves of horses, mules, cattle and hogs
were driven into the South from the Northern and "border" states, the
farmers all over the corn-raising section finding an unfailing source
of gain in the demand for live stock in the southern cotton fields. The
domestic slave trade commenced to be of importance after 1820, when
cotton culture spread among the Gulf States. Slaves were bought in
South Carolina, Georgia, Alabama, Mississippi, Louisiana, Arkansas and
Texas, and exported from Virginia, Maryland, North Carolina, Kentucky,
Tennessee, Missouri and Delaware. Though no statistics of the volume of
the internal slave trade exist, evidence from contemporary accounts
indicates that it was unquestionably extensive, probably reaching a
value of $30,000,000 a year in the late fifties.


3. TRADE OF THE FAR WEST

Long before Texas and the California territory became a part of the
United States, enterprising merchants on the western frontier began a
merchandise trade with the Mexican settlements in what is now New
Mexico. By 1843 this trade reached an annual value of $500,000. After
the occupation of the territory by the United States troops it became
much larger, reaching a total value in 1860 of $3,800,000. The chief
shipping points were Independence and Kansas City, Missouri.
Transportation was supplied by regular freighters who employed a large
number of men to conduct the white-topped prairie schooners across the
unsettled plains between the Missouri River and the mountains. New
Mexico paid for its imports with bullion and wool produced in the
territory, or with money secured by the sale of sheep driven to
California, or by the sale of a scanty agricultural produce to
government military posts and Indian agencies.

In addition to the wagon trade with New Mexico, the Missouri River
cities carried on a similar trade with Utah after its occupation by the
Mormons in 1848. When gold was discovered in Colorado in 1859 there was
an immediate rush of settlers to that territory, which was accompanied
by the rise of a large trade in tools and provisions. There was no
regular overland freight traffic to the Pacific coast, the commerce of
California with the rest of the country, aside from the sheep trade
with New Mexico, being carried on around Cape Horn or across Central
America. Within California itself there was an extensive trade between
San Francisco and the agricultural, lumbering and mining districts of
the surrounding regions.


4. CONCLUSION

The expansion of the volume of the internal trade of the United States
during this epoch more than justified the expectations existing at
1830. The improvement of the facilities for communication and
transportation, permitted a continually increasing accentuation of a
territorial division of labor which fostered the growth of mutual
dependence between regions where geographic, social or other conditions
led naturally to the predominance of a special type of industry. The
manufacturing and commercial population of the Northeast was fed by the
farm products of the Central States and the inhabitants of the Central
States drew their imported supplies, their clothing, shoes and large
quantities of other manufactured goods and general merchandise from the
Eastern markets. The South relied upon the North for food, manufactures
and imports. The North in turn bought from the South raw materials for
its cotton and sugar industries, and the Northern shipping interests
carried to European markets the heavy exports of Southern cotton, the
proceeds from which paid the Southern debts in Northern States and
settled the large unfavorable balance of the Northern foreign trade.

The multiplication of factories in the North together with the spread
of cotton culture in the South and the opening of foreign markets to
American grain brought about the demand for cereal products, which the
agricultural interests had been so anxious to create. When the market
problem was solved, the tariff duties were reduced to a revenue basis.

In the solution of the transportation problem the people freely used
their political institutions. Nearly all the numerous canals built
after 1825 and several of the early railroads were public enterprises,
undertaken by state governments. However, the states proved unable to
cope with the problem of administering their railways and canals, and
surrendered the field of transportation to private corporations, which
were helped to carry out the work by generous and munificent gifts of
land and money from federal, state and local governments.

Unfortunately the federal government did not attempt to establish a
satisfactory currency system. In 1837 and again in 1857 the country was
visited by a financial panic due in a large measure to extravagant
speculation, much of which would have been impossible had the issue of
money been properly regulated.

On the whole the period from 1830 to 1860 was one of great prosperity
and contentment. The wealth of the nation grew enormously and for the
most part it was equally distributed, there being few paupers and still
fewer very rich individuals. The twenty years following 1840 have been
called the "golden age" of American history, and as far as concerns the
diffusion of material comforts they certainly deserve the name.

Notwithstanding the great material prosperity however, the flames of
sectionalism, which had blazed forth during the contest over the
adoption of the "American System" remained unquenched even after the
question of protection had ceased to be an important political issue.
Filled with animosity engendered by the thought that the economic
progress of the North had been effected at the expense of the South,
and fearful that the fulminations of the abolitionists and the
successful efforts of the Northern political leaders to restrict the
territorial expansion of slavery only foretold an ultimate intention of
destroying that institution altogether, the Southern partisans decided
to sever the political bonds between the two sections, the economic
institutions of which differed so widely, and to establish a separate
state whose political ideals would conform to its economic and social
predilections. This decision the Southerners stood ready to enforce by
an appeal to arms; the people of the North, preferring "to accept war
rather than let the nation perish," made ready to prevent the proposed
dissolution of the Union; and the era of general happiness and comfort
ended amid the preparations for the impending struggle.




III

1860-1900


The Civil War marked a notable turning point in the economic history of
the United States. National development since 1860 has been shaped to a
large degree by fundamental political and economic changes that
occurred during the war--changes which were for the moat part the
effect of various expedients resorted to by the federal government to
bring the struggle for the preservation of the Union to a successful
issue. To crush the military strength of the South the federal
authorities adopted the expedient of the abolition of slavery, and to
the surprise of both the North and the South "the cause of the conflict
ceased before the conflict itself," and the nation emerged from the war
freed of the greatest obstacle to its social homogeneity. To secure
revenue for the prosecution of the war, the duties on imports were
raised to an unprecedented point, and when Congress failed, after the
return of peace, to reduce the tariff schedules to their former level,
manufacturing interests found themselves protected by a tariff wall so
high that foreign competition was largely eliminated. To secure needed
aid in financing the costly struggle, Congress established the national
banking system which gave greater uniformity to the currency and
brought the financial centers of the country into closer relation. The
anxiety to connect the Atlantic and Pacific coasts by rail led the
federal government to adopt the practice of granting large subsidies to
the builders of great transcontinental railway lines. The stimulation
which the war gave to manufacturing and transportation in the North and
the shrewd manipulation of the money market during the years of the
national crisis made possible the accumulation and concentration of
large quantities of capital funds under the control of a small number
of persons.

It was inevitable that such radical changes would modify the course of
industrial progress. Because of the importance of slavery as the
underlying cause of the war, there has been a natural tendency to
regard its abolition as the most striking and significant net result of
the great conflict, but it is to be doubted whether the emancipation of
the negro had as great an effect on subsequent economic development as
the other innovations, which were so obscured by the turmoil of the war
that they received but little attention and were regarded as being of
much less significance. The complete transformation in the tariff
policy of the nation permitted the growth of manufacturing to an extent
that would have been impossible had the war not occurred; the
construction of the transcontinental railroads had an immeasurable
effect on the development of the great region west of the Missouri
river; the concentration of capital provided the means by which
industrial enterprises could be carried out on a gigantic scale; the
establishment of a uniform currency and a better banking system
accelerated the growth of industry and trade. It is in these changes
that one finds the key to much of the economic history of the United
States since the Civil War.

The period from 1860 to 1900 was one of development and exploitation.
The years prior to the Civil War had been marked by the advance of the
political dominion of the United States to the Pacific Ocean, and at
the same time the nation had enjoyed an era of notable agricultural,
industrial and commercial prosperity, especially in the states east of
the Mississippi River. However, the tremendous possibilities of the
country were only beginning to be realized in 1860, and remarkable as
was development before that year, it was completely eclipsed by the
amazing progress made during the latter part of the century. An
abundance of unoccupied land, of rich and varied natural resources,
favorable climatic conditions, a complete absence of checks on
individual initiative and enterprise and of restrictions on internal
communication and trade, and the encouragement afforded to industry by
the liberal policies of the federal government all combined to create
economic opportunities of boundless scope. Labor, capital and
transportation facilities alone were needed and as these increased the
wealth production of the United States multiplied with astonishing
rapidity. The extension of the railway system permitted the constant
growth of agriculture and rendered accessible the mineral and forest
products in which the land abounded; cheap and plentiful raw materials
from field, mine and forest, made possible a phenomenal increase of
manufacturing. Multitudes of European immigrants, eager to share in the
wealth of the new world, poured in and recruited the labor force
necessary for the industrial conquest; and the invention and
application of labor-saving machinery of every description increased
many fold the effectiveness of the effort of each individual. All parts
of the country participated in the material progress. The South,
issuing quickly from the almost abject state of prostration in which it
was left by the ravages of a disastrous war, became more prosperous and
flourishing than ever; the Northern States east of the Mississippi
constantly increased their agricultural production, and at the same
time became one of the greatest manufacturing and mining districts in
the world; on the prairie lands west of the Mississippi a new cereal
kingdom was founded; the western plains were converted into great live
stock ranches; the forests, orchards and grain fields of the Pacific
States proved to be an even greater source of wealth than were their
mines of gold and silver.

In the forty years following 1860 the number of people in the United
States, exclusive of outlying possessions, rose from 31,000,000 to
76,000,000, the wealth of the nation grew from $16,000,000,000 to
$89,000,000,000. These figures convey some idea of the progress of the
country as a whole. Such an advance was possible only by the most rapid
expansion of all the numerous lines of industry to which the resources
and energies of the nation were devoted.

The growth of agriculture proceeded on a magnificent scale. Within two
decades after the war the United States assumed the leading place among
all nations of the world in the production of grain and live stock,
maintaining at the same time its supremacy as a producer and exporter
of cotton and tobacco. Countless thousands of acres of virgin soil west
of the Mississippi River were given away under the provisions of the
famous Homestead Act of 1862 and by 1880 the continent was practically
settled from one coast to the other. The area of farm lands increased
from 407,000,000 acres in 1859 to 841,000,000 acres in 1899, and the
value of farm property rose from $8,000,000,000 to $21,000,000,000. The
application of machinery to the cultivation of the soil and the
substitution of horse and steam power for manual labor multiplied the
productivity of each unit of land and labor. In 1899 the country
produced from its fields 4,500,000,000 bushels of cereals, 9,500,000
bales of cotton, 79,000,000 tons of hay and 868,000,000 pounds of
tobacco. The value of the live stock that year was $3,000,000,000, and
the production of dairy products, poultry and eggs amounted to
$750,000,000.

The output of the mines increased in value from $219,000,000 in 1869 to
$1,107,000,000 in 1899. Over 240,000,000 tons of coal, 27,000,000 tons
of iron ore, 270,000 tons of copper, and 63,000,000 barrels of
petroleum were taken from the earth during the latter year.

The most significant feature of the economic history of the United
States between 1860 and 1900 was the rise of manufacturing. The radical
change in tariff policy, the rapid expansion of the home market due to
the tremendous growth of agriculture and the spread of railroads, and
the presence of an unlimited amount of cheap fuel and raw materials all
combined to make manufacturing in some respects the dominant industry
of the country. The value of the products of manufactures in 1899
reached a total of $13,000,000,000.

Simultaneously with the expansion of agriculture, the exploitation of
natural resources and the rise of manufacturing, partly as an effect of
them but almost equally as a cause, came the development of the great
transportation system. This was the era of the railroad. Immediately
after the war there began a period of extensive construction, over
35,000 miles of line being laid between 1865 and 1874. The first
transcontinental line was completed in 1869. Unfortunately the enormous
increase of mileage during these years was considerably in excess of
the needs of the country, and the speculative fever which attended the
expansion resulted in the panic of 1873. After a period of depression
of five years there was a second and much greater revival of
construction. Between 1878 and 1890 over 85,000 miles of new track were
laid, including four transcontinental tracks completed and others
partially finished. By 1900 there were 199,000 miles of railroad
spreading a vast net over the entire country.

The important result of the growth and improvement of railways was the
great reduction in the cost of transportation. At the close of the
period before the war it had been demonstrated that railroads could
economically carry high grade freight such as flour, live stock,
lighter manufactured goods and general merchandise, but as yet they had
been unable to compete successfully with waterways for the
transportation of grain, and the carriage for long distances of such
low-grade freight as coal and ore had not been attempted. As the
railway developed, however, its use was extended, and it was soon found
that there was no commodity so cheap that it could not be profitably
handled. Accompanying the extension of the service to include all kinds
of bulky freight there was an uninterrupted decline in the general
level of rates on all classes of goods, resulting from the increased
efficiency of roads, the stress of competition, and above all from the
tremendous increase of traffic. The rate per ton per mile decreased
from 1.92 cents in 1867 to 0.73 of a cent in 1900. This reduction of
transportation charges was one of the most potent factors determining
the course of economic progress. Field, mine, forest and store were
linked together into a unified whole; raw materials could be
concentrated at any point and there was practically no limit to the
extent of the market for finished commodities. The increase of the
tonnage of railway freight from less than 20,000,000 tons in 1860 to
almost 600,000,000 tons in 1900 is the best index of the growth of
internal trade during this period.

As the railways increased in importance, transportation on most of the
inland waterways declined. Nearly 1,700 miles of canals were abandoned
between 1860 and 1900. After 1880 there was a gradual decrease of
nearly all canal and river traffic. The Great Lakes were practically
the only inland waterway that retained an important position in
internal trade. The unusually favorable conditions prevailing for the
growth of traffic on these bodies of water enabled their commerce to
thrive and expand at a rate which compared favorably at all times with
the growth of railway traffic.

Commerce has been aptly defined as "taking things from where they are
plentiful to where they are needed." This being true, the volume of
internal commerce of any country must depend upon the number of its
people, the total volume of its production, the sectional diversity of
its products, the efficiency and cheapness of its transportation, and
the freedom from foreign competition in the sale of native commodities
in home markets. In the economic progress of the United States from
1860 to 1900, there was a continuous and rapid development of all the
requisite factors for the existence of a large internal trade.
Population more than doubled, annual production per capita quadrupled,
the diversification of industry became more pronounced and the
transportation system developed to a degree that afforded the utmost
fluidity of movement of all articles of trade. Furthermore, the range
of movement of internal trade was greatly widened by the settlement of
the vast expanse of new country west of the Mississippi River.

The extent, volume and complexity of internal trade during this period
render it impossible to attempt, within the scope of this paper, to
give a connected account of its development. However, some idea of its
wonderful expansion may be conveyed by the following brief statement of
the growth of the movement of some of the most important commodities.

_Cereals and Flour._ The history of the internal grain trade from 1860
to 1900 centers around the receipts and shipments at the great primary
grain markets situated on the Great Lakes and the rivers of the upper
Mississippi Valley. In 1900 the chief surplus cereal area of the United
States comprised a vast stretch of territory included in a semicircle
described by a southern and western sweep of a compass moving on a
radius extending from Duluth to Buffalo. Three-fourths of the
4,500,000,000 bushels of grain were raised in the twelve states
embraced in this territory. The ten most important markets in the
region, each of which was receiving annually from 10,000,000 to
300,000,000 bushels of grain, were Chicago, Minneapolis,
Duluth-Superior, St. Louis, Milwaukee, Toledo, Kansas City, Peoria,
Cincinnati and Detroit. From each of these points there radiated toward
the South and West a network of railways over which grain came from the
farming districts and over some of which there was a return movement of
flour and grain for domestic consumption or for exportation from Gulf
ports, while stretching to the eastward were numerous rail and water
lines by which an immense cereal and flour traffic was carried to the
manufacturing districts and exporting cities of the Atlantic coast. In
1900 the ten markets named received about 850,000,000 bushels of grain,
including flour, and shipped 650,000,000 bushels.

_Live Stock and Meat._ The extension of railroads to the grazing lands
of the West and the tremendous increase of corn production in the
Mississippi Valley after 1860 gave a great impetus to live stock
raising. Like the trade in grain the trade in live stock centered
around a series of great cities located centrally within easy reach of
the producing sections on one side and of the consuming region on the
other. To these primary markets the railroads carried thousands of car
loads of stock--horses and mules for distribution among the farms and
cities of the East and South, cattle, hogs and sheep for slaughter at
the packing houses at the primary markets, for distribution among the
farms of the Central States to be fattened for subsequent killing, or
for shipment to the slaughter pens of Eastern cities.

Until 1863 Cincinnati was the chief meat packing city of the country,
but in that year Chicago took the lead and has held it ever since, and
as the live stock industry shifted westward, St. Louis, Kansas City,
Milwaukee, Indianapolis, Omaha and St. Joseph in turn surpassed
Cincinnati in the business. The trade in meat was revolutionized during
this period by the introduction of the refrigerator car which made
possible the transportation of fresh meat for any distance. The total
value of the products of wholesale slaughtering and meat packing in
1900 amounted in value to $700,000,000, of which more than one-half was
produced in three cities, Chicago, Kansas City and South Omaha. In
Chicago alone 2,000,000 cattle and 22,000,000 hogs were packed. The
chief market for the numerous products of the packing establishments
was in the manufacturing districts of the East. The eastbound rail
shipments of provisions from Chicago in 1900 averaged about 20,000 tons
a week.

_Cotton._ The geographical limits of the cotton belt had been reached
before 1860 and consequently there was no further extension, but the
cotton acreage was increased from about 13,000,000 acres to more than
30,000,000 acres during the period. Texas in 1900 had over 7,000,000
acres of land devoted to cotton raising and seven more of the thirteen
states in the cotton belt each had an acreage of more than 1,000,000.
The chief interior cotton markets in 1898 were Houston, St. Louis,
Memphis, Augusta, Cincinnati, Atlanta, Little Rock and Shreveport. The
city of Houston, through which passed a large part of the Texas crops,
destined for export from Galveston, had the heaviest receipts amounting
to 1,800,000 bales. St. Louis and Cincinnati owed their prominence to
their position as natural gateways through which cotton passed to
Northern markets from Texas and the lower valley of the Mississippi.
Among the Southern seaports New Orleans held the lead in cotton
receipts until 1899, when Galveston took first place. Together these
two cities shipped nine-tenths of the cotton exported by the way of the
Gulf of Mexico. On the Atlantic coast Savannah held the lead in cotton
receipts. The trade of Charleston declined somewhat after 1880; Norfolk
and Wilmington, of relatively small importance before the war, became
large markets during this period, the former ranking next to Savannah
after 1880.

The "overland movement" of cotton by rail to the North, which began in
1855, developed to large proportions after the war. This movement
represented the results of the efforts of the railroads to secure a
share of the traffic that had formerly belonged entirely to the
coasting trade. The "overland" traffic originated in all the cotton
states, most of it passing through St. Louis and the gateways on the
Ohio and Potomac rivers to North Atlantic States to be sold to Eastern
spinners or exported to Europe. In 1899 the all-rail movement of cotton
amounted to 1,370,000 bales, as compared to a coastwise movement of
2,019,153 bales.

A noteworthy feature of the cotton trade of this period was the
increase of cotton consumption in the South. After 1885 there was a
rapid expansion of cotton manufacturing in several Southern States, and
in 1899 their mills used 1,400,000 bales of cotton, only a third less
than the number of bales consumed in Northern mills. The decline of
cotton receipts at Charleston was largely due to the growth of cotton
manufacturing in South Carolina, whose mills were consuming more than
one-half of the annual product of the state at the close of the
century.

_Coal._ Previous to 1860 practically all the coal shipped from the
anthracite districts in Pennsylvania was transported to Philadelphia
and New York where it was consumed or carried coastwise to points along
the Atlantic seaboard. The movement to Eastern points continued to
constitute the largest part of the anthracite trade after 1860, but a
trade toward the West also sprang up. The chief route for this traffic
was by canal or rail to Buffalo, from where it was distributed among
other ports on the Great Lakes. Another important movement was to
Pittsburgh, large quantities being shipped thither for distribution
westward by rail.

Until the early sixties the production of bituminous coat was less than
that of anthracite, but with the increase of manufacturing the
production of the former increased rapidly and by 1900 the output,
amounting to 190,000,000 tons, was nearly four times the output of
anthracite. The great fields of Pennsylvania, West Virginia, Maryland
and Ohio turned out much more than one-half of the bituminous coal
mined during this period. From these fields there were large shipments
in all directions. The Chesapeake and Ohio Canal and the southern trunk
line railroads carried a heavy tonnage to the cities on the Atlantic
seaboard; millions of tons were floated down the Ohio River; the
railroads took immense quantities westward for consumption among the
Central States, a large part of it being distributed by water from all
the lake ports on the southern shore of Lake Erie. The second great
center of bituminous coal trade was in the fields of Indiana, Illinois,
Iowa, Missouri and Kansas, whence the numerous cities of that district
drew most of their large fuel supplies. The third important center of
production, which was developed very rapidly after 1885, was the
Alabama and Tennessee field. It provided fuel for the growing
manufacturing industries of the south-eastern portion of the country
and competed for the coal trade of points on the lower Mississippi.

_Iron Ore, Iron and Steel._ The development of the movement of iron ore
from the mines around Lake Superior to the furnaces of the Eastern
States was one of the most interesting features of the internal trade
of the United States during this entire period. This trade grew in
volume from less than 1,000,000 tons in 1870 to 18,000,000 tons in
1899, the shipments during the latter year comprising two-thirds of the
total iron ore production of the whole country. Practically the entire
traffic went by lake vessels to ports on Lake Erie and Lake Michigan
whence it was taken by rail to the blast furnaces of Pennsylvania,
Ohio, New York and Illinois.

No other industry in the United States had a more remarkable growth
after 1860 than the iron and steel industry. The production of pig iron
in 1899 was nearly 15,000,000 tons, and of crude steel almost
11,000,000 tons. Pennsylvania contributed about one-half of the entire
output of both pig iron and steel during the forty years, Ohio ranking
second. The pig iron industry began to expand rapidly in Alabama and
Illinois in the early eighties, and by 1900 the output of these two
states constituted a fifth of the total product. The immense output of
iron and steel was distributed everywhere throughout the country. A
large part of it was used in building the railroads and the remainder
was utilized as the raw material for the manufacture of a great variety
of iron and steel products that were used in all branches of industry.

_Lumber._ The forests of the United States were subjected to a rapid
and often wasteful exploitation during these years. Extensive building
operations, the construction and maintenance of an enormous railway
mileage and the growth of manufacturing created a heavy demand for
timber, and by 1900 the annual cut amounted to 35,000,000,000 feet. The
northeastern group of states which had formed the chief source of
lumber supply before 1860, lost precedence by 1880 to the lake states,
Michigan, Wisconsin and Minnesota. The tremendous consumption of timber
throughout the country rapidly depleted the supply in this district and
by 1900 the yellow pine of the South was being heavily drawn upon,
forming a fourth of the production of the country. The timber lands of
the Pacific coast contributed more than 2,000,000,000 feet a year after
1890, and the shipments of lumber and shingles from this region to the
interior were beginning to take on very large proportions.

_Manufactures._ In 1859 the New England and Middle Atlantic States
produced nearly three-fourths of the total manufactured products of the
United States, and these two groups together with the Central States
reported more than 80 per cent of the product of manufactures of each
census year thereafter. In general, it may be said that the rest of the
country was dependent upon these sections for its manufactured goods.
The fact that over one-half of the product of 1899 came from five
states, New York, Pennsylvania, Illinois, Massachusetts and Ohio,
serves to designate still more clearly the chief centers of trade in
manufactured goods. Of the fifteen leading manufacturing cities in
1899, twelve were located east of the Mississippi River and two were
situated on its west bank. New York City alone produced in 1899
one-tenth of all the manufactures of the country and Chicago and
Philadelphia together produced another tenth. The localization of many
industries within the manufacturing belt itself was an important factor
in determining the course of internal trade between the manufacturing
states and the rest of the country and among the manufacturing states
themselves, which were the largest consumers as well as the largest
producers of manufactured goods. The increase in the value of the
products of manufactures from $2,000,000,000 in 1859 to $13,000,000,000
in 1899 gives an idea of the expansion in the trade in manufactured
commodities, the details of which it is impossible here to consider.

There were no other articles the movements of which equalled in
importance those of the various commodities discussed above, but there
were many that contributed a tonnage of large volume and value to
internal trade. Dairy products, poultry and eggs, wool, hay, sugar,
tobacco, fruits and vegetables from the farms, petroleum, gas, copper,
stone and many other valuable mineral products, and the large annual
quantity of imports of food products, manufactures and raw materials
entering the seaports to be distributed among interior markets helped
to swell the volume of traffic that moved from place to place within
the country.

_Conclusion._ A most interesting and significant feature of the history
of the United States during this period was the transition in the
character of the economic problems of the country. Until the time of
the Civil War its chief problems had been those of securing the means
to develop its resources, of acquiring the facilities for transporting
its products from place to place, and of providing markets in which its
products could be sold. As capital, population and transportation
facilities were provided to exploit the latent wealth of the continent
it was found that out of their presence grew far larger and more vital
problems than their absence had ever created. The economic difficulties
of the nation after the Civil War arose chiefly because of the
existence of the things which before 1860 it was a question of
acquiring.

In no instance was this general proposition better demonstrated than in
the railroad problem. For nearly sixty years of the nineteenth century
the chief obstacle to internal trade had been the lack of the means of
transportation. To overcome this difficulty the states had first built
their own canals and railroads. Many of the state enterprises failing
because of weak administration, the states had surrendered the
management of railroads to private corporations, but the public
continued to share in railroad construction through numerous grants of
aid by federal, state and local governments. For a number of years
almost the only activity of the public in regard to railroads was to
foster and protect the interests of the railroad companies. In the
seventies the public gradually came to a realization of the fact that
the railroad companies were displaying a lamentable lack of regard for
the interests of the public. Persons and communities found themselves
entirely at the mercy of railroad corporations, which, by vicious
discriminations, built up and destroyed where they chose, and even
endeavored to control arbitrarily the economic future of entire groups
of states regardless of their natural advantages or the choice of their
people. And not only did the railroad companies themselves become a
source of danger, but they were instrumental in the creation and
development of great industrial combinations, which were equally
indifferent to the welfare of the general public. The transportation
problem of the United States was no longer that of providing
facilities, but of controlling and regulating the existing facilities
in such a manner that reasonable rates and services would be given to
the public which had entrusted the business of transportation to
private agencies. The demand for relief was first voiced in state
legislation. The states being powerless to regulate interstate trade,
the national government found it necessary to act, and, in 1887, the
Interstate Commerce Law was passed, having for its chief purpose the
prevention of unjust discrimination. As a regulative measure the law
proved inadequate, its most important provisions being emasculated by
court decisions, and the century ended with effective railway
regulation unaccomplished.

No less pressing than the problem of regulating railroads, over which
the internal commerce of the nation was carried on, was the question of
regulating the great industrial combinations through which a large part
of the buying and selling of the products of the country was
controlled. The unfair advantages secured by large combinations because
of their abundance of capital and the discriminating favors of
railroads enabled them often to throttle competition and to establish
monopolies that were a menace to the public. This situation likewise
called forth federal legislative measures intended to prevent the
monopolization of trade. Previous to 1900, however, but little
application of the law was made.

To the tariff and to the currency the nation owed its most bitter
political struggles after the reconstruction of the Union was
accomplished. The net result of a half dozen efforts to modify the
tariff was the existence, at the end of a century, of a tariff law in
which the general average of duties was 10 per cent higher than the
average at the close of the Civil War. The currency system of the
nation, with the exception of the improvement in banking, became worse
instead of better after the war, the chief trouble arising because of
the adoption of measures intended to satisfy insistent demands for a
greater volume of money, without making provision for its retirement
when business conditions were such as to warrant a contraction of
circulation. A quarter of a century of struggle finally ended in the
overthrow of the advocates of the unlimited issue of cheap money, but
no attempt was made before 1900 to remedy the inelasticity of the
national currency or to check the tendency toward a concentration of
the control of credit in a few financial centers. In 1873 and in 1893
the country suffered from money panics, the latter one being due almost
entirely to unwise financial measures that had virtually bankrupted the
government and destroyed confidence in the money it issued.

The end of the century was reached with only a little headway made in
the solution of the most vital economic problems. In striking contrast
to the "golden age" of American history, noted for the absence of both
pauperism and great riches, this period saw the development of the
extremes of poverty and wealth, and, furthermore, an ever-growing
tendency toward the concentration of the national wealth under the
control of a few powerful interests. The disregard which too many of
these interests evinced for the welfare of the general public and the
power which they possessed to thwart the efforts of the public to
protect itself created most of the great questions which confronted the
nation--questions of such serious nature as to dim the record of
achievement and material progress from 1860 to 1900.

However there was ample evidence that the national consciousness was
beginning to take cognizance of much of the prevailing maladjustment
and was awakening to a sense of duty--long undone. A growing sense of
personal responsibility both on the part of those who suffered from
existing conditions and on the part of those who profited by them was
paving the way for a speedy application and a willing acceptance of a
system of conservative public regulation of private business in which
careful consideration would be given to the rights of all persons. In
the intelligent realization of the meaning of the existing situation
lay the basis of a dear perception of the proper steps to be taken and
a strong hope for the immediate future.