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AUG ^vjiyi^ 

An Outline of the Development 


Internal Commerce of the United States 



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. 






UNITED STATES, 1789-19001 


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 in- 
ternal trade was devoted to bringing the surplus agricultural produce 
of the interior to the seaport towns where it was exchanged for im- 
ported 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. 

^ 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 trans- 
porting 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. 




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 be- 
tween 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 Revolu- 
tionary 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 indis- 
pensable 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 pro- 
visions 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. For- 
tunately, the Spanish government disavowed the action of the Intend- 
ant and in April, 1803, the river trade was again restored. Desirous 
of avoiding such difficulties in the future, Jefferson pushed the nego- 
tiations already begun with Napoleon, to whom Spain had ceded 
her claims to Louisiana, for the purchase of New Orleans and the terri- 
tory 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 


LouisiaDa 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 manu- 
factured 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 

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 commercial 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."^ Gallatin's report on internal improvements in 1808 
reflects the plans and ambitions that were in the minds of the com- 
mercial 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. 

» J. 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 condi- 
tions. 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 Missis- 
sippi 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 mer- 
chants. 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 extrava- 
gance 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 com- 
mercial 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 everjrwhere, 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 17J 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 circum- 
stances. The Ohio Valley was yielding a product far in excess of the 
demands that existed and each year found a large amount of unmar- 
ketable 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 planta- 
tions 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 Eng- 
land, 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 attract- 
ing 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 com- 
merce 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 doubled 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 enter- 
prises 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 mer- 
chandise to the West were abandoning the wagon roads from Phila- 
delphia, 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 Vir- 
ginia 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 enter- 
prise, 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 moun- 
tains 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."^ 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 arti- 
sans 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 popula- 
tion 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. 

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 

3 F. J. Turner, Rise of the New West, p. 297. 


building of the waterway westward from Chesapeake Bay. And 
meanwhile 44 miles of railway had been completed and were in opera- 
tion, 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. 



The years between 1830 and 1860 witnessed a remarkable expansion 
of the United States in area, population and wealth. By the annexa- 
tion 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 agricul- 
tural 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 construc- 
tion 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 construc- 
tion 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 coimtry. 

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 con- 
sisted 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 move- 
ments, there was an over-land trade by pack-horse and wagon with 
the Far West which became of particular importance after the dis- 
covery of gold. For the sake of greater clearness, these different cur- 
rents of trade will be considered separately in the order named. 


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 


imder 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 send- 
ing 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 Com 
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 valua- 
ble. 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 pre- 
ceding it, was largely one-sided, the westbound movement of light 
merchandise exceeding the eastbound movement of agricultural pro- 
duce. The inclined planes which carried the traffic across the moun- 
tains 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 com- 
pletely altered the position of Boston and brought an era of great 
prosperity to the city, at the same time demonstrating the practica- 
bility 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 Bos- 
ton incited the people of Pennsylvania to take decisive steps to win 
back some of the trade lost by Philadelphia and in 1846 the Pennsyl- 
vania Railroad Company was chartered for the purpose of completing 
steam railway connection between Philadelphia and Pittsburgh. By 
1854, this Ime, 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 com- 
merce 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 cot- 
ton 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 west- 
ward 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. 


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 con- 
nections 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 Mis- 
sissippi 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 manufac- 
tured 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 $22,000000 in 1830 to $185,000,000 in 1860. The largest part 
of the increa,se 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 im- 
portation 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 move- 


ment 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 un- 
failing source of gain in the demand for live stock in the southern 
cotton fields. The domestic slave trade commenced to be of impor- 
tance 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, Mary- 
land, North CaroUna, 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 unques- 
tionably extensive, probably reaching a value of $30,000,000 a year 
in the late fifties. 


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 provi- 
sions. 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. 


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 faciHties 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 condi- 
tions 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 mer- 
chandise 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 indus- 
tries, and the Northern shipping interests carried to European mar- 
kets 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 enter- 
prises, 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. s 


Unfortunately the federal government did not attempt to estab- 
lish 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 pros- 
perity 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 cer- 
tainly 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 abohtionists and 
the successful efforts of the Northern poHtical 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 



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 
most 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 im- 
ports 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 elimi- 
nated. 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 develop- 
ment 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 manufactur- 
ing 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 h 
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 exploi- 
tation. 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 com- 
pletely 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 com- 
bined 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 mate- 
rial 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 manufac- 
turing 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 jfigures 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. With- ^ 
in 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 

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 rail- 
roads, 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. Im- 
mediately 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 re- 
vival 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 mate- 
rials 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 pre* 


vailing 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 trans- 
portation, 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 produc- 
tion 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 com- 
pass 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, Cincin- 
nati 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 expor- 
tation from Gulf ports, while stretching to the eastward were numer- 
ous 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 

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 dis- 
tribution among the farms of the Central States to be fattened for 
subsequent killing, or for shipment to the slaughter pens of Eastern 

Until 1863 Cincinnati was the chief meat packing city of the coun- 
try, 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 sur- 
passed Cincinnati in the business. The trade in meat was revolu- 
tionized 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 numer- 
ous 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 Savan- 
nah 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 move- 
ment of cotton amounted to 1,370,000 bales, as compared to a coast- 
wise 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 con- 
suming 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 con- 


tinued 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 dis- 
tributed 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 coal 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, Mary- 
land 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 consump- 
tion 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 pro- 
vided 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. Prac- 
tically 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 im- 
mense output of iron and steel was distributed everyivhere 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 gieat 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 enor- 
mous 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 prod- 
uct 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 Missis- 
sippi 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 manufac- 


turing 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 manufac- 
tured goods. The increase in the value of the products of manufac- 
tures 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 his- 
tory 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 trans- 
porting 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 nine- 
teenth 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 realiza- 
tion of the fact that the railroad companies were displaying a lamen- 
table lack of regard for the interests of the public. Persons and 
communities found themselves entirely at the mercy of railroad cor- 
porations, 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 rail- 
road 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 regu- 
lating 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 neces- 
sary 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 impor- 
tant 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 dis- 
criminating favors of railroads enabled them often to throttle com- 
petition and to establish monopolies that were a menace to the 
public. This situation likewise called forth federal legislative meas- 
ures 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 accom- 
plished. 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 adop- 
tion 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 circula- 
tion. A quarter of a century of struggle finally ended in the over- 
throw 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 strik- 
ing contrast to the '' golden age" of American history, noted for the 
absence of both pauperism and great riches, this period saw the devel- 
opment 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 gen- 
eral 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 

However there was ample evidence that the national consciousness 
was beginning to take cognizance of much of the prevailing malad- 
justment 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 prof- 
ited 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 clear perception of the proper 
steps to be taken and a strong hope for the immediate future. 

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