aaaTheme 2 (3): Forging America’s First Paradigm: Overview of Pre-1830 Roads, Turnpikes, Canals, and Steamboat | Journal of Applied Research in Economic Development

NEEDs to be reduced and perhaps reconceptualized–certainly the DEVELOPMENTAL EDO section needs to be rethought

Overview of Pre-1837 Roads, Turnpikes, Canals, and Steamboat

In America spheres of involvement/responsibility for DTIS was surprisingly novel. Why? Because it was truly and fundamentally “developmental”. In America, DTIS was totally and crushingly “speculative”. America’s largest city in 1790, New York City with 33,000 inhabitant obscures the reality most 1790 cities were glorified villages. Isolation in 1790 means little to us today. It took about six days by stagecoach to get from New York to Boston (as late as 1828, it took two days). If one ventured into the interior, you probably walked and used the so-called Wagon Road for your baggage/food in wagons. The undeveloped, unsettled, harsh interior–most of which was not yet part of the United States-was raw wilderness. That very rudimentary road system that existed in 1790 became a first-order priority by governments of the new 1789 Early Republic. But to develop a sophisticated transportation system, you first needed access to capital–somebody, even government needed to borrow, and that was banks–described in the previous module. Once banks were institutionalized DTIS could be attempted.

Birth of American DTIS Paradigm: Developmental Transportation EDOs:

The Janus-External worldview would have been populated by a host of new urban centers, which, in effect, were dots on a continental map that stopped at the Mississippi River—dots unconnected by paved roads or any other mode of transportation. That reality imposed itself on American S&L ED: someone (thing) had to connect the dots if the dots were to survive. Even in hindsight, the obvious reality that city-building led inevitably to installing transportation and communication contact with the rest of the world.

The British experience was not suitable for American cities to copy. Britain’s earlier railroad infrastructure had been installed by private enterprise with limited public involvement–mostly tax abatement and land donation. This was possible because Britain was already settled, with existing large urban centers, and established investment banks holding accumulated capital to invest. Loans to private entrepreneurs were made, on the expectation of profits derived from operation of the infrastructure after construction. In short, England was already “developed” previous to its transportation revolution. America wasn’t.

In the earliest decades, the role of the federal government in “internal improvements” was extremely controversial–the South, in the main, was opposed, the North supportive. In any case, most of the burden was likely to fall on state and local government. In an age of limited government, reliance on local government with virtually no fiscal resources was not an option– reliance on the private sector was the only way to go. That became the first, and defining priority of Early Republic Janus-External S&L MED.

Great Dismal Swamp–Check It out on your next vacation

Today’s commonly accepted notion of conflicts of interest and “appearance” of conflict, i.e. the clear separation of public and private spheres, was only beginning to be appreciated—its development is a part of our history. We still bear much of the heritage—baggage–from the experimentation that followed in the Early Republic–which is a major reason for understanding it. That our Two Ships, Progressivism and Privatism, approach private-public experimentation with different sets of standards further compounded the lessons we might learn. In 1790 when our tale of private-public partnerships begins, boundaries between private and public are far from today’s. The reader might remember our discussion of President Washington and his city-building. Applying the standard now levied upon President Trump, it’s likely Washington would have been impeached and incarcerated.

Connecting urban dots required construction expertise. Construction of land-based infrastructure project financing required financing similar to today’s construction loans. Such loans have no collateral assets and must be made on the developer’s past history—which for toll roads, canals and railroads were nonexistent. Also land-based infrastructure required a legally-secure right-of-way that could only come from using governmental eminent domain. Moreover, most of the land was government-owned and required transfer to another entity.

Often forgotten, management of transportation service after construction meant the builder of the infrastructure also had to assume responsibility for subsequent operations–somebody had to make the trains run on time–and pay for them in their startup years before revenues could support costs. Tax abatement was seen as an operating subsidy. BTW, the technology to operate on these transportation routes had not been “proven”, nor commercialized. It was not at all clear at the onset, whether canals or the new-fangled rocket ship of the day (railroad locomotive) was the way to go. Someone had to pick a winner transportation mode?

The Last Spike

At the time of original financing, the proposed infrastructure project connected two geographies that had yet to develop;—say it another way, “there was no there “there”, and the here, “here” was not all that great either. As the London Times reacting to a British bank loan in a bankrupted 1874 American “wilderness” railroad project observed, the loan was predestined to failure; the railroad ran from “Nowhere-in-Particular to Nowhere-at-All”^[viii]. Even in 1850, NY Senator William Seward (later famous for his Alaska folly) observed “a great and extensive country like this has needs of roads and canals earlier than there is an accumulation of private capital within the state to construct them”^[ix]. Newly-founded, undercapitalized American banks could not satisfy capital needs without participation of foreign investors.

After 1800 American capital mostly consisted of savings from small homeowners held in small loosely-regulated, largely unknown and unrated state banks. Business capital was held in family-controlled firms or clumsy, illiquid business partnerships. The corporation, a flexible form of business structure only “appeared on a modest scale in the 1850’s notably in the railroad industry” (Trachtenberg, 2007, p. 4). Not only was a source of capital in question, but transportation infrastructure lacked a finance tool. S&L bond issuance in 1790 was far from what it is today.

Operating Canals in 1825

When we talk about “developmental transportation”, we are dealing with financing and installing infrastructure that can’t pay for itself, but will at some point become self-sustaining, while creating prosperity and economic growth. For readers interested in a more intense understanding of “developmental transportation infrastructure”, Carter Goodrich’s, Government Promotion of American Canals and Railroads, 1800-1890 is the classic.

Cities/states carving a city out of the wilderness, and desiring to link it with other cities needed an organizational structure—an EDO in which the public sector had to bring certain of its powers (credit, tax funds, loans, eminent domain, and tax exempt bond issuance) into a vehicle or structure possessing private expertise, financial management, construction expertise, and effective infrastructure service delivery–along with some measure of accountability to citizen, taxpayer, financial markets, shareholder-investors, and the customer.

In 1800, it was not at all evident what that accountability translated into in terms of organizational structure, or realistic expectations. The caveat that state/local legislatures which approved these new forms of ED, lacked expertise and experience themselves. No one really knew where the industrial revolution was going, and the notion of a business cycle, with panics, was underappreciated. Jefferson’s concern regarding banks was also not without merit.

In a nutshell, these were the ingredients for creating our first improvised public-private partnership–the holy grail of S&L American MED. By holy grail, I mean MED’s search for a workable, effective, accountable public-private structure is just beginning. The quest will continue through the entire 19th century. In due course MED will experiment with railroad corporations as EDOs, franchises, utility companies, and boards and commissions. Until it stole the modern conception of the British port authority in the early 20th century, no hybrid private-public EDO filled the bill. The modern port authority did–and was subsequently adapted in the 20th century to become today’s development, housing, urban renewal, industrial, redevelopment authority. BTW the same evolution applies to tax-exempt bond issuance agencies, and tourist and convention “bureaus”.

As a final observation, it seems likely to me the underlying themes and realities that feed into the development of Early Republic ED strategies, EDOs, tools, and programs can sensitize us today when our attention is on developing “brave new worlds”, seemingly inevitable scenarios, disruptive technologies and the like. This caution seems very salient to those who argue we are entering into a new Era or Age, or evolving beyond the industrial revolution(s). The often simplistic exuberance and optimism of such commentators and advocates might invite caution and some humility if this history teaches anything.

Developmental Transportation EDOs:

Great Dismal Swamp–Check It out on your next vacation

The Last Spike

Operating Canals in 1825

Regional Differentiation in External MED Strategies

DTIS, the first American MED paradigm came together as a coherent, comprehensive strategy in the first three decades of the Early Republic. That period encompassed two distinct phases which centered on a distinct “target” or infrastructure focus” (1) banks, which established the financial infrastructure necessary to conduct DTIS (integral to national/state-building strategy); and (2) “internal improvements” which pre-1825 constituted turnpikes, roads, rivers and canals, and steamboats. By the early 1830’s a new modes of transportation entered the DTIS picture (railroads, clipper ships, omnibus), and in short order launched a third, and much longer, DTIS phase which will be discussed in a future Themes and subsequent modules in this Theme.

In this module the reader will see the depth and pervasiveness of turnpikes and canals, and the history of those transportation modes through the first two phases of the DTIS paradigm (until 1837). It builds upon our very first module, describing Washington and his Patowmack Canal. From my perspective canal-focused DTIS seems in retrospect to be a transitional mode of transportation that generated, or encouraged, innovative (but often rival) new modes of transportation (steamboat, clipper ships, and post 1825 railroads) that were gazelles of the so-called First Industrial Revolution (dependent on coal and steam power). By the end of this module it should be apparent that the 1790’s witnessed the institutionalization of banks, a precondition for DTIS, canals gathered momentum only in the first decade of the 19th Century, and then ran afoul of the Napoleonic Wars, which seriously constrained DTIS financing by foreign lenders. The real golden era of canals, accordingly, only commenced at the end of the War of 1812 (i.e. 1815). This golden era overlapped with the rise of steamboats and by the late 1820’s the development of the railroad locomotive which quickly attracted investors and entrepreneurs, reducing the need for and viability of canal-based DTIS. Nevertheless, the Erie Canal, by anyone’s standards, was America’s transformative DTIS infrastructure of the 1820’s. Caught in the crosshairs of disruptive innovation characteristic of the First Industrial Revolution, canals and later steamboats lost their luster, certainly their primacy, in America’s first paradigm: the American System.

Canals and steamboats were transitional modes of transportation, but they were the essential first steps of American DTIS. For the most part both achieved their limited range of economic success, and they played a compelling role in getting goods and services moved through the American economy, and most importantly were critical to pre-1840 internal migration and settlement of east of the Mississippi America. They played a vital role in the city-building of eastern Midwest, and to some extent, but as we shall see in Theme 3 less a role in the rise of the Cotton Belt–where the steamboat was preeminent. Canals especially played a noticeable role in the diffusion of industrialization, and they remained viable in that purpose through the entire century. That early phase of DTIS deserves more respect than its stained legacy now affords it.

That stained legacy, and how it affects contemporary economic development, is little appreciated for lots go understandable reasons. Unfortunately, it did play a major role in the course of our S&L ED history–it cannot be ignored. Sorry. So previous to our outline of the first two DTIS phases, and the modes of transportation employed, I have inserted the section below–which can be avoided by those desiring to focus only on the DTIS strategy as applied in this Early Republic period.. If the reader makes that choice, fine, but I do want the reader to clearly understand that the seemingly innocent canal-building, so vital to this early, Early Republic, stirred up a ruckus that has yet to be satisfactorily settled. It open a deep and fundamental chasm that still divides us.

External MED/DTIS during the early, Early Republic: Characteristics and Overview

Reynolds asserted the first half of the nineteenth century witnessed three waves of transportation innovation: (1) road and turnpike construction 1790-1810; (2) the steamboat and canal-building 1811-1830; and (3) post-1830 steam (1826, John Steven’s, New Jersey) locomotive innovative and railroad construction [1] Reynolds, 2008, pp. 12-18. Each of these phases was interrupted by periodic panics, particularly 1837, and the prelude to (1806ff) and War of 1812-15. Each of the three regions employed different configurations of each transportation mode; the North making a firmer commitment to railroads earlier than the others, was able to take the lead in finance, production, and management of the ultimately victorious transportation mode/technology.

DTIS-relevant MED strategies seem to innately trigger an instinctive hierarchical competition. Connect the dots logically affects competitive hierarchies, and initial advantage, while usually over-hyped, does convey an intermediate advantage, and equally important a status and momentum advantage over over competitors that can stimulate business investment and population migration. Potential regional competition punctuated internal improvement discussion as early as the Articles of Confederation, i.e. from the very start of an independent America. The first “race” began with Washington’s Patowmack Canal which eventually made it through to Cumberland Maryland–five locks up the river from Washington D.C.–by the mid-1790’s. New England built four, two in Massachusetts, one each in Maine and Connecticut. The South, south of Washington D.DC, built three, but Pennsylvania and Ohio built a ton–too many to count. New York, of course, opened the one that really mattered, the Erie Canal in 1825-6, and it built a goodly number of others as well. If you call Ohio the Mid-Atlantic, than the Mid-Atlantic region was ground-zero for canals. After 1800, the states turned to the federal government for money, corp of engineers, and land grants. That pressure in its infancy had earlier generated the Gallatin Report and its national plan.

Gallatin defended the entry of the national government in S&L DTIS as a necessary counter to the constraints of an unforgiving geography–mountains, and the need to encouraging economic growth through trade (which included diffusion of manufacturing) along the coast, and into the hinterlands and new territories. His boss, Jefferson, stressed national defense. Gallatin’s ten-year plan included a budget, and the means to pay the incredible expense by the national government–or Plan B, the states–as well. His plan rested, however, on a hope that peace would endure. It did not. Within two years the threat of war was constant, and in 1812 it became a reality.

When the war ended in 1815-6, the pressure for internal improvements returned with a vengeance. This was the real golden era of canals, running to 1837. The feds rechartered the Second Bank in 1816, and it too reentered the picture. In the same year, Henry Clay previewed his first version of what was to be his famous “American System”, and even hard-core southern die-hard states righters like John C. Calhoun could propose that profits from the Second Bank could be used to pay for internal improvements: “Let us then bind the Republic together with a perfect system of roads and canals [because the nation was] now at peace with all the world, abounding in pecuniary means. {This opportunity, he insisted could ameliorate] party and sectional feelings, immerging [them] in a liberal and enlightened regard to the general concerns of the nation” [33] Goodrich, p.37.

Arguably, in this period the first opening to resolve the inherent sectional/regional tension that followed the Articles of Confederation “two region/economic bases compromise could have been address–if successfully perhaps making the Civil War unnecessary. The legislative bill that made this positive role of the federal government in a system of internal improvements that bound the two economies into a more meaningful whole–at the federal dime–was amended, and amended, log-rolled, compromised, and in the end passed as little more than a formula grant to the states, with implementation concurrently managed by both states and the federal government–a recipe for disaster. The bill was so hopelessly weakened that President Madison vetoed. it (he was, like Jefferson, skeptical that without a constitutional amendment, the federal government lacked the constitutional authority to be involved with S&L internal improvements.

In the next year, the National Road reached Wheeling (1818), and Indiana, Illinois, and Missouri were admitted to the Union, with the same road-building obligations that had been inserted into Ohio’s statehood. That meant the National Road could be extended into those areas–creating hope the National Road would substitute for canal-building. But even that hope was dashed when in 1822, President Monroe vetoed a toll on the road that would have paid for the extension and pay for maintenance. The federal government, slowly, but surely, was backing out of financing major capital-intensive internal improvements. In 1824, however, the feds approved the General Survey Act which instructed the President to approve surveys for canals and roads of national importance–empowering the earlier created national Board of Internal Improvement (in effect a federal agency] to directly involve itself in canal construction and design–which it immediately did for the Chesapeake and Ohio (now Delaware) Canal. That Canal, a restructured and expanded Patowmack Canal had been adopted by the Tidewater Federalists, and newly-elected President J. Q. Adams. Its tale will be told in Theme 3. In the same year (1824) the nation’s first river improvement legislation was passed, followed by a second first harbor-improvement bill (which was based on previous federal involvement in lighthouse construction). Since rivers were interstate the constitutional impediment did not obtain and Corp of Engineers involvement were thenceforth legitimized.

When Adams took office in 1825, national involvement in S&L internal improvements–and the spirit of the Gallatin Plan–captured a second wind–or seemed to, at least. Adams in his first Annual Message to Congress made it a top priority demanding that “the federal government should carry out ‘works important to the whole … and to which neither the authority {i.e. crossing state boundaries] nor the resources of any one State can be adequate”. He called for the Bureau of Internal Improvement and the Board (Corp) of Engineers to become actively involved, and presented a means by which the feds could directly finance the improvements–‘the swelling tide of wealth’ from the sale of public lands would be made ‘to reflow in unfailing streams of improvement from the Atlantic to the Pacific Ocean”. That last statement was how he described what today we would call a federal revolving loan fund. While individual canal and road projects were intermittently authorized in his Administration, his 1825 legislation was the high-water of Early Republic direct federal leadership and funding of S&L internal improvements. The bill was never passed in 1826, nor after. Congress did participate in federal purchase of stock subscriptions in various individual projects, so by the end of Adams’s Administration in 1828, the feds were financially involved with four major canal projects, and the National Road. In March, 1829 Andrew Jackson assumed office. By then the heyday of canals was drawing to an end. The Age of Railroads was beginning.

It was the railroad, inherently multi-state in impact, that really triggered steroidal hierarchical competition. It arrived on the scene after 1825–when the Erie Canal opened and shocked the DTIS-aware world. At that point both canals and railroads, sometimes both in a hybrid system, engaged in what historians liken to a race. Goodrich calls it the “Appalachian Competition”, and I simply entitle it as “off to the races” in my forthcoming module. The issue was to be first to cross the Appalachians and open up the new (mid) West. From that point on the races never stopped.

Cities/States competed, and DTIS was an essential strategy in city-building, no matter what the region. In future modules we shall describe Baltimore and Maryland’s competition with Pennsylvania–the most serious and impactful of the races. In Theme 3 we shall detail Charleston and South Carolina’s similar effort to cross the southern Piedmont and reach to the Mississippi. Stephen Douglas and his Illinois/Chicago race will be discussed in this Theme. Railroad-laden races, however, lie outside the purview of this module, which contents itself with roads, steamboats and canals.

Anyway, by the time we reach post-1800 Early Republic, such regional competition is simply assumed, and built-into individual projects, and Gallatin’s national plan. Getting there “firstest”, with hopefully the “mostest”, worked wonders in capital-raising subscription drives–and was the first argument of every lobbyist in the state legislature and city council. Early canals were like those of the Gallatin-hybrid variety with river systems and short canals to overcome trouble spots. By nature and the limits of technology, canals were more intra-state than inter-state.

Logically, port cities, seeking to access hinterlands and establish themselves as the state’s primary urban center, were the canal’s chief public advocate–and in state after state it was their delegations, and the port city’s business community that provided the muscle to generate state involvement. Canals were often initially subsidized/facilitated by the port city–after the state legislature had been convinced to issue a state charter with favorable terms for subscription/ownership and capital-raising.

Otherwise, with New England and South Carolina the prime examples, the private sector reached into its own pocket, and made canal-building a private activity. The early proponents of the Erie Canal, however, embraced a different concept than Gallatin’s hybrid river systems/short canals design, and chose to build a three-hundred mile canal, parallel to a river system, but independent of it. That project, it turns out shuffled the canal movement’s deck of cards, and its opening, against all odds–and disbelief of all–was a game-changer. The Erie Canal was the most impactful single infrastructure built during the Early Republic. It was also the most expensive and its sheer length elevated the public’s role in its construction and financing.

Roads, Bridges, Ferries, and Turnpikes

The nation’s first highway system commenced in two phases: 1790 to (about) the War of 1812, and 1820 to 1840. During that last period a widespread but geographically uneven canal movement occurred alongside the road-building. After 1840, the railroad would incrementally take over–reaching full stride by the 1850’s. Within that narrative it all came crashing down as a consequence of the horrific 1837 Panic, which as we appreciate today was not simply an economic depression, but a simultaneous collapse of the nation’s (including state) finance and fiscal system. It was in its effect similar to the recent 2007-9 Great Recession.

Excepting the National Road, roads and turnpikes previous to 1825 were privately financed and state-chartered. The first turnpike (1795), Pennsylvania Philadelphia to Lancaster Turnpike, initiated a “craze” among states to construct toll roads. By 1816 “turnpikes linked the major cities in the Northeast and formed a roughly continuous line from Maine to Georgia”. New York, Pennsylvania and New England were the most energetic builders.

Although turnpikes were sometimes macadamized, they were usually crude affairs,muddy, rocky, dotted with tree stumps, (and) forded swamps with … sawed logs. Every six to ten miles was a tollbooth that charged between ten and twenty-five cents. Investor optimism fed the turnpike boom. Before 1830, turnpike companies evidently won more state corporate charters than any other kind of private business…. With the rise of canals and railroads, turnpikes became increasingly unattractive for carriers of freight. ([2] Reynolds, 2008, p. 13) Excepting the National Road, roads and turnpikes previous to 1825 were privately financed and state-chartered. The first turnpike (1795), Pennsylvania’s Philadelphia to Lancaster Turnpike, initiated a “craze” among states to construct toll roads. By 1816 “turnpikes linked the major cities in the Northeast and formed a roughly continuous line from Maine to Georgia”. New York, Pennsylvania and New England were the most energetic builders. In this “turnpike era” New England, for example, chartered an estimated 240 state-chartered corporations which installed about 3700 miles of toll roads. Connecticut alone installed 1600 miles [1] http://www.teachushistory.org/detocqueville-visit-united-states/articles/roads-travel-new-england-1790-1840. Toll bridges state-chartered corporations, fewer in number, were also relatively common. River improvement, ports, and waterway dredging and clearing corporations were also common. Pennsylvania widely provided direct financial aid in some form to roads and river improvements [3] Carter Goodrich, p 22.

These enterprises, performing a hitherto governmental” were operating with little or no public aid. In New England, the turnpike companies received no public funds though those in Connecticut enjoyed exemption of their stock from taxation. On the other hand, New Jersey aided a turnpike company in 1804, and the city of Albany became the largest stockholder in the First Great Western Turnpike. In 1806 the Pennsylvania legislature the general policy of state participation [in turnpike corporations] and made its first subscription [purchase of stock directly by the state] to the stock of a company which undertook to build a road across the mountains to the west [2] Carter Goodrich, Government Promotion of American Canals and Railroads 1800-1890 (Greenwood Press, 1960], p. 21.

Overseen by local governments, construction, finance, and management was mostly private, but enjoyed key delegated public powers and tax abatement. Direct transfer of public funds was infrequent. There was considerable variation in the EDO structure as well as in the powers delegated and public involvement. States often delegated to local governments (within approved parameters), the authority and responsibility to approve and manage these corporations. The basic framework and state approach to DTIS-related EDOs was first developed from state turnpike, bridges, and ferries legislation, and adapted to the particular requirements of canals and railroads. Most important was the introductory preambles of state charters which clearly stipulated the public-private nature of the EDO, EDO’s accountability/reporting to the public, and the logic underlying the mutual endeavor. Given the criticism that was later levied against state chartered corporations, the reader is forgiven if she believes these charters were simply a greedy capitalist public benefit pass-thru structure. But as we have hopefully demonstrated in earlier modules, they were viewed as a legitimate exercise of public authority, and the involvement of the private sector, while never altruistic, was often compelled as these were the only legal structures available for an endeavor associated with DTIS. Do it yourself with private money, or use a state-chartered corporation.

Canals: an Overview

For all practical purposes, canals were the workhorses of the early, Early Republic transportation system. George Washington (1784) was an investor-owner of the Patowmack Company which attempted to connect the Potomac with western territories. His canal struggled at first, but pushed on to Cumberland MD, creating a viable traffic and paying a 12% dividend. The company went bankrupt in 1804, after Washington’s death, mostly because its management grew fat and lazy and the National Road captured more than its share of its traffic. Early canals were short, and mostly constructed in the South. The Great Dismal Swamp Canal (Virginia/North Carolina) opened in 1805. Washington, obviously when alive, had been involved with its early formative period, and was an investor as well. Alleged by the Supreme Court as the first confirmable instance of a S&L tax abatement (1790), the Great Dismal is allegedly America’s oldest presently-operating canal—it later become the starting point for the Inter-Coastal Waterway ([13] Reynolds, Waking Giant, op. cit. p. 15).

Washington, however innovative and far-sighted, was not the only advocate for pre-1800 American canals. The private sector, using early versions of the state-chartered corporation tackled the problems associated with river navigation–especially in the South where rivers ran west-east to the Atlantic. The Cape Fear Navigation Company in North Carolina was among the first of any size. It spawn others such as Neuse River Company, Tar River Company, and the Roanoke River Company–most of these were not “canal” companies, but river transportation and navigation focused, and they usually stopped at the Fall Line. North Carolina was not alone in use of these companies,. Before 1793 eight states had incorporated thirty canal companies–New Hampshire by 1823 had incorporated twenty [44] Martin Doyle, the Source, pp. 28-9.

Washington’s and his Patowmack had certainly raised the profile for canals, but equally important his grandiose vision of the role they played an a sophisticated DTIS ED strategy not only caught the spirit of the time, and ease the pressure of immigration by giving immigrants a place to go other than the house next door. Moreover, while clearly laced with his desire to make a buck, Washington developed a powerful rational justifying the use of DTIS, canals and roads as a pathway for economic growth, national unity, and indeed absolutely necessary to national defense and autonomy from the European powers. His prestige, and dare I say charisma, not to mention his wealth opened the door for public acceptance of the strategy, and enlisted support from America’s young elites. As a venture capitalist, he recognized the link between DTIS and innovation, and attempted, unsuccessfully it turned out, to create the innovation infrastructure–patents and patent protections free of politics.

Canal construction previous to Gallatin’s Report was less than spectacular–for many reasons, including lack of financing, lack of federal leadership, unwillingness/incapacity of private entrepreneurs. Only a relative handful of canals were built– the best known were the aptly named Great Dismal Swamp Canal–and Washington’s own Patowmack which in 1804 went belly-up (Washington died in 1799). The privately-built Massachusetts Middlesex Canal opened a small section of Essex County in 1804 was another well-known canal. Several early New York canal ventures failed as well. Louisville KY at the time was diddling with its transformative Ohio River canal project, but unable to put it together and get it funded. But in 1807 the atmosphere regarding canals changed. Henry Clay in that year led Congress to authorize grants of western land in return for stock in two Ohio canal state-chartered corporations, and a federally-led restructuring/renaming of Washington’s defunct canal (now the Chesapeake and Ohio/Delaware canals) had begun–and then Gallatin issued his 1808 Report.

Issued before a serious railroad locomotive prototype existed, Gallatin’s Report was based on a hybrid river systems/canals system, but also included the National Road, turnpikes/roads, and coastal shipping canals. New York’s response to Gallatin’s Report crystallized its drive to build a 365 mile Erie Canal, and immediately triggered an actual survey. The National Road construction accelerated in earnest. Each coastal state with a major port conceptualized a river/canal DTIS strategy to penetrate its hinterland, and “open up the West”. Canals were seen as vital to the national defense during the Napoleonic Wars–indeed since our 1883 independence., Canals made internal migration easier, but created larger market areas for both agricultural and industrial goods. Settling remote vulnerable and far-flung territories territories in the interior, and connecting them to Atlantic ports ensured these regions had an economic reason to join and remain in the Union. In the North canals were chiefly seen as necessary for the creation of market areas which permeated the diffusion of industry and manufacturing. In short, there was considerable public purpose inherent in a canal-building DTIS strategy in the early, Early Republic. The connect-the-dots DTIS strategy was quite popular (less so in the South, to be sure), and canals were viewed favorably. The polarizing issue, of course, was always who should build them: government or the private sector.

The opening of the Erie Canal dramatically demonstrated to other cities that they “could conquer the barriers that limited their development through a strategy which promised tremendous potential for commercial growth … [that] large sums of money could be easily raised for public works by utilizing state credit …. When states shared interests in economic development similar to those of cities, the state could promote programs to aid urban development through sale of state bonds”. [55](Kantor, 1988, p. 49). Other New York canals followed in short order: Oswego, Chenango, Cayuga-Seneca, the Champlain, and Delaware and Hudson. Ohio constructed two major canals: between Cleveland and Portsmouth (the Ohio River) and Cincinnati and Toledo. Pennsylvania’s Main Line (1826) connected Philadelphia to Pittsburgh. Virginia, Indiana, New Jersey, Maryland, Illinois also completed important canals. Canals, it seems, were another example of the infamous herd-like, copy-cat imitation that repeatedly characterizes diffusion of economic development tools and strategies throughout our history [55] Goodrich, Canals and American Economic Development, 196). Toward the end of the Early Republic Era, Chicago and Illinois made extensive, and very successful use of canals to foster city-economic base building. This continued use of canals after railroads had proven viable strongly suggests canals filled a niche role in the late Early Republic transportation system–a role that remained viable through much of the 19th Century.

Canal infrastructure projects were themselves a combination of sections built by state/municipality, by the state-chartered corporations. Carter Goodrich calculated that nearly 75% percent of total investment (about $188 million) in canal construction in New York, Pennsylvania, Ohio, Indiana, Illinois and Virginia (between 1815-1860) was financed by state/municipal governments thru these corporate charters. [88] Goodrich, 1961). The usual financing involved the state/municipality issuing bonds, purchased by foreign investors, whose proceeds were made available to the corporation through a variety of financial structures. The canal’s so-called golden era, overlapped with the steamboat, and except for its first decade, certainly after 1830 (or so), also overlapped with the early railroad and its fragile engine/locomotive. It is in this sense I view canals as a “transition mode of transportation”.

While canal technology was ancient, the considerable distances of America, and the placement of the Appalachian Mountains required considerable technology and construction innovation. Little appreciated, it was canals that spawned the steamboat, which was initially thought to be the river transportation mode in a hybrid river system and canal nexus. The “canal movement” commenced, under such leadership as George Washington during the 1780’s but the “golden years” of canals were, as Sam Bass Warner argues, from 1815 to 1834. In this period two-thousand miles of canals were constructed, mostly from port cities into the interior. Warner’s second boom, 1836-1854, was of lesser scale and impact [12] Sam Bass Warner Jr., the Urban Wilderness (Harper & Row, 1972), pp. 67-8. After 1840, having lost out to the railroad, canals were secondary, chiefly used for local/regional short haul to overcome specific barriers, and to fill gaps in the commercial transportation system for heavy-weight commodities. During this first period canals were targeted transportation mode tasked by not only S&L policy systems, but the federal government as well. As a cornerstone element of the Democratic-Republic Tidewater federal government approach to DTIS, canals were a national priority–with Gallatin’s 1808 Plan elevating them into a national MED paradigm (the use of the hybrid river system/canal as the principal mode of DTIS-relevant transportation).

National Road

The National Road anticipated the Eisenhower interstate highway system by over 150 years—but essentially that was what the National Road was–a highway. The Road started in Washington D.C.; by 1818 had reached Wheeling (West) Virginia, and got as far as Vandalia, Illinois. The Feds provided subsidies off and on through to 1835 when states took over. “So many towns sprang up along it that it became known as the Main Street of America”.[7] The National Road played the role railroads performed in opening up the American West some fifty or sixty years later. That federal project was a carryover from the Articles of Confederation’s Northwest Ordinance. Not well-known today, the Articles of Confederation Northwest Territories ordinance made a decision pertinent to its involvement in a future National Road, so fundamental in its impact, that it materially determined the future course of transcontinental migration, state and city-building, and MED. That decision was to retain control by the federal governments of the lands within the Northwest Territory. From the beginning, the American Republic held control of unsettled lands in unsettled territories–and it was the decision–and role–of the federal government to set the conditions for the future use of that land–and to rack up the proceeds, in the rare instances it actually sold such lands to private parties. Most of the time, federal land grants were the principal intergovernmental transfer of resources to lower levels of government–and federally chartered corporations.

The Articles retained control for the express purpose of ensuring access to the East through internal improvements, primarily roads. Goodrich confirms the impact of this decision, stating “the major political decision by which the public lands in the region were to remain at the disposition of the federal government [meant] … even before the first state in the region was admitted to the Union, federal power over land had been used to advance internal improvements” [8] Goodrich, p. 24. “Zane’s Trace, a Wheeling entrepreneur was the first instance of permission to plat a town based on land sales by federal government rested on the entrepreneurs construction of road access into southeastern Ohio.

When Ohio became a state in 1802, Gallatin, as described earlier, began the process which started the survey and construction of the great National Road. Construction of the road was directly managed and financed by the federal government, with the consent of the state(s). Three-fifths of the proceeds of Ohio land sales would be devoted to financing the construction. By 1805 the sales had accumulated to the level the Senate authorized building the road from Cumberland MD to Steubenville or Wheeling on the Ohio River. Senate passage of the appropriation was highly controversial, but narrowly approved–Pennsylvania in particular felt threatened. In 1806 Jefferson officially, authorized survey, clearance and construction of the “National Road”. By 1808 design and construction contracts (clearing of the land) had reached the Monongahela River. The road was on its way

In 1802 Secretary of the Treasury Gallatin simply asserted the federal government’s power to participate in “internal improvements” was inherited from the Articles and from the consent of states in joining the Union [4] Carter Goodrich, pp. 24-5. The purpose underlying this “detail” is to demonstrate (1) the priority afforded to this strategy; (2) the virtually exclusive use of state-chartered corporations; and the legitimacy afforded to this earliest form of public-private partnership.

Steamboats

Water transportation proved more durable and cost effect for commercial trade during the Early Republic–until the railroad in the 1850’s developed sufficient trackage and engine-power to haul heavy cargoes for the land-based long-haul. Steamboats developed simultaneously with toll roads, linking Atlantic coastal trade with hinterland internal trade and overlapped with early canals. Robert Fulton, initially a canal enthusiast, did not invent the steamboat (there were several such inventors; John Rumsey was America’s in the late 1780’s). Innovation was chiefly engine-relevant (to power heavy cargoes upstream against the current), and shallow draft boat design. Fulton made his fortune commercializing an already proven and patented innovation on the Hudson in 1807.

Fulton started a steamboat route between New York City and Albany in 1807, but aside from the Hudson, the steamboat in eastern coastal states never got traction. Steamboats were typically privately-owned, and did not require state charters. Public involvement was usually minimal, and hinterland ports developed waterfronts, docks, wharves etc., principally using private funds. That was much less the case for major eastern coastal ports where hybrid, public-private port development was the default.

Mark Twain asserted the steamboats greatest impact was felt on the Mississippi where the steamboat became a national institution and a powerful commercial/consumer transportation mode for mid-central, western, and southern states. Steamboats also were primary vehicles for Cotton Belt hinterland plantations to access port cities for export. Cotton Belt rivers (particularly in Alabama, Mississippi, Tennessee, and Louisiana) were able to take advantage of access provided by north-south river systems that accessed the Gulf Coastline. Where steamboats were the primary mode of commercial transportation, they could produce an unanticipated consequence: reducing need and market demand for the more expensive-to-build/operate railroads. Previous to the Civil War, one mode could substitute for the other.

Still Twain was correct. It was the Mississippi that made the steamboat into a national institution. In 1815, the first run of the “Enterprise” from Pittsburgh on the Ohio River to New Orleans via the Mississippi that demonstrated to all its potential on reasonably-sized inland waterways. Richard Wade [4] the Urban Frontier: Pioneer Life in Early Pittsburgh, Cincinnati, Lexington, Louisville, and St. Louis (Harvard University Press, 1959), p. 70-1 announced the voyage of the Enterprise and its venture into waters no ship had ever gone before “wrought such basic changes that it might be said to have ended the first era of the urban history of the West“. Be that as it might be, one could also say the same for New Orleans. Already a major export port city, the steamboat opened up a hinterland beyond its dreams–a hinterland that stretched nearly to the Great Lakes, and into the rapidly developing American Cotton Belt.

Segue Way

Overview of Pre-1837 Roads, Turnpikes, Canals, and Steamboat

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