Governments Fuel Economic Growth
At the nation’s founding, Alexander Hamilton led a coalition that advocated the use of federal power to fuel commercial development. Over the following decade, this coalition’s efforts to expand federal authority in the interest of commerce and industry inspired opposition within Federalist ranks. In 1800 Thomas Jefferson captured the presidency by advocating a reduction in federal powers and a renewed emphasis on the needs of small farmers and working men. Once in power, however, Jefferson and his Democratic-Republican supporters faced a series of economic and political developments that led many of them to embrace Hamilton’s loose interpretation of the U.S. Constitution and support federal efforts to aid economic growth (see chapter 8). In the 1810s, for example, Democratic-Republican representative Henry Clay of Kentucky sketched out a plan called the American System, which combined federally funded internal improvements to aid farmers with federal tariffs to protect U.S. manufacturing and a national bank to oversee economic development.
Western expansion helped fuel the demand for federally funded internal improvements. The non-Indian population west of the Appalachian Mountains more than doubled between 1810 and 1820, from 1,080,000 to 2,234,000. The new residents included veterans of the War of 1812, many of whom received 160-acre parcels of land between the Illinois and Mississippi Rivers. They and their families established farms, shops, and communities throughout the territory. Four frontier states were admitted to the Union in just four years: Indiana (1816), Mississippi (1817), Illinois (1818), and Alabama (1819).
Population growth and commercial expansion moved hand in hand. In 1811 the first steamboat traveled down the Mississippi from the Ohio River to New Orleans; over the next decade, steamboat traffic expanded, and freight charges dropped precipitously. This development helped western and southern residents but hurt trade on overland routes between northeastern seaports and the Ohio River valley. The Cumberland Road, a federally funded highway linking Maryland and Ohio, reestablished this connection, and Congress passed bills to fund more ambitious federal transportation projects. But President Madison vetoed much of this legislation, believing that it overstepped even a loose interpretation of the Constitution.
Congress also developed new trade routes by negotiating treaties with Indian nations. For instance, an ancient trail from Missouri to Santa Fe, a town in northern Mexico, cut across territory claimed by the Osage Indians. White traders began using the trail in 1821, and four years later Congress approved a treaty with the Osage nation to guarantee right of way for U.S. merchants. In the following decade, the Santa Fe Trail became a critical route for commerce between the United States and Mexico.
East of the Appalachian Mountains, most internal improvement projects were funded by individual states. The most significant of these was New York’s Erie Canal, a 363-mile waterway stretching from the Mohawk River to Buffalo that was completed in 1825. Tolls on the Erie Canal quickly repaid the tremendous cost of its construction. Freight charges and shipping times plunged. In 1820 transporting a ton of grain by land from Buffalo to New York City cost $100 and took 20 days; in 1825 shipping a ton of grain by canal between those two cities cost only $9 and took 6 days. And by linking western farmers to the Hudson River, the Erie Canal ensured that New York City became the nation’s premier seaport (Map 9.2).
The Erie Canal’s success inspired hundreds of similar projects in other states. Canals carried manufactured goods from New England and the Middle Atlantic states to rural households in the Ohio River valley. Western farmers, in turn, shipped hogs, hemp, flour, whiskey, and other farm products back east. Just as important, canals linked smaller cities within Pennsylvania and Ohio, facilitating the rise of commercial and manufacturing centers like Harrisburg, Pittsburgh, Cincinnati, and Toledo. Canals also allowed vast quantities of coal to be transported out of the Allegheny Mountains, fueling industrial development throughout the Northeast.
