Competitive Hierarchies: Transportation Infrastructure and Economic Development
Transportation infrastructure was a crucial economic development need in the Early Republic era. That strategy required cities and states devise new “tools” to overcome the chief barrier to new infrastructure: the need for investment capital. Earlier in this chapter, it was mentioned that a seventeenth century Puritan elite developed from its successful investment in forming new towns throughout New England. Through the New England shareholding trading corporation investment capital was raised to install infrastructure required for settlement. Long distance road/turnpike, canal, and railroad infrastructure, however, was enormously expensive, and if anything, even more risky than anything the Puritans experienced. Transportation investment returns were far in the future and terribly uncertain. If successful, the infrastructure investment would benefit both the investor and the “free rider”, i.e. the non-investor. Operation and on-going maintenance of the transportation infrastructure was also required, making the investment dependent on engineering and management expertise over extended periods of time. Puritan equity capital was both insufficient and inappropriate to the purpose.
Previous to the American Revolution, and even after the traditional source of investment capital came from England and British foreign direct investment (FDI). That would always be a mainstay for Americans, but in the early decades of the nineteenth century that source of capital was extremely volatile, expensive and uncertain—indeed through most of the first two decades of the Early Republic we were drifting toward war, engaged in war, or coming out from a war with Great Britain. The obvious alternative to FDI was American private capital, but in these years serious capital accumulation still lay in our future—most capital was savings from small homeowners held in small loosely structured banks dispersed in every state. Business capital was privately held in family-controlled firms or more clumsy business partnerships. The corporation as a form of business structure only “appeared on a modest scale in the 1850’s notably in the railroad industry”[1]. Instruments were needed to raise the capital and house the management and expertise necessary to operate the infrastructure/transportation mode. Moreover, rights of way and land acquisition were prerequisites for any transportation infrastructure.
Into this vacuum stepped the “corporate charter”—a hybrid economic development tool and structure combined. A corporate charter was approved at the discretion of the state legislature, for purpose alleged to be in the public interest only. The charter allowed for the creation of a semi-private mostly tax-exempt corporation managed by investors and private businessmen to own, construct, manage and operate the infrastructure/transportation mode in a clearly specified geography. In most cases, the right to condemn land (eminent domain) and to issue tax exempt bonds was included in the charter. The preamble too many such incorporations established that the entity to be created is both a “corporation and a body politic”. “Among the privileges (included in these charters) were monopoly rights of way, tax exemption, the right of eminent domain, and the right granted to nonbanking corporations to hold lotteries in order to raise needed capital…”[2] Elaborate regulations establishing some measure of accountability were usually included in these charters (boards of directors, liability, permitted sources of financing and financial standards) and limited the scope of action permitted to the corporation.
As we shall shortly see, the most common beneficiaries of state-approved corporate charters “were bestowed on insurance companies, commercial banks, canal, dock and highway companies all concerned with the growth of cities and the expansion of internal trade.”.[3] Bruchey asserts “these business corporations were no more exclusively profit-seeking associations than were the chartered joint stock companies with which the English had pioneered in the settlement of America. They were in fact quasi-public agencies of the state”[4]If so, they were among the earliest, if not the first, organization used for primarily economic development purposes in the United States.
Today Bruchey’s assertion would be dismissed as at best naive or more likely misinformed. I do not agree with contemporary characterization as private, profit-making monopolies wrongly vested with public powers. Instead, in their day they were viewed as appropriate instruments of public policy, although they attracted their fair share of corruption opportunities and misadventures—and ultimately many would come to a bad end. These “mixed enterprises” combined public purpose and powers with private expertise and profit in an awkward and uncomfortable tension. To this end, a semi-digression involving a dilemma confronted by George Washington may be illustrative.
In 1784-85 (during the Articles of Confederation), the Virginia legislature granted to George Washington, then a private citizen, 150 shares of the afore-mentioned James River and Potomac canal companies “in return for his services to the state and [his dedication] to the cause of canal-building”[5]. This gift threw Washington into a total dither—should he accept them or not? As Wood describes his reaction, the correct decision was a very serious matter to Washington, to his personal integrity and appropriateness. Washington wrote and conversed widely to seek reaction and advice. Personally, he deeply believed in canal-building, not only to make money, but literally intended to unify the nation by making travel and commerce easier. But he also believed that to accept the shares would seem a public gift—a gift which compromised his most treasured asset, his “disinterestedness” (no conflict of interest permitting him to decide based on the public interest). “Few decisions in Washington’s career caused more distress than this one”. Thomas Jefferson, apparently, convinced him to decline the shares by “donating” them “to the college that eventually became Washington and Lee”[6].
Despite their awkward, by today’s standards, structure, these infrastructure-related municipal/ state involvements are genuine economic development-related initiatives which characterized this era. That it may be wondered if state/sub-state economic development during the nineteenth century wandered perilously close to “state capitalism” seems a legitimate question.
Robert A. Lively has … observed that a ‘persistent theme in the nation’s economic development’ has been ‘the incorrigible willingness of American public officials to seek the public good through private negotiations. One need add to this rich suggestion only its obverse: the equally incorrigible insistence of private citizens that government encourage or entirely provide those services and utilities either too costly or too risky to attract unaided private capital. It was especially on the undeveloped frontiers of the nation that capital needs and development needs conjoined most pressingly. Social overhead capital, especially in transport, was a frontier need and a prerequisite for economic development.[7]
Roads, Steamboats and Canals
David S. Reynolds[8] asserts the first half of the nineteenth century witnessed three waves of transportation innovation: road and turnpike construction 1790-1810; the steamboat and canal-building 1811-1830; and post-1830 steam (1826, John Steven’s, New Jersey) locomotive innovative and railroad construction. Except for the National Road, roads and turnpikes previous to 1825 were privately financed and state-chartered. The first turnpike, Pennsylvania’s Lancaster Turnpike (between Philadelphia and Lancaster) 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”[9]. New York, Pennsylvania and New England were the most energetic builders.
Although turnpikes were sometimes macadamized, they were usually crude roads, 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.[10]
Water transportation proved more durable for commercial trade. Steamboats and canals developed simultaneously with toll roads, linking Atlantic coastal trade with hinterland internal trade. Robert Fulton did not invent the steamboat, like Steve Jobs (personal computers) and Edison (electric light) he made his fortune commercializing it. In 1807 Fulton started a steamboat route between New York City and Albany, and —the rest is history. If Mark Twain is to be listened to, the greatest impact of steamboats 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 made city connections to waterways economically necessary and that in turn fostered canals and waterfronts. In 1816 America had just 100 miles[11] of canals–by 1840 3,000. The 360 mile Erie Canal, DeWitt Clinton’s “eighth wonder of the world” or “Folly” or “Big Ditch” (Thomas Jefferson thought it “ a little short of madness”)[12] was the granddaddy of American canals. Connecting New York City to the Great Lakes (transshipment nexus being Buffalo) it opened up in 1825 the rich agricultural lands of the upper Midwest to ocean-going and coastal commerce and sharply reduced the transportation costs by 90%. The Erie Canal was a state-level project designed and advocated, then dug by a state commission; it cost seven million (financed by bonds) and took seven years to complete.
The Erie Canal set off the canal craze by dramatically showing other cities they “could conquer the barriers that limited their development through a strategy which promised tremendous potential for commercial growth … [demonstrating 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”.[13] Other New York canals followed in short order: the Oswego, Chenango, Cayuga-Seneca, the Champlain, and the 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 our first example of the infamous herd-like state/city copy-cat imitation which repeatedly will characterize diffusion of economic development tools and strategies throughout our history.
Following the War of 1812 canal-building generated a great deal of Washington D.C. palaver. Henry Clay embraced the strategy as a key element of his American System platform. So in 1825 Congress approved several canal-related bills (Rivers and Harbors Act, General Survey Act). Included in the former legislation was a funding authorization to the Corp of Engineers which was entrusted with a significant role in “internal improvements”. From that point forward, federal involvement in canals and other infrastructure was possible. Federal involvement, however, was always quite controversial. Previous to Jackson (who hated federal involvement and regarded infrastructure as a purely state affair) there had been several presidential vetoes of federal involvement in various internal improvements. The Supreme Court’s Gibbons v. Ogden (1824) decision finally paved the way for federal involvement in interstate commerce—and legitimized its role in national scale internal improvements.
Railroads and the Competitive Urban Hierarchy
Naturally, the enhanced economic prowess associated with a successful transportation infrastructure benefits the city at large and its reputation and status with outsiders (civic pride). There was, however, nothing written in stone that another city might seize advantage by being the first to build infrastructure and take away some (or most) of your hinterland—and for that matter build the connecting link to your town and therefore garner the benefits. The success of canal-building quickly overlapped into a novel, relatively untested, horrifically expense transportation innovation: the steam locomotive. Not unlike today’s rocket ship to Mars, the locomotive offered opportunity and risk and as a public investment generated substantial skepticism as an alternative to water transportation.
The 1825 opening of the Erie Canal engendered considerable apprehension in Baltimore, Philadelphia and Pittsburgh that New York (New York City) could steal the Ohio hinterland and exploit the agricultural production of the northern Great Lakes areas to that city’s advantage. Also, Philadelphia, the nation’s second largest city in 1830 felt further threatened by rival Baltimore (3rd largest city with about 200 fewer residents than Philadelphia)[14] and thought Baltimore would establish a trade route into Ohio as well. Philadelphia, however. possessed an advantage: Pittsburgh by dint of its location offered the potential of even better Ohio access. Pittsburgh was also in Pennsylvania and accordingly the state of Pennsylvania was more than willing to join in financing the transportation infrastructure. Baltimore was on its own and mostly dependent on its local investor/banking institutions.
As hoped, the state of Pennsylvania provided key financing through state bond issuance—the proceeds of which were not available to non-Pennsylvania firms. Two competing Pennsylvania infrastructures potentially would follow, however: canals, which obviously were a proven and financeable enterprise, and the new innovation—railroads. Philadelphia capital investors (the state government) believed rail to be unproven and too risky and so in 1826 they started construction on a “mongrel” transportation system composed of network of canals and some rail (the Pennsylvania Mainline) to Pittsburgh. Baltimore’s private entrepreneurs, unimpressed with canals that froze in the harsh winters, and believers of new rail engine technology, put their money into the start up “Baltimore and Ohio Railroad of Baltimore City” (1827). The race was on.
With access to Pittsburgh out of the picture, the B&O laid track across Maryland. They experimented with new locomotives; for example in 1830, the famous little engine that could, the “Tom Thumb”, ran a test run on the B&O. The B&O crossed the Potomac at Harper’s Ferry Virginia in 1837. By that time the city of Baltimore had established a commission to work with the railroad, and in 1836 the city purchased $3 million dollars of B&O stock and another $ 1million in the related Baltimore & Susquehanna Railroad stock. Because neither Pennsylvania nor Virginia wanted Baltimore to succeed in this endeavor, both states placed “roadblocks” in the path of the B&O. The B&O, accordingly did not reach Wheeling until 1853—twenty five years after construction had started. After the Civil War acquisitions the B&O, however, acquired key Ohio rail lines which crossed the state and provided back door access to Pittsburgh—in the 1880’s! Baltimore seemingly lost the race—or did they?
But Philadelphia was no more successful than Baltimore. Its choice of a mixed canal-rail infrastructure proved to be a dismal failure. Its routes, while speedier to construct, possessed all the disadvantages of both infrastructures: expensive (rail) and closed in winter (canal). Numerous break-bulk transshipment points slowed down passage and made it more expensive. The Philadelphia system could not compete with the Erie Canal which could handle more traffic and haul heavier cargoes. Therefore, Western farmers used the Erie Canal, and New York City became the end-point for the grain of the Midwest. Had Philadelphia chosen an all-rail four season route it would have been in a much improved position to compete with the Erie Canal—but that was too risky and unproven to the financiers of the Pennsylvania transportation system.
Examples of Charters and Railroads as Economic Development Tools
State/municipal support of Early Republic transportation-related projects was usually constructed and financed thru state incorporation charters which provided to a private firm public powers and rights and made it eligible for public subsidy. Previous to 1789 colonial governments had issued only six such charters. From 1780 to 1801, however, state governments issued more than 300 business corporation charters. “Fully two-thirds of them were established to provide inland navigation, turnpikes and toll bridges”; also thirty-two were issued to develop water supplies and four for harbor development [docks].[15] State involvement usually meant municipal level prodding from Privatist municipal governments and their business community in the state legislature. The motivation for municipal and state involvement (aside from any legal or illegal monetary inducement) was a perceived threat to the city’s (and the business community’s) competitiveness by other cities. For example:
The first threat to Philadelphia’s preeminence came from Baltimore Maryland, which between 1798 and 1800, boasted more exports than Philadelphia. Philadelphia responded by building a turnpike west to Lancaster Pennsylvania, so the hinterland could be more readily included in commercial growth. Economic competition with both Baltimore and New York, in fact fueled growth, and led to the state’s transportation revolution, which included the construction of turnpikes, canals, and eventually railroads that better connected Philadelphia’s port to the hinterland.[16]
An example of rather extreme municipal involvement is Cincinnati’s 1869-73 ownership and operation of a railroad to Chattanooga, Tennessee. Authorized by the Ohio state legislature, the municipal railroad was an “effort to shore up the city’s economic decline relative to faster-growing cities such as St. Louis, and Chicago.[17] While this last example does not precisely fit into this private incorporation topic or the Early Republic era, it does support the insight that municipalities during much of the nineteenth century were the drivers of many of state-level corporate charter issuances and that municipalities were themselves driven by perceived competition from other relevant cities.
While most research on this topic has focused primarily on state-level involvement, Louis Hartz observed that “state investment at its height was of minor significance compared with investments by cities and counties”. Henry H. Pierce stated that 315 municipalities “pledged approximately $37,000,000 toward the construction of (New York’s) roads between1827 and 1875”. Primm’s study of Missouri in the 1850’s asserted that it was the cities and counties along the railroad routes that bought most of the stocks of the state-assisted railroads—i.e. the state issued the bonds and the cities and counties bought them. Milton Heath states that cities and counties contributed more than $45 million in the pre-bellum south. Bruchey concludes that Baltimore, Cincinnati and Milwaukee (as well as other cities) subscribed to stock, purchased railroad bonds, or guaranteed the indentures of railroad companies. In some instances, he asserts that outright grants were made[18]. A specific example of this type of involvement is Baltimore City and its railroad investments as cited by Dilworth:
However, the internal improvements needed to maintain the city’s position in relation to its competitors were large scale collective enterprises, as much as political and economic. When Baltimore’s business class seized on the railroad system as an alternative to canals, they sought government support as an essential component in the new effort…. The (Maryland) Assembly authorized Baltimore City to purchase up to 5,000 shares in the company …. The City used property tax revenues to finance the railroad.[19]
The infrastructure projects were themselves a combination of sections built by state/municipality directly, and by the corporation indirectly. For example, Pennsylvania spent nearly $100 million dollars itself on the construction of its Main Line canal and railroad system—a project directed by a private chartered corporation.[20] Carter Goodyear 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.[21] The usual financing involved the state or municipality issuing bonds, typically purchased by foreign investors (insufficient American capital at that time). Without the full faith of the government issuer (thank you Alexander Hamilton for paying off the national debt), private financing of bonds (and foreign direct investment) would not have happened[22]. In other words, there are legitimate factors beyond profit-grubbing and corruption that underlie the use of corporate charters to not-so-private corporations.
That these were true private-public endeavors is further underscored by the reality these projects were not privately financeable from lenders applying conventional financing criteria. Why? First, such project financing provides funds for construction, i.e. similar to construction loans today. This means the loan has no assets to serve as collateral and must be made on the developer’s past history—which for canals and railroads were nonexistent. Secondly, at the time of original financing the proposed project was connected two geographies that had yet to develop; they were not “links between settled points”—say it another way, “there was no there, there” and the “here, here” was not all that great either. The “there” was an “if-come” resulting from successful construction, subsequent successful project operation and then subsequent settlement of the community. Without public backing these projects could not have been built conventionally. “Government typically played the role of the “pioneer”[23], a role which, in the end was supported by, and congruent with, the course of majority public opinion.
I have discovered there exists yet another dimension concerning state charters during the Early Republic: state charters provided state/municipal venture capital to start-up sectors such as manufacturing. The Pennsylvania state charter study[24] reported that 8% of that state’s charters (1790-1860) were issued to manufacturing corporations. Between 1808 and 1815 Pennsylvania issued more charters to joint stock companies engaged in manufacturing than to all public utilities combined. This overlaps very nicely with the drift to, and including, the War of 1812 when the principal source of American private capital, British capital, was more costly or not available. States and local jurisdictions would “step up to the plate” and provide the missing capital to grow their economic base.
But the larger truth is that, given the strength of the American desire for economic development, the scarcities of capital (private) funds in the early years following independence, and the sharpness of competition from foreign suppliers (of capital), manufacturing was endowed with a quasi-public and not private character, and given numerous encouragements by the state (and municipal)…. (an 1818 Massachusetts corporate charter reads) “Be it enacted by the Senate and House of Representatives in General Court assembled that the following named individuals hereby are constituted a corporation and body politic for the purpose of erecting a flour mill…. Between 1824 and 1840, the [actually mid] western and southwestern states issued more than $ 165,000,000 in bonds to provide banking capital to corporations.[25]
In addition, states not infrequently, would guarantee private corporation bonds–such indebtedness ultimately secured by taxes, not on the revenues and profitability of the corporation. What’s more, it appears that states played a secondary role, compared to municipalities, in financing both transportation-related private endeavors and start up financing to private corporations. Bruchey again reports that between 1830 and 1890 no fewer than 2,200 laws passed by states authorized municipalities to provide local assistance to such entities.[26]
But as we are fond of saying, all good things must sooner or later come to an end. The “end” came after the incredible number of scandals and private/municipal bankruptcies which followed the Panic of 1837. Five states temporarily defaulted and one outright repudiated some of its debt.
A wave of revulsion against state (and municipal) participation internal improvements swept over the Old Northwest and between 1842 and 1851 all six of its states bound themselves constitutionally not to make loans to improvement enterprises. In addition, Michigan, Indiana, Ohio and Iowa also prohibited stock ownership, Maryland, Michigan and Wisconsin prohibited state works, and Ohio, Michigan and Illinois abandoned their extensive programs in state construction. Pennsylvania sold part of its state stock in 1843, Tennessee virtually abandoned her improvements program, and in early 1840’s Virginia somewhat checked hers.[27]
This is the first phase of what contemporary legal observers title state constitutional “gift provisions”. We will return to these “gift provisions” in later chapters (in some detail) because they are some of the most critically important laws to affect the profession and the practice of economic development. The necessity to conform to these new constitutional provisions created the need to develop a modern quasi-public corporation. Succinctly, the gift provisions would fundamentally shape future eminent domain, taxable and tax exempt bond issuance, urban renewal and physical redevelopment, public lending and guarantee programs. As shall be seen, political culture would play a role in writing and defining the “gifts” provisions.
Wrap Up and Segueway
Contemporary economic development is a creature of the industrial city and its evolution. It will be, then, perhaps a bit surprising to discover some features of contemporary economic development prevalent in a period before the official arrival of the industrial city. Part of the reason for early manifestations of economic development is that through most of the first half of the eighteenth century, American cities were in the process of significant change, driven mostly by population migration-immigration (and some organic growth), but incrementally by the sector by sector rise of manufacturing, the introduction of technology and, of course, innovation and entrepreneurship. Eli Whitney’s innovation of interchangeable parts, for instance, was transformative to manufacturing and the firms that adopted this process technology grew jobs and cities. The forces of change characteristic of the 21st century could be found in American cities in 1850, but also in 1810.
Sprinkled throughout the chapter were descriptions of economic development programs and strategies, even structures. The surprising pervasiveness of corporate franchises and the delegation of public powers to them, creating a vehicle suggestive of the great quasi-public agencies and public-private partnerships of the future. The use of state and local bond issuance to provide necessary infrastructure, but also seed capital for early manufacturing firms was equally wide-spread. The first instance of a known urban renewal project, ironically the first Faneuil Hall, in the 1820’s was far from expected. And also evident was the multiple, and even divergent paths pursued by our chief urban centers–providing support to our Progressive/Privatist dichotomy, and suggesting the potential impact of a jurisdiction’s political culture on economic development policy-making. In any event, city-building and infrastructure were the chief economic development strategies of this period and for the most part Privatist structures were the chief EDOs, and private entrepreneurs/real estate professionals were the individual economic developers of the era. The obvious weakness of Early Republic governments, both state and local, rendered them incapable of sustaining a modern policy process.
This chapter has attempted, superficially perhaps, to introduce the drivers of economic development change in these early years, concentrating upon early population mobility by outlining the largely ethnic migrations of people into central America, east of the Mississippi. In so doing, hopefully, a foundation was made for understanding how such migrations created opportunities for forming political cultures through structures such as state constitutions and municipal incorporations. It is through these flows of different peoples that individual state SSS were set into motion. The different character of the migrations, between Southern Planter and the Yankee Diaspora chiefly, represented a dichotomy of contrasting economic systems, each with their own cultures and definitions of what would constitute economic development. Included in this description was my belief that the establishment of a jurisdiction’s political culture was critically determined by the jurisdictions first settlers and their values which were embedded into the state constitutions and municipal charters which became the bedrock on which future policy systems would be constructed.
The discussion concerning Henry Clay’s “American System” was the first discussion presented in this history on the federal role in state and sub-state economic development. Whatever else, Clay’s American System begins the tale of a consistent, albeit spasmodic, involvement by the federal government in state/sub-state economic development. Its instinctive gravitation toward multi-state infrastructure and tinkering with the international economy to encourage or protect domestic sectors is suggestive of “natural policy areas” for sustained federal involvement. Also, seemingly inherent in federal sub-state economic development activity is its controversial nature and a tendency toward inconsistent implementation. The effects of the competitive urban/state hierarchy on economic development activities of individual cities, on the other hand, is clearly powerful—and reflecting its effects on transportation infrastructure, it may be stimulative, but also counterproductive.
[1] Alan Trachtenberg, The Incorporation of America: Culture and Society in the Gilded Age (New York, Hili and Wang, 2007), p. 4.
[2] Stuart Bruchey, The Roots of American Economic Growth, op. cit. p. 130. Lottery was a term which today corresponds to public subscription of debt instruments, i.e. not dissimilar to authorizing the public to buy/invest in a savings bond. In this manner, a significant portion of public infrastructure could be financed not through taxes, but through private citizen “investment”. This is equivalent to empowering the entity to issue small-issue bonds to the general public. For the most part, the general public did purchase, i.e. invest in this fledgling infrastructure.
[3] Alan Trachtenberg, The Incorporation of America, op. cit., p. 6,
[4] Stuart Bruchey, Growth of the Modern American Economy (New York, 1975)
[5] Gordon Wood, Revolutionary Characters: What Made the Founders Different (New York, Penguin, 2006), p. 44.
[6] Gordon Wood, Revolutionary Characters, op. cit., pp. 44-45.
[7] Stuart Bruchey, The Roots of American Economic Growth, op. cit. p. 135; Robert A. Lively, “The American System: A Review Article”, Business History Review, XXIX, (March, 1955).
[8] David S. Reynolds, Waking Giant, op. cit. pp. 12-18.
[9] David S. Reynolds, Waking Giant, op. cit. p. 13.
[10] David S. Reynolds, Waking Giant, op. cit. p. 13. There also emerged a series of informal “shunpikes” which were free and bypassed the tollbooths which led to a network of “roads” which connected adjoining areas into the turnpike system—sort of like driving alone on a HOV lane on a contemporary highway.
[11] George Washington in 1784 was an investor-owner of the Patowmack Company (hoping to connect the Potomac with more western territories). The company went bankrupt. Reynolds, Waking Giant, op. cit. p. 15. The earliest canals were short, and constructed in southern states. The Great Dismal Swamp Canal (Virginia and North Carolina) opened in 1805, George Washington had been involved with it also in its earlier years, is allegedly America’s oldest presently operating canal—it become the starting point for the Intercoastal Waterways.
[12] David S. Reynolds, Waking Giant, op. cit. p. 15.
[13] Paul Kantor, the Dependent City, op. cit., p. 49.
[14] We have relied on a number of sources to describe this battle of transportation infrastructures. The best summary of this competition is that provided by William D. Angel Jr., “To Make a City: Entrepreneurship on the Sunbelt Frontier”, in David C. Perry and Albert J. Watkins, The Rise of the Sunbelt Cities (Volume 14) Urban Affairs Annual Reviews (Beverly Hills, SAGE Publications, 1977), pp. 111-116.
[15] Stuart Bruchey, The Roots of American Economic Growth 1607-1861 (New York, Harper & Row, 1968) p. 129. A detailed analysis of 1790-1860 Pennsylvania’s charter issuance provides an overview of this tool. A total of 2,333 business charters/special acts were approved: more than 64% were in transportation, 11% insurance, 8% manufacturing, 7% banking, 3% gas, 3% water, and 4% miscellaneous.
[16] Richardson Dilworth (ed) Cities in American Political History (Washington D.C., Sage (CQ Press), 2011), p. 87.
[17] Richardson Dilworth (ed) Cities in American Political History (Washington D.C., Sage (CQ Press), 2011), p. 258.
[18] Louis Hartz, Economic Policy and Democratic Thought: Pennsylvania 1776-1860 (Cambridge, Harvard University Press, 1948); Milton H. Heath, Constructive Liberalism: the Role of the State in Economic Development in Georgia to 1860 (Cambridge, Harvard University Press, 1948); Henry H. Pierce, Railroads of New York: A Study of Governmental Aid 1826-1875 (Cambridge, Harvard University Press, 1953); James Neal Primm, Economic Policy in the Development of a Western State: Missouri, 1820-1860 (Cambridge, Harvard University Press, 1954); as reported in Bruchey, op. cit. p. 135.
[19] Richardson Dilworth (ed), Cities in American Political History (Los Angeles, Sage (CQ Press), 2011), p. 153.
[20] Stuart Bruchey, The Roots of American Economic Growth, op. cit. p. 132.
[21] Carter Goodrich Canals and American Economic Development (New York, Columbia University Press, 1961); Also, ”American Development Policy: the Case of Internal Improvements” Journal of Economic History, XVI (December, 1956) and Government Promotion of American Canals and Railroads 1800-1890 (New York, 1960).
[22] Douglas North estimates that such foreign direct investment during the period 1790-1861 was approximately $500 million dollars (not adjusted for inflation). The peak years were 1816, 1836, and 1853.
[23] Stuart Bruchey, The Roots of American Economic Growth, op. cit. p. 135.
[24] Stuart Bruchey, The Roots of American Economic Growth 1607-1861 (New York, Harper & Row, 1968) p. 129.
[25] Stuart Bruchey, The Roots of American Economic Growth, op. cit. pp. 129- 130.
[26] Stuart Bruchey, The Roots of American Economic Growth, op. cit. p. 135.
[27] Stuart Bruchey, The Roots of American Economic Growth, op. cit. p. 134.
Ron W. Coan 