[Illustration:
Relative Prices—1865-1890]
Less general than agriculture, but more characteristic of the period after the war, was the development of manufacturing. The census of 1870 was faulty and inadequate, but it was sufficiently accurate to indicate that the manufacturing region was preeminently that north of the Potomac-Ohio river line and east of the Mississippi. By 1890 it was apparent that the industrial interests were shifting slightly toward the West; nevertheless the leading states were those of southern New England, and New York, New Jersey and Pennsylvania. In these states no fewer than four hundred and forty-seven industries employed more than a million dollars of capital each. The manufacturing of cotton, woolen and silk for the rest of the country was done here; foundry products, iron and steel manufactures, silver and brass goods, refined petroleum, boots and shoes, paper and books, with a host of other articles, were sent from this section to every part of the world. All along the line, from Massachusetts to Pennsylvania, capital engaged in manufacturing doubled between 1880 and 1890, and the number of employees greatly increased.
Although the industrial life of the South belongs, for the most part, to the years since 1890, the coal and iron deposits of Alabama were known and utilized before that year, the number of cotton mill spindles in North Carolina tripled between 1880 and 1890, and cotton expositions were held in Atlanta in 1881 and New Orleans in 1884. It was in the eighties, also, that the Chesapeake and Ohio Railroad and the Norfolk and Western led to the exploitation of the coal deposits of Virginia and West Virginia, especially the famous Pocahontas field.
Some aspects of the growth of manufacturing in the North are well illustrated in the development of the mineral resources around Lake Superior. The presence of copper and iron in this region had long been known, but they had not been utilized until a decade before the Civil War, and even then the output had been greatly restricted by insufficient transportation facilities. By the close of the war, however, a canal had been constructed which allowed the passage of barges from Lake Superior to Lake Huron, and railroads had been laid to a few important mining centers. The Marquette iron range in northern Michigan, the Gogebic in Wisconsin and Michigan, the Menominee near Marquette, the Vermilion Lake and Mesabec ore-beds near Duluth,—all these combined to yield millions of tons of ore, caused the development of numerous mining towns and laid the foundations of a gigantic expansion in the production of steel. As the iron and steel industry with its furnaces, machinery and skilled labor was already established at points in Illinois, Ohio and western Pennsylvania, it was cheaper to transport the ore to these places than to transfer the industry to the mines. Ore vessels were constructed capable of carrying mammoth cargoes; docks, railroads and canals were built; and the products of the mines taken to lake and inland cities. Improvements, meanwhile, were being continually made in the steel industry, such as the Bessemer process, by which the impurities were burned out of the iron ore, and exactly enough carbon introduced into the molten metal to transform it into steel.
Although the steel industry was established in many places, its most dramatic growth occurred in those parts of eastern Ohio and western Pennsylvania that center about the city of Pittsburg. Placed strategically at the point where the Allegheny and Monongahela rivers join to form the Ohio, in the midst of an area rich in coal, petroleum and natural gas, Pittsburg rapidly became the center of a region in which the development of manufacturing and the construction of railroads dwarfed other interests. A large portion of the ore mined in the Lake Superior fields was carried to the Pittsburg district to be transformed into steel products of all kinds. Moreover, the fortunes made by private individuals in the region, and the inflow of alien laborers to work in the factories and on the railroads raised weighty social and industrial problems.
Manifestly the extension of agriculture and industry in so large a country as the United States was dependent upon the corresponding growth of the means of transportation, both by water and by rail. A detailed account of the expansion of the railway net, with the accompanying' implications in the fields of finance and politics, is a matter for later consideration. Certain of its general features may be mentioned, however, because they are intimately interwoven with the economic developments which have just been explained. The concentration of the population in the cities, of which New York and Chicago were outstanding examples, was one of these features. From the time of the first census, the city of New York continued to maintain its position as the most populous city of the nation. Between 1850 and 1890 it added a round million to its numbers, containing 1,515,000 persons at the later date. Moreover it was the center of a thriving and thickly settled region extending from New Haven on the one side to Philadelphia on the other—the most densely populated area in America. The uninterrupted expansion of the city indicated that the reasons for its growth were constant in their operation. And, in fact, the reasons were not difficult to find. It was blessed with one of the world's finest harbors and had access to the interior of the state by way of the Hudson and Mohawk rivers. These natural advantages had long since been recognized and had been increased by the construction of the Erie Canal in 1825 which, with the Great Lakes and the several canals connecting the Lakes with the Ohio Valley, had given New York an early hold and almost a monopoly on the trade between the upper Mississippi, the Lakes and the coast. The city, therefore, became an importing and exporting center; its shipping interests grew, immigration flowed in, and its manufacturing establishments soon outstripped those of any other industrial center; the great printing and publishing, banking and commercial firms were drawn irresistibly to the most populous city, and Wall Street became the synonym for the financial center of the nation.
In 1840 Chicago had been an unimportant settlement of 4500 persons, but by the opening of the war it had grown to twenty-five times that size, and added 800,000 between 1870 and 1890. It had early become evident that the city was the natural outlet toward the East for the grain trade and the slaughtering and meatpacking industry of the upper Mississippi Valley. Before the late sixties, however, railway connection was defective, being composed of many short lines rather than of one continuous road, so that freight had to be loaded and unloaded many times during its passage to the seaboard. This situation, which had been merely inconvenient before the war, had become little short of intolerable during the struggle, because the closing of the Mississippi had cut off from the Middle West its water outlet toward the South and had diverted more freight to the railroads. After the war, Cornelius Vanderbilt, president of the Hudson River Railroad, combined a number of the shorter roads so as to give uninterrupted communication between Chicago and New York, to tap the trade of the Mississippi Valley, and to compete with water traffic by way of the Great Lakes and the Erie Canal. Other railroads saw the possibilities in the western trade, and the Baltimore and Ohio, the Grand Trunk, and the Erie followed the lead of Vanderbilt. A similar development, although on a smaller scale, accompanied the growth of other northern cities. The retroactive effects of the roads on the distribution of the population are too detailed for discussion, but a single example may typify many. In 1870 the Maine farmer supplied much of the meat consumed in Boston; by 1895, he was getting his own meat from the West. He must, therefore, adapt himself to the new conditions if he could, move to the manufacturing cities as so many of his neighbors did, or migrate to the West.
Like the growth of New York and Chicago, the development of California had an important effect on the history of American railway transportation. Although it had been agitated for many years, the project for a railroad from the Mississippi to the Pacific Coast had not reached the construction stage until the congressional acts of 1862 and 1864 provided for a line to be built from Omaha to San Francisco. The Union Pacific Railroad had been incorporated to build the eastern end, while the western end was to be constructed by the Central Pacific Railroad Company, a California corporation. The latter act, that of 1864, had given the roads substantial financial assistance and half the public land on a strip forty miles wide along the line of the track. Many difficulties had stood in the way—lack of funds, problems of construction and inadequate labor supply. Eventually they had all been overcome by the energy and skill of such men as Stanford, Crocker and Huntington. Imported Chinese coolies had met the labor demand and construction was speeded up. Actual building had begun in 1863 and six years later the two roads met at Promontory Point near Ogden in Utah, where the last spike was driven, the engines
Facing on the single track,
Half a world behind each back.
During the four years following the completion of the transcontinental line, 24,000 miles of new railroad were constructed, much of which was built into the wilderness ahead of settlement. So great an expansion, coming at a time when immense stretches of new land were being opened and industry being developed on a large scale, could hardly fail to result in over-speculation. The results appeared in 1873. Jay Cooke and Company, the most important financial concern in the country had been back of the Northern Pacific Railroad, marketing large quantities of its bonds and so providing capital for construction, the purchase of equipment, the payment of wages and so on. Obviously a large amount of money was thus being put into an enterprise from which returns would come only after a considerable period; and yet construction had to be continued, or what was already invested would be lost. What Cooke was doing for the Northern Pacific was being done for the Chesapeake and Ohio by Fisk and Hatch, and by other firms for speculative enterprises in every corner of the land.