Outline of the development of the internal commerce of the United States / 1789-1900

by Thurman William Van Metre

Notwithstanding the great material prosperity however, the flames of sectionalism, which had blazed forth during the contest over the adoption of the "American System" remained unquenched even after the question of protection had ceased to be an important political issue. Filled with animosity engendered by the thought that the economic progress of the North had been effected at the expense of the South, and fearful that the fulminations of the abolitionists and the successful efforts of the Northern political leaders to restrict the territorial expansion of slavery only foretold an ultimate intention of destroying that institution altogether, the Southern partisans decided to sever the political bonds between the two sections, the economic institutions of which differed so widely, and to establish a separate state whose political ideals would conform to its economic and social predilections. This decision the Southerners stood ready to enforce by an appeal to arms; the people of the North, preferring "to accept war rather than let the nation perish," made ready to prevent the proposed dissolution of the Union; and the era of general happiness and comfort ended amid the preparations for the impending struggle.

III

1860-1900

The Civil War marked a notable turning point in the economic history of the United States. National development since 1860 has been shaped to a large degree by fundamental political and economic changes that occurred during the war—changes which were for the moat part the effect of various expedients resorted to by the federal government to bring the struggle for the preservation of the Union to a successful issue. To crush the military strength of the South the federal authorities adopted the expedient of the abolition of slavery, and to the surprise of both the North and the South "the cause of the conflict ceased before the conflict itself," and the nation emerged from the war freed of the greatest obstacle to its social homogeneity. To secure revenue for the prosecution of the war, the duties on imports were raised to an unprecedented point, and when Congress failed, after the return of peace, to reduce the tariff schedules to their former level, manufacturing interests found themselves protected by a tariff wall so high that foreign competition was largely eliminated. To secure needed aid in financing the costly struggle, Congress established the national banking system which gave greater uniformity to the currency and brought the financial centers of the country into closer relation. The anxiety to connect the Atlantic and Pacific coasts by rail led the federal government to adopt the practice of granting large subsidies to the builders of great transcontinental railway lines. The stimulation which the war gave to manufacturing and transportation in the North and the shrewd manipulation of the money market during the years of the national crisis made possible the accumulation and concentration of large quantities of capital funds under the control of a small number of persons.

It was inevitable that such radical changes would modify the course of industrial progress. Because of the importance of slavery as the underlying cause of the war, there has been a natural tendency to regard its abolition as the most striking and significant net result of the great conflict, but it is to be doubted whether the emancipation of the negro had as great an effect on subsequent economic development as the other innovations, which were so obscured by the turmoil of the war that they received but little attention and were regarded as being of much less significance. The complete transformation in the tariff policy of the nation permitted the growth of manufacturing to an extent that would have been impossible had the war not occurred; the construction of the transcontinental railroads had an immeasurable effect on the development of the great region west of the Missouri river; the concentration of capital provided the means by which industrial enterprises could be carried out on a gigantic scale; the establishment of a uniform currency and a better banking system accelerated the growth of industry and trade. It is in these changes that one finds the key to much of the economic history of the United States since the Civil War.

The period from 1860 to 1900 was one of development and exploitation. The years prior to the Civil War had been marked by the advance of the political dominion of the United States to the Pacific Ocean, and at the same time the nation had enjoyed an era of notable agricultural, industrial and commercial prosperity, especially in the states east of the Mississippi River. However, the tremendous possibilities of the country were only beginning to be realized in 1860, and remarkable as was development before that year, it was completely eclipsed by the amazing progress made during the latter part of the century. An abundance of unoccupied land, of rich and varied natural resources, favorable climatic conditions, a complete absence of checks on individual initiative and enterprise and of restrictions on internal communication and trade, and the encouragement afforded to industry by the liberal policies of the federal government all combined to create economic opportunities of boundless scope. Labor, capital and transportation facilities alone were needed and as these increased the wealth production of the United States multiplied with astonishing rapidity. The extension of the railway system permitted the constant growth of agriculture and rendered accessible the mineral and forest products in which the land abounded; cheap and plentiful raw materials from field, mine and forest, made possible a phenomenal increase of manufacturing. Multitudes of European immigrants, eager to share in the wealth of the new world, poured in and recruited the labor force necessary for the industrial conquest; and the invention and application of labor-saving machinery of every description increased many fold the effectiveness of the effort of each individual. All parts of the country participated in the material progress. The South, issuing quickly from the almost abject state of prostration in which it was left by the ravages of a disastrous war, became more prosperous and flourishing than ever; the Northern States east of the Mississippi constantly increased their agricultural production, and at the same time became one of the greatest manufacturing and mining districts in the world; on the prairie lands west of the Mississippi a new cereal kingdom was founded; the western plains were converted into great live stock ranches; the forests, orchards and grain fields of the Pacific States proved to be an even greater source of wealth than were their mines of gold and silver.

In the forty years following 1860 the number of people in the United States, exclusive of outlying possessions, rose from 31,000,000 to 76,000,000, the wealth of the nation grew from $16,000,000,000 to $89,000,000,000. These figures convey some idea of the progress of the country as a whole. Such an advance was possible only by the most rapid expansion of all the numerous lines of industry to which the resources and energies of the nation were devoted.

The growth of agriculture proceeded on a magnificent scale. Within two decades after the war the United States assumed the leading place among all nations of the world in the production of grain and live stock, maintaining at the same time its supremacy as a producer and exporter of cotton and tobacco. Countless thousands of acres of virgin soil west of the Mississippi River were given away under the provisions of the famous Homestead Act of 1862 and by 1880 the continent was practically settled from one coast to the other. The area of farm lands increased from 407,000,000 acres in 1859 to 841,000,000 acres in 1899, and the value of farm property rose from $8,000,000,000 to $21,000,000,000. The application of machinery to the cultivation of the soil and the substitution of horse and steam power for manual labor multiplied the productivity of each unit of land and labor. In 1899 the country produced from its fields 4,500,000,000 bushels of cereals, 9,500,000 bales of cotton, 79,000,000 tons of hay and 868,000,000 pounds of tobacco. The value of the live stock that year was $3,000,000,000, and the production of dairy products, poultry and eggs amounted to $750,000,000.

The output of the mines increased in value from $219,000,000 in 1869 to $1,107,000,000 in 1899. Over 240,000,000 tons of coal, 27,000,000 tons of iron ore, 270,000 tons of copper, and 63,000,000 barrels of petroleum were taken from the earth during the latter year.

The most significant feature of the economic history of the United States between 1860 and 1900 was the rise of manufacturing. The radical change in tariff policy, the rapid expansion of the home market due to the tremendous growth of agriculture and the spread of railroads, and the presence of an unlimited amount of cheap fuel and raw materials all combined to make manufacturing in some respects the dominant industry of the country. The value of the products of manufactures in 1899 reached a total of $13,000,000,000.