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

by Thurman William Van Metre

Simultaneously with the expansion of agriculture, the exploitation of natural resources and the rise of manufacturing, partly as an effect of them but almost equally as a cause, came the development of the great transportation system. This was the era of the railroad. Immediately after the war there began a period of extensive construction, over 35,000 miles of line being laid between 1865 and 1874. The first transcontinental line was completed in 1869. Unfortunately the enormous increase of mileage during these years was considerably in excess of the needs of the country, and the speculative fever which attended the expansion resulted in the panic of 1873. After a period of depression of five years there was a second and much greater revival of construction. Between 1878 and 1890 over 85,000 miles of new track were laid, including four transcontinental tracks completed and others partially finished. By 1900 there were 199,000 miles of railroad spreading a vast net over the entire country.

The important result of the growth and improvement of railways was the great reduction in the cost of transportation. At the close of the period before the war it had been demonstrated that railroads could economically carry high grade freight such as flour, live stock, lighter manufactured goods and general merchandise, but as yet they had been unable to compete successfully with waterways for the transportation of grain, and the carriage for long distances of such low-grade freight as coal and ore had not been attempted. As the railway developed, however, its use was extended, and it was soon found that there was no commodity so cheap that it could not be profitably handled. Accompanying the extension of the service to include all kinds of bulky freight there was an uninterrupted decline in the general level of rates on all classes of goods, resulting from the increased efficiency of roads, the stress of competition, and above all from the tremendous increase of traffic. The rate per ton per mile decreased from 1.92 cents in 1867 to 0.73 of a cent in 1900. This reduction of transportation charges was one of the most potent factors determining the course of economic progress. Field, mine, forest and store were linked together into a unified whole; raw materials could be concentrated at any point and there was practically no limit to the extent of the market for finished commodities. The increase of the tonnage of railway freight from less than 20,000,000 tons in 1860 to almost 600,000,000 tons in 1900 is the best index of the growth of internal trade during this period.

As the railways increased in importance, transportation on most of the inland waterways declined. Nearly 1,700 miles of canals were abandoned between 1860 and 1900. After 1880 there was a gradual decrease of nearly all canal and river traffic. The Great Lakes were practically the only inland waterway that retained an important position in internal trade. The unusually favorable conditions prevailing for the growth of traffic on these bodies of water enabled their commerce to thrive and expand at a rate which compared favorably at all times with the growth of railway traffic.

Commerce has been aptly defined as "taking things from where they are plentiful to where they are needed." This being true, the volume of internal commerce of any country must depend upon the number of its people, the total volume of its production, the sectional diversity of its products, the efficiency and cheapness of its transportation, and the freedom from foreign competition in the sale of native commodities in home markets. In the economic progress of the United States from 1860 to 1900, there was a continuous and rapid development of all the requisite factors for the existence of a large internal trade. Population more than doubled, annual production per capita quadrupled, the diversification of industry became more pronounced and the transportation system developed to a degree that afforded the utmost fluidity of movement of all articles of trade. Furthermore, the range of movement of internal trade was greatly widened by the settlement of the vast expanse of new country west of the Mississippi River.

The extent, volume and complexity of internal trade during this period render it impossible to attempt, within the scope of this paper, to give a connected account of its development. However, some idea of its wonderful expansion may be conveyed by the following brief statement of the growth of the movement of some of the most important commodities.

Cereals and Flour. The history of the internal grain trade from 1860 to 1900 centers around the receipts and shipments at the great primary grain markets situated on the Great Lakes and the rivers of the upper Mississippi Valley. In 1900 the chief surplus cereal area of the United States comprised a vast stretch of territory included in a semicircle described by a southern and western sweep of a compass moving on a radius extending from Duluth to Buffalo. Three-fourths of the 4,500,000,000 bushels of grain were raised in the twelve states embraced in this territory. The ten most important markets in the region, each of which was receiving annually from 10,000,000 to 300,000,000 bushels of grain, were Chicago, Minneapolis, Duluth-Superior, St. Louis, Milwaukee, Toledo, Kansas City, Peoria, Cincinnati and Detroit. From each of these points there radiated toward the South and West a network of railways over which grain came from the farming districts and over some of which there was a return movement of flour and grain for domestic consumption or for exportation from Gulf ports, while stretching to the eastward were numerous rail and water lines by which an immense cereal and flour traffic was carried to the manufacturing districts and exporting cities of the Atlantic coast. In 1900 the ten markets named received about 850,000,000 bushels of grain, including flour, and shipped 650,000,000 bushels.

Live Stock and Meat. The extension of railroads to the grazing lands of the West and the tremendous increase of corn production in the Mississippi Valley after 1860 gave a great impetus to live stock raising. Like the trade in grain the trade in live stock centered around a series of great cities located centrally within easy reach of the producing sections on one side and of the consuming region on the other. To these primary markets the railroads carried thousands of car loads of stock—horses and mules for distribution among the farms and cities of the East and South, cattle, hogs and sheep for slaughter at the packing houses at the primary markets, for distribution among the farms of the Central States to be fattened for subsequent killing, or for shipment to the slaughter pens of Eastern cities.

Until 1863 Cincinnati was the chief meat packing city of the country, but in that year Chicago took the lead and has held it ever since, and as the live stock industry shifted westward, St. Louis, Kansas City, Milwaukee, Indianapolis, Omaha and St. Joseph in turn surpassed Cincinnati in the business. The trade in meat was revolutionized during this period by the introduction of the refrigerator car which made possible the transportation of fresh meat for any distance. The total value of the products of wholesale slaughtering and meat packing in 1900 amounted in value to $700,000,000, of which more than one-half was produced in three cities, Chicago, Kansas City and South Omaha. In Chicago alone 2,000,000 cattle and 22,000,000 hogs were packed. The chief market for the numerous products of the packing establishments was in the manufacturing districts of the East. The eastbound rail shipments of provisions from Chicago in 1900 averaged about 20,000 tons a week.

Cotton. The geographical limits of the cotton belt had been reached before 1860 and consequently there was no further extension, but the cotton acreage was increased from about 13,000,000 acres to more than 30,000,000 acres during the period. Texas in 1900 had over 7,000,000 acres of land devoted to cotton raising and seven more of the thirteen states in the cotton belt each had an acreage of more than 1,000,000. The chief interior cotton markets in 1898 were Houston, St. Louis, Memphis, Augusta, Cincinnati, Atlanta, Little Rock and Shreveport. The city of Houston, through which passed a large part of the Texas crops, destined for export from Galveston, had the heaviest receipts amounting to 1,800,000 bales. St. Louis and Cincinnati owed their prominence to their position as natural gateways through which cotton passed to Northern markets from Texas and the lower valley of the Mississippi. Among the Southern seaports New Orleans held the lead in cotton receipts until 1899, when Galveston took first place. Together these two cities shipped nine-tenths of the cotton exported by the way of the Gulf of Mexico. On the Atlantic coast Savannah held the lead in cotton receipts. The trade of Charleston declined somewhat after 1880; Norfolk and Wilmington, of relatively small importance before the war, became large markets during this period, the former ranking next to Savannah after 1880.

The "overland movement" of cotton by rail to the North, which began in 1855, developed to large proportions after the war. This movement represented the results of the efforts of the railroads to secure a share of the traffic that had formerly belonged entirely to the coasting trade. The "overland" traffic originated in all the cotton states, most of it passing through St. Louis and the gateways on the Ohio and Potomac rivers to North Atlantic States to be sold to Eastern spinners or exported to Europe. In 1899 the all-rail movement of cotton amounted to 1,370,000 bales, as compared to a coastwise movement of 2,019,153 bales.