One of the essential features of a frontier is that both labor and capital come from without, and much of the capital is contributed by people who do not come to the frontier. Exception must, indeed, be made to this statement. The Spaniards found labor in Peru and Mexico, and they found also capital, as did the miners of Australia and California, the lumber barons of Wisconsin, and the fur traders of Canada. In none of these instances, however, did either the local labor or local capital suffice, and in all the instances to be cited later the bulk of the labor came from away, and the owners of an important portion of the capital remained away; the frontier community, therefore, was a debtor community, and the debt was due to an outside community.
This common condition has in all cases had an important bearing not only on economic development, but on the whole texture of the social fabric which was created; it affected not only the frontier itself, but its reflex influence on the sections from which the labor and capital were drawn set at work influences which at times became leading factors in their existence. So important have their influences been, that where the study is confined to any one frontier, they seem to dominate development, and make history their creature. When we extend our study, however, we find that in spite of the fundamental resemblance, each has followed its separate course; that the different balance of other factors, and even such secondary considerations as laws and constitutions, have radically altered the actual operation of these powerful natural resemblances. The control of the frontier’s natural resources, the distribution of proceeds, the very content of politics have varied with every frontier. The problem has been one, the methods and results have been as varied as the fields in which it occurred.
In the United States the larger part of the capital came from or through another section of the same country. That is, the East furnished nearly all that was supplied, although to do so it had to borrow somewhat from Europe. The direct loans from Europe to the West were comparatively unimportant. Consequently the interests of the debtor and creditor sections conflicted in the arena of national politics. Two unique features made the working out of the problem different in this country from any other. The first was the division of the country into a large number of states, sovereign within a restricted range of powers, some controlled by the debtor element, some by the creditor. The other was that at one time, and that the most critical, the frontier was strong enough at least to veto the action of the national government.
The result of these conditions was a struggle unusually complex. The control of banking, of the currency, of natural resources, such as lands, minerals, and oil, and of transportation or, as it is phrased in our politics, internal improvements, were the bone of contention. The desire to have these controlled by national or state governments varied with the political situation. The frontier wished banks that would not be too particular, a currency that would be easy to get; it wished, and wishes, control of its own systems of transportation and its natural resources.
The sections furnishing the supplies were more interested in the capital to which strings were tied, than in the labor which cut its apron strings on leaving home. The struggle antedated the Revolution; the high points in its later history were the Shays Rebellion, the Jackson régime, the greenback movement, the Bryan campaign, and it finds present expression in the opposition in the Far West to the national conservation policy.
When the frontier secured the reins of power in the sinewy hands of Andrew Jackson, it was not in a position to impose its policy upon the nation, but it was powerful enough to wrest
banking, the currency, and internal improvements from the control of the national government, and turn them over to the states. The frontier states, elate, started on a mad career of making their own internal improvements, by means of borrowed capital diluted by paper issues, till money ran like fairy gold into the pockets of the needy. For one golden moment the problem of the frontier seemed solved to the satisfaction of the frontier. Jackson himself caused the first crash. Unable to tell good paper from bad, he could at any rate tell paper from gold, and in the Specie Circular of 1836 he brought credit to the touchstone of real value and sent the house of cards toppling. Feverishly rebuilt within the next few years, it fell again in 1841, carrying with it the whole dream of its builders. So severe was the blow that numbers of the states took advantage of their sovereign rights, and repudiated a portion of their debts. Securely entrenched behind their sovereign inviolability to legal attack, they still enjoyed the inviolability to force which their position as part of a larger nation afforded. They snapped their fingers at their creditors; but they could borrow no more. The nation had left the task of national development to the states; the states, by impairing their credit, had rendered themselves incapable of handling it.
This situation left the field free for, in fact rendered necessary, the intervention of individuals or of individuals organized as corporations. The legal position of the latter had already been prepared. The decisions of Justice Marshall had given corporation charters an unusual degree of legal sanctity, which the state constitutions modified rather than reversed. The fears of the Jeffersonian democracy had incorporated into the national constitution itself special restrictions upon the government in dealing with the individual, which the decisions of the Supreme Court under Justice Taney went far in applying to the corporations. Corporations became so firmly entrenched in their position
as the chief agency in national development, that even when, after the Civil War, the national government became more active and once more assumed control of banking and the currency, and the credit of the states was reëstablished, both agencies used their powers chiefly to assist corporations. When, in the present generation, the necessity of public control became obvious, it took the form, for the most part, of regulation of corporations, rather than that of absorbing or supplanting them.
The direction of the development of transportation and the exploitation of natural resources, therefore, was, for the most part, in the hands of individuals, and, in the case of large projects, of individuals organized as corporations, and, with the exception of farm land, of individuals and corporations representing nonresident capital. Many influences, of course, modified their activities, but these affected rather the security of their capital than the initiative of their plans. Many lost the capital which they poured into the new region, and the result was that the prospect of large returns was demanded by others before venturing; speculation, lost investments, and abnormally productive investments characterized the process as a whole. Politicians concerned themselves rather with the means, the questions of banking and currency, than with the end, the character of the development which should take place.