Internal Improvements

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The term "internal improvements" came into popular usage in the United States during the 1780s and originally referred to most economic, educational, and engineering programs undertaken by federal and state governments. Over the next few decades, the idea of internal improvements narrowed to include statesponsored transportation projects such as improvements in navigation of existing rivers, turnpike roads, canals, and railroads. Although all could agree that innovations in the nation's transportation network were a positive goal, the extent of public funding and administration quickly served as a focal point of a political debate that lasted throughout the antebellum period. The federal government had several opportunities to take the lead in promoting a national system of internal improvements, and in each instance it failed to overcome political opposition grounded in a states' rights approach to the Constitution. Individual states briefly seized the initiative during the canal boom of the 1830s, but they eventually withdrew from massive public works programs. In the end, private firms assumed the major responsibility for American transportation networks, although often with financial backing from public institutions.

early efforts

Early attempts at internal improvement often blended public and private initiative. George Washington, for example, promoted a survey of the Potomac and James Rivers to explore the possibility of connecting them with the Ohio River and the Great Lakes. In 1785 Virginia's legislature responded to Washington's idea by passing charters for the Potomac Company and the James River Company. The Potomac Company later declared bankruptcy, but the James River Company thrived during the post-Revolutionary decades. It had no problem finding subscribers for the initial capitalization of $100,000, of which the Commonwealth was entitled to purchase $20,000. In 1790 the company completed a short section of the canal and improved navigation linking Westham to Richmond; in that year it also successfully petitioned the legislature for permission to raise an additional $20,000 in private subscriptions plus another $20,000 in state-held stock. Although it never lived up to the ambitious designs of its founders, the James River Company is an excellent example of the mixed enterprises typical of early internal improvements.

Canals figured prominently in the nineteenth century, but at its beginning, turnpikes were the most common type of internal improvement. These toll roads were sometimes built on existing paths but in other cases blazed entirely new trails through the countryside. Most turnpikes were privately owned companies with routes of from fifteen to forty miles, although many received subsidies from local or state governments. The National Road, a federally funded turnpike, was the most ambitious road project of the early Republic. Federal engineers planned for this gravel-topped road to link Baltimore on the Chesapeake Bay to the Ohio River and ultimately to the Mississippi River. Although some hoped that the National Road could serve as a shining example for federally funded turnpikes, the vast majority of toll road construction occurred under the authority of private firms with only limited public investment. From 1800 to 1810, states chartered 398 turnpike companies—more than five times the amount during the previous decade. Meanwhile, construction on the National Road languished until the first major section, which connected Baltimore and Wheeling, Virginia (later West Virginia), was finally opened in 1818. Although the federal government spent $1.6 million dollars on the National Road over the next six years, it suffered from rockslides and erosion that made it almost impassable. When it finally reached Columbus, Ohio, in 1833, the grandiose plans for the federal turnpike had all but disappeared.

Internal-improvement boosters nonetheless continued to agitate for a larger role for government in transportation projects in the United States. In 1807 the Senate instructed Albert Gallatin, Thomas Jefferson's secretary of the treasury, to make a report on the need for further public improvements in the United States. Gallatin's Report on Roads, Canals, Harbours, and Rivers, issued in 1808, set out a plan for a nationwide series of federal projects aimed at improving the transportation and communications network of the young nation. Gallatin recommended that the federal government oversee the construction of canals and improvements to rivers that would create an inland water navigation from Massachusetts to North Carolina and build roads to cross the Appalachian Mountains and link the seaboard with inland cities such as Detroit, St. Louis, and New Orleans. He estimated that this network would cost approximately $16.6 million to build, and in addition, he also recommended $3.4 million for smaller local improvements across the United States. The revenue from tariffs would pay for this very ambitious scheme. Gallatin argued that the project was aimed at the development of both the seaboard and interior and that therefore it was the duty of the federal government to embark upon such a program. Despite the extensive nature of this plan, opponents denounced the use of public funds for projects that would benefit only those in the projects' immediate area.

The War of 1812 (1812–1815) put an immediate stop to Gallatin's plan, but it was revived in 1817 when John C. Calhoun of South Carolina suggested that a $1.5 million chartering bonus along with any future stock earnings from the newly created second Bank of the United States be used to create a permanent fund to "bind the Republic together with a perfect system of roads and canals." The debate in the House over Calhoun's so-called Bonus Bill revolved around an all-too-familiar question: Should the federal government pay for projects that did not benefit all of the states? Nationalists argued that the federal government should allocate funds to roads and canals that would have the greatest impact upon the economy; states' rights advocates countered that such a plan would funnel massive amounts of money for pet projects that would reflect political, not economic, agendas. In the end, opponents of Calhoun's plan stated, the federal system would be corrupted beyond repair. The Bonus Bill narrowly passed Congress, but President James Madison sided with the states' rights approach to the matter and vetoed the legislation in 1817.

state governments take charge

With the federal government temporarily out of the picture, state governments picked up the internal improvements torch. New York was the first state to undertake a massive internal improvement project with its own public funds. In 1817 the legislature authorized the construction of the Erie Canal, to run from the Hudson River to Buffalo on Lake Erie, under the watchful eye of the state's governor, DeWitt Clinton. Critics of the plan thought that it would never succeed and referred to the project as "Clinton's Big Ditch." But in 1825, only eight years after work on the project had begun, the Erie Canal was finished. The fruits of the endeavor were both impressive and immediate. In the first year of its operation, toll revenues on the Erie Canal surpassed the annual interest on the state's construction debt as traffic on the improvement ranged from heavy freight including lumber and wheat to small manufactured valuables to passengers utilizing the canal for both speedy transportation and leisure. By 1837 the revenues from the Erie Canal had erased New York's construction debt completely—only twelve years after beginning operation. The waterway shortened the time and expense required for the transportation of both bulk and high value commodities considerably and also effectively opened up New York's western counties to development; the growing cities of Buffalo, Syracuse, and Rochester all prospered from bordering the Erie Canal. Moreover, as a public works project constructed by New York's state government, the Erie Canal demonstrated the potential benefit that a state-funded internal improvement networks could provide.

Many states rushed to copy New York's success with the Erie Canal. During the 1820s the state of Virginia took over the James River and Kanawha Canal project, which was designed to cross the mountains and enrich the inland counties along the way. In 1826 Pennsylvania decided to build a statewide system of trunk and branch canals, commonly known as the State Works. Even states west of the Appalachian Mountains such as Ohio, Indiana, and Illinois rushed to build systems of their own, and during the 1830s a full-blown canal boom gripped the United States. But as quickly as many of these projects were begun, they began to see diminishing returns. Because many canal projects were inspired more by political expediency than by an actual prospect of improved economic efficiency, they lost money.

In addition to building these roads themselves, states also chartered transportation companies that provided funding for other ventures. Probably the most famous example of this is the Baltimore and Ohio Railroad. In 1827 a group of Baltimore merchants met to discuss ideas about a central line of improvements for Maryland. They looked at the case of New York and Pennsylvania to the north and Virginia to the south and saw that these states were all planning massive canal systems to aid the development of their interior counties. Since Maryland had no sizable river system to expand upon like the Hudson River in New York or the James River in Virginia, they decided to experiment with a new form of transportation known as the railroad. These merchants petitioned the legislature for a charter, and in February 1827 the Baltimore and Ohio Railroad was created with a capital stock of $3 million. But more important, of the company's thirty thousand shares of $100, the state subscribed to ten thousand, for $1 million. In exchange for the rights of eminent domain and exemption from taxation, the Maryland legislature received the right to set passenger and freight rates. Railroads, like turnpikes, would be built by private firms, but often with limited public financial backing.

the rise of laissez-faire

A final attempt to involve the federal government in supporting internal improvements occurred in 1830 during the administration of President Andrew Jackson. Although a proposed national road linking Buffalo to New Orleans failed to pass Congress, several bills authorizing the federal government to subscribe to the stock of private canals and turnpikes passed. One such project, the Maysville Road, was a planned route from the Ohio River to Lexington, Kentucky. Jackson vetoed federal funding for the Maysville Road and seized the opportunity of his veto message to make a statement about the appropriateness of the federal government's role in internal improvements. In his message Jackson argued that the Maysville Road was of "purely local character" and that he wanted to "keep the movements of the Federal Government within the sphere intended." Thus, like James Madison before him, Andrew Jackson constricted the federal government's role in regard to internal improvement programs.

Following the heady canal boom of the 1830s, individual states showed signs of withdrawing their support for massive public works. As construction and operational expenses rose and revenues dwindled, state officials reconsidered their support for canal construction. The Pennsylvania State Works, for example, was completed in 1835 and cost an estimated $12 million. But toll revenues never lived up to expectations and the State Works dragged Pennsylvania into a deep financial crisis. In 1844 the legislature authorized the sale of the Philadelphia to Pittsburgh route for $20 million, a price that no private concern was willing to pay for a line of navigation that had proved both unpopular and unprofitable. In the end, the State Works were sold to the Pennsylvania Railroad over the course of the 1850s, but in the process, the idea that state-built internal improvement projects were not just expensive, but were by their nature an unwise move, became popular. The idea of laissez-faire began to take hold in many states. Railroads—the next great innovation in transportation in the United States—would depend mainly upon private firms for their construction and operation.

Internal improvements thus went through several distinct stages. At first, it seemed as if the federal government would replicate its sponsorship of the National Road and branch into other endeavors. After it failed to do so, state governments responded with ambitious but unwieldy canal programs to provide needed links between market centers. The failure of these programs caused a withdrawal of administrative, if not financial, support for internal improvements by state governments.

See alsoEconomic Theory; Erie Canal; Railroads; States'Rights; Transportation .


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Sean Patrick Adams