Rhode Island

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RHODE ISLAND

Rhode Island, the smallest state of the United States, has struggled to maintain its economic health. Born as a colony of dissenters and a haven for individual liberty, the state has not always matched its idealistic beginnings with its political and economic realities. It has experienced divisions between its old-line citizenry and the descendants of the immigrants who have staffed its factories. It reached an economic peak around the turn of the century but it has since fought competition from southern industries and has gone through periods of depression and recession. In the latter half of the twentieth century, however, Rhode Island achieved a significant economic recovery.

In 1524 the first European explorer of Rhode Island to arrive in the region was Italian Giovanni da Verrazano. In 1636 English clergyman Roger Williams established a colony at Providence seeking religious freedom for a group of nonconformists from the Massachusetts Bay Colony. As other towns developed in the area, Williams secured a charter from King Charles II for Rhode Island and Providence Plantations (which encompassed several towns), that guaranteed religious freedom and substantial local autonomy.

Rhode Island grew rapidly in agriculture and commerce, which included the slave trade. Its exports included naval stores, molasses, preserved meats, cider, and dairy products. Rhode Island was also a whaling center. As the colony with the highest degree of self-rule, Rhode Island was the first to declare its independence from England in 1776. Fearing too much federal power, however, it was the last state to ratify the U.S. Constitution (1790).

Rhode Island merchant ships in the early nineteenth century traded with China, India, the Baltics, and the East Indies, and later with the U.S. Pacific coast. The mid-nineteenth century in the state was marked by divisions between ordinary citizens and wealthy rural landowners who held nearly all the power in the legislature and who were the only ones allowed to vote. By 1843 a new constitution was formed which corrected some of the inequalities.

Meanwhile, the economy of the state had shifted from commerce to industry, with textile manufacturing as the most prominent. Samuel Slater established the first cotton mill in Pawtucket in 1790. Under the socalled "Rhode Island System," company-built housing was established for the workers and their families. Oftentimes mill owners employed entire families that worked from sunup to sundown. Between 1830 and 1840 the number of mills in the state almost doubled. After 1830 steam power replaced water power in the mills and also provided the power for steamboats and newly emerging railroads.

Other products were being manufactured such as jewelry (represented best by Gorham Silver) and steam engines. By 1860 less than an estimated three percent of the state's workforce was in the maritime industry; 10 percent were employed in agriculture, and 50 percent in manufacturing. Between 1776 and 1860 Rhode Island's population had increased two and one-half times, mostly through foreign immigration.

The port of Providence soon became the center for commerce in the region. With three rivers at the head of Narragansett Bay and a growing number of railroad termini, Providence boasted a large number of textile mills. It was also home to the metals industry, the banking and insurance sector, and the import-export business. Providence began to lose some of its prominence after 1845 when steamships found a more suitable port at Fall River, Massachusetts, and rail connections began to gravitate toward New York City.

As several southern states began seceding from the Union just before the American Civil War (1861–1865), Rhode Island still had some sympathies with the South because of its economic relationship with southern cotton planters. A slave-free state since 1807, Rhode Island even temporarily repealed its "personal liberty law" to make it easier for runaway slaves to be returned to their owners. Still, when the Union called for volunteers against the Confederacy, Rhode Island responded, exceeding its quota for troops. The state made great profits in the textile and other industries during the war. After the war, the town of Newport became a haven for newly rich Americans who built large mansions on its rocky shores Many of which still survive as tourist attractions.

According to historian William G. McLoughlin the decades following the war were Rhode Island's finest: "Its manufacturers hobnobbed with the rich and powerful who controlled the nation. . . . (It) had reached the pinnacle of success. . . ." Foremost among the rich and powerful people was Nelson W. Aldrich (whose daughter later married into the Rockefeller family) who, as a senator, controlled tariff schedules in the U.S. Congress. As chairman of the Finance Committee he was in a position to help protect businessmen against foreign competition and to encourage sound money policies. He also was instrumental in devising the Federal Reserve System.

The economic system in Rhode Island changed rapidly after World War I. French-Canadians, Irish, and Portuguese, encouraged to immigrate to provide cheap labor, began to outnumber people of the old Yankee stock. The state's industries continued to prosper and they were especially productive during World War I (1914–1918). After the war, however, decreased production caused labor unrest and a widespread strike of textile workers in 1922 crippled an industry that was already plagued by competition from textile mills in southern states. Bitter divisions in the state at this time, coupled with the onset of the Great Depression (1929–1939), helped to precipitate the 1934 Democratic overthrow of longtime Republican rule in the state.

Improvements in Rhode Island's economy have been slow in coming. Since the Depression years the state often had one of the highest rates of unemployment in the nation, reaching more than 15 percent by 1975. In the late 1990s about 30 percent of workers were still employed in manufacturing and many were working in low-paid jobs in the jewelry and textile industries. After a real estate boom in the 1980s the real estate market declined at the end of the decade. The state experienced a banking crisis in the early 1990s, which necessitated a government bailout of uninsured financial institutions. Rhode Island had slowly begun to recover from its economic doldrums, largely because of new jobs in the financial and electronic industries. Unemployment fell to around five percent by 1997.

See also: Rhode Island System of Labor