An Outline of the Development

OF THE

Internal Commerce of the United States

1789-1900

By
T. W. VAN METRE

Thesis presented to the Faculty of the Graduate School
of the University of Pennsylvania in partial
fulfilment of the requirements for
the degree of Ph.D.

BALTIMORE
WILLIAMS & WILKINS CO.
1913

AN OUTLINE OF THE DEVELOPMENT OF THE
INTERNAL COMMERCE OF THE
UNITED STATES, 1789-1900¹

I

1789-1830

At the beginning of the national era the internal commerce of the United States gave small promise of the tremendous development it was to undergo during the ensuing century. There was as yet too little differentiation of occupation to give rise to a large interstate trade in native products, and the proximity of the greater part of the population to the seacoast made it cheaper and more convenient to carry on the small interstate trade that did exist by means of small sailing vessels plying along the coast. Practically all the internal trade was devoted to bringing the surplus agricultural produce of the interior to the seaport towns where it was exchanged for imported wares that could not be produced by the inhabitants of the inland region.

As is usual in a new country, the settlers who had first pushed into the interior had founded their new homes close to the rivers, and these natural highways had always been and still were the most important means of transportation to and from the seacoast. At the mouths of the larger streams flowing into the Atlantic Ocean were to be found large and wealthy cities, where enterprising men were laying the foundations of large fortunes in a rapidly growing trade in the agricultural and forest products floated down from the interior.

Living close along the ocean where numerous excellent harbors and long stretches of sheltered water gave ample facilities for the little inter-colonial trade that existed, and where rivers afforded natural means of transportation from the interior to towns on the coast, the people of early colonial days had not found it necessary to give much time to the construction of roads. The gradual inland movement of the population had finally compelled them, however, to give some attention to the means of land transportation and many rude earth roads were built to replace the old Indian trails. These roads were unspeakably poor, sloughs of mire during the thaws of winter and spring and thick with dust in the summer, but bad as they were they carried considerable traffic and their use was constantly growing. Inland towns were beginning to grow up at the focusing points of the country roads, and the owners of general stores at such places derived large profits out of their position as middlemen between the farmers of the interior and the merchants at the nearest seaports. Three great roads had been built into the western country, one up the Mohawk Valley into western New York, and two across the Alleghany Mountains, the Pennsylvania Road from Philadelphia to Pittsburgh, and the Wilderness Road over which the early settlers of Kentucky had threaded their way up the Shenandoah Valley and through Cumberland Gap to the southern banks of the Ohio River.

The transportation facilities of the times were, however, entirely inadequate to the needs of the country, and the lack of better means of getting products to market was a serious impediment to internal development. Tench Coxe wrote in 1792: "To a nation inhabiting a great continent not yet traversed by artificial roads and canals, the rivers of which above their natural navigation have hitherto been very little improved, many of whose people are at this moment closely settled upon lands, which actually sink from one-fifth to one-half of the value of their crops in the mere charges of transporting them to seaport towns, and others, of whose inhabitants cannot at present send their produce to a seaport for its whole value, a thorough sense of the truth of the position is a matter of unequalled magnitude and importance."

Especially was communication between the Ohio Valley and the outside world difficult and expensive. The natural outlet for the surplus of this valley was the Mississippi River. During the Revolutionary War, the Spanish government had given the people of the colonies the right of free navigation of the river and a brisk trade had sprung up between the western settlements and New Orleans, but in 1784 Spain had put an end to this trade by withdrawing the right of free navigation. The people of the West, enraged at being deprived of what they considered their natural right, protested furiously and appealed to Congress for protection, but their appeals were unavailing and the river remained closed for more than a decade. The only market left to the western farmers was the cities on the eastern coast. Peltry, ginseng and whiskey were almost the only products that would pay their cost of transportation to Philadelphia, and the proceeds derived from the sale of these were sufficient to purchase only a few things of prime necessity such as salt, gunpowder, and some indispensable articles of iron. Even this small trade of the West was crippled when the new government placed an excise tax on whiskey, and the resentment felt against the federal authorities for their apparent disregard of the economic interests of the western people blazed forth in open rebellion.

The commercial isolation of the Ohio Valley ended, however, in 1795, when the national government, spurred to action by the threats of secession and clamor for protection coming from the western farmers, secured a treaty with Spain opening the Mississippi River to navigation. The successful conclusion of the negotiations was hailed with great rejoicing in Tennessee, Kentucky, Pennsylvania and Ohio. Fleets of flat-boats loaded with tobacco, pork, flour, grain and whiskey began to move down the river. In 1799, more than a million dollars worth of goods were received at New Orleans from the country up the Mississippi. In October, 1802, the Spanish Intendant at New Orleans, acting on his own responsibility, suddenly withdrew the "right of deposit" at the city, and contrary to the provisions of the treaty, he refused to assign an equivalent establishment at any other place on the banks of the river. The western people were wild with rage. It was necessary to send troops to Kentucky to prevent an armed expedition against the Spanish province. Fortunately, the Spanish government disavowed the action of the Intendant and in April, 1803, the river trade was again restored. Desirous of avoiding such difficulties in the future, Jefferson pushed the negotiations already begun with Napoleon, to whom Spain had ceded her claims to Louisiana, for the purchase of New Orleans and the territory through which the river flowed from the possessions of the United States to the Gulf of Mexico. The negotiations ended in October, 1803, with a wholly unexpected result—the purchase of the entire Louisiana province. In December, the United States took possession of the newly acquired territory and the undisputed control of the Mississippi was secured forever.

The opening of the Mississippi marked the beginning of an active internal commerce within the United States. The farmers of the Ohio Valley, which was now being rapidly settled, found an outlet for their heavy agricultural produce, and consequently secured a purchasing power, enabling them to buy manufactured goods and merchandise, which, notwithstanding the distance and the inferior roads, could be carried to them in wagons from the East. Though the