on internal improvements or investing in
private companies building them. Many
companies went bankrupt and left internal
improvement projects unfinished. Federal
funding remained anemic for years;
it totaled just over $3 million in each of
the one-term administrations of Presidents
William Henry Harrison/John Tyler
(1841–45) and James K. Polk (1845–49).
Nevertheless, some railroad builders
found sufficient funding in the 1840s to
add more than 6,000 miles of track to the
nationwide total of just over 3,000 miles in
existence at the beginning of that decade.
External events, such as the settlement
of Oregon Country in 1846, the acquisition
of southwestern lands from Mexico
in 1848 and the discovery of gold in California
in 1849 influenced the next phase of
federal action on internal improvements.
By 1850, states and private companies had
come to consider railroads the best type
of thoroughfares for transportation and
commerce. The budgets for constructing
such projects dwarfed those of most roads
and canals. Moreover, they required the
acquisition of large segments of undeveloped
land. When he acceded to the
presidency after the death of Zachary
Taylor in mid-1850, Milliard Fillmore
became the first President in years to
fully support federal financing of internal
improvements. He approved the spending
of more than $4 million on such projects
during his two and a half years in office.
In response to one particular request, the
President approved a bill granting 3.7 million
acres of federal land in Illinois, Alabama
and Mississippi for the construction
of a network of railroads connecting the
Great Lakes with the Gulf of Mexico.
During the rest of the decade, Presidents
Franklin Pierce and James Buchanan
approved a combined total of $20 million
worth of spending on internal improvements.
Much of this funding supported
road-building in the West and the construction
of lighthouses and other navigational
aids to sustain the burgeoning
increase in commercial trading along the
country’s coastlines. The federal government
also oversaw the distribution of
thousands of acres of land grants and
rights of way to more than six dozen railroad
companies.
In these closing years of the antebellum
era, Congress devoted a lot of time and
energy debating the best way to extend the
efficient and practical network of railroads
Check drawn on the Second Bank of the United States and payable to the Honorable Henry Clay,
March 15, 1833. Clay, along with Representative John Calhoun, introduced a bill to establish a fund
to finance the construction of roads and canals, but it was vetoed by President Madison.
in the eastern half of the country to the
rapidly growing western region. As early
as 1845, New York merchant Asa Whitney
had presented a plan for a transcontinental
railroad, i.e. one that would connect
the eastern railroad terminuses at the
Missouri River to locations on the Pacific
coast. In 1853, Secretary of War Jefferson
Davis had the Topographic Corps survey
several possible routes. But a divided
Congress took no action on any of several
proposed plans for construction.
It seems clear from this review that
the federal government’s attitude towards
financing improvements to the country’s
transportation network took many twists
and turns from 1790 to 1860. Initially, neither
Congresses nor Presidents thought
such a role was appropriate or desirable
in a new Republic with a strong tradition
of states’ rights. As the 19th century
unfolded, however, the growing country
seemed to demand an expanded federal
role in financing much-needed roads,
canals and railroads. Some Presidents
used the absence of clear constitutional
authority as a reason for vetoing proposals
for federal financing of such projects;
others found ways to get around that lack
of explicit authority.
Throughout the period, even congressmen
who backed projects that would help
their local and sectional interest did not
see fit to authorize a constitutional amendment
that would codify the federal role in
financing these improvements. By 1860,
the nation had more than 39,000 miles of
turnpikes and toll roads, 4,000 miles of
canals and 30,000 miles of railroad tracks
running through every state and territory.
Different historians have come up with
different figures for the total costs of these
internal improvements. All agree, however,
that the federal government contributed
between 10% and 15% of the total.
State and local governments, as well as
many private investors, provided the vast
majority of the funding for the transportation
network that had finally begun to
tie the country together on the eve of the
Civil War.
Michael A. Martorelli is a Director
Emeritus at Fairmount Partners and a
frequent contributor to Financial History.
He earned his MA in History from
American Military University.
Sources
Goodrich, Carter. Government Promotion of
American Canals and Railroads, 1800–1890.
New York: Columbia University Press. 1960.
Minicucci, Stephen. “Internal Improvements
and the Union, 1790-1860.” Studies in American
Political Development, Vol. 18. Fall
2004.
Theis, Clifford F. “The American Railroad Network
During the Early 19th Century: Private
versus Public Enterprise.” Cato Journal, Vol
22, No. 2. 2002.
Wallis, John Joseph and Barry. R. Weingast.
“Equilibrium Impotence: Why States and
Not the American National Government
Financed Economic Development in the
Antebellum Era.” National Bureau of Economic
Research Working Paper No. 11397.
2005.
Collection of the Museum of American Finance;
Sanford J. and Patricia Mock Collection
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