I. N. Phelps Stokes Collection, Miriam and Ira D. Wallach Division of Art, Prints and Photographs. The New York Public Library. Astor, Lenox and Tilden Foundations.
The Erie Canal was the central economic event of the first half of
the nineteenth century; however, this revolution in transportation
would cost the American people more than it bargained for. The economic
policies derived from the building of this canal would set a precedent
for “internal improvements,” a system that would lead to America’s
bloodiest war.
As Americans moved west deeper into the frontier, projects were
springing up to connect the eastern port towns of New England with the
new settlements emerging out west. Roadways and turnpikes were being
constructed to assist in this process; but “even on well-built gravel
roads, travel over land was slow and expensive.”1 To solve this problem, American engineers turned to waterways and looked to the building of canals.
The legislature of New York decided to invest into the
construction of a canal unlike any America had seen before. This complex
project would create a canal that spanned 364 miles from the Hudson
River to Lake Erie. Prior to the construction of the Erie Canal, “the
longest artificial waterway in the United States was just 28 miles
long.”2 De Witt Clinton, the Governor of New York, was the
“architect” who convinced the State legislature to “finance the waterway
from tax revenues, tolls, and bond sales to foreign investors.”3
The Erie Canal would be a “success” in that it did boost the
economy and increased the trade between the east and west.
Transportation costs dropped and profits for farmers and merchants
increased. Even the construction costs for the canal were paid off
quickly. “By 1825, when the Erie was completed, toll revenues already
exceeded a half million dollars a year. Soon the canal’s entire $7
million cost had been recovered.”4
Governor Clinton would become a model for Hamiltonians in
political office across the states to the north, which would create
similar internal improvement projects in order to increase the influence
and power of the central government. This push for internal
improvements (corporate welfare)—with all its financial failures—would
lead to government waste, fraud, and abuse, which ultimately would
create a war between the states.
Internal improvement projects such as the building of canals,
railroads, highways etc., through government subsidies were riddled with
failure throughout the states. These projects would become the key
point of contention between the two political parties raised up around
the philosophies of Alexander Hamilton and Thomas Jefferson. Hamilton’s
disciples, Henry Clay and Abraham Lincoln, would continually push for
British-style mercantilism and a strong central government. “Lincoln
confessed to a friend early in his political career that his ambition
was to become ‘the DeWitt Clinton of Illinois.’”5
Despite the success of the Erie Canal, other internal improvement
projects that followed, especially those in the 1830s, were complete and
utter failures. So horrific were the problems created by these
government sponsored projects that all but two states, Missouri and
Massachusetts, amended their state constitutions to prohibit further
such internal improvements. John Bach McMaster, a historian, wrote, “In
every state which had gone recklessly into internal improvements the
financial situation was alarming. No works were finished; little or no
income was derived from them; interest on the bonds increased day by day
and no means of paying it save by taxation remained.”6
The taxation—tariffs—to pay for these economically catastrophic
failed internal improvements lead the Southern States to secede from the
Federal government. The South, who relied heavily on manufactured
goods, paid for the majority of the Federal revenue accrued through the
high tariffs during the early 19th century, which ultimately would be
spent on internal improvements. Not only did they believe these internal
improvements were unconstitutional, they could not stand seeing their
income being wasted in the states to the north. The South hated these
internal improvements so much that they would prohibit them when they
wrote their new Confederate Constitution. In Article I, Section 8,
Clause 3, it reads that
the Congress shall have power to regulate commerce with foreign
nations, and among the several States, and with the Indian tribes; but
neither this, nor any other clause contained in the constitution, shall
ever be construed to delegate the power to Congress to appropriate money
for any internal improvement intended to facilitate commerce….7
When Abraham Lincoln was elected as the sixteenth president, the
South knew that they would be further enslaved to the “American System”
or British-style mercantilism. The South was fully aware of Lincoln’s
true motivations and political position. They remembered what he had
said in 1832:
I presume you all know who I am. I am humble Abraham Lincoln. I have
been solicited by many friends to become a candidate for the
legislature. My politics are short and sweet, like the old woman’s
dance. I am in favor of a national bank…in favor of the internal
improvements system and a high protective tariff.”8
Rather than submit to the same tyrannical economic system that was
inflicted upon the colonies in the 17th and 18th centuries, the South
set out to fight their Second War for Independence. Government sponsored
internal improvements—like the massive economic event in the building
of the Erie Canal—culminated into America’s bloodiest war that took the
lives of over 800,000 souls.
Notes
- Henretta, James A. and David Brody. America: A Concise History, Volume I: To 1877, 4th ed. Boston: Bedford/St. Martin's, 2010, 271.
- Ibid, 271
- Ibid, 271
- David Burner, Virginia Bernhard, and Stanley I. Kutler. Firsthand America: A History of the United States, Volume I, 4th ed. St. James: Brandywine Press, 1996, 251
- DiLorenzo, Thomas J. Ludwig von Mises Institute, n.d. http://mises.org/journals/scholar/internal.pdf (accessed October 28, 2013).
- Ibid
- Constitution of the Confederate States of America, University of Georgia Special Collections Libraries. October 25, 2012. http://www.libs.uga.edu/hargrett/selections/confed/trans.html (accessed October 30, 2013).
- DiLorenzo, Thomas J. The Real Lincoln: A New Look at Abraham Lincoln, His Agenda, and an Unnecessary War. New York: Three Rivers Press, 2002, 54.