Passage II

SOCIAL SCIENCE: This passage is adapted from the article “10 Moments that Made American Business” by John Steele Gordon (@2007 by American Heritage Publishing).

The cost of overland transportation had been a limiting factor in the world economy since time immemorial. Any material with a low value-to-weight ratio, such as foodstuffs, that couldn’t be transported to distant markets by water couldn’t be sold in those markets at a price anyone would pay. This meant that national economies were fragmented into an infinity of local ones.

Until the Industrial Revolution, there was only one way to reduce these transportation costs: build artificial rivers. By the end of the eighteenth century England was well laced with canals, greatly facilitating industrialization as factories could sell their goods profitably throughout the entire country.

But the new United States was 10 times the size of England and far less developed. And a considerable mountain range divided the more developed eastern seaboard from the fertile, resource-rich, and rapidly growing West. Settlers west of the Appalachians had no choice but to send their crops down the Mississippi to market.

Along the whole great chain of mountains that stretched from Maine to Alabama, there was only a single gap一where the Mohawk River tumbles into the Hudson near Albany—at which a canal was even theoretically possible.

The idea of building a canal to connect the Hudson with the Great Lakes there had been around for many years but always dismissed as hopelessly impracticable. Even Thomas Jefferson thought the idea “little short of madness.” DeWitt Clinton, however, did not. Born into a prominent New York family (his uncle had been governor of New York and then Vice President under James Madison), Clinton would be the mayor of New York City and governor of the state for most of the first quarter of the nineteenth century. A shrewd politician, he built public support for the canal and pushed it through a reluctant state legislature.

One can understand the reluctance, for the project was huge by the standards of the day. At 363 miles the Erie would be by far the longest canal in the world. It would require moving, largely by hand, 11.4 million cubic yards of earth and rock—well over three times the volume of the Great Pyramid of Egypt—and building locks in what was still a semiwilderness. The budget, seven million dollars, was about equal to one percent of the gross domestic product of the entire country. Nonetheless, when the federal government refused to help, New York decided to go it alone. It was a gigantic roll of the economic dice, but one that paid off beyond even Clinton’s dreams. The Erie Canal put the Empire in the Empire State.

The canal was a success even before it fully opened, as traffic burgeoned on the completed parts, helping fund continuing construction. When it was finished in 1825, ahead of schedule and under budget, traffic was tremendous from the start. It is not hard to understand why. Before, it had taken three weeks and cost $120 to ship a ton of flour from Buffalo to New York City. With the canal, it took eight days and cost $6.

Produce that had gone down the Mississippi to New Orleans now began to flow eastward. In a few years the Boston poet and physician Oliver Wendell Holmes (father of the Supreme Court justice) described New York as “that tongue that is licking up the cream of commerce and finance of a continent.” In 1800 about 9 percent of American exports passed through the port of New York. By 1860 it was 62 percent.

With the opening of the Erie Canal, New York became the greatest boomtown the world has ever known. The population of New York had been increasing by about 30,000 every decade since 1790, with 123,000 inhabitants in 1820. By 1830, however, New York’s population had reached 202,000; by 1840, 313,000. It was 516,000 in 1850 and 814,000 in 1860. Development roared up Manhattan Island, at the astonishing rate of about two blocks a year.

Thanks to the Erie Canal, by the 1840s New York’s financial market was the largest in the country. In that decade the telegraph began to spread quickly, allowing more and more people to trade in the New York market, which has dominated American financial activity ever since.

Even so, perhaps the greatest consequence of the Erie Canal was that its success made the country far more receptive to other projects of unprecedented scale and scope and encouraged its entrepreneurs and politicians to think big. The result was a still-continuing string of megaprojects—the Atlantic cable, the Brooklyn Bridge, the Panama Canal, Hoover Dam, the interstate highway system, the Apollo missions—that have marked the economic history of the United States and shaped the national character.