663. Survey of commercial development, 1860-1914.—In the chapters introductory to the history of commerce in the nineteenth century, attention was directed to the increasing rapidity of movement, which makes the second half of the century a period by itself, distinguished above all others by its wonderful commercial development. That the United States enjoyed a full measure of the world’s progress in commerce is shown by the following table, which gives the figures of imports and exports in millions of dollars.

Prices were falling in the last quarter of the century, so that the figures in the text, giving the value of imports and exports, do not do justice to the growth in the physical volume of trade. On the other hand prices began to rise just before 1900 and, therefore, the figures exaggerate the increase of trade in the most recent period. Prices of 1913 were, however, only about one-third higher than in the decade 1890-99 so that after allowance is made for their rise the growth of American commerce in this period remains extraordinary.

664. Internal development of the country.—During this period the natural growth of population was augmented by a steady stream of immigration, which has increased with time and has made to appear small in comparison all previous movements of people to the country. In spite, however, of this growth, the increase in the value of foreign trade has been even more rapid, and the share contributed by the average person to the commerce of the country was greater at the close of the century than at any previous period. The average inhabitant had in 1913 a share of about $18 in the imports, and of about $25 in the exports.

While the preceding period was called the period of national expansion, the period lasting from the Civil War to the close of the century may fitly be termed that of national development. The population continued, it is true, to spread out within the national frontiers. It occupied the great plains leading up to the Rocky Mountains region, and the strip of fertile land along the Pacific Coast, and penetrated the mountains and semi-arid region in all parts where mineral wealth and agricultural possibilities promised returns to the laborer. The most striking feature, however, in the progress of the last forty years has been not so much the breaking-in of new territory as the improved means adopted for making the most of all resources, in old and new territory alike. Improvements of a technical character have transformed the methods of transportation and manufacture, and new methods of cooperation have changed the aspects of business life completely.

The first subject requiring attention is the development of the transportation system.

665. Extension of railroads.—In the recent history of the transportation system of the United States the most noteworthy feature has been, of course, the development of railroads. The railroad mileage of the country in 1860 was divided almost equally between the North, the South, and the West, each section having roughly 10,000 miles. The section which felt most keenly the need of increased railroad facilities was the agricultural West, where the products of rich farm lands were wasted and where corn was not infrequently used for fuel, for lack of means to reach a market. After 1860 the railroads were rapidly extended through the upper Mississippi Valley, and in 1869 the first transcontinental route was completed (Union and Central Pacific). Railroads reaching out like feelers into new regions attracted population and stimulated traffic not only in the new country but also in the older settled districts, where the opportunities for profitable business were multiplied by the increased supply of raw materials and by the widened market for finished products. Old lines were extended and new lines were built until, in 1913, the mileage of the country had risen from about 30,000 as it was in 1860, to over 250,000, showing an average gain of about 40,000 miles in a decade, a greater amount than the total of 1860.

666. Improvements in the operation of railroads.—Equal in practical importance to the extension of the railroad system were the improvements effected during the period in the construction and operation of the lines. This was the time in which steel rails and bridges were introduced, which permitted the use of more efficient locomotives, drawing heavier trains, and so reducing the expense of carriage. Lines which had been constructed in short sections under the control of different companies were now merged in great corporations, operating thousands of miles of track. The railroads had previously been so independent of each other that there was not even a standard gage for the track; some lines set the rails 6 or even 7 feet apart, a California law fixed the gage in that State at 5 feet, while the Missouri Pacific had a gage of 5 feet 6 inches. A difference in gage necessitated, of course, the unloading and reloading of wares in passage from one line to another, and prohibited distant freight movements. Soon after 1860 a movement toward the present standard, 4 feet 8¹⁄₂ inches, brought a uniform gage into use, and when the consolidation of railroads was under way there was no longer a thought of varying from the standard. The first consolidation of a through line from Chicago to the sea was effected in 1869 under the management of Cornelius Vanderbilt (Lake Shore and Michigan Southern and New York Central and Hudson River); and the movement soon spread to other lines (Pennsylvania, etc.). The benefits were greater than the reader may be inclined to suppose. The management of railroads was made at the same time more efficient and less expensive; uniformity of policy was established in such matters as the track gage; and, most important, a new policy of freight rates, designed to stimulate distant shipments, became practicable.

667. Reduction of railroad rates.—The charges for freight movements before 1860 rarely fell below 2 cents per ton-mile. Railroad managers believed that the lowest rates which they could profitably make were, roughly, 2 cents for heavy agricultural produce, 3 for groceries, 4 for dry goods. The improvements effected in road-bed and rolling stock after 1860 suggested the possibility of reducing rates, and the reorganization of small railroads in large systems made it possible to institute reductions to stimulate distant freight movements. The results exceeded all expectations. The railroads found that a reduction brought such an increase of traffic that the lower rates were not only an advantage to the shippers, but also a benefit to themselves; and rates have fallen almost constantly in the course of the period. In 1914 the average freight rate was only three quarters of a cent per ton-mile, and some of the lines between Chicago and the Atlantic coast had reduced their charges very close to half a cent.

668. Contribution of the railroads to recent national development.—The importance of this change in a country of great distances can scarcely be exaggerated. It has transformed the railroad from a luxury for the use of passengers and high-class freight to a necessity for the producers and consumers of the commonest articles. In 1860 even a ware like wheat could not pay the expense of transportation over a distance exceeding many hundred miles, and distant freight traffic was restricted to manufactures and the most valuable of farm products, such as live stock. The reduction in charges has opened a profitable market for the commonest agricultural products of distant western States, and has made accessible the natural resources of all kinds, which otherwise would count for nothing among the economic assets of the country. In 1913 more than half of the tonnage carried on the railways of the United States consisted of ores, coal, and other products of mines, which could scarcely have been carried at all in 1860. The railroads now carry a tonnage far exceeding that transported through other channels (rivers, lakes, canals, and coasting trade); and it may be said in sober earnest that a considerable proportion of the people in the country would starve, without the means of earning a livelihood, if the railroad improvements that have come since 1860 were suddenly swept away.

Some idea of the growth of railroad service in the United States in recent years can be gained from the accompanying brief table, which pictures the contribution of the railroads in their two important activities, the carriage of freight and the carriage of passengers.

669. Relative decline in transportation by canals and rivers.—The development of the railroad system has not entirely done away with the previous systems of internal transportation, but it has reduced them to subordinate importance. The decline is especially noticeable in the case of canals. Even in 1880 nearly half of the total canal mileage had been abandoned and a large number of the canals remaining in operation were not paying expenses. The cost of transportation on the canals has been reduced by deepening them to take in larger boats; tolls have been entirely abolished, as in the case of the Erie Canal; and still the superior speed and certainty of transportation by rail have robbed the canals of the bulk of the traffic. Some of the river routes have fared better. The Mississippi River system, notably, is still an important channel of trade, but even in the territory it serves the railroads far outrank it in importance, and most of the inland waterways have lost their previous significance.

670. Importance of the Great Lakes; St. Mary’s Canal.—While the country could now renounce, without very serious loss, the rivers and canals which were formerly so important as means of transportation, it could ill afford to dispense with the Great Lakes along its northern boundary. In the first half of the century Lake Erie was a useful means of communication with the growing States of the West, and gained greatly in importance with the construction of canals after 1825. It was not until the second half of the century, however, that the three western lakes showed their possibilities as channels through which the national resources might be conducted to districts where they could be best utilized. Between 1860 and 1900 the tonnage on the Great Lakes grew sixfold, and increased even more in carrying capacity as wooden sailing vessels gave place to large steel steamers. Freight rates have fallen below one tenth of a cent per ton-mile, and immense amounts of ore, coal, grain, and lumber have thus found a cheap means of access to market.

In 1855 a canal was completed to avoid the rapids in St. Mary’s River at the outlet of Lake Superior, and this canal, since deepened and improved, has become one of the great commercial channels of the world. The Lake Superior region has proved to be wonderfully rich in iron, copper, timber, and other products essential to modern industry. In 1913 the tonnage of vessels passing through the St. Mary’s Canal was greater than the tonnage entering the seaports of the United States from all foreign countries, and was more than double the tonnage passing through the Suez Canal.

671. Decline of American shipping.—In contrast with the great development of the means of internal transportation we have to note, in this period, a decided decline in the American shipping engaged in foreign trade. The total tonnage of the country was in 1913 nearly double what it had been in 1860, and entitled the United States to a position high up among trading countries. About one third of this total, however, was employed on the Great Lakes, and most of the remainder was engaged in the coasting trade. Both of these branches of navigation could be, and were, protected by law against the competition of foreign ship-owners. The trade of this country with other countries, however, could not be restricted to American vessels without danger of retaliation; and the attempts of the United States to favor its own vessels in foreign trade, by taxing foreign vessels at the port of entry, had been given up before 1860. Now in this branch of shipping, in which the vessels of all countries of the world compete on equal terms, the tonnage of the United States declined from 2.5 million in 1860 to 1.0 in 1913.

672. Effect of the Civil War on the merchant marine.—Of this great loss in tonnage the larger part fell in the years immediately following 1860, the period of the Civil War. The southern States, unable to break the blockade which closed their ports and prevented the sale of their cotton, sought to retaliate by loosing swift cruisers to prey on the ships which sailed under the United States flag. The most celebrated of these cruisers, the Alabama, was fitted out in England, and for two years, until its destruction by the Kearsarge in 1864, haunted the chief routes of trade, and captured no less than 69 vessels. Other cruisers were less successful, but altogether 261 Northern vessels were taken. The fear of capture caused a decline in tonnage far greater than the actual losses at sea; American ship-owners found their profits eaten up by heavy insurance charges, and sold their vessels to foreigners, who could navigate them in safety under a neutral flag. Altogether the country came out of the war with about a million tons of shipping less than it had owned at the beginning.

673. Other causes of decline.—The American merchant marine would have recovered from the losses of the war but for other difficulties which it faced. This was the period in which steamers began to gain rapidly on sailing ships, and in which iron began to be extensively used in ship-building. The Americans had at this time neither the resources nor the experience to compete with the English in the new forms of naval construction, and even before the war it was apparent that the English were drawing ahead. Moreover, the war had, indirectly, a great influence on the fortunes of American shipping, for it led to a great increase in the tariff and to heavy taxes of all kinds. It cost more both to build and to navigate an American ship than it had cost before the war or than it cost an English owner. Add to these influences the fact that the country was just entering the period of great railroad extension, and that the West now offered wonderful opportunities for the investment both of labor and capital; and it is not surprising that the American people turned from the sea to the land, and resigned the high position which they had formerly held in foreign carrying-trade.

674. Recent position of the merchant marine.—Since 1860, therefore, the United States has relied mainly upon foreigners to carry its freight across the seas. Of the tonnage that cleared from ports of the United States for foreign countries in 1913 about one quarter sailed under the American flag. The effective service of American ships did not, however, correspond to this proportion; they carried only about one-tenth in value of the exports that went out by sea. Various attempts have been made to stimulate the construction and navigation of American ships by the grant of subsidies from the national government, but the success has been very moderate, and the people have been in general unwilling to levy taxes for the support of this particular industry. In one respect legislation has become more liberal; the Panama Canal Act of 1912 made it at last possible, under somewhat severe restrictions, to register under the American flag foreign built vessels engaged in foreign trade.

675. Development of national manufactures.—Part of the energy diverted from the sea found a fruitful field of labor in the developing manufactures of the country. The period from 1860 to 1914 marked the advance beyond the age of trial and experiment in the history of American manufactures; at the close of this period the United States was the greatest manufacturing country of the world, supplying most of its own requirements for manufactured wares, and producing a large surplus for export to other countries. The development of the transportation system was the indispensable condition of this progress. The railroads have brought all parts of our great national domain so closely together, in a commercial sense, that the choicest natural resources of the continent have been made available at the centers of production. Abundant labor has been supplied both by the growth of the native population and by the increasing flow of immigrants. Leaders have arisen from the people, stimulated to energy by the rapid promotion which has been granted on proof of signal ability; and the necessary capital has been contributed by investors in all parts of the world, who have sought eagerly the opportunity to share in our industrial gains. Finally, our factories have enjoyed an advantage beyond those of any country, in the great market which has stood waiting to receive their products. Within boundaries, each of which measures thousands of miles, lay an area absolutely free to trade, provided with the most efficient instruments of transportation and communication, and settled by a people numbering nearly a hundred million, of prosperous producers and educated consumers.

676. Coal production and the use of steam power.—Not until this period did the country realize the full value of its hidden mineral wealth. The coal deposits of the United States are thought to be richer than those of any other whole continent, and the Ohio Valley has coal mines together with iron deposits and rich agricultural resources in a combination which is unmatched. The coal production of 1860 (13 million tons) was considerably larger than in previous decades, but it seems insignificant in comparison with 240 million of 1900, or the 509 million of 1913. Bituminous coal, the kind chiefly used in manufactures, formed only one third of the total output in 1850 and only one half even in 1870, while in 1913 it comprised four fifths of the whole. In coal production the United States now led the world.

The vast increase in the coal product was used in innumerable ways, but it found its chief employment in furnishing motive power to the transportation system, and to the factories of the country. In studying the history of coal production one is inclined to say that the country did not really enter the age of steam until after the Civil War. The total horse-power employed in manufactures in 1869 (2.3 million), was derived from steam and water in almost equal proportion. In the period closing in 1914 the power employed increased about ten-fold (to 22.5 million), and of the increase steam supplied nearly three-quarters.

677. Machinery.—That the Civil War really marks a dividing line in our industrial progress is shown by the history of the Patent Office; within a few years after the close of the war the number of patents granted increased greatly, and the new level thus established was steadily maintained. American machine manufacturers made in this period their great contributions to mechanical progress: the system of interchangeable parts, automatic and specialized machines, the utilization of by-products, etc. Brass screws at one time could be produced only at great expense; it is characteristic that some manufacturers would now make them absolutely free of charge, if the customer would furnish the brass rod and would allow them to keep the chips of brass which were cut off in the process.

It is impossible here to trace the history of manufactures in detail, but a single manufacture, that of carpets, may be taken for illustration. In the carpet industry about 1835 modern factory methods were unknown; weavers worked at home with old-fashioned hand looms, producing 7 or 8 yards of inferior carpet per day. Power looms were invented, and were introduced little by little, but even after the Civil War nearly half the carpets were still woven on hand looms. Since that time has come the great advance in the industry, by the introduction of improved power machinery, which has reduced the price of fine tapestries and Brussels to that formerly paid for the rudest ingrain, and which has stimulated an immense increase in consumption.

The rapid development of the national manufactures in this period may be shown by brief statistics, in thousand millions of dollars; the capital invested grew from 1.0 to 22.8 while the value of the product grew from 1.9 to 24.2.

678. Extension of manufactures in the West and South.—There had been, moreover, a noteworthy change in the distribution of manufactures throughout the country. The northeastern States had greatly extended their manufacturing plants, and relatively to population no European state rivalled New England in output: but American manufactures had extended also into the West and the South. The southern States, instead of sending their raw cotton to the North or to Europe, began to manufacture it in increasing quantities, and now competed with northern mills for the markets of the Mississippi Valley. The development of iron production in the South was phenomenally rapid. The rich coal and iron fields of the Southern Appalachian range were opened, and contributed now an important share of the total output, while large industrial centers were growing up in Chattanooga, Birmingham, and other Southern cities.

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