a new field for its operation. One of the most striking features of the new period was the increase of speculative activity everywhere in American industry. This was largely the result of the enormous increase in land values, to which the changes we have described gave rise. The choice cotton lands of the southwest and the coal lands of eastern Pennsylvania suddenly became worth fabulous sums. Along the canals and rivers, especially in western New York and central Ohio, farm produce more than doubled in value; and the value of the land rose correspondingly. From New York on the east to New Orleans on the west, new towns were springing up along the lines of trade, and old ones growing with a rapidity that was new in American experience. The population of New York increased from 123,000 to 203,000 in the ten years from 1820 to 1830; New Orleans, from 27,000 to 46,000; Cincinnati, from 9,000 to 24,000; and Louisville, from 4,000 to 12,000. Buffalo and Rochester were hardly in existence in 1816; in 1830 they had 18,000 inhabitants. The number of villages along the New York canals increased from 55 to 105 between 1817 and 1833. Of course, the growth of all these cities and towns caused a corresponding increase in the value of real estate. That of New York went up from $69,000,000 to $165,000,000 in ten years, and the increase in many others was still greater. It is easy to see how all these things would foster speculation. Josiah Quincy declared in 1826 "that the enormous increase in wealth without labor which has come to fortunate speculators since 1815 seems to make the invocation of chance legitimate business."

We are now in a position to understand the economic forces which were acting in this country during the early part of the nineteenth century, and to judge correctly of the causes which led the American people at that time to make so large a use of the powers of the state to assist industries. There are three matters which need to be considered in this connection, in order to bring out the situation which produced the movement. The first is the great increase in the demand for capital which accompanied the opening of the west; the second is the supplies of capital which were available at that time to satisfy this demand; and the third is the obstacles which prevented

this capital from being secured and applied to the various projects of the time by the ordinary agency of private enterprise, the corporation. We will take up each of these matters in turn.

The effect which the economic changes described above had upon the demand for capital may best be shown by comparing the chief enterprises in which capital was invested before 1815 with those that arose after that date. Demand for capital in any community means the existence of numerous opportunities for its profitable investment. Such opportunities had always existed in America in sufficient numbers to absorb all the capital that could be obtained, and interest had been high; but these opportunities had been confined for the most part to enterprises connected with commerce, to mercantile transactions, banking, insurance, shipping, and, to a small extent, manufactures. The people had not found it profitable to risk much capital in enterprises designed to promote the settlement of the country and the exploitation of its resources. The principal ways in which capital is applied to a new country for this purpose is in constructing works of transportation, canals or railroads, and in supplying advances of goods through commercial credit or making loans of cash to settlers to enable them to clear and cultivate the land. In Pennsylvania and the states north of it considerable progress had been made in building turnpike roads during the ten or fifteen years prior to the war. But the improvement of rivers and building of canals, which alone could enable remote regions to send their produce to market, had been almost entirely neglected. Numerous efforts had been made to induce capital to take up this work, but with very little success. Two small canals, one in Massachusetts to connect Boston with the Merrimac river, the other in South Carolina to connect Charleston harbor with the Santee river, were all that had been completed. An imperfect canal navigation had been opened from the Hudson to Lake Ontario, and the navigation of the Susquehanna, Potomac, and James rivers slightly improved. The capital for these works had been secured with great difficulty; and many similar projects, like the Delaware & Chesapeake, the Delaware & Schuylkill, and the Schuylkill & Susquehanna canals,

had secured no capital at all. In the settlement of the west and the development of its resources, men were even less inclined to risk their capital. I have found no evidence that any eastern capital was invested in this way before 1815. The settler moved out into the wilderness with his own little stock of household goods, farm implements, and cattle. No merchant with large credit in the east stood ready to advance supplies of food and other necessaries to him, while he devoted his labor to the production of a crop to be sent to market, nor was he assisted to clear his land and prepare it for cultivation by loans of cash from individuals or mortgage companies. Of course there were banks in the new states; but most of them were mere paper money machines, with no capital at all, and those that had a real instead of a nominal capital had to depend more upon local than upon eastern supplies.

After 1815 the situation began to change. As the settlement of the west took on a different character with the improvement of its economic condition, enterprises designed to promote its development received much more attention from the business men of the country. Not only was the utility of such works to the public more clearly perceived, but the possibility of their yielding a profit to the investor appeared less remote; and, as a result, many more such projects came into existence. The commercial cities of the seaboard were the first to be affected. They had long been interested in western trade, and some of them had made efforts to improve their communications with the west; but the trade before 1815 was comparatively small, as we have seen, and, with the exception of a canal of little value from the Hudson to Lake Ontario and some little improvement in the roads from Philadelphia and Baltimore to the Ohio river, nothing had been accomplished. They now took up the matter in earnest. New York was the first to act, and in two years after the close of the war was ready to break ground on a canal to connect the Hudson with Lake Erie, and another to connect it with Lake Champlain. Virginia established a board of internal improvements in 1816, and began the James river & Kanawha canal in 1820; Pennsylvania commenced the

construction of a canal to connect the Susquehanna river with Pittsburg with a portage railroad over the mountains in 1825; Maryland, Virginia, and the federal government undertook to build the Chesapeake & Ohio canal to connect the Potomac and Ohio rivers in 1828; and a legislative committee recommended a canal to connect Boston with the Hudson as early as 1826. With the advent of the railroad a new crop of projects to reach the west arose. The Baltimore & Ohio was the first, begun in 1828; a few years later the Massachusetts project of a canal to the Hudson was changed into the Western railroad from Worcester to Albany; New York planned the Erie railroad to connect New York harbor with Lake Erie; Virginia proposed to reach the west by a railroad from Lynchburg on the James river canal southwest to the Tennessee river; Georgia was to reach the west by extending her local railroads from Atlanta to Chattanooga; while South Carolina, Kentucky, and Tennessee united to further the construction of the Louisville, Cincinnati & Charleston railway to connect the Ohio river with the south Atlantic seaboard. Besides these larger works there was a multitude of smaller ones in nearly all the eastern states. Not to mention turnpike roads, there were the Blackstone and Farmington canals in New England, the former to connect Providence with Worcester, and the latter New Haven with the Connecticut valley. New York and Pennsylvania planned a network of lateral canals connecting their main works with all parts of these states. The development of the anthracite coal industry began immediately after 1815, and led to a series of canal projects in New York, New Jersey, and Pennsylvania. The Schuylkill navigation was the first, beginning in 1815, and followed about 1825 by the Lehigh Navigation and the Delaware & Hudson, and Morris canals. The Raritan canal was also projected a little later, to connect New York and Philadelphia. A great number of small canals and river improvements were undertaken in Maryland, Virginia, and the states south of them. The Delaware & Chesapeake and Dismal Swamp canals were the largest of these. The local railway projects were numerous

in all the states after 1830, particularly in Massachusetts, New York, and Virginia.

In the west the transportation enterprises were scarcely less numerous or magnificent. The most important works were to connect the lakes with the Ohio and Mississippi rivers, while the rest were either branches of the main lines or shorter lines designed to connect the interior of the states with the lakes or the rivers. The first to be undertaken was the Ohio canal from Cleveland to Portsmouth, which was begun in 1825; the Miami canal from Cincinnati to Dayton was begun at the same time, but was soon after extended to Toledo, making a second line from the lake to the Ohio river; the Muskingum river was made navigable from its mouth to its junction with the Ohio canal at Dresden; and two canals were built from the Ohio canal eastward to connect with the canal system of Pennsylvania. In western Pennsylvania a line was built from Beaver on the Ohio river to Erie on the lake. West of Ohio the Wabash canal was projected from the Miami to the navigable waters of the Wabash, thus connecting Lake Erie with the Ohio by a fourth route. The Illinois & Michigan canal from Chicago to the Illinois river made still another connection between the lakes and the river system of the west. Besides these, many smaller canals were projected and partially constructed: the Whitewater canal northward from the Ohio river to the national road in eastern Indiana; the Central canal of Indiana through the state from the Wabash canal to Evansville on the Ohio river; several branches to the Ohio canal; the Sault canal and one across the lower peninsula in Michigan; the Louisville & Portland canal around the falls of the Ohio; a canal around the Muscle Shoals of the Tennessee in northern Alabama; the improvement by slack water navigation of the Kentucky, Licking, Green, and Barren rivers in Kentucky. These improvements, together with the rivers and lakes, made up a network of navigable waterways for the west quite equal to anything then to be found in the world. About the middle of the '30's several of the western states also projected important railway lines. Michigan undertook to build two lines across the state to connect Lake Erie with Lake Michigan. Illinois planned and began the con