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on receipt of payment. The wealth and financial standing of American houses increased to such an extent that they began to establish their own agents in the manufacturing districts of England and the continent for the purchase and shipment of goods to America. They were able also to obtain credit with the great Anglo-American houses in London or Liverpool, who would then allow the agents to draw upon them at four months to pay for the goods purchased and shipped to America. This arrangement was also introduced into other branches of our foreign trade, notably with India, China, and South America. American merchants were allowed to pay for their cargoes from those places by means of bills on London, which were allowed to run until met by the export of American produce. The system practically amounted to this: Englishmen bought nearly all of our products for cash, sold their own to us on credit, and in addition supplied us with letters of credit against which we could draw in all parts of the world. The effect of such an arrangement would obviously be to replace American capital engaged in foreign trade by English capital supplied by the great Anglo-American mercantile houses in London and Liverpool or by the numerous joint stock banks which eagerly discounted the paper of these houses. The American capital thus liberated from trade became available for carrying on the various improvements within the country. The amount of capital thus lent to us on commercial account may be estimated from the acceptances of these Anglo-American houses, which in 1836 were said to amount to $100,000,000. If we add this to the amount invested in our securities of various kinds, it is safe to say that nearly $300,000,000 of foreign capital was lent to this country between 1815 and 1840.

The American people were perfectly aware of the possibility of securing foreign capital at this time. New York from the first looked to this source to secure the funds necessary for her canals; Ohio did likewise; and Louisiana and the city of New Orleans, in the early twenties, were negotiating loans in London. The success of these first loans encouraged others; and after 1830 the whole country looked to England for capital to carry out its system of internal improvements, just

as Australia and Argentina have relied upon the same sources in later times. A large number of the public works were planned with this prospect clearly in view, and would not have been undertaken without it. Events proved that the works could not be carried on after foreign capital ceased to be lent freely to them. When the market for American securities in London failed towards the end of 1839, work on public improvements in most of the states was checked, and ceased altogether in several of the western states. The Wabash & Erie canal in Indiana and the Illinois & Michigan canal in Illinois were not completed until arrangement was made with English capitalists some years later to supply the funds.

Such was the situation regarding the demand for capital in this country, and the supply of it during the period we are investigating. We come now to the question how far private enterprise was able to deal with this situation. The means by which the large masses of capital required by modern industry are brought together, is the corporation; and we have next to examine the condition of corporations, and ascertain how far they were able to perform the services required of them. Private business corporations began to be created in this country soon after the revolution; and their rise was undoubtedly due to the growth of industries which required. more capital than could be easily supplied by individuals or partnerships. The industry in which they first appeared, and in which for many years the most important ones were to be found, was banking. Congress chartered the bank of North America in 1781, and the next year Pennsylvania and New York each granted it a charter. By 1791 most of the states had chartered one or more banks, and the federal government the bank of the United States. Ten years later there were eighty eight state banks, and in 1830, 330. Insurance companies grew up about the same time, and became very numerous as the commerce of the country expanded after the outbreak of the European wars. There were twenty nine companies in the city of New York in 1830, nineteen in Boston, thirteen in Philadelphia, and six each in Baltimore and New Orleans. When the people turned their attention to improv

ing the transportation facilities of the country, a large number of companies for that purpose were formed. Virginia chartered two canal companies in 1784, and several were chartered by Pennsylvania, New York, and Massachusetts by the end of the century; but canal companies were never numerous in any of the states, and, as already pointed out, in very few cases accomplished the purposes for which they were formed. Far more important and more numerous were the turnpike and bridge companies, the first of which was chartered by Pennsylvania in 1792, and which after 1800 were created in great numbers by all the states north of Maryland and to some extent by the southern states. By 1812 Pennsylvania had chartered 57, New York 112, Massachusetts 78, Maryland 8, Virginia 8. Pennsylvania also chartered twenty one bridge companies during the same period, and they were nearly as numerous in other states. In the same way, when the embargo turned the attention of the northern states to manufacturing, corporations for that purpose made their appearance, especially in New England and New York. Five or six such companies were chartered in Massachusetts before 1808, but 106 were chartered between that time and 1815; and in New York forty seven were chartered in the six years following 1809. Water companies also appeared about this time. Twenty six were chartered in New York before 1812, and twenty one from that time to 1829. Steamboat companies were also created in considerable numbers as the introduction of steamboats took place.

Thus by 1830 business corporations of various kinds were very numerous in this country, and the American people had already shown remarkable facility in forming them. De Tocqueville declared that the most democratic country on the face of the earth is that in which men have, in our time, carried to the highest perfection the art of pursuing in common the object of their common desires, and have applied this new science to the greatest number of purposes.

Nevertheless, a little consideration of the extent and character of the business operations of corporations at this time will show that they were not yet able to raise very large sums of capital, especially for such enterprises as were

then most prominent. Much the largest corporations were banks; and, with the exception of the United States bank, there was but one that had as large a capital as $2,900,000. Of the 330 state banks, only seven had as much as $2,000,000 capital, and only thirty as much as $1,000,000. Several of the largest of these were in the south, and were heavily subsidized by the states. Insurance companies were still smaller. New York had two with $1,000,000 capital, and New Orleans one; Philadelphia had one with $600,000; and in all the rest of the country there were only fifteen with a capital of half a million dollars. The great majority of both banks and insurance companies were small concerns with less than $100,000 capital. Two or three of the big textile manufacturing companies of New England had about a million capital in 1830; but, for the most part, manufacturing companies were even smaller than insurance companies. It would appear from these facts that no great difficulty was experienced in raising from half a million to one or two millions of capital for banks and insurance companies. But it should be noted that all the larger companies of this kind were organized in the commercial cities, where most of the loanable capital of the country was owned. The capital was supplied chiefly by the business men of the cities where they were organized. Except in the west and south, where state aid to banks was common, banking corporations did not have to attract capital from a distance or collect it from a great many small sources in different communities. Moreover, in neither of these industries was the capital actually sunk in a single industrial undertaking; it was in reality divided in loans among a great number of different industries, chiefly commercial, and for that reason involved much less risk than industries requiring large fixed capital. The conditions for the formation of corporations were, therefore, very favorable in these industries. To a great extent, conditions were also favorable to the formation of manufacturing companies. The amount of capital necessary to establish a manufacturing industry was not large, and could be easily supplied by a few men. The stock. of manufacturing companies was usually owned by the men directly interested in the enterprise, and was rarely bought

and sold. It was not quoted on the Boston stock market before 1827, and in 1830 the stock of only six of the largest companies was dealt in there. In the case of turnpike and bridge companies it would seem that no great difficulty should have been experienced in raising the small amount of capital which they required. Nevertheless, one state at least, Pennsylvania, found it advisable to adopt the policy of subsidizing turnpike companies as early as 1806, and bridge companies in 1811. By 1822 that state had subscribed $1,861,000 to the stock of fifty six turnpike companies, and $382,000 to the stock of twelve bridge companies. South Carolina also expended about $2,000,000 of state funds on turnpikes and canals. We have already seen how few of the canal companies formed before 1815 succeeded in accomplishing very much. The Middlesex in Massachusetts and the Santee & Cooper in South Carolina were the only important ones not assisted by the states. They were comparatively small undertakings, requiring only a little over $500,000 each. The state of New York supplied most of the capital of the Western & Northern Inland Lock Navigation company, and Maryland and Virginia did the same for the Potomac and the James river companies. Companies that received no public assistance, like the Delaware & Chesapeake in Maryland and the Delaware & Schuylkill and Schuylkill & Susquehanna in Pennsylvania, were unable to accomplish anything worthy of notice. In the later twenties a number of canals were built by private companies, with little or no assistance from the states. The Blackstone and Farmington canals in New England, the Morris canal in New Jersey, and the Lehigh Navigation in Pennsylvania were constructed entirely with private funds. The Schuylkill Navigation and the Union canal companies received small subscriptions of stock from Pennsylvania; New York contributed $800,000 to the Delaware & Hudson canal; and the federal government, Pennsylvania, Maryland, and Delaware, $475,000 to the Delaware & Chesapeake canal, which was resumed in 1824. The largest of these were the Delaware & Hudson canal, which cost $2,300,000, and the Schuylkill Navigation, which cost $2,190,000. The Blackstone and