One of the chief reasons for the hearty acceptance of the compromise measures as a final settlement was the fact that they were adopted in the midst of an era of great economic prosperity and optimism. To the men of the decade before the Civil War, the real interests of the country were financial, commercial, and industrial, and in their eyes, the slavery controversy was an annoying interruption. Foremost among the causes for congratulation after the compromise was the opportunity for undivided attention to the absorbing expansion of the country's business.
The most striking economic fact of these years is the extension of the railway systems of the United States from the seaboard into the great plains and the creation of a new economic balance. Under the influence of this new opportunity for exchange, there came a great growth of American manufacturing, stimulated in addition by the sudden deluge of Californian gold and the temporary disorganization of European economic conditions through the Crimean War. All these agencies combined to bring an era of confidence, hope, and expansion in agriculture, industry, and finance.
The construction of the first railways began slowly in the eastern states, and for many years was carried on as an adjunct to river, canal, or other water carriage. The total number of miles built from 1830 to 1848 was under 6000; but after that year railroads suddenly became a mania, and no less than 16,500 miles were laid down between 1849 and 1857, the larger part in the interior. The barrier of the Appalachian Mountain system was penetrated by seven trunk lines, and these by their connections in the central states were able to reach the Ohio River at eight places and the Mississippi at ten. The first railroad to make a through connection to the lakes was the New York Central system in 1850; next followed the Erie road, whose completion to Dunkirk in 1851 was celebrated by a journey of the Fillmore cabinet, including Webster, from one end to the other. Farther south the Pennsylvania road reached Pittsburg in 1852, and the Baltimore and Ohio road was completed to Wheeling in 1853, the same year in which the Grand Trunk line was opened between Portland and Montreal. In contrast to these important connections between the northern seaboard and the interior, the southern communications lagged behind, none being completed before 1857. In this period the northeastern states built nearly 4000 miles, the south Atlantic states only 2750; the northern central states constructed no less than 7530 miles, the southern interior states only 2150. In the "Old Northwest" this expansion was fairly extravagant, railways radiating from city to city until the region speedily became a network. The roadbeds, it is true, were often of such a character as to appall an English engineer, and the cars and engines appeared flimsy; but, such as they were, they represented a great sinking of capital in a still sparsely settled community.
This extension of railways was not merely the venture of capitalists, but the absorbing interest of the people of the country. Where the laws permitted them, cities and counties subscribed liberally for the mortgage bonds which were the usual means of securing capital and carried on fierce rivalries for the possession of railway communications. Individuals contributed from motives of local patriotism as well as from a desire to speculate, and popular meetings to agitate for branch lines and short connections gave the movement a semipolitical aspect. Intense indignation was stirred up in New York, Buffalo, Cleveland, and Cincinnati when the people of the town of Erie, in order to preserve business for their freight handlers and hotels, forcibly prevented the alteration of the broad gauge railroad tracks in its territory to conform to the width of connecting lines. The "Erie war" attracted general interest in the early part of 1854, and the railroads were for a time held at bay, but the contest ended in the defeat of the obstructionists. All felt that the only salvation of a community from economic death depended upon good steam communications with the eastern seaboard, or at least with the leading lake or river cities. In this way, in the years from 1850-1857, the main lines of the present railway system of the United States east of Chicago were brought into being.
Westerners rose to rhapsody in contemplating the situation. "The West is no longer the West, nor even the great West," said an enthusiastic Ohioan, "it is the great Centre. . . . The change is coming upon us so rapidly that only the young can fully appreciate it. Like a splendid dream will it appear to people of mature age. Before the census of i860, the whistle of the locomotive and the roar of the rolling train will be heard at nearly every house and hamlet of the wide central plain, and no one but a hermit will be willing to live beyond the cheering sounds. . . . The imagination can conceive nothing more imposing than this march of humanity westward, to enter into possession of 'Time's noblest Empire.'"
The Telegraph, also, first used extensively in this decade, spread with the railways and branched into every important community. Mail routes took immediate advantage of the new lines, and Congress was led, in 1851, to pass a cheap postage law. By 1855 the chief elements of the modern commercial world — namely, rapid transportation and prompt and easy communication by mail and telegraph — were established.
The general effect of this rush into railroad building was to upset the previous economic balance of the country. Prior to 1850 the only routes of transportation from the interior, except the turnpike roads over the mountains, were the Great Lakes and the Erie Canal or the Mississippi outlet to the Gulf. The traffic of the country ran, as a rule, upon north and south lines, the northern seaboard states trading with the southern by water, and the northern interior states reaching the southern central states and the exterior world by the great river system of the Mississippi and its branches. But after 1850 the opening of the trunk lines made it possible for the farmer of the west to ship his wool, cattle, and grain directly I to the east, and receive in exchange the products of I eastern mills and the wares of the importer. The whole current of trade in the free states swung in a new direction within a few years. Yet the inland and seacoast navigation of these years did not feel the competition of railways sufficiently to keep it from continuing with great vigor, carried on by a host of light-draught, high-sided river - steamers and a growing fleet of sail and steam craft upon the ocean and the Great Lakes.
The rush into railway building was accompanied by a rising demand for government assistance from the promoters in the western states, backed in most cases by the state legislatures. The first grant of public lands, in response to such an appeal, was the donation, in 1850, of two and a half million acres in the states between Lake Michigan and the Gulf of Mexico to the state of Illinois, by which it was to be transferred to the Illinois Central Railroad. This precedent was eagerly pressed by other western and southern states, but of fifteen similar land-grant bills to pass the Senate in 1851, only one passed the House. In 1853, however, Illinois, Mississippi, Alabama, Missouri, and Arkansas received coveted grants of land to be transferred to railways, and in 1856 no less than nineteen million acres were given for railroads in Florida, Alabama, Louisiana, Mississippi, Michigan, Wisconsin, Iowa, and Minnesota. The years following were busily occupied by the states mentioned in transmitting these gifts to railway corporations, though seldom with immediate satisfactory results.
In addition to this federal munificence, several states, especially Tennessee, Georgia, and Florida entered into financial support of railways which proved at a later time a serious embarrassment. The largest scheme was that of a railroad to the Pacific, to be built by the aid of federal land grants of alternate sections along the line of the projected road. In spite of constant efforts by the California senators, no bill passed up to the Civil War, mainly because of the bitter quarrels over the eastern terminal; just as rival towns struggled for railway connections, so the north and south pulled against each other in urging New Orleans, St. Louis, or Chicago.
During these years the long-standing pressure for government aid to internal and sea-coast navigation was not forgotten. President Pierce's Democratic scruples, based on traditions of Madison, Monroe, and Jackson, were put to the test which Polk and Tyler had been obliged to meet, and, like them, Pierce did not flinch. In 1854 his veto blocked an internal improvement bill, but in 1856, when he returned five bills for deepening the channels of interior and sea-coast rivers, a Democratic Senate joined an opposition House in passing them over his veto.
Side by side with these schemes for aiding railways and steamers went demands upon Congress and the state legislatures to regulate them. There was crying need for protection against the accidents which, in the age of reckless construction and unskilled operation, happened with appalling frequency. The number of deaths from railway collisions and steamboat explosions and wrecks were such as in a time of less buoyant optimism would have filled the country with horror. In the first seven months of 1853, the New York Herald counted 65 railway accidents; the total for 1855 was 142. This was equaled by the list of steamboat accidents on the western rivers, which in 1853 amounted to 138. The states struggled, without great success, to render travel less murderous by placing pecuniary responsibility for losses upon the railroad companies. Congress, with more decisive results, regulated steamboat traffic by an act passed in 1852 which provided for the inspection and licensing of steam vessels engaged in interstate commerce, with a view to enforce safety in construction and equipment.
Such mighty changes had marked effects in transportation and upon the agricultural life of the country. The grain of the interior found an increased market in the east and in Europe, its sale abroad being stimulated by the reduction of the English corn tariffs and the loss of the Russian grain supply during the Crimean War. The northwest, hitherto content to feed the south, now found itself called upon to send its surplus to Europe, and the grain crops of the land swelled correspondingly from one hundred million bushels in 1850 to one hundred and seventy-one million in i860, of which more than one-half was grown in the "Old Northwest." Ohio, Indiana, Illinois, and Wisconsin replaced New York, Pennsylvania, and Virginia as the leading grain states. In the same way, the center of the grazing industry passed in this decade from the northeast to the states north of the Ohio River and to Texas, which furnished the bulk of the wool grown in the United States.
In the south, the railways shared, although to a less degree, in causing the great prosperity of the cotton growers, which in this decade of general expansion seemed to surpass that of any other class in the Union. In spite of the rapid extension of the cotton culture in the southwest, and the increase of crops from an average of two million one hundred thousand bales before 1850 to more than three million three hundred thousand, the world's demand seemed unlimited, and the price remained at a profitable level. If the prosperity of the whole region might be gauged by the success of this single crop — and southern writers and speakers invariably assumed that such was the case — the south was undeniably on the top wave. Never were prices for slaves higher nor the demand for their labor steadier. From all parts of the "cotton states" railroads and river steamers brought to the exporting centers the one never-failing and profitable product. The value of exports of cotton grew from an average amount of sixty million dollars to a hundred million in the years 1850-1857, and it was estimated that three-fourths of the total world's supply was furnished by the Gulf states. "Cotton is King," said the southern planter, and few ventured to contradict him. "In the three million bags of cotton the slave-labor annually throws upon the world for the poor and naked," wrote one, "we are doing more to advance civilization . . . than all the canting philanthropists of New and Old England will do in centuries. Slavery is the backbone of the Northern commercial as it is of the British manufacturing system. . . . Our labor has enabled us to make New England rich."
The agricultural prosperity of the west and south was matched by a new industrial prosperity in the northeast, where all kinds of manufacturing felt a great impetus. The completion of the railroad connections with the interior offered an opportunity which the businessmen of New England, New York, and Pennsylvania were not slow to seize upon. A rapid extension of manufactures followed, especially in the staples, such as cotton goods, shoes, household articles, and the cheaper sorts of woollens. The production of pig iron increased from an estimated output of 564,755 tons in 1850 to 883,137 in 1856, and iron manufacturing followed, although more slowly. The optimism of the western farmer was fully equaled by the enthusiasm of the eastern manufacturer.
In the face of the attractive field for investment offered by this new traffic of east with west, the long-established importance of the shipbuilding industry was now first threatened. In these years, between 1850 and 1857, American shipping reached its maximum, a flush of prosperity crowning a long period of success, before the inevitable decline resulting from the diversion of the capital once invested in it to more lucrative fields. These were the days of the American clipper-ships, marvels of speed and carrying power under sail, and they were also days of expansion in coasting trade, new steamship lines being established from one end of the Atlantic seaboard to the other, and to Central and South America. In the transatlantic trade, the Collins line, aided by a government subsidy, built a fleet of paddle-wheel steamers which vigorously competed with the British Cunard mail line. Under the stimulus of the great export and import trade, the American merchant marine grew prodigiously, almost doubling its tonnage between 1850 and 1855, so that although British vessels were given reciprocal trading privileges, fully three-quarters of the country's foreign trade was carried on in American bottoms. The change from wood to iron as the standard for marine construction, although officially recognized by the Lloyds in 1854, did not affect the well-being of American shipping during these years of prosperity.
During this period the steady flow of gold from California powerfully affected the commercial imagination, creating the general sense of an inexhaustible reservoir of wealth and stimulating commerce and financial expansion. Nevertheless, although the mints from 1850 to 1857 added an annual average of nearly fifty million in gold to the coinage, there was no sharp general rise in prices which could be laid to an increase in the currency. The range of prices in 1850-1857 appears to have been a result of sanguine spirit and business confidence rather than of inflation. The explanation is partly to be found in the fact that gold became a regular article of export during these years, and two-thirds of the total product, at least, left the country.
An inevitable concomitant of the expansion of industry and transportation was an expansion in banking, in order to furnish the credit necessary to put the new enterprises into operation. From 1850 to 1857 the number of banks, all under state charters increased from 824^01416, and the banking capital from $217,000,000 to $343,000,000, while circulation and deposits nearly doubled. To meet the obligations there was a specie reserve of less than one-seventh, clearly indicating a speculative spirit.
The optimism and confidence of the country's financiers was shown still more by the increase of loans from $364,000,000 to $684,000,000, the repayment of which rested upon the success of new industrial ventures and the earning power of the new railroads.
The condition of these fourteen hundred banks was far from uniform. In the east, where the institution of clearinghouses was now established, they were careful, and, on the whole, sound; but in some of the western and southern states, notably Illinois, they were recklessly extravagant and speculative. In nine states the revulsion against banks which followed the crisis of 1837 led to their absolute prohibition by state constitution or by popular referendum, and in most states attempts were made in these years to regulate and safeguard the practice of banking. No legislation, however, was adequate to secure to banknotes anything like an approximately equal value in different states, or to prevent rashness in the management of bank capital; but for the time being, universal prosperity obscured all doubts.
The course of foreign trade in these years reflected the expansion of credit and commercial optimism. Exports, mainly of agricultural products, rose from $137,000,000 in 1850 to $338,000,000 in 1857, while imports grew at the same time from $178,000,000 to $360,000,000, thus creating an annual balance against the United States of nearly thirty million dollars. This apparent deficit was largely made up by actual shipments of California gold and by European investments in American railway projects to an amount variously estimated at from two hundred to five hundred million dollars. The fact is also to be remembered that the carrying trade, still mainly in American hands, earned high freights. Notwithstanding contemporary alarm over an abnormal foreign trade and reckless importation of luxuries, there is nothing to show that the commerce was beyond the abilities of the country.
Government finances during these years offered no points of interest or difficulty beyond paying off the debts contracted during the Mexican War, for the annexations of California and Texas, and for the Gadsden purchase, and providing for coining the sudden flood of gold. The coinage acts of 1850 and 1853 practically made gold the standard, with subsidiary silver. Reduction of the debt was made possible by a surplus revenue resulting from the heavy importations, and under the provisions of an act of 1853 Secretary Guthrie, during Pierce's administration, was able to purchase United States securities at market prices. In this and other ways, the debt was reduced from $68,000,000 in 1850 to less than $29,000,000 in 1857. Nevertheless, gold continued to accumulate in the subtreasuries, and although Guthrie was a firm believer in the subtreasury system, and had done much to improve its operation, he felt this hoarding to be unhealthy, and repeatedly recommended a revision of the customs duties, from which nearly nine-tenths of the revenue was derived.
To diminish the unwelcome surplus, the existing tariff of 1846 was reduced in the last month of Pierce's administration by a bill which passed almost without debate and without eliciting popular interest. Protectionism as a political force seemed dead. The tariff of 1846 probably did not afford certain industries, notably the woolen, sufficient protection to enable them to endure competition from English mills; but although the woolen men, when the tariff was under consideration, exerted themselves to secure relief by getting wool on the free list, they failed. Only the lowest grades were so treated and the situation in the finer woolens remained unaltered. The House and Senate showed great indecision, adopting the most inconsistent amendments, but finally, they joined in reducing the rates on the schedules of the tariff of 1846 by one-fifth to one-half. The vote for the bill bore no relation to party or sectional feeling and seems to have included both advocates of protection and of free trade. Every Massachusetts and every South Carolina member voted for it. The issue which had been so prominent a generation earlier seemed to have dropped out of sight.
So the country came to the end of Pierce's term in the flood tide of prosperity, hopefulness, and contentment. If there were occasional doubters who queried the security of the foundations for the great expansion of credit and doubted the immediate returns from all the new railways and mills, their voices were drowned in the general assertion of a magnificent industrial, agricultural, and financial future spreading before the "happiest people on God's earth."
