Financial History 134 (Summer 2020) | Page 18

Federal Financing of Internal Improvements in Antebellum America Collection of the Museum of American Finance By Michael A. Martorelli Throughout this Republic’s first seven decades, many people expressed strong interest in making improvements to the country’s transportation network. Civic leaders believed an integrated system of roads, turnpikes, canals and, eventually, railroads would help strengthen the nation’s political and economic ties. Throughout the decades, however, those men disagreed over the federal government’s role in financing the costs of such internal improvements. This analysis shows that ambiguous guidance from the Constitution was only one problem. Others included an anti-government attitude, state and sectional differences and sporadic budgetary concerns. The US Constitution permitted Congress to regulate interstate commerce and establish post roads, but it did not give that body the permission to finance or build internal improvements, such as roads and canals. The nation’s early political leaders were wary of exercising any unspecified power and were quite conscious of the perceived threat that an over-reaching central government would pose to the states. None of the first six Congresses and neither of the first two Presidents wanted to commit the federal government to funding internal improvements. Instead, they counted on the states and the moneyed gentry to finance and build any appropriate additions to the country’s transportation network. Throughout the 1790s, state legislators and private investors cooperated to establish dozens of toll-free roads and fee-based turnpikes. Private companies in several states even managed to overcome significant engineering challenges and build relatively short canals to connect important bodies of water. By 1802, it became apparent that states and private companies could not provide the capital necessary to pursue large internal improvements. Officials of the Chesapeake and Delaware Canal Company were forced to suspend work on that eponymous pathway between two important waterways when the company ran out of money. So Engraved portrait of Secretary of the Treasury Albert Gallatin. Gallatin’s April 1808 Report on the Subject of Public Roads and Canals detailed a comprehensive network of roads and waterways he believed the government should build to connect towns, rivers and lakes in every section of the country. 16 FINANCIAL HISTORY | Summer 2020 | www.MoAF.org