Michigan's passion for internal improvements began as the territory's population expanded following the opening of the Erie Canal in 1825. Detroit at the time had barely over 2000 people, yet there was a sense, an eagerness, to make improved connections with the Atlantic seaboard. A prediction published on December 17, 1829, in the Detroit Gazette? said that within ten years (or by 1840), "the citizens of Detroit will be able to reach the Atlantic in twenty-four hours" and that by 1850, "the navigation of our broad and beautiful lakes will be of no manner of use to us, because land transportation will be so much cheaper." By then, the Gazette predicted, "It will be a comfortable thing to get into not a coach or a steamboat – but a snug house built over a steam engine, and, after journeying smoothly and safely at the rate of thirty or forty miles per hour, find yourself at breakfast next morning in New York or Washington." As things turned out though, it would not be until then that the connection with the Seaboard was actually made, and decades more until Detroiters could make a twenty-four hour trip to DC. Nonetheless, Michigan and Detroit held a popular excitement for transportation improvements.1
As the territory in 1829 was relatively poor—farmers and merchants just did not have the spare change to invest millions in new technology or transportation improvements—Michiganians turned to the federal government as the most likely agent of construction. Congress received some petitions from individual citizens about improvements, but most of the missives, memorials, and petitions for roads, canals, and railroads came from the Territorial Council. Most of these petitions were inspired by Michigan's farmers, and most of the early ones were for federally-funded roads as roads seemed easily fundable, a proven technology, and in the national interest. As one proposal after another flowed from Detroit, some Michiganians began to agitate for a complete program for transportation improvements in the territory. Farmers (and their legislators) tended to seek roads, but the wealthier and more enterprising segments of Michigan society proposed more capital intensive projects such as canals, and then later, railroads.
The first capital-intensive internal improvement proposal from Michigan was a 1827 appeal from the citizens of Detroit for a trans-peninsula canal. The proposal was to build a canal from Detroit to Lake Michigan. It would cut six hundred miles from the trip from Buffalo to Chicago. The petitioners argued that the route would have easy grades (no more than one-hundred and fifty feet of rise to cross the peninsula), and that the initial cost would be cheap because the federal government already owned most of the land. Lewis Cass would echo these arguments in 1830, noting that "the country presents no formidable obstacle to the execution of these works. It is generally level and well watered. And the summit on each side ... is attained by a gradual and imperceptible elevation. There is probably no similar extent of the country in the Union, where less labor or expense would be required to produce so important a result."2
A similar appeal in February of 1828 came from Frenchtown proposing a canal from the mouth of the River Raisin to the mouth of the St. Joseph River. When Henry Schoolcraft, who at this time was a representative to the territorial assembly from Sault Ste Marie, introduced legislation for the project and a resolution that the assembly add its weight to the congressional appeal, he unveiled a northern-southern territorial political alliance in the assembly. This northern-southern alliance was able to pass a second petition to Congress in 1829. In addition to the arguments advanced by the central people, the north-south proposal added that a trans-peninsular canal would keep communications open with Lake Michigan in the event of another war with British Canada.
Also in 1829, the advocates for the central canal, including Charles C. Trowbridge, John Biddle, and Conrad Ten Eyck?, sent a second petition to Congress that included requests for land grants for a survey and construction. The southern interests by the end of 1829 had sent a third petition asking also for land grants.
Most of the petitions stressed the importance of such a canal in a grander east-west system of communications between the Atlantic seaboard and the Mississippi River Valley.
In his 1830 message to the territorial assembly, Lewis Cass noted that "there is one obvious and signal improvement, which could be made, which no doubt eventually will be made. And that is, to unite the mouth of the St. Joseph with our eastern coast, by a canal or rail-road ... across the base of the peninsula."3
The various memorials to Congress and territorial resolutions for transportation improvements can be found in the Territorial Papers XII, 12, 102, 254, 365, 621-626, 656, 688-690, 825-828, 850, 1031-1032; XL, 131-133, 1163-1164, 1190; Journal of the Legislative Council, 4th Council, 1st Sess., 1830, 127-128; 6th Council, Extra Sess., 1834, 14-16, 132; 6th Council, Extra Session, 1835, 132.
The Michigan State Constitution of 1835?, under which the first state government was organized, declared (Article XII, Section 3) that "Internal improvement shall be encouraged by the government of this State; and it shall be the duty of the Legislature as soon as may be to make provision by law for ascertaining the proper objects of improvement in relation to roads, canals, and navigable waters." The delegates to the Constitutional Convention had put Michigan's burning desire to span the peninsula as quickly as possible into this constitutional provision. Other states, in particular New York, Illinois, Indiana, and Ohio had subsidized and inspired their transportation works and their examples inspired Michigan.4
While Michigan farmers began shipping east across Lake Erie, Michigan also experienced a problem of interior transportation: farmers needed to get their products to centralized shipping points most importantly Detroit, Monroe, or Port Lawrence? (which was soon to be renamed Toledo). In response to this, the Territorial Council had passed many road, canal, and railroad construction proposals and incorporated many companies for their construction. The only one of these companies that got started during the territorial period was the Erie & Kalamazoo Railroad. By 1837, Michigan had incorporated twenty-four companies proposing to build 1,011 miles of railroad in the state.5
Because both canals and railroads required a significant initial capital outlay, few private entrepreneurs came forward to start these projects. Alternative funding was necessary. And because the west was sparsely populated and yet developing (compared to the east), there was little local capital and few outside investors. Capital had to come from outside sources. Internal improvements would make specific areas of Michigan more attractive, leading to quicker settlement and development. As settlement and development occurred, local sources of capital would grow, but until then, outside sources of capital would be needed. William H. Seward understood this process when he said, "A great and extensive country like this has need of roads and canals earlier than there is an accumulation of private capital within the state to construct them."6
An abundance of capital was soon at hand. By 1836, the United States had repaid all its debt and had accumulated a budget surplus. Additionally, Andrew Jackson was distributing to state banks the assets of the U.S. previously held by the Second Bank of the United States. Congress authorized distributing that surplus to the states starting on January 1, 1837. (The legislation admitting Michigan to the Union on January 26, 1837, granted that Michigan would share, on an equal basis, in this distribution). Thus with this great influx of capital, many states now had funds for internal improvements. Many Midwestern states passed programs for canal and railroad construction.7 Ohio, Indiana, Illinois, and Michigan turned to state financing and operation of their internal improvements. Ohio's Improvements
The Great Lakes was particularly hampered by poor access to the Atlantic Ocean (at least until the St. Lawrence Seaway project). Because of this lack of access, areas connecting to the Great Lakes states had created artificial modes of transportation in order to facilitate north-south and, later, east-west trade. New York had exceptional, and unique, geography to aid it. The flat, mid-state terrain allowed for the construction of a canal to connect the Hudson River Valley with Lake Erie.
The Erie Canal was 363 miles long. It was initially conceived to be a instrument of the state and so was financed by state bonds. However, the bonds initially sold rather poorly, being taken up mostly by local investors. However by 1829, four years after the canal opened and its money-making possibilities had become more fully known, New York City and London financiers began buying up the canal bonds. As a result, more than half of the canal debt was owned abroad.8 The Erie Canal also shifted inland transportation patterns. By 1836, more grain and flour was received at Buffalo than at New Orleans. By 1839, New York was receiving more grain and flour than it was producing.9
For the states of the Midwest, their initial internal improvement projects mirrored the established directions of trade: down the Mississippi River watershed towards New Orleans. Thus for Ohio, Indiana, and Illinois, their canal and first railroad projects intended to connect the lakes with navigable rivers flowing south. But this flow of trade was eventually re-routed by eastern investment in trunkline railroads.
Other east coast states found that they were not as geographically blessed as New York was and unable to make a low-level water connection with the Great Lakes. Other cities, notably Boston, Baltimore, and Philadelphia also sought to compete with New York. Their states were likewise willing to pledge the public credit to transportation undertakings. Pennsylvania started the "Main Line" of internal improvements, a hybrid canal-railroad project through the center of the state. Baltimore was reluctant to invest in a canal as it had no river into the mountains, but expected to benefit from the C&O Canal which was being constructed from Washington DC westward towards Cumberland. Baltimore also benefited from national largess as it was the terminus for the federally-funded National Road?. Lastly, Boston, like Baltimore, did not start any canal project but once railroad technology seemed viable, investors built a line westward hoping to connect at Albany and siphon some of the Erie Canal traffic.
Once Americans began thinking of the railroad as a viable transportation technology, the eastern states invested in construction. But progress was slow. It took decades for lines to reach the Ohio River Valley, and even then the four main trunks (New York Central Railroad, Pennsylvania Railroad, Baltimore & Ohio Railroad, and the New York & Erie Railroad) combined did not haul as much freight as the Erie Canal did, 10 but they did collectively and significantly impact the national economy. Combined, the Erie Canal and the trunklines succeeded in accomplishing, by the time of the Civil War, a reversal of the flow of trade in the interior of the United States, the so-called "Transportation Revolution".11
Railroad construction took a lot of capital. Some of this capital was acquired through equity investments. More, however, was found through debt instruments which gave the railroads high fixed costs. This financial structure made railroads very risky investments. A short railroad was of use to almost nobody. To affect trade, a railroad had to connect distant places, which meant that until those connections were made, a lot of capital was sunk (on which fixed costs had to be paid) without any immediate return.12
In Michigan, the Territorial Committee on Internal Improvements advised that the state borrow five million dollars for twenty-five years at five per cent interest to finance its investment in improving inland communication. The Board calculated that Michigan's public works project would return ten percent on the state's investment. Thus when the loan would be paid back, the state would profit by $3,375,000.13
The Erie Canal and roads had demonstrated that internal improvements raise property values. This was as true in Michigan during the 1830s as elsewhere. Hariett Martineau in her travels across Michigan stayed with a farmer near Laporte, Indiana, but he lived on the Chicago Road so his experience would be similar for Michigan farmers also along the same route. Wrote Martineau,
Their estate consists of eight hundred acres, a large portion of which is not yet broken up. The owner says he walks over the ground once a year, to see the huckleberries grow. He gave the upset price for the land; a dollar and a-quarter an acre. He is now offered forty dollars an acre, and says the land is worth fifty, its situation being very advantageous; but he does not wish to sell. He has thus become worth 40,000 dollars in the three years which have elapsed since he came out of Ohio.14
With potential gains such as these, the passion for roads, canals, and railroads seemed limitless.
4. ⇑ Lew Allen Chase, "Michigan and the Early History of Transportation East and West," The Magazine of History 13, no. 4 (April 1911), 170. ⇑
8. ⇑ Arthur M. Johnson and Barry E. Supple, Boston Capitalists and Western Railroads: A Study in Nineteenth-Century Railroad Investment Process (Cambridge: Harvard University Press, 1967), 72n; Carter L. Goodrich, Government Promotion of American Canals and Railroads, 1800-1890 (New York: 1960), 53-54. ⇑
9. ⇑ Johnson and Supple, 72; Douglass C. North, Economic Growth of the United States, 1790-1860 (Englewood Cliffs, NJ: Prentice-Hall, 1961), 105, 253; Emory R. Johnson, T. W. Van Metre, G. G. Huebner, and D. S. Hanchett, History of Domestic and Foreign Commerce of the United States (Washington, D.C., Carnegie institution of Washington, 1915), I:222-230. ⇑
13. ⇑ Lew Allen Chase, "Michigan and the Early History of Transportation East and West," The Magazine of History 13, no. 4 (April 1911), 171. ⇑
Chase, Lew Allen. "Michigan and the Early History of Transportation East and West." The Magazine of History 13, no. 4 (April 1911): 165-179.
Robert J. Parks, Democracy's Railroads: Public Enterprise in Jacksonian Michigan (Port Washington, NY; London: Kennikat Press, 1974),
Loomis, Bill. "Riding the First Rails Brought Excitement, Danger." The Detroit News, July 8, 2012.
Larson, John Lauritz. Internal Improvement: National Public Works and the Promise of Popular Government in the Early United States. Chapel Hill: University of North Carolina Press, 2001.
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