INTRODUCTION

The United States was the first country of continental proportions to develop in the nineteenth century. This result was largely the consequence of the development of internal transportation. Through a combination of a massive investment in the transport sector and the initiation of newer and more efficient transport modes, the original coastal settlement on the Atlantic reached out to an ever-wider hinterland. The rich interior, with its better soils, was integrated into a regionally specialized whole. Without the allocation of resources to transportation on a large scale and the succession of nineteenth-century transport innovations in canals and railroads, the contours of the American economy would have been far different.

In this chapter I examine how the interplay of American market conditions and social intervention functioned to evoke transport investment in great abundance; how these facilities both lowered the costs of movement and widened the market; and how the benefits were distributed to the rest of the economy.

I begin by discussing some of the theoretical effects of transport investment. The second section then treats the motives, magnitudes, and financing of the succession of transport innovations undertaken in the nineteenth and early twentieth centuries. It also deals with their success in lowering transport rates and attracting traffic. The third and fourth sections examine the variety of economic effects attributable to the nineteenth- and twentieth-century transportation revolutions. The final section briefly reviews that entire experience to see what conclusions may be drawn from it.