Page 2 Did Railroads Induce or Follow Economic Growth? Urbanization and Population Growth in the American Midwest, 1850-60 Over half a century ago, George Rogers Taylor (1951) celebrated what he believed to be the central role played by “[t]he Transportation Revolution” in America’s social and economic changes during the nineteenth century. According to Taylor, nowhere were these changes greater than in the Midwest. There, in less than two generations, a sparsely populated frontier region was transformed into the world’s bread basket, an industrial heartland and home to the 7th, 8th and 9th largest cities in the United States. When Ohio achieved statehood in 1803, the only ways into the region were by sail, paddle, or on foot. Eight years later, the New Orleans had successfully demonstrated the feasibility of steam navigation on the Ohio and Mississippi rivers. By 1818, the National Road had reached eastern shore of the Ohio River at Wheeling and in 1832 the first canal in the region, the Ohio and Pennsylvania, opened to traffic. In the years that followed, not only did these transportation networks spread throughout the region but they were joined by a new medium, the steam railroad. Collectively, they provided ever-easier means of entry for new migrants and ever-cheaper means for the export of the region’s produce. The potential economic impact of improved transportation was recognized from the very beginning. For example, 200 years ago, Treasury Secretary, Albert Gallatin, in his famous report on “Roads and Canals” to Congress noted "good roads and canals will shorten distances, facilitate commercial and personal intercourse, and unite, by still more intimate community of interests, the most remote quarters of the United States” (U. S. Congress., Senate 1808). The net result, he argued, would be an increase in nationalPage 3 wealth. Consequently, he advocated the “early and efficient aid of the Federal [emphasis in the original] government” to mediate market failures and the externalities associated with the supply of these transportation services (Paskoff, Paul F. 2007). Many states also took this advice to heart with the result that most of the roads and canals were built with state sponsorship (Goodrich, Carter 1961). Although it was the latecomer to the transportation revolution, the railroad quickly rose to dominance. By 1840, there were about as many miles of railroad in operation as canals (Taylor, George Rogers 1951 p. 79). A decade later, railroad mileage exceeded that of canals by more than two to one and was closing in on the total miles of navigable waterway in the Mississippi and Ohio river system (Taylor, George Rogers 1951 p. 79); (Hunter, Louis C. 1949) and, by 1860, the United States had more miles of railroad than the rest of the world combined (Mitchell, B. R. 2003, Series F1, pp. 673-4). Moreover, the American Midwest which, at the start of 1836, had no railroads was, by the mid-1850s, the focus of much of this rail construction. Indeed, between 1853 and 1856, more than half the track miles built were built in the Midwest and, in 1856, this share reached a remarkable 75%, of which almost 40% was built in just one state, Illinois(Carter, Susan B., Scott Sigmund Gartner et al. 2006 Series Df882); (Fishlow, Albert 1965, p. 172). According to Leland Jenks, the expansion of this railroad network into the Midwest “to link the seaboard with the interior, the Ohio Valley with the Great Lakes, and, breaking away from the contours of water transport, to unite distant points by more direct routes … gave the ‘railroad idea’ prolonged force in American economic life. The conviction that the railroad would run anywhere at a profit put fresh spurs to AmericanPage 4 ingenuity and opened closed paddocks of potential enterprise” (Jenks, Leland H. 1944 pp. 2-3). Jenks was far from the first person to make the claim that the railroads preceded economic development. A New Orleans Picayune editorial from 1860 claiming the “nine-tenths of our roads when first traversed by steam pass through long ranges of woodlands in which the ax has never resounded, cross prairies whose flowery sod has never been turned by the plow, and penetrate valleys as wild as when the first pioneers followed upon the trail of the savage…” (Fishlow, Albert 1965) and a British investment adviser of the late nineteenth century, Salomon Frederik Van Oss (1893), opined to the investing public “the American railroad came in advance of the settlers.” Certainly, between 1840 and 1860, a period which includes the first construction boom in American railroads, population flooded into the American Middle West. Wisconsin’s population increased more than 20-fold in these two decades; Michigan’s grew 15-fold and even Illinois saw its population grow almost four-fold. Moreover, vast areas of territory were transformed from what the federal government identified as “frontier”—areas where population density was below six persons per square mile (essentially less than one typical family per square mile)—to settled, and even urban, communities. Indeed, densities in the counties surrounding the cities of Cincinnati, St. Louis and Milwaukee averaged over 250 persons per square mile by 1860. In the East, railroads and canals essentially developed alongside one another. America’s first railroad, the Baltimore and Ohio, for example, was chartered just eight years after the very first section of the Erie Canal (between Rome and Utica) had ushered in the canal age in America. Moreover, the limited power of early locomotives and thePage 5 economics of railroad and canal construction and operation which placed a premium on a level grade and led both media to follow the same routes as natural waterways. Railroads in the East, as the comparative latecomer if only by a few years, tended to supplement existing transportation media. Eventually though, railroads were forced to strike out on their own. At no time or place was this more obvious than in the push to build the transcontinental railroads linking the East and West coasts together in the 1860s. Even before that, however, the railroads had begun to spread out as the mountain valleys of the Appalachians gave way to the broader plains in the Midwest and lower population densities of a newly settled agricultural region. It was there, in the Midwest, that Fishlow (1965) sought to determine