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Growth of nys business

Growth of NYS Business

April 17, 1996

For a number of reasons, business enterprise in New

York grew by leaps and bounds between 1825 and 1860.

New York's growth between the years 1825 and 1860 can be attributed to a number

of factors. These include but cannot be limited to the construction of the Erie

Canal, the invention of the telegraph, the developed of the railroads, the

establishment of Wall Street and banking, the textile, shipping, agriculture and

newpaper industries, the development of steam power and the use of iron products.

On October 26, 1825 the Erie Canal was opened. The canal immediately became an

important commercial route connecting the East with the Ohio and Mississippi

Valleys. With tht time of travel cut to one-third and the cost of shipping

freight cut to one-tenthof the previous figures, commerce via the canal soon

made New York City the chief port of the Atlantic. The growing urban

population and the contruction of canals, railroads and factories stimulated the

demand for raw materials and food stuffs. In 1836 four-fifths of the tonnage

over the Erie Canal came from western New York (North, 105). Much of this

cargo was in the form of agriculture goods.

The farmer become a shrewed businessaman of sorts as he tended to produce

whatever products would leave him the greatest profit margin. The rise of the

dairy industry was by far the most significant development in the agricultural

history of the state between 1825 and 1860. Farmers discovered that cows were

their most relliable money-makers, since both the domestic and foreign market

kept demanding more dairy products (Ellis, 273). Price flucuations became

increasingly important for the farming population between 1825 and 1860. Prices

rose from the low level of the early 1820's until the middle 1830's and the

farmer's shared in the general prosperity (271). Although the rapid

industrialization and urbanization of New York had a great deal to do with the

success of agricultural markets sporadic demand from aboard as a result of the

Irish famine, the Crimean War and the repeal of the Corn Laws in England also

contributed(North, 141). During this period Ohio, Pennsylvania, New York and

Virginia, in that order were the leading wheat growing states. Between the

years 1840 and 1850 New York ranked first in the production of beef.

The absence of politic party differences on issues related to the the growth of

democracy existed in regard to the foremost economic questions, there was

absolutely no partisan division evident in the movement to incorporate new

financial institutions; rather , the primary factors , which the legislators

examined, concerned value, feasibility, profit and the location within the state.

Dozens of turnpike proposals, most of which werebacked by the Republicans,

passed the legislature; but the Federalists cooperated, seeing the chance for

profits. Prominent Federalists like John Rutherfurd, John Neilson, William

Paterson, John Bayard, and James Parker invested susstanial sums in the

turnpike business. There were numerous Republicans who were also vitally

interested in the turnpike business (Kass, 150). Bipartisan support also

accompanied plans for the construction of bridges and canals. All of the parties

contained a large number of adherents from from every level of economic well-

being in society. This helps to expain the absence of any clear-cut party

differences on the major economic issues of the such as the chartering of banks,

the protestive tariff, internal improvements, the development of manufacturing,

and the promotion of superior agricultural techniques. Each politcal faction

had segments both pro and con on most of these questions, and, inall cases it

was opprtunism, the desire for profits, which was decisive in determining one's

political position on these economic issues(175). New York's economic growth can

also be attributed to the invention of the cotton gin. Cotton had become a boom

crop in the south, however, plantation owners were either too engrossed in the

production of their crops or too unschooled in business techiniques to handle

its distribution. Some just did not want to be bothered. This opened thee door

for agents representing New York shipping firms who were only too happy to help

them out - for a fee. This scheme not only earned the New York merchants a

handsome profit but also solved the problem that without cotton the ship owner

would be hards preesed to find adequate cargoes for their return voyages. And

so it came about that New York in the nineteeth century became the nation's

foremost shipper of cotton(Allen, 108-109). The cotton shipments entering New

York harbor were brought to textile mills for processing. A group of New york

capitalist estashlished the Harmony Cotton Manufacturing Company in Cohoes. A

heavy investment of capital caused the rapid growth of the factory system, which

was mass production with integration of processes and produced a high quality

cotton cloth as well as other textiles(Ellis, 266).

This set the scene for an industrial society by widening the market,

manufacturing increased rapidly throughout this period, although development

varied enormously from industry to industry. Often developments were due to

improvements in technical processes such as the adoption of steam power and

the use of anthracite coal instead of charcoal by the iron industry. The

metallurgical industries emplyed thousands for skillful workers who produced a

variety of iron and steel products, such as farm machinery, pistols, sewing

machines, clocks and stoves. These products were being produced using standard

parts and multiple quantities(267). The iron industry made rapid progress as a

result of this processas well as the expansion of the railroad industry which

created increased demand for iron products. It can therefore be surmized that

often growth in a one industry would cause increased demand for another

industry's product, hence the boom of both industries. The growth of

manufacturing was the main impetus to expansion , the industrial base broadened

during this period, reflecting the overall improvement in factor endowments for

manufacturing. Equally important was the cost decline in transportation, which

opened up new sites for manufacturing development and reduced transport costs

for existing firms (North, 208). Production increases required a retail market.

In November of 1858, R.H. Macy established a department store in New York City

successfully implementing a fixed price policy on a large scale developed by

small New York stores since 1840 establishing a n American retail sales custom

(Spann, 125).

Some additional elements that should mentioned include the founding of the New

York Tribune by Horace Greely, the development of the telegraph by Samuel Morse,

the colaboration of six New York newspapers who joined to pay telegragh costs of

foreign news relayed from Boston, and the establishment of a New York

clearinghouse to facilitate banking operations.

Research reveals that the reasons for the success of New York's business

enterprise between 1825 and 1860 were enumerous with no reason weighting more

heavily than another with the exception of as Ellis states that, "Plank roads,

railroads, canals, steamships-all had revolutionary effects on the economy of

New York. The predominately self-sufficent farmer of pioneer days was gradually

tramnsformed into a specialized commercial farmer sensitive to every shift in

the markets. The isolation of many rural communities was breaking down as

citzensand goods flowed freely in and out. Merchants in both the upstae and

metropolitan region, recognizing the crucial role of canals and railroads,

looked with satisfaction upon the finest and most actively expanding

transportation network in the country. New York grew steadily in population,

wealth, and trade largely to the splendid system of water and rail

transportation promoted by its citizens in this period.", but all entwinding to

create a boom of business expansion during this period. It appeared as if we

were developing not only as a state but as a civilized nation whenever this

development would be curtailed by the onsloat of a civil war.

Works Cited

Allen, Oliver E. New York, New York: A History of the World's Most Exhilarating

and Challenging City. New York: Macmillan, 1990.

Ellis, David M., et al. A History of New York State. Ithaca: Cornell UP, 1967.

Kass, Alvin. Politics in New York State, 1800 -1830. Syracuse: Syracuse UP,

1965.

North, Douglas C. The Economic Growth of the United States, 1790-1860. New

York: Norton, 1966.

Spann, Edward K. The New Metropolis: New York City, 1840-1857. New York:

Columbia UP, 1981.

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