Growth Of Nyse Essay, Research Paper

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.

54e

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.