THE PIONEERS OF AMERICAN INDUSTRY 23 



a new field for its operation. One of the most striking features 

 of the new period was the increase of speculative activity 

 everywhere in American industry. This was largely the result 

 of the enormous increase in land values, to which the changes 

 we have described gave rise. The choice cotton lands of the 

 southwest and the coal lands of eastern Pennsylvania sud- 

 denly became worth fabulous sums. Along the canals and 

 rivers, especially in western New York and central Ohio, 

 farm produce more than doubled in value; and the value of 

 the land rose correspondingly. From New York on the east 

 to New Orleans on the west, new towns were springing up 

 along the lines of trade, and old ones growing with a rapidity 

 that was new in American experience. The population of 

 New York increased from 123,000 to 203,000 in the ten years 

 from 1820 to 1830; New Orleans, from 27,000 to 46,000; 

 Cincinnati, from 9,000 to 24,000; and Louisville, from 4,000 

 to 12,000. Buffalo and Rochester were hardly in existence in 

 1816; in 1830 they had 18,000 inhabitants. *The number of 

 villages along the New York canals increased from 55 to 105 

 between 1817 and 1833. Of course, the growth of all these 

 cities and towns caused a corresponding increase in the value 

 of real estate. That of New York went up from $69,000,000 

 to $165,000,000 in ten years, and the increase in many others 

 was still greater. It is easy to see how all these things would 

 foster speculation. Josiah Quincy declared in 1826 "that the 

 enormous increase in wealth without labor which has come 

 to fortunate speculators since 1815 seems to make the invoca- 

 tion of chance legitimate business." 



We are now in a position to understand the economic 

 forces which were acting in this country during the early part 

 of the nineteenth century, and to judge correctly of the causes 

 which led the American people at that time to make so large a 

 use of the powers of the state to assist industries. There are 

 three matters which need to be considered in this connection, 

 in order to bring out the situation which produced the move- 

 ment. The first is the great increase in the demand for capital 

 which accompanied the opening of the west; the second is the 

 supplies of capital which were available at that time to satisfy 

 this demand; and the third is the obstacles which prevented 



