THE PIONEERS OF AMERICAN INDUSTRY 41 



capital it was necessary to bring together the many small 

 savings of this country, and to attract the large ones of 

 foreigners. There was no body of private individuals in the 

 country well enough known and with sufficient influence in 

 the business world to establish the credit of a corporation so 

 that it could command the confidence of both these classes of 

 investors. The only securities that could do this were public 

 securities, or the securities of corporations which were guar- 

 anteed or assisted by the government. American public credit 

 had been raised to the highest pitch by the debt paying policy 

 of the federal government; and it was inevitable that the 

 American people should turn to the only means in their power 

 to provide for their needs. When New York demonstrated 

 that it was easy to secure all the capital necessary for carrying 

 out public works by the issue of bonds on the credit of the 

 state, the way was open for other states to pursue the same 

 course; and only New Jersey and the smaller New England 

 states refused to enter upon it. 



The crisis of 1839, and the subsequent embarrassment of 

 the states, ruined public credit for a time, and put an end to 

 the movement. In the older states of the north, like Massa- 

 chusetts, New York, and Pennsylvania, it was never resumed, 

 except in the case of the enlargement of the Erie canal and 

 the building of the Hoosac tunnel. In the west and south, 

 however, where capital was more difficult to secure, public 

 assistance to railways was resumed in the later forties, and 

 continued in some sections until comparatively recent times. 

 In the west this assistance was granted in the shape of sub- 

 sidies by comities, towns, and cities. In the south, however, 

 the states also took part in it. Virginia, South Carolina, 

 Tennessee, and Missouri created debts aggregating over $80,- 

 000,000 for this purpose between 1848 and the civil war. 

 South Carolina, Georgia, and Louisiana were fairly started on 

 the same course when the war broke out; and, after the war, 

 under the reconstruction governments, all the southern states 

 adopted the policy on a large scale. Local bodies were also 

 active. Hardly a southern city of any importance failed to 

 make grants of aid to railway lines in which they were espe- 

 cially interested. In Louisiana, Mississippi, and Kentucky 



