THE PIONEERS OF AMERICAN INDUSTRY 45 



The attitude of the people toward the policy of internal 

 improvements was not due to any modern socialistic or 

 populistic idea that the business of supplying transportation 

 and banking facilities to the community was not a safe and 

 legitimate one, to be left to the management of private en- 

 terprise. As a matter of fact, only a part of the states under- 

 took the actual construction and control of such works. 

 This was the policy of New York, Pennsylvania, Ohio, and 

 the northwestern states, excepting in the case of one or two 

 canals and railways and all the turnpikes; but Massachusetts, 

 Maryland, and the southern states generally pursued the 

 policy of shortening corporations to carry out the works, and 

 assisting these corporations by subscriptions to their stock 

 or by loans of state credit. After the crisis of the early 

 forties, all the states pursued this policy of assisting corpora- 

 tions. It required the experience of later years with the 

 evils of unrestricted private railway management, the rise 

 of labor difficulties, and the appearance of monopolies and 

 trusts in many industries, to teach the American public that 

 private enterprise might sometimes require to be restricted 

 and controlled rather than stimulated, in the interest of 

 public welfare. Down to the civil war, except in case of 

 the banking industry, the powers of the government were used 

 to encourage and assist private enterprise, not to restrict it. 



It remains to add a few words further concerning the con- 

 nection of the states with banking enterprises. It has already 

 been pointed out that nearly all the states invested public 

 funds, derived either from revenue or from the sale of state 

 bonds, in the stock of banking corporations. The motive 

 which caused this widespread connection of the states with 

 banks was not, however, the same in all sections of the coun- 

 try. In the older states, both north and south, it was not 

 primarily, if at all, due to a desire to encourage the growth of 

 banking. Banks needed no such encouragement in those 

 states. On the contrary, they were regarded as very profita- 

 ble enterprises, and the investment of capital in them as a dis- 

 tinct privilege. In New York, at least, the struggle of indi- 

 viduals to secure charters from the legislature gave rise to 

 political corruption. Many of the early charters contained 



