THE PIONEERS OF AMERICAN INDUSTRY 47 



9 per cent dividends. They found it profitable, therefore, 

 to provide for the payment of a part of the interest on their 

 internal improvement debts by selling bonds and investing the 

 proceeds in bank stock. A similar motive influenced the ac- 

 tion of Kentucky and Tennessee. The governor of Kentucky 

 urged the legislature to subscribe for bank stock in order to 

 provide funds for a system of public education; and the act 

 which established the bank of Tennessee, in which the state 

 invested $1,500,000, was entitled "an act to establish a state 

 bank to raise a fund for internal improvements, and to aid in a 

 system of education." 



In the southwest the situation was different. The de- 

 mand for capital here, and the difficulty of obtaining it, were, 

 perhaps, greater than in any other part of the country. It is 

 true there were no important works of internal improvements 

 undertaken, except in Louisiana, where the state issued $1,- 

 200,000 worth of bonds to assist railroad companies. But the 

 character of agriculture gave rise to a very great demand for 

 capital. The plantation system carried on by slave labor is 

 a highly capitalistic form of industry. Not only has labor 

 to be employed on a large scale, but the planter has to pur- 

 chase the labor outright, as well as to maintain it from year 

 to year. This involves an enormous initial expense to the 

 person who begins cotton or sugar culture with slave labor. 

 As the planter's crop is marketed but once in the year, it is 

 necessary for him to have large supplies of provisions on hand 

 before these provisions can be paid for from the proceeds of 

 his crop. The southern planter was therefore more like a 

 man engaged in manufacturing or commercial business than 

 like a northern farmer, and, like the manufacturer and mer- 

 chant, required from time to time advances of capital to 

 enable him to carry on his business. When it came to set- 

 tling a new country with such a system of agriculture, the 

 demand for capital became still greater. The hardy settler 

 of the northwest could move into the wilderness with his 

 family and gain a livelihood for them from the first, while he 

 cleared his land and prepared it for cultivation; but the 

 planter had to maintain his slaves while the land was being 

 cleared and the first crop produced, which would require at 



