Effects of Transportation on the Economy

Effects of Transportation on the Economy

The construction of roads, canals, and railways in the 19th century accelerated the rise of the massive United States economy.


3 - 12


Geography, Social Studies, U.S. History


Train Governor Stanford

The locomotive revolutionized commercial transportation with a durable, faster, cheaper way to move goods. The Governor Stanford was the first train on the Central Pacific, the first transcontinental line in 1869 when joined with the Union Pacific.

Photograph courtesy of CSU Archives/Everett Collection
The locomotive revolutionized commercial transportation with a durable, faster, cheaper way to move goods. The Governor Stanford was the first train on the Central Pacific, the first transcontinental line in 1869 when joined with the Union Pacific.
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The ability to transport goods and human beings safely and efficiently across long distances is fundamental to economic life in modern societies. A brief look at the early United States illustrates this principle dramatically. In the first half of the 19th century, Americans built a robust transportation network through new technologies and heroic engineering ventures. These investments in infrastructure, often described as “internal improvements” in the political debate of the time, rapidly transformed the North American continent into a patchwork of overland roads, canals, and railways. These expanded transport links laid the foundation of a bustling nationwide economy of commercial agriculture and industry.

During the colonial and revolutionary periods, most of the nonindigenous population of North America lived near the Atlantic coast. Eighteenth-century America depended chiefly on water transportation to link small-scale farming and the artisan industry with transatlantic trade. Farmers living near the Hudson River or other river systems could float their crops downstream to the port cities. Upstream travel was slow and arduous. Post roads between the colonies had been built by the mid-1700s, but they were poorly built and not suitable for commercial transport. As a rule, the movement of agricultural produce and other goods was costly and took a great deal of time.

In 1794, a new road opened between Philadelphia, Pennsylvania, and Lancaster, Pennsylvania. It was the country’s first toll road, financed and built privately by a corporation, which was chartered by the state. Soon, other groups of merchants were incorporating to pave more turnpikes, especially in the northeast. By the early 1820s, thousands of kilometers of graded paths crisscrossed the region. The toll roads usually failed to turn a profit for their investors, but they provided a major boost to regional commerce. The federal government paid for one major highway during this era, heading westward from Cumberland, Maryland, at the inland headwaters of the Potomac River. The Army Corps of Engineers began building the Cumberland Road, also called the National Road, in 1811. By 1818, it had crossed the Appalachian Mountains and reached Wheeling, West Virginia, permitting overland travel between the Potomac and Ohio rivers.

Meanwhile, river transport was aided immensely by the application of steam power. While American engineer Robert Fulton did not invent the steamboat, he was the first to make an unqualified success with the technology. In 1807, his paddle-wheeled vessel, the Clermont, achieved the astonishing speed of eight kilometers per hour (five miles per hour) on its first voyage up the Hudson River from New York City, New York, to Albany, New York. Steamboats made two-way river traffic a viable proposition—and they could haul a large amount of freight. Before long there were dozens of them, then hundreds, steaming along the Mississippi River and other major rivers.

Canals gave the maritime transportation system still greater reach. The largest and most important was New York’s Erie Canal, approved by the state legislature in 1817 and completed eight years later. Extending from Buffalo to Albany at a width of 12.1 meters (40 feet) and a depth of 1.2 meters (four feet), this mighty engineering feat created an artificial waterway connecting the Great Lakes to the Hudson River, which empties into the Atlantic. The Erie Canal drastically reduced both the travel time and the cost of shipping commodities such as grain and lumber from the Midwest to the eastern seaboard. It led to an immediate and dramatic increase in the shipment of such goods, and the state’s investment in the monumental project paid off handsomely. Incoming toll revenues surpassed the entire cost of the canal’s construction within 12 years. By the 1840s, New York City had become the nation’s leading commercial port and well established as the country’s financial and trade capital. The rest of the state of New York—especially cities along the canal route, such as Rochester and Syracuse—also prospered.

Other state governments hoped to replicate New York’s success, leading to a furious round of publicly financed canal projects. By 1840, the United States had dug more than 4,828 kilometers (3,000 miles) of canals. Both Ohio and Indiana built systems connecting the Ohio River to Lake Erie at Cleveland and Toledo, respectively. The Illinois & Michigan Canal, completed in 1848, established a water link between the Mississippi River Valley and the Great Lakes. It spurred the city of Chicago, Illinois, to rise to prominence as the great Midwestern transport hub.

It was yet another innovation in transportation, the steam-powered locomotive, that ultimately had the furthest-reaching impact. Trains were a heavy-duty, fast, year-round transport solution, and in time they became the preferred option for commercial shipping. The earliest U.S. railroads covered only short distances, providing portage between two waterways. In 1827, a group of Baltimore, Maryland, businessmen formed a chartered corporation to build the first major railway between their city and the Ohio River. Many more private railway enterprises followed in the decades prior to the Civil War. Between 1840 and 1860, the nation saw a ten-fold increase in the amount of track laid, from 4,828 to 48,280 kilometers (3,000 to 30,000 miles). The majority of this development was in the northern states. Because competing companies built railways, the different lines used different rail gauges and track widths and were not interoperable until rails were standardized years later. The first transcontinental line was established in 1869 when the Central Pacific and Union Pacific lines met. Once their infrastructure was completed and initial problems resolved, the railways lowered the cost of transporting many kinds of goods. Railroads became a major industry, stimulating other heavy industries such as iron and steel production.

These advances in travel and transport helped drive settlement in the western regions of North America and were integral to the nation’s industrialization. The development of steamboats and the canal system made it possible for farmers to settle in the fertile lands of the Midwest and Southwest, while still having an efficient and relatively inexpensive means to deliver their goods to market. The resulting growth in productivity was staggering. Between 1829 and 1841, for example, the amount of wheat delivered along the Erie Canal rose from 3,640 bushels to one million bushels. Busy transport links stimulated the growth of cities, especially New York and Chicago, but also strategically located towns like Buffalo; Cleveland, Ohio; Pittsburgh, Pennsylvania; and St. Louis, Missouri. The transportation system allowed Americans to take advantage of the continent’s vast territory and natural resources, and to build an industrial economy on a national scale.

Media Credits

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Tyson Brown, National Geographic Society
National Geographic Society
Production Managers
Gina Borgia, National Geographic Society
Jeanna Sullivan, National Geographic Society
Program Specialists
Sarah Appleton, National Geographic Society, National Geographic Society
Margot Willis, National Geographic Society
Clint Parks
Last Updated

October 19, 2023

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