Download Chapter 8: Transportation, Internal Improvements and Urbanization

Chapter 8: Transportation, Internal Improvements and Urbanization
Summary
Transportation, internal improvements and urbanization proceeded in notable ways during the
antebellum period of U.S. history, some of which was guided by government and the rest of it by market
forces. Government planners rationalized their involvement by claiming that the U.S. territory was too
large and the population relatively sparse. Government was needed to bring in sufficient capital to
advance internal land and water transportation.
Key Terms and Concepts
Business cycle
Communication
Economic planning
Efficiently
Externalities
Gallatin Plan
Mixed enterprises
Negative externalities
Positive externalities
Productivity
Social savings
Technology transfer
Transportation
Turnpikes
Urbanization
Teaching Tips
1. During the antebellum period of U.S. history, ask students to compare and contrast the
associated costs and benefits of fostering the growth of a manufacturing site under different
transportation scenarios (roads, turnpikes, canals, steamboat, and railroad). Ask them to
explain how the net benefits of each shifted over time given the circumstances of the period.
Identify some of the key factors behind each shift.
2. Define the business cycle. Explain how business cycles affect internal improvements and
transportation. Discuss how different sectors respond to changes in aggregate market
conditions. Explain that any one industry, e.g. railroads, must contribute a significant share to
total GDP if it is to lead the business cycle versus follow it.
3. Many historians claim that antebellum railroads were typically built ahead of demand by risktaking entrepreneurs seeking private profits in the future. Discuss the evidence that Albert
Fishlow (1972) presents against this claim. Highlight the role of government money in
transportation investment.
4. Discuss the controversy focused on the role of railroads in contributing to the growth and
development of the U.S. economy during its antebellum years. Bring in Robert Fogel’s (1964)
5. work on the social savings created by railroads and discuss what these savings thus imply.
6. Discuss the Gallatin Plan and highlight the federal government’s attempt to design and
implement a national transportation plan to ease the flow of goods, services and resources.
Explain that this federal plan failed to be implemented out of fear that it was unconstitutional
for the federal government to use funds in this way. State and local governments assumed a
redistributive role and took on similar investments. Discuss the economic effects of
transportation investment by government, pricing set by government, regulation and other
public policies on individual behaviors as they apply to private transportation investments.
7. Define externalities and urbanization. Ask students to compare and contrast the positive and
negative externalities associated with urban living.