Initially, prominent American figures did not want the nation to be dependent on manufacturing. They feared the poverty they witnessed in European factory towns would be mimicked, and feared that it would erode American ideals. But as people realized that a stronger economy was needed to ensure the future of the nation, they began to advocate industrialization and feel that it was vital.a

Alexander Hamilton can be said to have been a proponent of facilitating industrialization. Heilbroner speculates that Alexander Hamilton, the Secretary of the Treasury, sought to encourage manufacturing by solving the debt problems of the United States. He wanted to refinance all outstanding bonds with a money reserve built on fixed taxes, and have the federal government absorb all state debts. He also established a national bank. This, he felt, would be a secure place for tax generated revenues and would at the same time provide credit for people willing to take risks in the manufacturing industry. Despite his efforts, it was too easy for people to continue with their established economic tendencies, and few felt compelled to move away from agriculture. Not u

The efficiency of transporting material via canal was supplemented by the invention of the steam-powered boat. Heilbroner has noted that in 1815, the Enterprise sailed up the Mississippi in one month from New Orleans to Pittsburgh. Before that, the trip had taken four months. By 1840, there were over 500 steamboats moving through western canals and rivers. Upstream rates had been reduced by 94% from 1815 to 1860. Downstream rates were down 75% from 1815. This encouraged more farmers to move to the mid-west, in an effort to increase their output of goods for the expanding market.6

The Erie canal ,which was completed in 1825, had a profound impact on the economy of the northern region. Heilbroner notes that, as a result of the canal, the cost of transporting freights to New York from the west was reduced by 90%. He states that the cost of shipping one ton of cargo from Buffalo to New York was 20 cents a mile in 1817. By the mid-1850s, after the completion of the Erie canal, the cost fell to less than one cent a ton-mile. This caused the volume of goods entering the economy to increase drastically. In 1836, about 58,000 tons moved along the Erie canal. By 1860, the number of tons increased to 1.8 million.4 The Erie canal significantly reduced the cost of moving goods and raw materials, and it had other effects on the economy as well.

The Erie canal encouraged the planning of other canal projects. Heilbroner claims that at least one hundred major canal projects were planned within a year of the completion of the Eerie canal. The cumulative cost of canal building in the 1820s and 30s was $125 million; a significant portion of that came from foreign investors. And Heilbroner has stated that more than a few canal projects were over extended financially. Despite being a disaster for the investors, these failed projects still had an enormous benefit for the economy as a whole. The canals allowed goods to be shipped from the interior to the coast, and then off to Europe or vice-versa. Also, th

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