Why has New York by the mid 19th Century clearly become America’s ‘capital of commerce’?

Abstract

The establishment of New York as the capital of commerce in the 19th Century was due to the influx of capital into the region through trade, manufacturing and agriculture. This in turn led to the parallel development of infrastructure and the property sector leading to massive wealth creation in the state. The wealth creation in the state as a result of these industries led to the increased commercial activity and the development of commercial institutions to support those activities. The combination of these factors secured New York’s position as the capital of commerce from the 19th century to the present day.

Introduction

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The establishment of New York as the capital of commerce in the 19th century is arguably a combination of effective planning and an influx of capital into the city. There were a number of advancements made in the city during the century which secured the dominance of the city as an economic, social and political powerhouse. All these developments leading up to the culmination of commercial development in New York in the 19th century are important for understanding the prominence of the city during this period. Arguably, the central reason why New York established itself in this manner is largely due to the influx of capital into the city through various means, including trade activity as a result of the Port of New York, the surrounding agriculture and manufacturing sectors, and the technological advancements made possible by the Erie Canal.

Prior to the 19th Century

Prior to the 19th Century, the economic and political situation in New York was somewhat tumultuous with the overthrow of the Dutch colonial powers in 1664 by English forces (Eisenstadt & Moss, 2005). This political change was significant in the development of the economy in New York as it established the state as the lumberyard, breadbasket and centre of refinery for the British sugar colonies in the Caribbean. This industry remained a significant part of the economy in the state for the next three centuries. This dominance of agriculture in the area ensured that the slave population of the state was significant and indeed in the 18th century, the slave population in New York was the highest North of the Mason-Dixon Line (Eisenstadt & Moss, 2005). This flourishing agriculture surrounding the city, coupled with the increasing artisan activity and trade, ensured that New York thrived as a city of commerce in the 18th century. This was reflected in the increased population in the city and the political prominence that was seen in the city.

A combination of the political and economic landscape of the city, due in part to the entry port at New York allowing an influx of trade activity into the city and the families that had historical interest in various different trades, had established New York as a centre of commerce by the 19th Century. It is evident that the establishment of New York as the capital of commerce in the 19th century was due largely to the geographical position of the city being favourable to increased trade activity and the associated benefits, but also due to the increased political concentration which allowed prominent families to prosper based on these economic benefits.

Dominance in the 19th Century

The 19th century marked a turning point for New York as a centre of commercial dominance, due to a number of very important infrastructural and economic developments. The first of these was the exponential growth of the real estate industry in the city by property tycoons such as John Jacob Astor between 1800 and 1828 (Cornog, 1998). Prior to investment in real estate, Astor had established himself as the wealthiest man in America as a result of his thriving fur trade made possible by the port at New York. With the increased population in the city, the real estate market grew comparatively and as a source of commerce, it proved to be a worthy investment.

A final measure ensuring the establishment of New York as the capital of commerce was the opening of the Erie Canal in 1825, which cemented the economic status of the city, as it provided a powerful means of trade control to its Western neighbours (Klein, 2005). This allowed for the prosperity of merchants in competition with the wealth earned by real-estate families (Melville, 2004). The dominance asserted by New York through the Canal also earned the nickname, ‘the empire state’ –a reference which still exists in modern reference (Klein, 2005).

With the tumultuous politics of the city establishing a new order after the Civil War, the city was found to be the largest in the United States as well as having the most dominant port, the most liquid securities market and the largest commercial banks (Kessner, 2003). In addition to which, the Civil War had provided substantial capital influx into the state because of the large demand of munitions and supplies (Klein, 2005). The Erie Canal during the Civil War exposed the might of New York’s manufacturing sector, as there was substantial reliance on the state for clothing, steel and textiles, as well as grain processing (Eisenstadt & Moss, 2005). The progression from increased trade on the canal included rapid advancement in transportation and communications, which included a series of railroad networks supporting the agriculture and manufacturing sectors alike (Eisenstadt & Moss, 2005). The by-product of the thriving industry in New York had obvious effects on the commercial success of New York as a city, as it meant that the population increased to support these industries and the surrounding services developed parallel to the economy. The introduction of commercial banking and the stock exchange in the city is one such by-product as the wealthy merchants and real-estate tycoons, and supporting industries represent a content of wealth in the city which necessary will create commercial activity (Kessner, 2003).

Conclusion

The establishment of New York as a commercial capital in the United States during the 19th century can be attributed to the natural geographical location of the city which established it as an important port and trade base for access to the Western states from Europe. This allowed for booming trade and as a result, industry and commercial activities grew parallel to the successful trade industry. Entrepreneurs at the time took full advantage of the economic, social and political status of the city, investing heavily in property, commercial banks and manufacturing ensuring an exponential influx of capital into the city. The increased capital resulted in successful commercial growth, which was unrivalled by any other city at the time. Capitalizing on the success of New York as a trade, agriculture and manufacturing power, infrastructure was built to support these industries ensuring the continued reliance on goods and services from the state. The combination of effective planning and natural selection therefore ensured that New York was the capital of commerce in the 19th century continued through to the modern day.

References

Cornog, E. (1998) The Birth of Empire: DeWitt Clinton and the American Experience, 1769-1828. New York: Oxford University Press.

Eisenstadt, P. & Moss, L. (2005) The Encyclopedia of New York State. New York: Syracuse University Press

Kessner, T. (2003) Capital city: New York City and the men behind America’s rise to economic dominance, 1860-1900. Simon & Schuster

Klein, M. (2005) The Empire State: A History of New York. New York: Cornell University Press

Melville, H. (2004) Bartleby: The Scrivener. Gutenberg

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