Internal Improvement: National Public Works and the Promise of Popular Government in the Early United States by John Lauritz Larson
Can Transportation Networks Be Centrally Planned?
JUNE 01, 2002 by BURTON FOLSOM
Filed Under : Capitalism, Central Planning, Taxation
University of North Carolina Press • 2001 • 324 pages • $55.00 cloth; $19.95 paperback
Reviewed by Burton Folsom, Jr.
In 1805 Thomas Jefferson, in his second inaugural address, focused attention on the limited government of his presidency: “[I]t may be the pleasure and the pride of an American to ask, What farmer, what mechanic, what laborer ever sees a taxgatherer of the United States?” Little did Jefferson know that the issue of “internal improvements at federal expense” would unleash the taxgatherers during his second term to support an abundance of canal building from the coast of Maine to Athens, Georgia.
Professor John Larson of Purdue University sympathizes with plans—especially the Gallatin Plan of 1808—to unite America with a network of federally funded canals, post roads, and other improvements. What’s more, Larson finds such extra-constitutional actions consistent with republican ideals. “It is my contention,” Larson argues, “that the positive use of government power for popular constructive purposes, such as public works of internal improvement, never was proscribed by republicanism.” He commends, for example, “[George] Washington’s vision of a rising empire, guided from the center by benevolent government and striving toward some splendid republican future.” By contrast, those “capitalists” who wanted to build internal improvements with private funds Larson dismisses as localistic, obstructionist, and narrowly partisan.
Larson laments that the latter group usually won the congressional battles in the early 1800s and prevented the national planning of America’s transportation network. The states then began building their own canals. Much of this state-directed construction, Larson concedes, was a failure, but he still prefers state planning to private enterprise. He spends many pages describing the Erie Canal and commending the New York legislature for funding it. Since the Erie Canal brought in millions of dollars of profit in tolls, Larson sees it as a microcosm of what could have happened nationally if we had only tried public planning.
Despite an abundance of research, Larson’s analysis is often superficial and weak. The first problem is with typology. Both planners and capitalists wanted internal improvements—the question was how to fund them. The Founders refused to grant the federal government the power to tax generally to build canals locally. Presidents Jefferson and Monroe, among others, urged the planners to pass a constitutional amendment before going forward with their schemes.
Larson’s second problem is that national planning is hard to impose on a nation with a representative government. What if voters change their minds on where they want canals? Or, if they want railroads instead, whether they want them built with expensive T-rails or cheaper strap-iron rails. Strong changes in the composition of Congress—not to mention the inherent problems of voter self-interest, overly bureaucratic planning boards, and the almost daily adjustments necessary with new technologies—make any national plan almost impossible to direct centrally.
Larson’s third problem is that the internal improvements ultimately built by the various state governments were usually inferior to the ones built by private enterprise. Larson described the typical government-run canal when he said, “Early projects often failed, soaking up great sums of investment capital while yielding little or no general benefit.” State after state—Illinois, Indiana, Ohio, Michigan, among others—tried to build transportation networks only to watch them collapse ignominiously through mismanagement, poor planning, miscalculated funding, and partisan politics. Pennsylvania tried to copy the Erie Canal only to run up such catastrophic debt that the state had to declare bankruptcy. Even New York ran into debt because it built other canals that were all unprofitable and soaked up the capital gained by the success of the Erie Canal.
Governor Stevens T. Mason, who presided over the failed canals and railroads in Michigan, eventually called the fever to build at taxpayer expense the “false spirit of the age.” Upstate New York, with its excellent and atypical geography, topography, and river system, was a natural choice and the Erie Canal would have been profitable whether built by state or private funds. States that followed the Erie Canal example were later eager to privatize their failed transportation system. Larson is simply wrong when he says that in Michigan (and, by implication, elsewhere), “it was with great reluctance that voters embraced the privatization of their transportation networks.” In fact, Michigan voters went to the polls with gusto in 1851 to amend the state constitution to say “the [s]tate shall not be a party to or interested in any work of internal improvement.”
After the canal era, national planning and federal subsidies in transportation continued to fail. Private enterprise consistently worked better in the steamship business, in the building of the transcontinental railroads, and in developing the airplane. Internal Improvement contains useful information on early transportation, but its interpretation is unsupportable.