Trade and Commerce

Trade and commerce fueled the urban growth of the United States, blessed as it was with three coastlines containing navigable saltwater ports and an extensive river and lake trading network. Trade centers, defined as strategically located population centers that facilitate the movements of goods and services, became transportation hubs through which moved U.S. agricultural products in the 19th century and industrial products in the 20th century; they are moving ideas over the Internet in the 21st century. In all eras of U.S. history, the economic fortunes of trade centers waxed and waned contingent upon their ability to meet the ever-changing demands of domestic and international markets. New York parlayed its strategic location and built a canal to move wheat from the Great Lakes region to other areas of the United States. In addition, New York developed an ethos that allowed it to play banker to the United States and, after World War II, to the entire globe. Chicago embraced new technology, the railroad, and served as the trade and commerce center for the interior of the country after the Civil War. Los Angeles used its location as the first U.S. port of call for northbound vessels navigating from the Panama Canal to become the dominant port on the Pacific Coast. In sum, geography greatly influenced where trade centers were initially situated, and trade and commerce patterns determined how vital the trade centers remained.

Yet throughout all eras of U.S. history, one city stood above all others in leading the nation in trade and commerce: New York. Founded by the Dutch West Indies Company in 1625 and originally called New Amsterdam, the trading post initially specialized in exporting Hudson Valley fur to the Netherlands. It was the most religiously open and tolerant trade center of the colonial era, and the English, who gained permanent control in 1674, remained committed to deepening the city's trade and commerce heritage. Early in its history, New York gained a reputation as a place of business when an opportunistic commissioners plan of 1811 allowed for a comprehensive project to use the immigrant labor force as a means to facilitate the region's business interests. A critical event in New York's development as a trade center occurred in 1825 with the official opening of the Erie Canal, a waterway that linked the Great Lakes with the Atlantic Ocean. Freight rates dropped from $100 per ton to $10 per ton, and the amount of wheat exported into New York for foreign and domestic consumption expanded to one million bushels. Prior to the Erie Canal, either Philadelphia or New York could claim the mantel as the leading trade center. In 1835, New York overtook Philadelphia as the largest city in the United States, and by 1840 New York moved as much tonnage as Boston, Baltimore, and New Orleans combined.

[Page 802]The second great contribution from New York was its 18th-century ascension as the domestic center of capital followed by its 20th-century ascension to the global center of capital. The United States would not have become the dominant country in trade and commerce without New York capital. New York's origins as a financial center facilitating trade and commerce started after the Revolutionary War. New York experienced a rapid population growth from a steady influx of immigrants that needed cash and credit, and Secretary of Treasury and New Yorker Alexander Hamilton provided guidance on how to facilitate financing for business. In the 1790s, one prominent New Yorker, William Duer, was instrumental in obtaining an influx of capital from investors in Boston, Philadelphia, Amsterdam, Paris, and London. New York began providing financial services to its own population and began to service Revolutionary War debts from the Southern states. With increased liquidity came increased trade. Money from New York banks and private investors financed railroad construction on the East Coast prior to the Civil War, and after 1865 New York business acumen led the way in defining global capitalism. Andrew Carnegie, John Pierpont Morgan, Cornelius Vanderbilt, and John D. Rockefeller amassed fortunes in steel, banking, shipping, and petroleum and used New York as their base of operations. New York cemented its position as the global trade center following World War II, and in 1998 New York firms raised a total of $3.2 trillion for global businesses. This $3.2 trillion is equal to the entire global gross domestic product (GDP) minus the GDP of three countries (United States, China, and Japan). By raising such a staggering amount of capital, New York will continue to serve as the global trade and commerce center well into the 21st century.

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