Rhode Island : three centuries of democracy, Vol. I, Part 89

Author: Carroll, Charles, author
Publication date: 1932
Publisher: New York : Lewis historical Pub. Co.
Number of Pages: 716

USA > Rhode Island > Rhode Island : three centuries of democracy, Vol. I > Part 89

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The value of water-power was so little appreciated before the era of power-driven machinery and the factory that the Rhode Island General Assembly in the colonial period some- times hesitated between granting a right to dam a stream to an enterprising mill man and safe- guarding the fishery by insisting rigorously that the passage of fish should be free and unre- stricted during the spawning season. At one time it was proposed to cut a channel around the rugged, rocky falls at Pawtucket, thus to assist fish to ascend from salt into fresh water; the consequence might have been destruction or deterioration of one of the most valuable water- rights in Rhode Island. In the development of mill sites those nearest to tide water and navigable streams were chosen first, because the raw material for manufacturing could be brought almost to the factory door by water routes, and the finished product likewise could be shipped practically without expense for carting. Thus it happened that Pawtucket pre- ceded Woonsocket by a full quarter of a century as the location for large industrial enter- prises; Pawtucket had the advantage over the then northern village of being more than ten miles nearer to navigable water.

ROAD BUILDING-The building of factories along the banks of inland rivers necessitated a simultaneous construction of roads that should be passable for the heavy types of wagons employed in carrying alternately loads of raw material from wharves to factories, and loads of the finished product from factories to wharves. The roads were constructed; in forty years, 1803-1842, toll-road companies were incorporated by the General Assembly with the frequency of almost one a year. The introduction of the toll-road plan indicated the purpose of taxing the cost upon the traffic; it was a departure from the colonial device of promoting the construction of roads and bridges principally by granting lotteries. The conception of a state-wide interest in the construction of arteries of travel was to appear much later in the history of Rhode Island. Along with the building of toll roads went the construction of toll bridges, including the two bridges across the Seekonk, the Washington bridge built by John Brown and his associates, and the old Central bridge, later the Red bridge, undertaken by Moses Brown and associates almost so soon as John Brown's plans were disclosed. The Howland Ferry bridge across the Seaconnet River and Kelly's bridge across the Warren River

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were early toll bridge projects. Both the Seekonk River bridges were swept away by storm and high tide in 1807, and were replaced by new structures, also toll bridges. The toll roads and toll bridges combined to furnish the system of internal transportation needed to carry the traffic incident to the expansion of manufacturing, and also the new lines of stage coaches, which were established as a response to a demand for direct overland passenger transportation between Rhode Island towns and cities and other places in Connecticut and Massachusetts, as business and other relations became more intimate in the new industrial régime. The char- tering of toll roads and bridges stopped abruptly, with the incorporation and building of steam railroads, and the stage coaches soon gave way to railway service. The construction of the Mount Hope bridge in the twentieth century as a toll bridge marks a return in Rhode Island to a plan that had been abandoned three-quarters of a century earlier.

One more, and that a major transportation project, was developed before the steam rail- road. The Blackstone Canal, planned by John Brown in 1796 to connect Providence with Worcester by water via the Blackstone Valley, and ultimately, by westward extension, to reach the waters of the Connecticut River, perhaps near Springfield-a project worthy of the daring initiative of the most valiant of the four brothers-was revived in 1823, when both the Rhode Island General Assembly and the Massachusetts General Court granted charters each to a state company, and the state companies united to conduct a joint enterprise. The devices of state incorporation for interstate business and of trusts and holding companies had not been developed a century ago to the fineness and finesse that promotes modern major business enter- prises. The Blackstone Canal was principally a Rhode Island project; the capital stock of $500,000 was allocated $400,000 to Rhode Island and $100,000 to Massachusetts. The names of the Rhode Island trustees-Edward Carrington, Stephen H. Smith, and Moses Brown Ives-are suggestive of the Rhode Island promoters. Rhode Island's allotment of capital stock was oversubscribed to the amount of nearly three-quarters of a million dollars, when offers of $1,130,000 for a subscription limited to $400,000 were received within three hours after the books were opened. It was unfortunate that so much must be rejected; the canal cost $750,000 for construction, and began operation with the handicap of an indebtedness equal to half its capital, involving interest charges which were fixed, and not, like dividends, related to earnings. As constructed, the canal was a trench not quite forty-five miles long, with a minimum width of forty-five feet and minimum depth of four feet. Where feasible it followed the bed of the Moshassuck River to Scott's Pond, above Lonsdale, and thence the bed of the Blackstone River. The connection between the Moshassuck and Blackstone Rivers was through Scott's Pond and Cranberry Pond, the waters of which were raised by building an embankment. Cranberry Pond was raised nearly twenty feet, and the "floating island," which for many years moved on Scott's Pond as driven by the wind, no doubt was a mass of compactly matted root systems lifted from the bottom by rising water. The combined Scott's and Cranberry Ponds became three locks in the canal system. Altogether forty-nine locks were constructed to overcome the rise of 450 feet from tide water in Providence to Worces- ter. The canal was completed and opened for business on July 1, 1828, when the "Lady Carrington," passenger packet, a vessel specially constructed for use in the canal, made the trip from Providence to Worcester. The "Lady Carrington" returned the following day, thus opening a daily passenger service alternately up and down the canal. The "Lady Car- rington" was seventy feet long, drew less than one foot of water, and was hauled by two horses at a speed of four to five miles an hour. The Providence and Worcester Canal Boat Company operated a fleet of twelve freight barges on the canal, and there were, besides, another dozen of privately owned freight barges serving corporations along the line.

The canal was abandoned in 1849, when its charter was revoked on the completion of the Providence and Worcester Railroad. It had not been a success financially, and the investment in the capital stock had occasioned a total loss .* Competition with the railroad company was.

*Total dividends were less than $2 per share.

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of course, impossible. Aside from that, the canal company was involved, almost from the beginning of operation, in litigation with the owners of water-rights along the Blackstone River, involving questions as to the canal company's right to divert water from the streams and ponds along the line for flooding its locks, and as to the obligation of the canal company to pump back into the river and ponds water sufficient to maintain the levels necessary for storage and mill operation. The connection of Scott's Pond with the Blackstone River reopened the pre-glacial course of the Blackstone down the Moshassuck River valley, and threatened destruction of the water-rights along the modern course of the Blackstone by which it reaches Pawtucket Falls and the Seekonk River, in a drop of seventy-four feet. The canal company was required to pump back into the Blackstone within an hour water drawn off through the locks in Scott's Pond. When the canal charter was revoked the company was ordered to "close the outlet for Scott's Pond into the Moshassuck River, so as to prevent any flow or leakage therefrom, and also, in all places from which locks are removed, to fill up the canal. or use some other manner to prevent escape of water below its present ordinary level." The Lonsdale Company acquired the canal water rights in Scott's Pond, and the enforcement of these prevents the Saylesville Bleachery from diverting water therefrom for use in its factory. The Blackstone Canal, while serving the Blackstone Valley mills as a low-priced transporta- tion system, as an intruder in the use of established water-rights incurred hostility; modern capitalists, no doubt, would solve the problem by buying water-rights, and selling power and water in a thoroughly organized development. The canal was doomed by the building of a railway before a master capitalist had appeared.

The construction of railways was a solution in part of internal and in part also of external transportation problems. The first railroad serving Rhode Island was a toll-rail-turnpike between Providence and Boston, constructed under a charter granted in Rhode Island in 1831 and supplemented by a Massachusetts charter. It was estimated in 1829 that 29,000 tons of freight passed annually, most of it overland, between Providence and Boston, while two of several stage coach lines carried 25,000 passengers annually. Both freight and passengers could be moved more economically and more expeditiously on a railroad. The Boston and Providence Railroad consisted of a roadbed equipped with rails, extending from India Point through Attleboro, Mansfield and Canton to Boston. The railroad company operated coaches and carts drawn by horses; any person, as the charter read, owning a coach or cart with standard gauge wheels might drive on the road, paying toll for using the rails. The road was similar to the horse-power railroads in use in the British Isles before the introduction of steam locomotives. Four years after the granting of the charter, in June, 1835, steam locomotives had replaced horses, and the company was carrying passengers and freight by steam power from Providence to Boston and return. Other railroads were incorporated and constructedt as follows: The New York, Providence and Boston, 1832, which operated between Provi- dence and Stonington, 1837; the Providence and Worcester, 1844, 1848; Providence, Hart- ford and Fishkill, 1852; Providence, Warren and Bristol, 1854. The Boston and Providence was connected with the Stonington line by steam ferry, and the journey to New York was completed by boat from Stonington. When the Providence and Worcester built the Union railroad station in Providence, the Boston and Providence laid rails for a connecting line from East Junction, near Attleboro, to Boston switch, near Pawtucket, and entered the new station from the east over the rails of the Providence and Worcester. The Stonington line also laid rails to enter and leave the new station from the west, and the Providence, Hartford and Fishkill entered from the same direction. The new railroads in part followed river valleys close to the sites of factories, the business of which furnished freight, or built branch lines and spur tracks connecting with factory yards, and steam railroad transportation drove both stage coaches and overland freight carting lines out of business.

¡Second date is date of construction.

OLD RAILROAD STATION, PROVIDENCE Destroyed by Fire and Replaced by Present Union Station

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Rhode Island merchants and mariners had carried on a profitable trade with New York in colonial days in small packets built on fine lines for rapid sailing. The "Hannah," packet, which lured the "Gaspee" to the sandbar and destruction, was one of these vessels. Coastwise traffic, passenger and freight, continued; and increased in volume with the development of manufacturing. Rhode Island had more to sell beyond its borders, and must buy so much more to feed the population in factory villages and to provide them with other necessities of life. Larger vessels than the packets brought into Narragansett Bay cargoes of southern cotton, Pennsylvania iron, and later coal as steam factories were developed. Foreign trade direct with distant countries declined in the first quarter of the nineteenth century, and had practically disappeared altogether before 1850. But the waters of the bay were still busy, and the wharves and warehouses were piled and filled with freight passing in and out, while the passenger service grew by leaps and bounds to meet the exigencies of new business. Until 1817 the traffic was carried exclusively in sailing vessels. The "Firefly," a steamboat built in New York, entered Narragansett Bay, May 28, 1817, and two days later made a round trip from Providence to Newport in eleven hours. The "Firefly" established a regular service between Newport and Providence, which President Monroe patronized in June on his tour of the northern states. Five years later, June, 1822, a steamboat line was established between Providence and New York. John Babcock of Providence, invented the Babcock boiler engine in 1826, an improvement which reduced the consumption of wood on the voyage from Narra- gansett Bay to New York from fourteen cords to less than two cords. The earlier types of steamboat, in making trips between New London and New York, stopped at New Haven for wood. There was rugged competition for a time between sailing packets and steamboats for the carrying trade, passengers and freight, between Providence and New York. as there was also between stage coaches and steam railroad trains. The number of vessels entering and leaving Narragansett Bay was reduced with the substitution of steamboats for sailing vessels, but the weight of cargoes and the value thereof increased with the growth of the manufactur- ing industries. Besides, the railroads brought into and carried away from Rhode Island a tremendous tonnage, including on incoming trains vast quantities of food for the population that was no longer supported by the soil.

BANKING AND CREDIT -- For promoting manufacturing Rhode Island's second need was capital. In colonial days attempts to convert wealth into capital by issuing paper money on the security of land mortgages had resulted disastrously. Ratification of the Constitution had effectually ended state banking so far as the latter involved emitting bills of credit or issuing paper money. An effort to obtain subscriptions for a private "Bank of Rhode Island and Providence Plantations" failed in 1784. Seven years later the Providence Bank was char- tered, October 3, 1791, because "well regulated banks are highly useful to society by promoting punctuality in the performance of contracts, increasing the medium of trade, facilitating the payment of taxes, preventing the exportation of specie, furnishing for it a safe deposit, and by discount rendering easy and expeditious the anticipation of funds on lawful interest. ... . " The bank was promoted by John Brown and Moses Brown and their associates; in a letter to Moses Brown from Philadelphia, John Brown advocated the undertaking as "favoring a good and substantial foundation for the commercial, manufacturing and mechanical rising gen- eration." "Without a spring to promote our young men in business here," he wrote further, "they must and will continue to go to such places as will aid them with the means of business ; and, in short, all our wealth, I mean the wealth as fast as acquired, in this state must be trans- ferred to other states, who by their banks promote all the valuable arts of mankind." The capital was oversubscribed, and the bank, still in existence, and a flourishing twentieth cen- tury institution, was immediately successful. Additional to performing the customary func- tions of promoting business by extending credit and discounting notes (another form of credit ) the bank "promoted punctuality" by recourse to "bank process," a summary procedure

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through the operation of which the bank could obtain court judgment and execution on undis- puted claims without the delay of trial. A competing bank, the Exchange, later the National Exchange Bank, until absorbed by the Industrial Trust Company, was established in Provi- dence in 1801, and the Roger Williams Bank in 1803. Newport banks were established : Bank of Rhode Island, 1795; Newport Bank, 1803; Rhode Island Union Bank, 1804. Other banks established before 1805 were the Washington of Westerly, 1800; Bristol Bank of Bristol, 1800; Manufacturers' of Pawtucket, 1803; and Smithfield of Woonsocket, 1805. As the General Assembly of the period, in the instance of legislation, not infrequently intro- duced a statute by a preamble stating the purpose, so early bank charters contained elaborate preambles. Thus the Washington Bank was established, "considering that those banks which are at present established in this state are too remote or too confined in their operations to diffuse their benefits so generally to the country as could be wished; considering the embar- rassments into which the farmer is frequently drove for the want of means of stocking his farm at those seasons of the year when money is obtained with the greatest difficulty ; con- sidering that in a place particularly fitted by nature to encourage the industry and ingenuity of the mechanic by holding out the sure prospect of a suitable return for his enterprise, nothing is wanting but those little assistances from time to time which banks only can give." The charter of the Rhode Island Union Bank of Newport declared that "in the establishment of banks heretofore the interest of the farmers has not been sufficiently consulted, and the pledge of his real estate, the best security in his power to give, is not accepted"; it proposed "a bank in which the agricultural and mercantile interests should be united." Some of the early banks were associated closely with insurance companies; thus the Newport Insurance Company, chartered in 1799, was merged in the Rhode Island Union Bank. The Providence Insurance Company, 1799, and the Washington Insurance Company, 1800, both marine insurance com- panies, were merged as the Providence Washington Insurance Company in 1820, and in 1821 began to issue fire policies. The Providence Mutual Fire Insurance Company, established in 1800, issued the first fire insurance policy written in Rhode Island. Zachariah Allen, in 1835, organized the Manufacturers' Mutual Fire Insurance Company, which incorporated in its administration a new principle invented by Mr. Allen, that is, the selection of risks or the regulation of premiums upon the basis of compliance with proper regulations to prevent fires. Allen placed a rotary fire pump and copper-rivetted leather hose in his mill at Allendale, sub- stituted central heating for stoves, and shut off parts of his factory by substantial walls; when the insurance companies of his day refused to reduce their premium charges in consideration of the reduced risk, he organized a mutual company to underwrite insurance in textile fac- tories regularly inspected and supplied with fire apparatus and other safeguards. With the rapid development of industrial enterprises and the decrease of ocean commerce, interest shifted in insurance from marine to fire protection, and the insurance companies underwrote fire policies for mills and other factory property. Banks afforded for insurance companies exactly the facilities for business that were needed and the banks also furnished for industrial enterprises the credit for carrying on between investment and realization, purchase of raw material and sale of product ; cash for ready money purchases or meeting payrolls; facilities for discounting and paying drafts and notes; for exchange in distant commercial cities ; besides all the banking services that tend to promote business, in addition to credit instruments that add the element of flexibility to a sound currency system.

In the first half of the nineteenth century, when both industrial enterprises and banking enterprises were new, there was not that "division of labor" which in the twentieth century tends to make of banking a separate and distinct profession; quite the contrary, there was a substantial identity of banker and manufacturer. In very many instances the same entrepre- neurs who launched a manufacturing corporation established a bank or banks to facilitate the process of obtaining or creating money credit. An examination of lists of owners of factories,

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or holders of controlling interests in large industrial corporations, and of presidents and directors of banks revealed the identity. Besides the industrial banks, there were also agri- cultural banks. With rare exceptions the Rhode Island banks of the first half of the nine- teenth century were honestly and capably administered; there were few failures, and the operations of banks involved inconsiderable losses. The power to issue bank notes, assumed as lawful until the Supreme Court of the United States held that bank notes were not "bills of credit" within the meaning of the Constitution of the United States,* was little abused in Rhode Island. The Rhode Island banks continued business without embarrassment when state banks in other parts of the United States closed their doors, and very rarely suspended specie payments, that is, payments in coin or in notes payable on demand. The Rhode Island banks weathered the panic of 1837, although from May II, 1837, until August, 1838, specie payments were suspended. The General Assembly, while gracious in granting charters, sixty- eight betwen 1791 and 1838, from time to time established more and more stringent regula- tions of banks and banking either by general law, or by the introduction of restrictions in charters. The Rhode Island state banks served their purpose admirably; they furnished capi- tal for industrial and other enterprises, and afforded the means whereby the increasing wealth of Rhode Island could be made available as capital. They carried Rhode Island manufacturers successfully through the stress of financial and other business depressions. They did not prevent individual or corporation failures, nor recourse to state insolvency laws that were operative while there was no federal bankruptcy legislation. Along with the commercial banks rose industrial savings banks in various parts of Rhode Island, which served several significant functions, such as depositories for small savings, promotion of thrift, accumula- tions available for long-time loans on real estate mortgages, and also ready money capital for the commercial banks with which many of the savings banks were intimately associated.

The expansion of bank capital and bank credit in Rhode Island attained notable figures relative to the territory served and the population, but the profitable business, as indicated by the small number of failures, was the most satisfactory evidence that the expansion was not excessive. As it was, the banks furnished the ready money without which the rapid develop- ment of industrial enterprises would not have been possible. The success of the banks dem- onstrated similarly the essential soundness of Rhode Island business, and the remarkable acumen of Rhode Island captains of industry. They had grasped the opportunity to replace intercolonial commerce by recourse to foreign commerce, and had raised Rhode Island from the poverty that followed the Revolution to a new prosperity. Again, they had anticipated the loss of foreign commerce by building industrial enterprises. Even the depression in for- eign trade during the embargo preceding the War of 1812, when Rhode Island's exports declined from $1,600,000 in 1807 to $240,000 in 1808, was tempered by gains in manufactur- ing for home markets. The embargo was so far from being unmitigated evil as it was from being an unsought blessing, but it was vastly more effective than the most stringent protec- tive tariff could be in assuring to American manufacturers unchallenged control of home markets. As a manufacturing state Rhode Island reaped from the embargo advantages that did much to offset losses in commerce. Moreover, the embargo accelerated the movement from commerce to industry; energy withdrawn from directing and promoting foreign com- merce was directed into the building of factories. The remarkable development of textile mills in the Pawtuxet Valleyt and elsewhere was related to the embargo, which set free for atten- tion to factory building the restless groups of adventurers, who anchored their ships and deserted their wharves, and began to build the foundations for a new prosperity where the thunder and splash of falling water, and the whir of belts and the racket of machinery made music that was not so sweet but served as a solace for ears tuned to and longing for

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Rhode Island : three centuries of democracy, Vol. I, Part 89

Author: Carroll, Charles, author Publication date: 1932 Publisher: New York : Lewis historical Pub. Co. Number of Pages: 716

Author: Carroll, Charles, author
Publication date: 1932
Publisher: New York : Lewis historical Pub. Co.
Number of Pages: 716