Changes in gas prices have a sweeping impact on the United States because so many households rely on their cars to commute. Even people who live close to their places of work, child-care providers and other destinations often drive because they lack access to safe pedestrian roads or reliable public transit. These realities expose people to the whimsy of volatile gas prices.
This is not the first time that the American economy faced systemic vulnerability due to high transportation costs. The frequently cited 1970s energy crisis may be the most vivid example in public memory, but it was not unique. An examination of events in the 19th century shows that the insecurity stemming from constraints on mobility worsened inequality and entrenched an existing social hierarchy. And these past cases highlight the urgent need for a coordinated public policy response today.
In the first decades of the republic’s independence, the absence of robust transportation infrastructure in the country’s interior caused tremendous hardships. The vastness of the expanding country, combined with the Appalachian Mountains blocking easy east-west movement, complicated domestic travel and commerce. Financial historian Peter Bernstein notes that the cost of carrying commodities by wagon from Buffalo to the New York capital, Albany, during this period “often involved sums equal to five or six times the value of the goods themselves.”
This drove many farmers to grow a handful of highly valued staples that would justify the heavy burden of transporting goods to the market. In the second decade of the 19th century, these commodities were wheat and cotton as European buyers sought them to feed both their war-ravaged population and burgeoning textile industry. While the export of these cash crops led to periods of intense economic growth, it also meant that declines in trans-Atlantic trade or the oversupply and falling price of just a few goods could devastate the entire economy.
When the first of these crises occurred in 1819, much of the commentary focused on bad banking practices that had amplified the downturn. However, some prominent public figures like economist Mathew Carey identified weak internal commerce and the resulting reliance on exports as the root source of the systemic failure.
People like Carey believed that the country would produce a more diverse set of goods and consume them domestically if Americans could traverse their own country more easily. John Quincy Adams, who won the 1824 presidential election, agreed and proposed federal projects to construct interstate canals and roads.