2.3.1. The Mid-Atlantic States (1825-1865): Law and the Transportation Revolution

  • Mid-Atlantic lawmakers subsidized canals, railroads, bridges and other transportation improvements early and often.  New York led the way by financed the Erie Canal, starting in 1808; it also subsidized a number of side canals after the Erie was completed in 1825.  Pennsylvania financing the “Main Line” canal between Philadelphia and Pittsburgh (1835) and a series of side canals. 
  • In the aftermath of the depression of 1837, both states retrenched.  New York enacted a “stop and tax” law in 1842 requiring that all future subsidies be paid off quickly with special taxes.  Pennsylvania began trying to sell the unprofitable Main Line in the 1840s and in 1858, it amended its constitution to prohibit further state and local aid for railroads and other internal improvements.
  • New Jersey, almost alone among American states, made railroads a paying proposition for taxpayers.  In 1830, it granted the Camden & Amboy Railroad a monopoly over the lucrative rail route between Philadelphia and New York on condition that the railroad make substantial annual payments which for many years covered most of the state’s budget.  The arrangement worked out well, at least on the surface:  for the next 40 years, New Jerseyites had to pay almost no taxes but the railroad controlled the state’s politics.  

Lansing v. Smith – New York, 1829 (8 Cowen 146, 4 Wendell 9); Beekman v. Saratoga & Schenectady R Co. – New York, 1831 (3 Paige Ch. 45); Mohawk Bridge Co. v. Utica & Schenectady R. Co. – New York, 1837 (6 Paige Ch. 554); Sharpless v. Mayor of Philadelphia – Pennsylvania, 1853 (21 Pa. 147)

  • Mid-Atlantic courts strongly supported government support of transportation improvements.  No serious challenge to state and municipal subsidy of canals and railroads was ever mounted in New York or New Jersey, and several years before Pennsylvania amended its constitution to prohibit railroad subsidies, its supreme court rejected a challenge to such subsidies in Sharpless, albeit by a narrow (3-2) vote.
  •  In Lansing, New York’s highest court held that an Albany riverfront landowner who lost an economic advantage when the state built a ship basin on the Hudson River could not sue for damages:  he, like other nearby landowners, shared in the gains the waterfront generated as well as the costs.   The decision was crucial to the state:  if it had gone the other way, damage awards would have put an end to state subsidies.  In Beekman, the court held that the state could allow private railroad companies to exercise eminent domain power to acquire land on which to build their lines.  But at the same time, the court made clear that the state had broad power to control and regulate railroads as well as confer favors on them.
  • Mohawk Bridge was New York’s version of the Charles River Bridge case (see section ____).  Chancellor Walworth rejected a toll bridge owner’s effort to block a law giving a rival railroad the right to build a second bridge at the same site, holding that public interest took priority  over the first bridge builder’s private interest when economic growth demanded new bridges.  

George Inness, The Lackawanna Valley (1855) - courtesy Wikimedia Commons and the Yorck Project

“[E]very great public improvement must, almost of necessity, more or less affect individual convenience and property; and where the injury sustained is remote and consequential, it is to be borne as apart of the price to be paid for the advantages of the social condition.” -  Judge __, in Lansing

 “The legislature has indeed protected the Mohawk Bridge Company in the enjoyment of an exclusive right, … to a certain extent, by prohibiting others from establishing a ferry within a certain distance from the toll bridge; but it has not deprived a future legislature of the right to authorize the erection of another bridge within the prescribed limits whenever the public good shall appear to require it.” – Chancellor Reuben Walworth, in Mohawk Bridge

“If [railroad building] be public it makes no difference that the corporation which has it in charge is private.  A railroad is a public highway for the public benefit … because travel and transportation are cheapened by it to a degree far exceeding all the tolls and charges of every kind.” – Justice Jeremiah Black, in Sharpless