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ECONOMIC INFANTCY

Inadequate transportation infrastructure impeded rural development in early Kentucky. Most roads — some former bison or Native American trails — permitted only foot traffic. Despite numerous waterways, many required improvement before they were readily navigable. Difficult access to external markets heightened transport expenses, hindering participation in the national economy.

Kentucky first addressed land transportation. Nearly impassable dirt roads slowed travel and internal development. The state chartered companies to build several toll, or turnpike roads. State and local governments, and private investors funded initial construction. Tollgates were erected to collect fees for road maintenance and dividends, paid to investors. Workers built "macadamized roads" using broken rock. To cross marshy land, they created "corduroy roads" by covering split logs with dirt.

Although toll roads improved travel, this did not resolve Kentucky’s road problems. By the 1850s, private companies still controlled most roads and continued enforcing tolls. But, many turnpikes did not yield sufficient revenue for adequate maintenance and roads fell into disrepair. Kentuckians’ contention with high tolls culminated in the late 19th–century Tollgate Wars — violent protests against tollgate owners. Thereafter, local governments attained turnpikes through sale or forfeiture, and were responsible for construction and maintenance.

Rivers served Kentucky well. The Ohio, Mississippi, and Cumberland Rivers surround the state, connecting it to national and coastal ports. Other waterways, such as the Licking, Kentucky and Green Rivers fostered internal development, particularly at major river junctions. Port towns, like Maysville, Covington–Newport, Louisville, and Paducah matured near such confluences. Kentuckians used various watercrafts, including keelboats and flatboats, for downstream travel. Steam power revolutionized transportation, expediting travel, and increasing cargo and passenger capacity. Steamboats quickly became common on larger waterways, though shallow–draft models could also access some shallow streams. Kentucky’s steamboat era began in the 1810s; soon, larger river towns, such as Louisville, flourished with shipbuilding industries.

Necessary improvements accommodated increasing river traffic. The 1830 Louisville and Portland Canal bypassed the dangerous Falls of the Ohio, enhancing Ohio River travel. By the 1840s, engineers were constructing lock and dam systems, which transformed Kentucky waterways. By 1847, the Green and Barren River Navigation Company had created such a system, bringing prosperity through increased access to Bowling Green. Steamboat use peaked in the 1850s, as new railroad technologies brought increasing competition. Railroads connected inland communities to port towns developed during the steamboat era. By the Civil War, several companies, including the enduring Louisville and Nashville, laid tracks across Kentucky connecting major Northern and Southern markets.

Kentucky’s population increased sevenfold between the 1790s and the 1820s. Most antebellum Kentuckians were subsistence farmers, producing nearly everything they needed. They grew food for themselves and their livestock, made clothing from flax and wool, bred work horses and mules, and raised hogs, cattle, and sheep. Farmers commonly bartered with merchants for other items, trading whiskey, surplus products, and cash crops, such as hemp. Rural country stores stocked everyday essentials and luxuries not locally produced, while functioning as post offices and community centers where people gathered and socialized. Aside from barter, storekeepers granted credit, functioning as pseudo–bankers.

Despite an agricultural economy with less labor–intensive crops than Southern staples, many Kentuckians owned slaves, though most worked as domestics, and in extractive, construction, or manufacturing industries. The number of slaves peaked at one–quarter of the population. Slave trading was highly controversial and inspired debate. Legislation, including Fugitive Slave Laws and the Nonimportation Act, intended to protect slave–owners’ "financial investments." Lexington’s "Cheapside" became one of the largest Southern slave trading centers.

The state’s abundant resources provided raw goods for manufacturing. Kentuckians initially processed salt, milled grain, and manufactured gunpowder, iron, and rope. Manufacturing stimulated urban growth, particularly in Lexington and Louisville. But factory work did not displace agriculture in importance until Industrialization.

As the commonwealth’s economy and industries developed, paper money gradually replaced bartering. The state issued unique, easily counterfeited banknotes, not completely insured by specie, causing instability. Extensive debt collection after the War of 1812 led to economic depression. Kentucky’s initial solution was to license the "Forty Thieves," or 46 private banks, in 1818. Financial pressure on undercapitalized banks contributed to the nationwide Panic of 1819. Relief efforts in 1820 closed banks, suspended specie payments, and printed money, decimating its value. Rural citizens generally reverted to barter, finding relief through petitions and a new state bank. The crisis ebbed but the economy lacked stability until 1842.

Antebellum Kentucky continued its agricultural and bartering traditions while developing transportation infrastructure, manufacturing, and banking, which stimulated urban growth. However, the Civil War temporarily slowed state and national economic progress.