New Jersey: 19th Century Economic Development

History-- 19th Century Industrial Development

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In its early years as a colony and state, New Jersey slowly began to develop a more diversified economy to complement its traditional agricultural base. Some of its first commercial ventures as a colony evolved into more advanced businesses; the fur trade with the Native Americans, for example, evolved into hatting and coat factories which made the later cities of Orange and Newark leading national centers. Water power, which long had been used by farmers to serve grist mills, was now seen as a resource for industrial machinery. New Jersey iron mines provided raw materials for the emerging metal refining and fabricating industries. The increasing numbers of foreign immigrants, many lacking interests or skills in farming, served as a ready source of labor. Since much of its economy had failed to diversify beyond farming, state policy-makers encouraged new investment in development to reduce dependence on the growing cities of New York and Philadelphia for consumer goods and banking and financial needs.

Seal of the Society for Establishing Useful Manufactures. Image: PatersonGreatFalls.org

-- Paterson and the Society for Establishing Useful Manufactures

In 1791, Alexander Hamilton, secretary of the treasury in the Washington administration, submitted a report to Congress arguing that the new nation could not succeed as a purely agricultural society, and that the government should support efforts to promote manufacturing. The report also referred to a private venture backed by Hamilton to raise capital for a corporation whose purpose was to build an industrial city, with its first project the "making and printing of cotton goods." In part, Hamilton selected New Jersey as the site for the operations because, as he wrote, the state had "scarcely any external commerce," and would be unlikely to harbor interests "hostile to the advancement of manufactures." During the Revolution, Hamilton had seen the Great Falls when he picnicked above it with Washington, Madison and others during a break in the conflict.

After receiving reports of the water power offered by the Passaic River and its Great Falls, Hamilton's group purchased 700 acres for their venture and hired Pierre L'Enfant, the French engineer who had previously drawn the plans for the nation's capital, to design the new town and oversee its construction on the site of what would become Paterson.

Great Falls in Paterson. Image: Cory Hartman CC BY SA-3.0 via Wikimedia Commons

In 1791, the venture became the first corporation chartered by the State of New Jersey, taking the name of The Society for Establishing Useful Manufactures, and was granted a “perpetual monopoly” for manufacturing in Paterson. The Society also functioned as Paterson’s only effective government until 1830 and was given tax immunity under the City’s first charter adopted in 1831. Hamilton also drew up the charter for the Associates of the Jersey Company to develop what is now the waterfront of Jersey City, again receiving generous incentives, tax exemptions and protection from competition.

The ventures promoted by Hamilton ultimately failed due to its problems in raising sufficient investment capital and mismanagement, but they did set the stage for later, more successful efforts by others to develop New Jersey as an industrial center. After struggling through recessions during the early years of the nineteenth century and the trade embargo imposed during the War of 1812, Paterson's early struggles eventually led to a growing number of successful enterprises, with new factories producing heavy machinery, other metal products and textiles.

"The General," one of the best-known locomotives produced by the Rogers Locomotive Works, on display in Kennesaw, Georgia. Image: Harvey Henkelmann via Wikimedia Commons

In 1836, Samuel Colt founded the Patent Arms Manufacturing Company below the Great Falls, where he first manufactured his newly patented repeating firearm, the revolver which would become a fixture of the Western frontier. In the 1850s, the Rogers Locomotive Works of Paterson had become the nation's leading producer of locomotives, turning out over 100 each year. By 1900, Paterson became known as "Silk City," hosting 175 different silk mills employing over 20,000 workers in often harsh conditions which later would provoke violent labor strife.

-- Camden and Amboy Railroad and the Joint Companies

       Bridges, canals and toll roads also became a new source of economic growth and government revenue, with transportation revenues financing most of the State government’s expenses.

       In 1830, the New Jersey Legislature granted a charter for the Camden and Amboy Railroad after first rejecting the earlier petition for a charter submitted in 1811 by the railroad’s founder, Colonel John Stevens of Hoboken. The 30-year monopoly granted the railroad exclusive rights to convey rail passengers between the Hudson and Delaware rivers in return for the State government's being given 1,000 shares of stock in the company and a guarantee of $30,000 annually from taxes imposed on rail passengers and freight.

       In the year after receiving its charter, the Camden and Amboy was also allowed to combine operations with the Delaware and Raritan Canal Company, founded by the Stockton family of Princeton and which initially had competed with the Railroad for investors, in an entity known as the Joint Companies, effectively giving it exclusive control over both rail and water transport in the lucrative New Jersey corridor connecting New York City and Philadelphia.

       The monopoly allowed the Camden and Amboy to charge what were considered at the time exorbitant rates for transporting passengers and freight through the corridor. A second-class fare between New York and Philadelphia on the Camden and Amboy was $2.50 when the average weekly wage for a worker was $1.

       At the same time, the railroad quickly gained a reputation for neglecting safety of its rail line and its engines and cars. Just two months after it began operation with steam locomotives in 1833, the Camden and Amboy had the first railroad accident resulting in deaths, when two were killed in its run from Hightstown to Spotswood. Among the injured was Cornelius Vanderbilt, who broke a leg and vowed never to travel by train again, ironically later becoming one of the nation's wealthiest individuals through his ownership of railroads including the New York Central. Another passenger was Congressman and former US President John Quincy Adams, who was uninjured, but wrote in his diary that the accident was "the most dreadful catastrophe that ever my eyes beheld."

Stock certificate of the Delaware & Raritan Canal Company and Camden & Amboy Rail Road. Image: Library of Congress

The revenue from the rail and canal monopoly enabled the Legislature to pass most of the costs of government to those traveling through the state, thus avoiding the political risks of imposing direct taxes or fees on New Jersey residents. At its peak, revenues to the state government accounted for about a fifth of its total budget. The economic leverage of the Joint Companies also extended to domination of New Jersey government and politics through both open and covert support of those sympathetic to its interests, primarily in the Democratic Party. The corruption which resulted led outsiders to deride New Jersey as the "State of the Camden and Amboy."

-- Banking and Finance

The chartering of banks to support the new industrial and commercial ventures also served as a means for New Jersey to avoid broad taxes. When the Newark Banking and Insurance Company was chartered in 1804 as New Jersey's first bank, the Legislature included a clause in the charter reserving a designated number of shares for the State if the Legislature exercised its option to subscribe. This practice continued with several later charters; rather than exercising its option to buy shares and participate in bank management, the Legislature generally chose to sell its rights, thus generating revenue for the State treasury.

Serving other financial needs led to the founding in 1873 by John Dryden of the Widows and Orphans Friendly Society in Newark. Two years later, Dryden changed his company's name to The Prudential Friendly Society and proceeded to sell low-cost insurance to working class families to cover the costs of funerals and burials, later expanding to pensions, accident and life insurance. From 1885 to 1905, the company's assets grew by a hundred-fold, topping $100 million. The close relationship between New Jersey's business and political establishment was reflected by Dryden's election by the state legislature to the US Senate, where he served a single term from 1902 to 1907.

-- Manufacturing and consumer products

In other cities, New Jersey evolved to become one of the nation's largest manufacturing centers, producing a wide range of industrial machinery and consumer products by the end of the nineteenth century .

Edison had perhaps the most pervasive impact on consumer society. After relocating from Massachusetts, he began working in Newark, introducing the phonograph in 1877. Later, he established laboratories in Menlo Park and then West Orange, eventually holding 1,093 US patents in his name, comprising a diverse range of inventions like electric light and power utilities, sound recording, motion pictures and the stock ticker.

The City of Orange, which during colonial times had begun processing fur pelts from the Watchung Mountains, grew to become the "hatter to the world," the site of over 30 hat factories, including one founded by the Stetson family which later became famous after moving its operations to the Western frontier. Newark became known for making shoes and other leather goods; its textiles, along with those produced in Paterson and Passaic, were sold in both domestic and foreign markets. The Clark Thread Company founded in 1864 in Newark developed cotton thread suitable for both machine and hand sewing, extensively marketing its brand as "O.N.T", or Our New Thread. A complementary addition to the state's strong position in apparel through the hat factories, textile mills and thread plants came in 1873, when Isaac Singer consolidated his sewing machine operations employing some 3,000 workers in Elizabeth, making New Jersey the world's leading producer of the machines which soon became popular home items.

Johnson & Johnson first building in 1886. Image: kilmerhouse.com

       New Brunswick hosted rubber factories and wallpaper plants, but gained its greatest recognition for the company established in 1873 to make sterile surgical dressings, which by 1887 had begun to market its growing number of medical products under the name of Johnson & Johnson. In 1888, the company introduced a first aid kit intended primarily for railroad workers, but which soon became a standard product for other consumers, and in the following century began marketing its diverse range of adhesive dressings under its Band-Aid trademark.

       Paper mills in river towns like Millburn and Whippany produced newsprint for the newspapers of New York City. Jersey City was the site for the shipyards where Robert Fulton built his steamboats, and the Adirondack Iron and Steel Company in the City produced the nation's highest-quality crucible steel by the middle of the century. In 1847, William Colgate relocated his soap plant from New York to Jersey City, soon shipping its growing consumer product line to customers across the country. New Jersey became the world's leading producer of sewing machines when Isaac Singer consolidated operations in 1873 in Elizabeth, employing some 3,000 workers. Glass and iron production in the Pinelands serviced many industrial customers and individual consumers.

       Trenton's economy was strengthened by the completion of the Delaware and Raritan Canal conveying coal and iron ore from Pennsylvania mines and other freight through the City, and its location facilitated its emergence as a nationally prominent center for iron refining and metalworking. In 1848, John Roebling relocated the wire rope company he had established in Pennsylvania to Trenton, joining the Trenton Iron Company controlled by Peter Cooper and Abram Hewitt, which had become the nation's largest iron company. Roebling's innovative designs of suspension bridges utilized the cable that he had developed; Trenton gained worldwide visibility as Roebling was hired to supply the cable and to design bridges of increasing length, including the Brooklyn Bridge opened in 1883 and promoted as the "eighth wonder of the world." Trenton also became a major supplier of bricks, pottery and ceramics, with its most prominent ceramics firm established in 1889 by Walter Lenox and Jonathan Coxon, later known around the world as the Lenox China Company. By 1910, Trenton's pride as a manufacturing center was evident in the adoption of its slogan, "Trenton Makes, the World Takes."

In 1847, William Colgate relocated his soap plant from New York to Jersey City, soon shipping its growing consumer product line to customers across the country. The Colgate complex would eventually grow to cover seven blocks with 44 buildings, in which soaps, talcums, toothpaste and other products were made. Other toiletries evolved from a pharmacy opened in 1879 by Gerhard Mennen in Newark, which later became the Mennen Company.

In Camden, what later would become the Campbell Soup Company was started in 1869 by Joseph A. Campbell, a fruit merchant and Abraham Anderson, an icebox manufacturer. Initially, they produced, in addition to soups, canned tomatoes, vegetables, jellies, condiments, and minced meats; when Anderson left the partnership in 1876, the company reorganized as the "Joseph A. Campbell Preserve Company." Some twenty years later, it grew rapidly after John Dorrance, a nephew of the plant's general manager and a chemist with degrees from MIT and Göttingen University in Germany, developed a commercially viable method for condensing soup through reducing by half the volume of water, thus saving storage and shipping costs. Dorrance went on to become president of the company from 1914 to 1930, eventually buying out the Campbell family.

-- Tourism

Tourism, a sector often not considered in the nineteenth century as a part of New Jersey's economy, would evolve to become one of the state's largest job producers. In the 1830s, Cape May (then known as Cape Island) became the nation's first summer resort, hosting affluent families, including many southern plantation owners escaping the heat at home. As it became increasingly popular, larger hotels were built. The New Atlantic, opened in 1842, could accommodate 300 guests. A two-week stay in 1847 by Senator Henry Clay reinforced the Cape's position as the leading seaside resort in the country. In 1852, a group of investors began construction of the largest hotel in the world, the Mt. Vernon Hotel, intended to serve 3,500 patrons, but it was still unfinished when it was consumed by fire in 1856 while it was accommodating 2,100 guests. In 1878, after another fire devastated much of the village, Cape May rebuilt, but deliberately chose to redevelop with smaller inns and boarding houses, avoiding the large hotels of competing resorts.

To the north, the beaches of Absecon Island remained largely free of visitors until Dr. Jonathan Pitney, a young physician who envisaged the area as a health resort, succeeded in getting the legislature to charter a new railroad from Camden to the shore. The railroad's completion in 1854, the same year that Atlantic City was incorporated, led to explosive growth based on the new concept of short-term stays by workers and their families with limited means, a sharp distinction from the wealthy visitors spending summers at the older resorts of Cape May and Newport. By 1874, nearly 500,000 passengers a year were coming to Atlantic City by rail, attracted not only by its beaches and popular entertainment but also by its reputation for openly ignoring restrictions on drinking, gambling and prostitution. At the turn of the century, 27,000 people lived year-round in the city, a dramatic gain from the estimated 250 in 1855.

Image: NewJerseyAlmanac.com

In Monmouth County, after the Civil War, Long Branch hosted visits by seven presidents: Ulysses S. Grant, Chester A. Arthur, Rutherford B. Hayes, James A. Garfield, Benjamin Harrison, William McKinley, and Woodrow Wilson. After he was shot on July 2, 1881 at the rail station in Washington, President Garfield was brought to Long Branch, with his trip eased by a specially laid rail from the central rail station to the beachfront home of his convalescence, in the hope that the fresh sea breezes might aid his recovery, but he died here on September 19, 1881.

Other shore towns began as religious retreats, particularly those established by the Methodist Church where preachers would deliver sermons to congregations who would stay in tents on or near the beach. Gradually, the tents would be replaced by more permanent structures and homes. The Ocean Grove Camp Meeting Association was organized in 1869 by a group of thirteen ministers and thirteen citizens, and sponsored the first camp gathering during the summer of 1870. In five years, there were 600 tents, 400 cottages, and seventy-nine hotels and boardinghouses. Its popularity later attracted some of the nation's most prominent preachers such as Billy Sunday. Unlike wide-open resorts like Atlantic City, dancing, card-playing, alcohol, tobacco, and driving on Sundays were forbidden. In 1894, its Great Auditorium was completed, with seating for 10,000, and offering programs of sermons, religious music and family entertainment..

Other shore towns began as religious retreats, particularly those established by the Methodist Church where preachers would deliver sermons to congregations who would stay in tents on or near the beach. Gradually, the tents would be replaced by more permanent structures and homes. The Ocean Grove Camp Meeting Association was organized in 1869 by a group of thirteen ministers and thirteen citizens, and sponsored the first camp gathering during the summer of 1870. In five years, there were 600 tents, 400 cottages, and seventy-nine hotels and boardinghouses. Its popularity later attracted some of the nation's most prominent preachers such as Billy Sunday. Unlike the wide-open resorts like Atlantic City, dancing, card-playing, alcohol, tobacco, and driving on Sundays were forbidden.

-- Movement for reform

        Toward the end of the century, New Jersey's long-standing policy to seek revenue from business enterprises to avoid general taxes arose in a new context as the state passed laws designed to attract corporations to establish their legal headquarters in the state, taking advantage of New Jersey's lax controls on anti-competitive practices and the creation of monopolies. As it was derided earlier in the century as the "State of the Camden and Amboy," muckrakers such as Lincoln Steffens now branded New Jersey as the "traitor state." In 1905, Steffens bluntly charged: "New Jersey sold us out for money. She passed her miscellaneous incorporation acts for revenue. And she gets the revenue. Her citizens pay no direct state tax. The corporations pay all the expenses of the state, and more."

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