The subject I should like to discuss grows directly out of the theme of the meetings as a whole. They have been concerned with the American West as an Underdeveloped Region, and the title was intended to suggest the analogy between the United States of an earlier period and the so-called underdeveloped nations of the present day. To many it would suggest a contrast in policy. These other nations are now in many cases striving to achieve economic development by national planning and deliberate measures of governmental policy. On the other hand the United States achieved its massive economic development without over-all economic planning, without five-year plans or explicit national targets of input and output, and—it is sometimes believed—without the adoption of policies deliberately intended to promote development.

The general theme of these discussions calls for a reinterpretation of the West as an underdeveloped region. This lends credence to a hypothesis occasionally encountered that history is comprised of the examination of a succession of conceptual anachronisms devised in each case by the historian's generation for the solution of contemporary problems and applied as an afterthought to the reconstruction of the past. The adoption of the concept of underdevelopment in die present circumstance is in line with this hypothesis and is, in this regard, in good company with well-worn frames of reference utilized by earlier generations of North American economic historians. Turner advanced the frontier thesis as a tool of analysis of the past at a time when major concern was arising over the frontier's disappearance. Innis fashioned the staple-trade approach to Canadian economic development in the interwar years when for a time it appeared that Canadian prosperity and material advance had vanished coincidentally with the mortal illness of the last great Canadian staple, wheat.

Professor Fowke ably demonstrates the merit of a comparative approach to American and Canadian economic history. His penetrating analysis reveals how relevant the understanding of economic development in Canada is to the study of that in the United States. Of the two, the Canadian national period has been shorter, the essential lines of economic growth simpler, and the role of government clearer and more pronounced. Canadian experience thereby provides a fruitful comparative basis for analyzing the longer, more complex development of the American economy and the more varied, often puzzling, part taken by government.

The period between 1860 and the death of Queen Victoria in 1901 saw the pound sterling moving into even the most isolated corners of the world, seeking, amoeba-like, to reproduce itself with a minimum of effort. Among other areas to feel its impact and to reap its benefits was the American West, particularly the mineral frontier. Records of the Board of Trade indicate that during these forty-one years at least 518 British joint-stock companies were incorporated, with a total nominal capitalization of not less than £77,705,751, to engage in mining and milling activities in the intermountain West, exclusive of the Pacific Coast.

When the Chairman asked me to undertake this paper he reminded me that the general theme was the West as an underdeveloped area and suggested that some comparison be made with underdeveloped areas today. However, it should be made clear at the outset that the problems of the development of the American West in the nineteenth century are very different from the problems of achieving sustained growth in the underdeveloped areas today. The underdeveloped areas today are most typically characterized by a factor combination of abundant labor with scarce capital and land (and resources), usually complicated by a social and political structure not geared to economic advance. America in the nineteenth century, in contrast, was characterized by scarce labor and capital combined with seemingly endless land (and natural resources) set in a framework of social and political institutions that was highly favorable to economic growth.

When in 1872 the English Reverend Alexander King, Secretary of the Freedmen's Mission Aid Society, returned to Blackheath (London) from his travels in the American West, he wrote a letter to the editor of the London Observer. Said he: “I believe our great national problem … must be solved by … the British occupation of America. Emigration, on a grand scale, to the trans-Mississippi regions will prove the destiny of the Anglo-Saxon people, and our cheapest and most effectual remedy for some of our most formidable national evils.”

Some historians of Kansas City claim, with an arresting simplicity, that the principal reason for that city's growth and prosperity is to be found in the enterprise of its citizens. And, although enterprise is by no means a self-explanatory notion, it seems a compellingly obvious way to account for the circumstances of the city's formative years. Much of that history can be written around a series of crises of decision, urgent moments when poor judgment, or the faulty execution of policy, might have plunged the city into obscurity or downright decadence. Yet such was the city's good fortune, we are told, that at precisely these times brilliant leadership seems always to have been forthcoming, and enterprising men—usually businessmen—can be discerned standing in the storm center pointing the way to safety and success.

The work of converting the undeveloped forest resources of the Lake States into usable forms absorbed the energies of thousands of individual entrepreneurs. Their combined activity was scarcely able to meet the insatiable demand from the growing number of settlements that dotted the Midwestern prairies and from villages throughout the nation that were growing into towns or mushrooming into major cities. A universal building material was indispensable during a time of rapid economic expansion. Moreover, in the prevailing Age of Wood, white pine lumber, of the finest quality and incredibly low in price, was fortuitously available in abundance.

A Figure common to all frontiers was the businessman who made the transition from pioneer merchant to financier. This paper is an examination of the early career of one such merchant on the remote underdeveloped Oregon frontier during the 1850's and 1860's.

In his valedictory address when retiring as Chairman of the Board of Directors in 1912, James J. Hill said of the Great Northern Railway Company, “The financial outlook of this company is as well assured as that of most governments. … No emergency can surprise it.” 1 The rise of the Great Northern to this almost impregnable position revolved mainly around Hill's far-famed leadership and two major commodities—wheat and iron ore.

In 1930, the West—for present purposes, Kansas, Nebraska, the Dakotas, Montana, Idaho, Wyoming, Utah, and Colorado—had a level of per capita income payments that stood at 79 per cent of the national figure. In that same year, the figure for the South—Kentucky, Tennessee, Virginia, the Carolinas, Georgia, Florida, Alabama, Mississippi, Louisiana, and Arkansas—was 51 per cent.

The name of our discipline, economic history, suggests the use of history in reaching economic conclusions, and the use of economic principles in classifying the findings of history. Actually, both practices deserve to be employed more than they are. This is an effort to employ a simple economic principle to reinterpret our nation's economic development. The principle is that the cheaper a factor of production is, the more generously it will be used, and contrariwise, the more costly a factor of production is, the more sparingly it will be used.