SAN JOSÉ STATE UNIVERSITY
ECONOMIC DEPARTMENT
Thayer Watkins

The History of the Economy of St. Louis

1. French fur traders founded a trading post on the west side of the Mississippi near its confluence with the Missouri River. Although it was founded at the confluence so as it could draw upon the trade of the two river valley systems it grew because it was at the point where later it was necessary to transfer cargos from large river boats from New Orleans to smaller river boats to go up the two rivers. And, of course, the reverse transfer took place for trade down river.
2. The formerly French land east of the Mississippi was transferred to British control in the Treaty of Paris in 1763. The French settlers from east of the Mississippi in Illinois crossed over to the west side and settled in what was subsequently named St. Louis.
3. In 1803 the Louisiana Purchase transferred control of the town of St. Louis to the U.S.
4. During the decade of 1830-1840 St. Louis expanded and developed. St. Louis University, the first university west of the Mississippi, was created. There was heavy immigration, primarily from Germany.
5. The decade of the 1850's was the "Golden Age of Steamboats." As noted above, St. Louis was the break point between the larger steamboats of the lower Mississippi and the smaller steamboats of the upper Mississippi and Missouri.

6. Between 1850 and 1870 there was a rivalry between St. Louis and Chicago for dominance in the Midwest. Chicago eventually won because:

a. St. Louis leaders were passively conservative and depended upon St. Louis' superior location, whereas Chicago leaders were more astute and agressively developed the potential of the railroads. Rail provided year-round transport while river travel was impossible five months of the year.
b. St. Louis aligned herself with New Orleans for the competition with Chicago, but New Orleans began to focus on cotton and the South rather than the river trade of the Midwest. The Civil War closed the lower Mississippi.