Notes: Northern Agriculture Lecture: Econ 113: American Economic History: Fall 2007
Trying to do something different: a very quick rush through pre-Civil War U.S. economic history to create space in the syllabus to cover post-WWII history.
This week and next week spent trying to do four things:
- Northern agrarian westward expansion
- Early industrialization as a result of the tariff
- Why did slavery--which people like Adam Smith thought was bad even for the slaveholder and was on the way out--grow and strengthen in pre-Civil War America
- The Civil War--600K dead, 600K maimed; could there have been a better way?
Smithian Growth
The United States--at least the northern United States--as Adam Smith's Utopia:
- Literate and entrepreneurial population
- Good legal infrastructure
- Market exchange
- Abundant land (means high output per worker)
- Free land (means high wages)
Constrast with Engerman and Sokoloff's picture of Latin America: populations to exploit and ways to exploit them create extreme inequality... which has poisonous consequences....
And the colonial economy prospers...
Population
| 1600 | 1,000 |
| 1640 | 24,000 |
| 1680 | 150,000 |
| 1700 | 260,000 |
| 1730 | 650,000 |
| 1780 | 2,700,000 |
Output...
How to even claim to measure output? Nevertheless, we have heroic guesses...
| Year | Y/Pop in 2004$ |
| 1710 | $800 |
| 1775 | $1,100 |
| 1840 | $1,800 |
| 1929 | $8,300 |
| 2004 | $40,000 |
Accumulation
Alice Hanson Jones... data from estates...
Top 20% of households have about 60% of wealth...
Median Wealth Estimates as of 1774:
| Region | Land | Slaves | Other |
|---|---|---|---|
| New England | $2800 | -- | $1200 |
| Middle States | $4800 | -- | $3200 |
| South | $4000 | $1600 | $2400 |
Note that slaves were fully a third of southern wealth, according to AHJ... Big skew in slave ownership...
Politics
| Year | Settlement/Event |
|---|---|
| 1607 | Jamestown |
| 1608 | Quebec |
| 1620 | Plymouth |
| 1624 | New Amsterdam |
| 1630 | Massachusetts Bay Company |
| 1643 | Swedesboro, Pennsylvania |
| 1640-1660 | English Revolution |
| 1689 | "Glorious Revolution" in England |
| 1754-1763 | French and Indian War |
Mercantile System...
American Revolution...
National Population:
1790: 3.9M people, $1100 1840 17.1M people, $1800 1860 31.4M people, $2000
% urban: 5% 1790, 11% 1840, 20% 1860.
"Urban" means "2500 or more"...
City sizes: 1790: NY 33, PH 29, BO 18; 1840: NY 313, Balt 102, NO 102, PH 93; 1860 NY+Brooklyn 1081, PH 565, Balt 212.
Why this pattern? Transport: Erie Canal, C&O Canal, Mississippi-Missouri-Ohio river system. The coming of the railroad to keep NO from surpassing NY... New York Central RR, Pennsylvania RR...
SF in 1860: 15th among American cities with 57K people...
Conquest: Northwest territories, inland southeast and War of 1812, Louisiana Purchase, Florida, Texas, Mexican Cession, Oregon Territory, Alaska "Seward's Folly", Hawaii. Conquest keeps land abundant, hence keeps wages high.
Relatively fast increase in output per capita in the U.S. before 1860. A puzzle that growth was so fast. The puzzle set out for your inspection... Implication: an enormous increase in effective land and natural resources per worker from 1790 to 1860. Population grows. Accessible natural resources grow significantly faster... A handout on growth accounting, resources, and the pre-Civil War U.S.
Alexander Hamilton: Debt, Banks, and Manufactures.
U.S. Revolutionary War hyperinflation: $241 million continental dollars worth $1 million gold dollars by the end of the war.
Value of Revolutionary War debt tripled as debt assumption was discussed and debated.
- Alexander Hamilton believed that an America which owed lots of rich merchants lots of money--an America that "assumed" the debts the states had run up during the Revolutionary War and were not likely to pay--would be a stronger and better America. Why did he believe this?
Megasthenes: the coming of cotton to the Mediterranean...
Format of the first midterm exam...
David Ricardo: Why didn't the U.S. become one big unindustralized Canada?
Answer: the tariff
Could the tariff have been good for the country?
Answer--yes, if the infant industry argument holds.
What is the infant industry argument? There has to be some benefit--external to the firm and to the worker--from production. Future productivity has to be positively influenced by past production in order to make it beneficial in the long run to upset the Ricardian pattern of comparative advantage.
The infant industry argument is plausible, but not certain, for the case of U.S. textile manufacture.
Even so, it's not good for the cotton-exporting tariff-paying south.
The history of the cotton textile business: Samuel Slater, Francis Cabot Lowell, Lowell Massachusetts, et cetera...
Peter Temin's article: the American system
The Crystal Palace exhibition What is special about American industry Eli Whitney Interchangeable parts The "American System" Resource-using technological style.
Consequences for post-Civil War industrialization...
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