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The Cambridge Economic History of the United States
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    The Cambridge Economic History of the United States
    • Online ISBN: 9781139053808
    • Book DOI: https://doi.org/10.1017/CHOL9780521553070
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Book description

Volume II surveys the economic history of the United States, Canada, and the Caribbean during the nineteenth century, a period of massive international and intercontinental movements of labor, capital, and commodities. The United States and Canada began the period as small but vigorous societies; the United States ended the period as the world's premier economic power. Five main themes frame the economic changes described in the volume: the migration of labor and capital from Europe, Asia, and Africa to the Americas; westward expansion; slavery and its aftermath; the process of industrialization; and the social consequences of economic growth that led to fundamental changes in the role of government. Other topics include: inequality, population, labor, agriculture, entrepreneurship, transportation, banking and finance, business law, and international trade.

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  • 1 - Economic Growth and Structural Change in the Long Nineteenth Century
    pp 1-56
  • https://doi.org/10.1017/CHOL9780521553070.002
  • View abstract
    Summary
    This chapter concerns quantitative features of the development of the American economy in the period between the late eighteenth century and World War I-the long nineteenth century. It explains four important developments in the nineteenth century, including improvements in technology, improvements in efficiency, improvements in human capital, and economies of scale. The modernization of the American economy in the nineteenth century, then, called for a much larger annual consumption of capital goods than had been true formerly. When adjusted to incorporate home manufacturing, the long-term rate of growth of consumer commodities is reduced. In the decade 1839 through 1848 Americans saved about 14 percent of the gross national product, a large savings rate by recent standards. Intermediaries help to bring potential savers and investors together, there by realizing savings and investment plans that otherwise would be unrealized. The shift in the structure of the economy affected the level as well as the structure of output.
  • 2 - The Economy of Canada in the Nineteenth Century
    pp 57-108
  • https://doi.org/10.1017/CHOL9780521553070.003
  • View abstract
    Summary
    The economic history of Canada over the course of the nineteenth century is predominantly a story of achievement and success. In the nineteenth century transport improvement was a central element of economic development everywhere in the world, and this was very much the case in Canada as well. A much more vigorous line of industrial development was the manufacture of agricultural implements. Newfoundland and Prince Edward Island declined to join Canadian Confederation in 1867. There is an unresolved issue of whether the Maritime provinces came into Canadian Confederation with productivity levels below those of central Canada. Whatever the ultimate explanation, the Conservative party swept back into power in 1879, after five years of severe depression in the economy, on a platform of industrial development through a National Policy of tariff protection. The late nineteenth century Canadian economy lacked size at a time when economies of large-scale production were coming into prominence.
  • 3 - Inequality in the Nineteenth Century
    pp 109-142
  • https://doi.org/10.1017/CHOL9780521553070.004
  • View abstract
    Summary
    Alexis de Tocqueville, Frederick Jackson Turner, and Simon Kuznets posed the fundamental and still largely unanswered questions about inequality in nineteenth-century America. Wealth accumulation has several motives, including desires to make bequests to children, concerns over possible hard times in the future, and what economists refer to as "life-cycle" motives. There was a positive relationship between duration in a local economy and the level of wealth of a household for most locations in the nineteenth century. Few studies, either historical or contemporary, have been able to isolate the effect of family background on the level of wealth or income of a household. There was considerable intergenerational mobility and regression toward the mean in the distributions of income and wealth. If measurement error were uncorrelated with the level of wealth, it would add spurious inequality, biasing the measured levels of inequality upward.
  • 4 - The Population of the United States, 1790–1920
    pp 143-206
  • https://doi.org/10.1017/CHOL9780521553070.005
  • View abstract
    Summary
    This chapter focusses on the evolution of the American population over the long nineteenth century, 1790-1920. The discussion has perforce covered fertility, marriage, mortality, and both internal and international migration. The census has been the major source for the study of population growth, structure, and redistribution as well as fertility prior to the twentieth century. A number of studies have been done on the federal census and on various systems that collected vital data in the nineteenth and twentieth centuries. A criterion for admission to the official federal Death Registration Area after 1900 and the Birth Registration Area after 1915 was only that registration be 90 percent complete. Demography, the study of human populations, depends heavily on measurement and estimation techniques. The inexorable decline of American birth rates continued apace after the Civil War. The leading theory of the American fertility decline for the antebellum period has been the land availability hypothesis.
  • 5 - The Labor Force in the Nineteenth Century
    pp 207-244
  • https://doi.org/10.1017/CHOL9780521553070.006
  • View abstract
    Summary
    This chapter surveys the major developments in the American labor force in the nineteenth century: its size, composition and structure; rewards to labor; and labor relations, within firms and with the government. Despite the long-term slowdown in the growth rate of the labor force, the aggregate labor force participation rate increased by 6 percentage points over the century. Information on variations in labor force participation across population groups is more abundant for the late nineteenth century, particularly from census data. The structure of the labor force refers to the distribution of workers across industries or occupations. The chapter also reviews the available evidence on wages in nineteenth-century America. For the years during and after the American Civil War the measurement of trends in real wages is on a reasonably firm footing. Strikes before the Civil War were procyclical, rising in booms and falling in recessions. Contemporary labor markets are subject to an enormous array of government regulations.
  • 6 - The Farm, The Farmer, and The Market
    pp 245-284
  • https://doi.org/10.1017/CHOL9780521553070.007
  • View abstract
    Summary
    The relationship between the farmer and the market in the nineteenth century was frequently ambiguous and fraught with contradictions. The peasant populations of Southern and Central Europe sent their migrants into the farm markets of European and American industrial areas. The American Middle and Far West joined the world's other food exporting regions. Markets generated powerful incentives to increase agricultural productivity. Mechanization generated the most dramatic changes in nineteenth-century agricultural productivity. An emerging agricultural press also helped to disseminate this growing body of folk wisdom and scientific knowledge. Farmers at the time complained that monopoly power allowed the representatives of banks and insurance companies to charge interest above purely competitive rates. By elevating expectations, the Civil War prosperity, with its positive impact on mechanization and profits, may account for some of the disillusionment and the pessimism of American farmers afterwards.
  • 7 - Northern Agriculture and the Westward Movement
    pp 285-328
  • https://doi.org/10.1017/CHOL9780521553070.008
  • View abstract
    Summary
    This chapter examines the geographic expansion and economic development of agriculture during the nineteenth century across the northern region, where Thomas Jefferson hoped his vision would materialize most clearly. In 1800 the Atlantic Coast economies that formed the newly created United States of America looked outward. Federal land policy, by offering the land for sale at public auction with competition between buyers paying cash, should have ensured that conversion took place at the "right" time. The immediate short-term impact of land sales and homestead donations is seen in the contemporaneous size distributions of farms. Land speculators were accused of pricing land out of reach of the common man, thereby forcing would-be land-owning yeoman farmers to settle for tenancy. On the eve of the Revolution there were an estimated six to seven thousand tenant farmers in New York. Opening western land to settlement was to have a profound impact upon the distribution of population and national economic activities.
  • 8 - Slavery and its Consequences for the South in the Nineteenth Century
    pp 329-366
  • https://doi.org/10.1017/CHOL9780521553070.009
  • View abstract
    Summary
    Slavery had long existed in many parts of the world prior to the settlement of the Americas. The transatlantic slave trade, lasting over three centuries, entailed the purchase and transportation of Africans, originally captured within Africa, to various parts of the Americas. The British were long a major carrier of slaves, particularly to the Caribbean and to mainland North America. The situation on the mainland was rather different, both before and after the American Revolution. The Revolutionary War created major difficulties for the American slave-owners. The expansion of the cotton kingdom of the nineteenth century flowed from the growth of demand for raw cotton, mainly from Great Britain, which took over two-thirds of U.S. exports, and New England, for use in producing cotton textiles. The initial economic adjustments in the U.S. South to the end of slavery after the Civil War were in many ways similar to the economic changes that accompanied emancipation elsewhere.
  • 9 - Technology and Industrialization, 1790–1914
    pp 367-402
  • https://doi.org/10.1017/CHOL9780521553070.010
  • View abstract
    Summary
    The study of American economic growth in the nineteenth century has been influenced by controversies concerning the sources and potential for manufacturing development during early industrialization. The colonial period was one of relatively rapid economic growth in what was to become the United States. A significant growth of domestic production did not take place until just prior to the War of 1812, however. It had long been argued that the Civil War and its outcome were the starting point of American economic and manufacturing growth. In describing the changing nature of institutional changes, it is useful to distinguish those that evolve within the private sector from those that require some governmental action. The revenue needs generated by that Civil War induced a sharp increase in tariffs in 1861, and although they fluctuated, their levels remained high through World War I.
  • 10 - Entrepreneurship, Business Organization, and Economic Concentration
    pp 403-434
  • https://doi.org/10.1017/CHOL9780521553070.011
  • View abstract
    Summary
    This chapter discusses the small-firm world of the early nineteenth century, its structure and dynamics. It analyzes the ways in which small firms organized their businesses during this period and the relationship between this kind of business structure and the process of technological change. For bookkeeping models, for example, manufacturers turned to the double-entry methods that merchants had employed since the late middle ages. Entrepreneurs who fit Schumpeter's definition certainly existed in the early nineteenth century United States. The chapter also describes the early development of big-business forms in the railroad industry, and explains the process by which similar large-scale enterprises emerged in other parts of the economy during the last quarter of the century. As a result of the merger movement, then, large manufacturing corporations gained the same access to national capital markets that railroads had achieved by the middle of the nineteenth century.
  • 11 - Business Law and American Economic History
    pp 435-482
  • https://doi.org/10.1017/CHOL9780521553070.012
  • View abstract
    Summary
    Within broad limits business law always has been instrumental to American economic development. Between Independence and World War I business law influenced four periods of American economic development. Before Independence and the Constitution created an independent and more united nation, British mercantilism governed the American economy. Meanwhile, as the new American brand of federalism evolved, state and local governments established wider direct influence over the economic order than did the national government. Institutional conflict reflected a producer ideology that favored both the promotion and protection of economic opportunity. The central place that producers occupied in the public discourse of the period suggests the priority they were given as voters in the minds of elected public officials. The triumph of Progressivism after 1900 indicated that the corporate economy had grown beyond the means of the new regulatory order to maintain constitutional and legal accountability, ensuring perpetual clashes between public interests and private rights.
  • 12 - Experimental Federalism: the Economics of American Government, 1789–1914
    pp 483-542
  • https://doi.org/10.1017/CHOL9780521553070.013
  • View abstract
    Summary
    The scale of American government in relation to the economy would increase greatly after 1914. Two centuries of subsequent American history relating to government and the economy could be written along lines of the waxing and waning of the respective political philosophies and practical goals of Alexander Hamilton and Thomas Jefferson. This chapter discusses long-term trends in the overall size of the governmental sector and its federal, state, and local components; the ways in which these component governments divided the responsibilities of government; and how each component financed its activities. It also describes how the components of the federal system worked together through time to sustain the momentum of economic development, a theme that has not received the attention it deserves. The chapter also talks about the Civil War and the postbellum decades. In reducing war-swollen public debts after the return of peace, the Republican era after 1860 was not so different from the Democratic era that preceded it.
  • 13 - Internal Transportation in the Nineteenth and Early Twentieth Centuries
    pp 543-642
  • https://doi.org/10.1017/CHOL9780521553070.014
  • View abstract
    Summary
    This chapter examines how the interplay of American market conditions and social intervention functioned to evoke transport investment in great abundance. It also shows how these facilities both lowered the costs of movement and widened the market, and how the benefits were distributed to the rest of the economy. Canal construction, for all its advantages, was of limited extension. The system of naturally navigable waters, rivers, lakes, and the coastal perimeter possessed by the United States was many times larger. The ascendancy of the railroad before the Civil War marked a virtual end to the diffusion of the other transport innovations of the period. Further advance in the nineteenth century depended upon continued railroad extension and increasingly efficient transport capacity. Transport innovation profoundly altered existing production relationships in nineteenth-century America in three ways. The chapter finally examines the variety of economic effects attributable to the nineteenth- and twentieth-century transportation revolutions.
  • 14 - Banking and Finance, 1789–1914
    pp 643-684
  • https://doi.org/10.1017/CHOL9780521553070.015
  • View abstract
    Summary
    By 1914 the United States had become one of the world's leading financial powers; it possessed a well-developed banking system and a broad array of non-bank financial intermediaries. The U.S. Constitution imposed several fundamental constraints on the monetary system. Although no action was taken during the war, soon afterwards the disorganized state of the currency produced widespread support for a federal bank to manage the resumption of specie payments. President Jackson's attack on the Bank continues to be debated by historians. In some states, when the bond security was inadequate free banking produced wildcat banking. A revised act, the National Banking Act, was passed in 1864. The nineteenth-century trends in financial development, money, and prices were frequently punctuated by financial crises that affected the economy as a whole, and created long-term changes in the structure of financial regulations. The organization of the Federal Reserve differed in another important way from the First and Second Banks, and from European models.
  • 15 - U.S. Foreign Trade and the Balance of Payments, 1800–1913
    pp 685-732
  • https://doi.org/10.1017/CHOL9780521553070.016
  • View abstract
    Summary
    Trade was on the minds of the entrepreneurs who financed the first settlements in the Americas. The comparison of U.S. trade with world trade can be made also for total trade measured by the sum of exports and imports. The obverse of the excess of current account payments was the import of capital into the United States. Estimates of the industrial distribution of the U.S. labor force also show the shift out of agriculture, particularly after 1810 or 1820. The changes in U.S. comparative advantage after the Civil War can be illustrated by the comparison of the composition of U.S. exports with that of world exports. Europe was about as important as a source of imports as it was as a destination for exports in the early decades of the nineteenth century. Classical economic thought contained strong predictions about the long-term trends of the relative prices of agricultural and other primary products relative to manufactured goods.
  • 16 - International Capital Movements, Domestic Capital Markets, and American Economic Growth, 1820–1914
    pp 733-812
  • https://doi.org/10.1017/CHOL9780521553070.017
  • View abstract
    Summary
    For almost three-quarters of a century, from the end of World War I until the early 1980s, the United States was the world's largest capital exporter. This chapter sketches the time path of the net flows of capital. It provides quantitative estimates of the geographic source and industrial structure of foreign investment in the U.S.; and adduces additional qualitative evidence of the extent, industrial and spatial distribution, and importance of those flows. The chapter examines the nature of the capital mobilized through the New York and London stock exchanges; and analyzes the nature of the institutional structure of the American capital market that led to the important role that foreign, in particular British, capital played in American development. It also examines the export of American capital, particularly over the two and a half decades prior to the outbreak of World War I, and, finally, reports some tentative conclusions.
  • 17 - The Social Implications of U.S. Economic Development
    pp 813-864
  • https://doi.org/10.1017/CHOL9780521553070.018
  • View abstract
    Summary
    This chapter discusses the movement of people from the countryside into cities and towns, and of urban-based institutions outward into closer contact with the persisting rural population. It explains the mostly westward expansion of European-American and African-American populations into areas more distant from established urban centers and market systems. The chapter shows how American society was organized and reorganized in conjunction with economic growth, new modes of production, and the ever-more-pervasive market. In 1840 fewer than a million Americans, one in twenty of the national population, lived west of the Mississippi River. Urban growth continued during the Civil War decade, and perhaps during the war itself, and by 1870 25 percent of the American population lived in 663 cities and towns. The promise of American life, argued Herbert Croly in 1909, lay not in the restoration of a Jeffersonian world of small, dispersed, competing units of production and exchange.
  • Bibliographic Essays
    pp 865-964
  • https://doi.org/10.1017/CHOL9780521553070.019
  • View abstract
    Summary
    This bibliography contains a list of reference articles and books related to the U.S. economy. Notable contemporary efforts to measure the scale and performance of the U.S. economy were made in the nineteenth century. In the early twentieth century Willford Isbell King and Robert F. Martin prepared national product figures for various dates in the nineteenth century: King, The Wealth and Income of the People of the United States and Martin, National Income in the United States. The most comprehensive sample of nineteenth-century wealth may be found in Lee Soltow, Men and Wealth in the United States. The most comprehensive survey of the extension system is presented in Roy V. Scott's The Reluctant Farmer: The Rise of Agricultural Extension to 1914. Work and success are explored as cultural themes in Daniel T. Rodgers, The Work Ethic in Industrial America, and Rex Burns, Success in America: The Yeoman Dream and the Industrial Revolution.

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