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American Economic Growth before 1840: New Evidence and New Directions

Published online by Cambridge University Press:  11 May 2010

Diane Lindstrom
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Abstract

This article reviews recent literature on American growth before 1840 and compares it with estimates derived from the Philadelphia region. The estimates indicate that national output per capita rose no less than 0.S to 1.0 percent per annum in the period 1810-1840 and that growth exhibited trend acceleration. Relatively modest growth was accompanied by extensive development, initiated by sharply lowered transport costs. Faced with higher returns for exports and diminished costs for imports, regional producers increasingly specialized. Heightened intraregional trade fostered a pervasive reallocation of resources among sectors and among subsections of the region. This development helped ensure rapid, post-1840 growth.

Type
Papers Presented at the Thirty-Eighth Annual Meeting of the Economic History Association
Information
The Journal of Economic History , Volume 39 , Issue 1 , March 1979 , pp. 289 - 301
Copyright
Copyright © The Economic History Association 1979

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References

1 Taylor, George Rogers, “American Economic Growth Before 1840: An Exploratory Essay,” this Journal, 24 (12 1964), 427–44Google Scholar. The 1800-40 growth literature began with Robert Martin's 1939 essay. For a review of the literature see David, Paul, “The Growth of Real Product in the United States Before 1840: New Evidence, Controlled Conjectures,” this Journal, 27 (06 1967), 150–54Google Scholar.

2 , Taylor, “American Economic Growth Before 1840,” p. 443Google Scholar.

3 , David, “The Growth of Real Product,” p. 155Google Scholar.

4 Ibid., p. 194.

5 The basic framework of statistical analysis was developed by Simon Kuznets in 1948. See his “Long-Term Changes in the National Income of the United States of America Since 1870,” in Kuznets, Simon, ed., Income and Wealth of the United States, Trends and Structures (Cambridge, 1952), pp 221–41Google Scholar.

6 “The Statistical Approach,” in Taylor, George Rogers and Ellsworth, Lucius, eds., Approaches to American Economic History (Charlottesville, 1971), pp. 63–86Google Scholar; Gallman, Robert, “Changes in Total U. S. Factor Productivity in the 19th Century,” Agricultural History, 46 (01 1972), 191–210Google Scholar; and , Gallman, “The Agricultural Sector and the Pace of Economic Growth: U. S. Experience in the Nineteenth Century,” in Klingaman, David C. and Vedder, Richard K., eds., Essays in Nineteenth Century Economic History: The Old Northwest (Athens, Ohio, 1975), pp. 35–76Google Scholar.

7 , Gallman, “The Statistical Approach,” p. 79Google Scholar.

8 , Gallman, “The Agricultural Sector,” p. 54Google Scholar.

9 Brownlee, W. Elliot, Dynamics ofAscent (New York, 1974), pp. 85–94Google Scholar; Bruchey, Stuart, Growth of the Modern American Economy (New York, 1975), pp. 28–34Google Scholar; Gunderson, Gerald, A New Economic History of America (New York, 1976), pp: 181–82Google Scholar; North, Douglass C., Growth and Welfare in the American Past, 2nd ed. (Englewood Cliffs, N.J., 1974), pp. 83–86Google Scholar; Niemi, Albert W. Jr, U. S. Economic History: A Survey of the Major Issues (Chicago, 1975), p. 11Google Scholar; and Scheiber, Harry, Harold Vat ter, and Harold Underwood Faulkner, American Economic History (New York, 1976), p. 6Google Scholar.

10 According to the federal census, regional employment by sectors was: 1820: agriculture, 66.8 percent; manufacturing, 26.2 percent; other, 7.0 percent; 1840: agriculture, 58.2 percent; manufacturing, 29.5 percent; mining, 1.0 percent; other, 11.3 percent. The labor force participation rate rose over this period from 18 to 20 percent. This does not affect the statistics derived here since output is being measured and not productivity.

11 This excludes extraregional domestic and foreign agricultural goods, such as sugar and tobacco. See Grotjan's Philadelphia Public Sale Report (06 25, 1813), p. 2Google Scholar; Pennsylvania Bureau of Industrial Statistics, Annual Report of the Secretary of Internal Affairs of the Commonwealth of Pennsylvania, Part III, Industrial Statistics (Harrisburg, 1892), pp. 122–286CGoogle Scholar; and Lindstrom, Diane, Economic De velopment in the Philadelphia Region, 1810-1850 (New York, 1978), pp. 193–98Google Scholar.

12 Ibid., p. 155. This consumption estimate compares well with contemporary estimates. See Hunt's Merchants Magazine, 6 (02, 1842), 185Google Scholar; Ibid., 16 (June, 1847), 587; and National Magazine and Industrial Record, 3 (07, 1846), 148Google Scholar.

13 This range of elasticities follows the example of Crafts, N. F. R.. See his “English Economic Growth in the Eighteenth Century: A Re-Examination of Deane and Cole's Estimates,” Economic History Review, 29 (05, 1976), 226–35CrossRefGoogle Scholar.

12 , Lindstrom, Economic Development, pp. 43, 156Google Scholar.

13 The percentage deducted for raw materials for each manufacturing product was derived from Seaman and applied to both 1810 and 1840. See Seaman, Ezra, Essays on the Progress of Nations (New York, 1852), pp. 455–56Google Scholar.

16 The demise of household industry led to a rise in shop and factory-made goods. The former fell from $2.98 per capita in 1810 to $.55 in 1840, whereas the latter increased from $32.43 per capita to $34.66 over the same interval.

17 Coxe, Tench, A Statement of the Arts and Manufactures of the U. S.…1810 (Philadelphia, 1814), pp. 39–41, 49-50, 76Google Scholar; U. S. Department of State, Compendium, 1840, (Washington, D.C., 1841), pp. 126Google Scholar, 138; and Philadelphia Board of Trade, Annual Report, 1860 (Philadelphia, 1861), p. 77Google Scholar.

18 The value-added equivalents were derived from Seaman. See his Essays on the Progress of Nations, p. 457.

19 Gallman finds-that the major component of agricultural output-foodstuffs-grew little faster than the population, since “dietary standards changed little from colonial times to 1840.” See , Gall-man, “The Statistical Approach,” p. 76Google Scholar.

20 This assumption is not unrealistic. See , Gallman's discussion of construction and services in “The Statistical Approach,” p. 84Google Scholar.

21 , David, “The Growth of Real Product,” pp. 154–55Google Scholar.

22 Ibid., p. 156.

23 Ibid., p. 193.

24 , Lindstrom, Economic Development, p. 33Google Scholar.

25 Ibid., p. 91.

26 “Antebellum Interregional Trade Reconsidered,” in Andreano, Ralph, ed., New Views on American Economic Development (New York, 1965), p. 200Google Scholar.

27 , Lindstrom, Economic Development, pp. 106–12Google Scholar.

28 Ibid., p. 45.

29 Ibid., p. 146.

30 Lemon, James T., Best Poor Man's Country A Geographical Study of Early Southeastern Pennsylvania (Baltimore, 1972), p. 185Google Scholar.

31 English legislation affecting both the home market and that in the West Indies severely limited Philadelphia's grain export. See Klopfer, Helen, “Statistics of Foreign Trade of Philadelphia” (Unpublished manuscript, Eleutherian Mills Historian Library, 1937), pp. 230–31Google Scholar, 246-49. For quantitative measures of the growth in the Philadelphia market for foodstuffs and the decline in transport costs, see , Lindstrom, Economic Development, pp. 111–19Google Scholar.

32 Ibid., pp. 140-45.

33 The tendency for regional residents to migrate within the region rather than from it lends support to Alexander Field's hypothesis of an imperfect labor market. See his “Sectoral Shift in Antebellum Massachusetts: A Reconsideration,” Explorations in Economic History, 15 (04, 1978), 156–64Google Scholar.

34 For estimates as to the size and composition of this demand, see Hunt's Merchants Magazine, 16 (06, 1847), 587Google Scholar; and National Magazine and Industrial Record, 3 (07, 1846), 148Google Scholar.

35 For specific measures of the increase in output, see , Lindstrom, Economic Development, pp. 183–84Google Scholar.

36 Abramowitz, Moses and David, Paul, “Reinterpreting Economic Growth: Parables and Realities,” American Economic Review: Papers and Proceedings, 63 (05, 1973), 431Google Scholar. The specific statistics given in the text are drawn from Williamson, Jeffrey, “Inequality and Accumulation: 19th Century American Evidence and the Great Trade-off Debate” (Unpublished manuscript, 1978), p. 37Google Scholar.

37 Ibid., p. 23.