Download ECON 8534-001 Economic History of North America

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SEMINAR
Economic History of North America
Ann Carlos
;~ l$;5'-f
Fall 1992
Office: Rm 121
Office Hours: TR 9.30-11.00
or by appointment
This seminar course examines North America's past from the perspective of economics. In designing
the course, i had two objectives in mind. First, topics have been chosen to provide a comprehensive perspective
on the development of the economies of the United States and Canada since European settlement. Second, this
is a course in applied economics. To that end, topics have been chosen to illustrate haw evidence and theoretical
frameworks are combined to further the understanding of particular historical developments. The economist, by
his/her training, tends to become expert in the construction and manipulation of theory - that is to say of
hypothesis. The historian , on the other hand, tends to become an expert on evidence - its sources and reliability.
A satisfactory social science should combine both these aspects. For the student of economics, economic history
presents a nearly unique opportunity to observe the use of economics as a mode of explanation in a wide range
of issues. The issues have often been raised by non-economists and studying them deepens appreciation of how
the tools of the economist may be used to understand the evolution of societies.
Requirements:
This course is designed as a seminar in which much of the learning takes place during the process of
discussion of the assigned readings. As a result, student participation is a key to its success. One listed topic
will be covered each week. In general, a student will be responsible for leading the discussion, although I will
spend some time introducing the nature of the issues under-examination. Assignments will be made at the first
class. The student leading the discussion should have read all the items on the reading list and be prepared to
introduce the principal theoretical and empirical issues. A written outline to distribute to the other students is
a good plan. Students not leading the discussion are expected to have read at least the starred items on the
reading list and to participate actively in class discussion. Each student will give me a written paper on his/her
topic within three weeks of the presentation or by the last day of term - whichever is first. There will also be
a take-home final examination. The examination will be handed out in class December 1 and due back in class
December 8.
The grading for this course is as follows;
Class Attendance and Participation
Topic Presentation
Paper
Final Examination
u
15%
25%
30%
30%
Detailed Topic Outlines and Readings
Topic 1:
European Environment
Initially, the history of North America should be placed in a long run international context. What stands out is
the fact that regular growth of population and per capita income at rates exceeding one percent a year is a very
recent phenomenon and represents a fundamental change in man's relationship to his environment. Considerable
attention should be devoted to inquiring into the origins of this change. The history of North America, at least
into the twentieth century, has involved the geographic extension of the European economy and the exploitation
of hitherto unused resources. Some understanding of the European environment is therefore necessary. For this
see
*E.L. Jones, European Miracle, chs 3 and 4,
and for an excellent discussion of the Malthusian framework
*E.A. Wrigley and R.S. Schofield, The Population History of England, 1541-1871, ch 11.
Topic 2:
Colonial Economies
Here we will examine issues relating to the motivation of the settlers who came to North America and the nature
of the economies that they set up over the course of a century and a half.
A recent book which provides an excellent overview of current scholarship on the Colonial economy is
*John J. McCusker and Russell R. Menard , The Economy of British America, chs 1,2,3 and 4.
For a discussion of standards of living in the early colonies, see
Lois Carr Green," Emigration and the Standard of Living: The Seventeenth Century Chesapeake",
Journal of Economic History, June 1993.
Mccusker and Menard clearly see the colonial economies developing in terms of an export-led or staples model.
The classic sources are
W. A. Mackintosh, "Economic Factors in Canadian History" in Approaches to Canadian
Economic History, Easterbrook and Watkins, eds,
and
Harold A.Innis, "The Fur Trade" in Approaches.
The view has been usefully formalized in
*M. H. Watkins , "A Staple Theory of Economic Growth", in Approaches,
and in his more Marxist reinterpretation;
*M. H. Watkins, "The Staple Theory Revisited", Journal of Canadian Studies, Winter 1977.
Although the staples framework has proved to be a useful tool in classifying like events, it is not a theory. You
might also like to think about the growth of these colonial economies in terms of an endogenous growth model.
While the American colonies were founded with British common law at their foundation, not all of the North
, American Colonies were British in origin. For a look at the impact of a different legal structure on economic
growth, see
Morris Altman, "Seigniorial Tenure in New France, 1688-1739: An Essay on Income
Distribution and Retarded Economic Development" Historical Reflections/Reflexions
Historiques, 1983.
Topic 3:
Labour Markets
The staples thesis described above provide a way to think about the differential growth paths of the different
regions. Another view of these same events comes from a study of the labor markets.
*David W. Galenson, Markets in History, ch 2.
An interesting discusssion of the rise of slavery in the American South is to be found in
*Gavin Wright, The Political Economy of the Cotton South, ch 2, pp.11-15.
The issue of indentured servants has been extensively studied by Farley Grubb . See
Farley Grubb, "The Market for Indentured Immigrants: Evidence on the Efficiency of ForwardLabor Contracting in Philadelphia, 1745-1773", Journal of Economic History, December
1985.
Although Grubb's work shows that both men and women came over as indentured servants, we tend to think of
the labor market as male. Women tended to participate in a much more informal though equal way
Gloria L Main, "Gender, Work and Wages in Colonial New England" Working Paper,
Department of History, University of Colorado, Boulder.
Topic 4:
South and Slavery
The economics of slavery in the Cotton South has generated an enormous literature during the last twenty years,
which we cannot attempt to cover in any great detail. An excellent overall summary of much of the work is
*Gavin Wright, Political Economy, chs 1,2 and 3.
The position and treatment of black slaves has been a major source of debate. Much of that debate was set off
by
Robert W. Fogel and Stanley L. Engerman, Time On the Cross, ch.4
This view has been bitterly disputed. In particular see
Roger Ransom and Richard Sutch, One Kind of Freedom, chs 1 and 2.
Topic S:
Industrial Development and the Tariff
Through most of its history the United States has enforced a protective tariff on manufactured goods. For the
classic discussion of the tariff, see
F.W. Taussig, The Tariff History of the United States .
For the impact of a tariff on the development of an industry, consider
A. R. M. Lower, "The Trade in Square Timber" in Approaches.
During the ante-bell um period it is argued that the tariff had strong regional effects, such as benefitting the North
and hurting the South. Analysis of the issue is complicated, however, by America's strong position in the
international cotton market which conveyed market power and makes it necessary to consider optimal tariff issues.
For an attempt to examine this issue, see
*John James , "The welfare effects of the antebellum tariff", Explorations in Economic History,
July 1978.
John James, "The optimal tariff in the antebellum United States", AER, September 1981.
However, not everyone believes these results.
*C. Knick Harley, "The Antebellum American Tariff, Welfare and Manufacturing: Explorations
in General Equilibrium History", Working Paper, University of Western Ontario.
Tariffs are political tools and so one must consider the political process of tariff creation.
J .J. Pincus, "Pressure Groups and the Pattern of Tariffs", JPE, August 1975.
*Marc Hayford and Carl A. Pasurka, "The Political Economy of the Fordney-McCumber and
Smoot-Hawley Tariff Acts", Explorations in Economic History, January 1992.
Topic 6:
Nineteenth Century American Technology: Superiority to Britain?
Britain is generarlly regarded as the first nation to pass through the "Industrial Revolution". But Americans
clear! y developed a preciosity in certain industries that developed into modern mass production technology. A
classic statement of the issues, which will serve as a fo cus for discussion, are to be found in
*Peter Temin, "Labor Scarcity and the Problem of American Industrial Efficiency in the 1850s",
Journal of Economic History, September 1966.
An argument that the history is more complex than this simple model followed, see
*Edward Ames and Nathan Rosenberg, "The Enfield Arsenal in Theory and Practice, Economic
Journal, December 1978.
The choice of techniques is not trivial in real world situations. Many forces operate on the environment in which
the choice is made. Some industry studies show this
William Lazonick, "Factor Costs and the Diffusion of Ring Spinning in Britain prior to World
War l" , QI.E, 198 1
A theoretical treatment of the issues found in Temin 's article is
R.W. Jones, "A Three Factor Model in Theory, Trade and History" , in Bhagwati et al, eds.
Trade, Balance of Payments and Growth .
A recent general equilibrium approach to this issue is
John James and Jonathan Skinner, "The resolution of the Labor-Scarcity Paradox", Journal of
Economic History, September 1985.
Topic 7:
Nineteenth Century Transportation
Transportation and railroads in particular have been seen as a key element in the transformation of the nineteenth
century economy. For a discussion of the role played by transporation improvements, see
*William Marr and Donald Paterson, Canada: An Economic History, pp 302-307.
The extent to which railroads were indispensible to American economic growth was asked and tested in
Robert Fogel, "A Quantitative Approach to the Study of Railroads in American Economic
Growth" , Journal of Economic History, June 1962.
Another classic discussion of railroads is to be found in
Albert Fishlow, American Railroads and the Transformation of the Ante-BeUum Economy.
While railroads may not have been indispensible, transportation improvements clearly were. Thus subsidization
of these improvements became an important question. The issues are well set out in
*Stanley Engerman, "Some Economic Issues Relating to Railroad Subsidies and the Evaluation
of Land Grants" , Journal of Economic History, June 1972.
For a discussion on rates of return and the impact of subsidies see
Ann Carlos and Frank Lewis, "The Profitability of Early Canadian Railroads: Evidence from the
Grand Trunk and Great Western Railway Companies" in Strategic Factors in Nineteenth
Century American Economic History, Goldin and Rockoff, eds.
The extent to which railroad pricing policies could affect the land use pattern is described in
Ann M. Carlos, "Land Use, Supply and Welfare Distoritions Induced By Inefficient Freight
Rates: Lessons form the CPR Circa 1901 ", Canadian Jou rnal of Economics, November
1988.
Topic 8:
Nineteenth Century North American Agriculture
In many ways the history of agriculture in the Canadas before Confederation and that in the American middle
west were similar. Agricultural development obviously benefitted from transportation improvements, but also
from growth in local and regional markets. The impact of those regional markets is described for the Canadian
case in
John McCallum, Unequal Beginnings, chs 1-4.
This view is challenged in
Marvin Mcinnis, "A Reconsideration of Agriculture in the First Half of the Nineteenth Century"
Canadian Paters in Rural History, 1981
and
*Frank Lewis and Marvin Mcinnis, "The Efficiency of the French Canadian Farmer", Journal
of Economic History, September 1980.
Another major issue has been the impact of technological change. Consider
Paul David, "The Mechanization of Reaping in the Ante-Bell um Midwest", reprinted m
Reinterpretations of American Economic History.
and
*Richard Pomfret, "The Mechanization of Reaping in Nineteenth
Century Ontario: a Case Study of the Pace and Causes of the
Diffusion of Embodied Technical Change", Reprinted in
Perspectives on Canadian Economic History.
Topic 9:
Western Expansion: Agriculture continued!
Much of the economic history of North America in the late nineteenth century involved the expansion of
settlement into the farming interior of the West. This expansion took place within the context of the international
economy. For a summary of this
*C. Knick Harley, "Late Ninteenth Century Transporation, Trade and Settlement" in Wolfram
Fischer, et al. The Emergence of a World Economy 1500-1914.
Again railroad investment was a key part of the process.
*C. Knick Harley, "Oligopoly Strategy and the Timing of American Railroad Construction"
Journal of Economic History, December 1982.
The Canadian wheat boom was one of the most striking examples of the expansion in response to international
conditions. It has long been seen as the key to Canadian growth. An important essay challang'ing this position
was written twenty years ago
Edward Chambers and Donald F. Gordon "Primary Products and Economic Growth: An
Empirical Measurement" Journal of Political Economy, August 1966.
Their argument was so at variance with the accepted wisdom that it has been widely challenged. The new
estimates of Canadian national income support the view that the wheat boom was a major engine of growth.
A. G. Green and M. C. Urquhard, "New Estimates of Output Growth in Canada: Measurement
and Interpretation", in Perspectives.
Topic 10:
The Industrial Labor Market: Immigrants and Women.
Much was involved in the transition to an industrial society. Far from lest was the creation of an industrial labor
force from workers whose backgrounds were not industrial. This process, receives classical treatment in
*Herbert G. Gutman, "Work, Culture and Society in Industrializing America, 1815-1919"
American Historical Review, June 1973.
One key issue in the process has been that of racial discrimination. Higgs argues that wage differentials reflected
real productivity differentials
Robert Higgs, "Race, Skills and Earnings: American Immigrants in 1909" Journal of Economic
History, June 1971.
This has been challenged in
Paul McGouldrick and Michael Tanner, "Did American Manufacturers Discrimate Against
Immigrants before 1914?" Journal of Economic History, September 1977.
A further major issue involves the changing role of women in the labor force. The main source is
*Claudia Goldin, Understanding the Gender Gap,
Topic 11: American Economy and Monetary Forces in the Nineteenth Century.
The cyclical behaviour of the Antebellum economy was most pronounced during the 1830s. Monetary forces had
a large impact.
*Peter Temin, Jacksonian Economy, chs. 1, 3 and 4.
While the Jacksonian disruptions were caused by international forces, domestic factors were also able to play a
role.
*Charles Calomiris and Larry Schweikart, "The Panic of 1857: Origins, Transmission, and
Containment", Journal of Economic History, December 1991.
The role played by the American banking system is documented in the Calomiris and Schwiekart article. Banking
problems and the evolution of the banking system have been extensively studied. See, for instance
Richard Sylla, The American Capital Market, 1846-1914.
John A. James, Money and Capital markets in Postbellum America.
Eugene N. White, The Regulation and Reform of the American Banking System 1900-1929.
The creation and maintenance of the international economy by the end of the nineteenth century has led to a
discussion of the Gold Standard. The idea of a gold standard is well discussed in
*Michael Bordo, "The Gold Standard: The Traditional Approach", in Bordo and Schwartz, A
Retrospective on the Classical Gold Standard, 1821-1931.
It is often argued that a monetary system needs a central authority. For an examination of this question see
Michael Bordo and Angela Redish , "Why did the Bank of Canada Emerge in 1935?", Journal of
Economic History , June 1987.
A number of other topics are possible. We could examine the rise of big business and big government; the
Southern transformation; the Great Depression; the New Deal; Urbanization in America. Obviously class time
does not permit an examination of all of these. Through some voting process , we will have to decide on one or
two.