Sources of Productivity Change in American Colonial Shipping, 1675-1775

Abstract

NE of the most notable features of the seventeenth and eighteenth centuries was the rapid growth of trade and the emergence of a trading Atlantic community. The underlying importance of this growth of trade was the increased specialization and division of labour according to the comparative advantages in production among regions in the Western world. One significant impetus to this improvement came from changes taking place in the primary means of transportation-namely, ocean shipping. This essay gives evidence on sources of changing productivity of shipping in colonial waters for the hundred-year period preceding the American Revolution. The findings reveal that most of the improvement which occurred is attributable to gains in economic organization and reduced uncertainties associated with pirates, privateering, and similar hazards. On the other hand, technological change, which typically is a main source of advancing productivity, appears to have been of minor importance to this industry at that time. The ideal measure of productivity change would require a quantitative measure of output changes per units of input, but unfortunately the data do not lend themselves to this approach. An alternative to this procedure, assuming a competitive industry, is to estimate productivity change by using freight-rate indices for a number of commodity routes.' For this period, the reciprocal of the freightrate indices provides a fairly direct measure of productivity change, because the major input costs of seamen's wages and shipbuilding costs remain almost constant throughout the entire period.2 The data clearly indicate that this industry was undergoing significant changes which had a favourable impact on the growth and development of a trading Atlantic community. The decline in rates varies among commodity routes, but