Transportation developments and economic growth

Abstract

Introduction One of the chief sources of the growth of output in the American economy has been the continent-wide domestic market within which the process of specialization has been allowed to proceed without the development of any significant barriers to the flow of commodities across regional boundaries. The constitutional prohibition against interstate tariffs was a necessary condition for this development, but it was not sufficient. In addition, to realize the benefits of specialization the economy required a transport system capable of moving bulk commodities across regional boundaries at relatively low cost. In 1800 only the Atlantic Ocean provided such a transport route, and the history of American economic development is closely tied to the development of such a transport system. The successful innovation of new transport techniques, however, required substantial institutional change. Within the transport sector the technical innovations were the canals and railroads. The arrangemental innovations are not so easily described. This chapter makes no pretense of being a complete history of transport in the United States. Instead it focuses only on the organizational developments within that or some related sector that permitted someone or some group to capture the profits that could accrue from the movements of commodities in interregional trade at prices that would support a fairly high degree of specialization. Both the transport industry itself, and the economy within which it operated, were subject to continual change over the nineteenth and early twentieth centuries.