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16 - International Capital Movements, Domestic Capital Markets, and American Economic Growth, 1820–1914

Published online by Cambridge University Press:  28 March 2008

By
Lance Davis  and
Robert Cull
Edited by
Stanley L. Engerman  and
Robert E. Gallman
Lance Davis
Affiliation:
California Institute of Technology
Robert Cull
Affiliation:
World Bank
Stanley L. Engerman
Affiliation:
University of Rochester, New York
Robert E. Gallman
Affiliation:
University of North Carolina, Chapel Hill
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Summary

INTRODUCTION

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. In the last decade of the previous century, Americans had begun to finance economic activity in Canada and Mexico; until recently these transfers grew and their geographic focus broadened. Over the past decade, however, the world’s largest creditor has become its largest debtor.

Before 1914, however, it was Europe who acted as the world’s banker; and within that continent, it was Britain who was the senior partner. Moreover, over the course of the nineteenth century, it was the United States that received the lion’s share of Europe’s foreign investment. Unlike their great grandchildren, nineteenth-century Americans displayed a high propensity to save. Although the evidence for the early years is sketchy, the share of net capital formation in net national product appears to have averaged about 6.5 percent in the years between 1805 and 1840 and to have risen to almost 20 percent by the end of the century; and most of the resources that were diverted from consumption were domestic not foreign.

Type
Chapter
Information
The Cambridge Economic History of the United States , pp. 733 - 812
Publisher: Cambridge University Press
Print publication year: 2000

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