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Railroads and American Economic Growth*

Published online by Cambridge University Press:  03 February 2011

Marc Nerlove
Marc Nerlove
Affiliation:
Yale University
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Extract

In his classic paper on the significance of railroads to American economic development, Leland Jenks distinguished three principal avenues of influence: (1) The railroad was what Jenks called an “innovating idea” with important psychological impact “manifested in a wave-like profusion of new enterprise of many sorts.” (2) The railroad and railway construction and maintenance were a stimulus to the industrial and financial sectors of the economy. The railroad not only stimulated the iron and steel, timber, and other industries directly but “encouraged innovations in financial enterprise.” (3) Finally, the railroad contributed directly to the generation of national income through the rendering of transportation services. Although on this last point Jenks despaired that, “There appears to be no satisfactory technique for giving a precise measure to the extent of this contribution.”

Type
Review Articles
Information
The Journal of Economic History , Volume 26 , Issue 1 , March 1966 , pp. 107 - 115
Copyright
Copyright © The Economic History Association 1966

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References

1 Jenks, L. H., “Railroad as an Economic Force in American Development,” Journal of Economic History, IV, No. 1 (May 1944), 1–20CrossRefGoogle Scholar; reprinted in F. C. Lane and J. C. Riemersma, eds., Enterprise and Secular Change (Homewood, Ill.: Richard D. Irwin, 1953), 161–80.

2 Fogel, Robert William, Railroads and American Economic Growth: Essays in Econometric History (Baltimore: The Johns Hopkins Press, 1964). Pp. xv, 296. $6.95.Google Scholar

3 Jenks, in Lane and Riemersma, pp. 172–73.

4 Fogel, p. 26.

5 Ibid., pp. 244–45.

6 Ibid., p. 55.

7 Ibid., p. 233.

8 Average of Kuznets' figures for 1887–91 and 1889–93, U. S. Bureau of the Census, Historical Statistics of the United States (Washington. GPO, 1960), p. 139Google Scholar. The figure would be somewhat higher if the Department of Commerce concept were used.

9 Solow, R. M., Capital Theory and the Rate of Return (Amsterdam: North-Holland Publishing Co., 1964).Google Scholar

10 Ibid., pp. 56–65.

11 Ulmer, M. J., Capital Formation in Transportation, Communications, and Public Utilities: Its Formation and Financing (Princeton, N. J.: Princeton University Press, 1960).Google Scholar

12 Moore, G. H., “Statistical Indicators of Cyclical Revivals and Recessions,” in Moore, G. H., ed., Business Cycle Indicators, I (Princeton, N. J.: Princeton University Press, 1961), 198Google Scholar; Friedman, M. and Schwartz, A., A Monetary History of the United States (Princeton, N. J.: Princeton University Press, 1963), pp. 104–5.Google Scholar

13 Ulmer, p. 256.

14 Ibid., p. 288.

15 Klein, L. R., A Textbook of Econometrics (Evanston, Ill.: Row, Peterson, 1953), p. 234.Google Scholar

16 Historical Statistics, p. 656. No doubt some allowance must be made for default.

17 Fogel, p. 82.

18 Historical Statistics, p. 151.

19 Ibid.

20 Valavanis-Vail, S., “An Econometric Model of Growth: U. S. A. 1869–1953,” American Economic Review, XLV (May 1955), 208–21.Google Scholar

21 Budd, E. C., “Factor Shares, 1850–1910,” in Trends in the American Economy in the Nineteenth Century (Princeton, N. J.: Princeton University Press for the NBER, 1960), p. 382.Google Scholar

22 Solow, p. 92, obtains a net rate of 18 per cent in the United States in 1954. I do not at this time see any explanation of why the rate of return should be so much lower in 1890. However, use of a higher rate would, of course, only widen the distance between the overall rate of return on capital and the specific rate of return to capital invested in railroads.