Category Archives: History

Slavery, the Development of the United States, and the Case for Reparations

Recognising the role of slavery in the United States’ development up to 1865 bolsters the case for making reparations

In a new working paper I outline how slavery contributed to the development of the United States before the Civil War. The paper is called ‘King Cotton, the Munificent’ because I argue that slavery benefitted the free society of the North. In a nutshell, I argue that slaves were required to produce the cotton exports that balanced the imports that the Federal Government taxed. Those customs revenues then financed westward expansion, which tended to benefit Northerners because they had prohibited slavery in the Midwest. As the free states grew faster than the slave states, Southern slaveholders recognised that their cotton exports were being used to finance their own disempowerment in Congress, so they seceded. The North would not let them go, however, because they threatened to take with them the customs revenues that the Federal Government had relied upon up to then. The result was the Civil War, which eventually led to emancipation. Such is my analysis in an abbreviated form.

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Cotton and Slavery in Antebellum America

Slavery was necessary for the United States’ cotton boom because productivity levels were not high enough to attract free labour.

The dominant view among economic historians is that American slavery was an unnecessary evil: nothing good came of it for the development of the United States after independence. Even if some reluctantly accept that the boom in cotton production may have had some benefits for Antebellum America, they argue that the cotton could have instead been produced by free labour. Here, however, I will argue that productivity levels were too low in cotton to attract free labour, so slave labour was a necessary evil for the cotton boom.

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Without Slavery in the United States, Would California Still Be in Mexico?

The Mexican-American War illustrates how important slavery was for the expansion of the United States.

Unless you are Mexican, it is easy to forget that California was not always in the United States, having been a part of Mexico until the Mexican-American War of 1846-48, after which it was annexed. Slavery had much to do with the origins of that war, since white settlers hoping to grow cotton on slave plantations had fought for the secession of Texas in 1836, and then supported its annexation by the United States in 1845; a disagreement over Texas’ western boundary would lead to war with Mexico the following year. My argument here, however, is that slavery was also crucial to the outcome of the Mexican-American war because the goods produced by slaves were essential to the United States’ healthy public finances, which allowed it to defeat its poorer neighbour. This blog post thus makes a small contribution to the ongoing debate about slavery’s role in the development of the United States in the long nineteenth century.¹

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The Known Unknowns of Historical GDP Estimates

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A figure from the most recent update to the Maddison Project illustrates how little we know about historical GDP.

One of my favourite graphs in recent writing on economic history might seem obscure. Reproduced below, it is found on page 28 of the working paper underlying the latest update of the Maddison Project database of historical GDP estimates. It shows the various estimates of British GDP per capita relative to US GDP per capita from 1770 to 1950. For me, this is interesting because it illustrates how little we know about levels of GDP in the past.

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Arbitrage and Import Controls in Argentina during the 1950s

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Two documents from the US State Department’s archives show how import controls presented opportunities for extraordinary profits during the first Peronist governments.

Following the Second World War, there was a worldwide dollar shortage due to the United States’ high level of self-sufficiency as an agro-industrial behemoth. Governments therefore imposed quantitative controls on imports, in order to ration the available supply of dollars. A study made in 1955 by John Hopkins, an enterprising member of the US Embassy in Buenos Aires, demonstrates how these controls presented fantastic opportunities for arbitrage profits for those who could obtain them.

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An Open Source Update of the Buy-to-Build Indicator

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The tendency toward buying other companies more than building new productive capacity continues in the United States

In a past life I had access to expensive databases of corporate statistics, which I used to calculate the buy-to-build indicator for the United States from the 1880s until 2012. In short, the buy-to-build indicator shows how much corporations are spending on buying other corporations (that is, on mergers and acquisitions) relative to how much they are spending on new productive capacity (fixed capital formation). It gives an indication of whether corporations prefer to expand by buying or by building.

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Problems of the Periphery in Federico and Tena’s World Trade Data

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A new data set of historical trade statistics has some familiar methodological problems.

Giovanni Federico and Antonio Tena-Junguito (2016) have produced a data set of world trade that includes exports and imports, in both current and constant prices, going back to the early nineteenth century for over 100 countries. It will give all economic historians a mass of easily available long-term time series. What could there possibly be to complain about? In short, methodologically speaking, it’s a bit iffy.

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Argentina’s Industrial Output, 1876-1913

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A new estimate of Argentina’s industrial output suggests a less optimistic view of the country’s ‘golden age’.

In a previous post I discussed a working paper in which I criticised Roberto Cortés Conde’s estimates of Argentina’s industrial output from 1875 to 1913. In a new version of that working paper I have taken the plunge by producing my own index for this period. It suggests a considerably lower rate of industrial growth than is found in the standard optimistic account of the country’s ‘golden age’.

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The Terms of Trade and (Under)development in the Long Nineteenth Century

The differential impact of improving terms of trade on land-abundant and land-scarce regions provides a framework for understanding the Great Divergence during the long nineteenth century.

In a forthcoming article in the Journal of Latin American Studies I discuss the origins of Argentina’s expansion in the long nineteenth century. It is largely an optimistic account of how globalisation led to progress in this remote part of the world. However, it does have a sting in its tail.

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Was Argentina Really Better Off Than the United States in 1800?

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Argentina’s economic history provides yet another example of the problem of Mickey Mouse numbers.

When a prominent economic historian provides a new estimate of something, it is likely that the estimate will be taken at face value. Other economic historians will cite it, so it becomes reified, until it is treated as fact, even when it is little more than fancy. John Coatsworth’s estimate of Argentina’s GDP in 1800 provides an example of this.

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