Working Paper: NBER ID: w4710
Authors: Robert E. Lipsey
Abstract: This paper reviews the main developments in U.S. trade and the balance of payments from the first years of the 19th century to the first decade of the 20th. American export trade was dominated by agricultural and other resource products long after the majority of the labor force had shifted out of agriculture. The shift out of agriculture was more rapid among the major trading partners of the United States because the American land area increased in the first half of the nineteenth century and agricultural land increased throughout the century. The rise in agricultural land area and a rapid decline in transport cost increased the supply of U.S. agricultural products to Europe and further displaced European agriculture and encouraged migration from Europe. The existence of the large world market, relatively open to the products of American comparative advantage and with a high price elasticity of demand for American exports, encouraged the expansion of U.S. land, agriculture, capital inflows, immigration, and the western migration of population.
Keywords: US trade; balance of payments; agricultural exports; 19th century trade
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased agricultural capacity and reduced transport costs (R49) | Increased supply of agricultural products to Europe (Q11) |
| Increased supply of agricultural products to Europe (Q11) | Displacement of European agriculture (N54) |
| Increased supply of agricultural products to Europe (Q11) | Encouragement of migration from Europe (F22) |
| High price elasticity of demand for American exports (F14) | Growth of U.S. land agriculture (N52) |
| High price elasticity of demand for American exports (F14) | Capital inflows (F21) |
| High price elasticity of demand for American exports (F14) | Western migration of the population (R23) |
| U.S. shipping services (L87) | Significant portion of export earnings (F10) |
| Negative trade balance offset by freight earnings (F19) | Complex interplay between different sectors of the economy (E44) |