Economic Growth During the US Antebellum Era 1834-1863

USS ALASKA

Captain
Joined
Mar 16, 2016
WARNING / DANGER - Heavy Math

Financial Deepening and Economic Growth During the US Antebellum Era 1834-1863
by Abdus Samad
Utah Valley University

INTRODUCTION
Financial deepening, and economic growth and economic development are widely discussed and debated issues. Schumpeter (1912) argued that banks providing intermediary services such as mobilizing savings, allocating resources, facilitating transactions, risk taking, and risk management support innovation, and produce economic development.

Industrial development in Britain and elsewhere has been viewed as a direct result of the development of financial institutions. Hicks (1969) and Bagehot (1962) argued that financial institutions played a pivotal role in Britain’s industrial revolution. In the continental United States, bank success stories during the antebellum period were mixed. In the Antebellum Period, banks were considered “wildcats” (Hamond, 1957), “legal swindle” and fraudulent. Repeated suspension of specie and a large scale failure were the reason of for these assumptions. It was widely believed that banks invariably issued depreciated currency, these practices benefited a few but “everybody would suffer from the harm they would cause” (Scott, 2000). As a result, several states in the Midwest banned banks. Illinois was one of them.

In addition, there were also persistent complaints by the farmers of the antebellum period that banks were biased against lending farmers even though agriculture was an important source of GDP. Banks, according to Redlich (1968), did not provide capital to the development of industries. Banks were established by the merchants and traders to cater to their needs of short term capital supply. Importantly, banks, according to Redlich (1968), were engaged in merchant lending because of the mercantile philosophy of the early banks—lending for the very short term (Redlich 1968).

The other views were that banks were engaged in the internal development programs.

Taus (1967) said that “during the 1850s, banks became heavily interested in railway road construction” (page, 53). The construction of railroads, roads, and canals began. The railroads construction boom started in the 1830s and continued until the Civil War. The railroads connected to various parts and cities. At the end of the 1850s, the Eastern coast and the Great Lakes were connected to the western side of the Mississippi, and Chicago by the railroads.

By the end of the 1840s not only was the Erie Canal linked to Lake Eire, more than 10,000 miles of turnpikes were operating. Travel times significantly reduced before the Civil War. In the center of these developments were banks which contributed to the American economic growth. Due to the development transport, population growth, and industrial boom in the North and increased agricultural production in the West and South, the American economy experienced economic growth during the antebellum period. As a result, the average per capita GDP increased during these periods.

http://www.na-businesspress.com/JABE/SamadA_Web18_5_.pdf
53

Cheers,
USS ALASKA
 

Attachments

  • Financial Deepening and Economic Growth During the US Antebellum Era 1834-1863.pdf
    643.9 KB · Views: 22
Back
Top