≡ Menu

Quotation of the Day…

… is from page 193 of the late Nobel-laureate economist Douglass North‘s 1961 paper “The United States in the International Economy, 1790-1950,” which is Chapter 7 of American Economic History (Seymour Harris, ed., 1961):

Imports, too, played an important role in economic development. Quite aside from their general role in permitting international specialization, during the booming periods of rapid growth 1832-1839 and 1850-1857 substantial resources of labor and capital were diverted out of consumer-goods production into canal and railroad construction, and a large increase in imported consumer goods partially offset this domestic decline. In the 1850s, we [Americans] also imported a large amount of railroad iron for construction.

DBx: Keep this historical fact in mind when you next hear someone insist that the increased scarcity brought about by high American tariffs at various times in the 19th century was the chief fuel for American economic growth back then. Insisting that a policy of obstructing people‘s access to goods and services – including many goods and services that would be inputs into production – is a means of increasing prosperity makes no more sense than insisting that a policy of obstructing someone‘s access to exercise equipment and nutritious food is a means of increasing that person‘s health.

Here’s a conclusion drawn by North, in his 1961 paper, from his review of that era of American economic history.