Kharechko Tatiana, Veretennikova Valeria

PhD in Philosophy, Petrova Yulia Andreevna

Rostov State University of Economics (RIPE)

The review of the economic growth in the United States

from 1790 to 1860.

Over the last few decades, there has been a significant increase in our knowledge of the economic history of the United States. New knowledge gave us an opportunity to observe the development of economic history, most particularly with the emergence of the statistical and analytical contributions, and in part, because of the related development in social, labor, and political history that gave important implications of the understanding of economic changes. In present time many historians still examine the U.S. economy from 1790 to 1860, and noted the main factors, that were the main reasons of economic growth in that period of time [1].

The years following the achievement of independence were difficult ones for new American nation. Bickering among the states and groping for a viable political structure were paralleled by difficult economic readjustments. By 1790 the political crisis had been resolved and the economy enjoyed a measure of prosperity. Given political stability, an energetic populace, and an abundance of resources, the country's long run economic growth would appear assured. Yet there was little prospect of rapid growth on the horizon, and available information about the economy from 1789 through 1792 provides incomplete but convincing evidence that the prospects of the economy in the foreseeable future were limited by the size of the domestic market and an inability to expand the foreign market [2; 18]. Also, the Constitution and subsequent legislation passed by Congress favoring carrying trade (including the exclusion of foreign ships from coastwise trade) and foreign commerce were beneficial to the economy, the years 1790-92 reflected no significant alteration in the position of carrying trade and exports. The proportion of United States ships in foreign trade increased from fifty-nine per cent in 1790 to sixty-three per cent in 1792 [2; 20-21].

Two items completely dominated the credits in balance of payments during this period, exports and earnings from the carrying trade. Both exhibited little change until 1793, but grew thereafter with striking rapidity. Between 1793 and 1801 there was almost a five-fold increase in the value of exports and in net earnings from the carrying trade. 1807 was a peak year, with exports of $108.3 million as compared to $20.2 million in 1790, and net earnings for the carrying trade of $42.1 million as compared to $5.9 million in 1790.

The expansion of exports was primarily a result of the rapid development of the re-export trade. While domestic exports doubled between 1790 and 1807, re-exports grew from $300,000 in 1790 to $59,643,558 during the same period and actually exceeded by $11 million the value of domestic exports [2; 25-26].

The period in general is characterized by the fact that the value of exports plus earnings in the carrying trade almost equaled imports. Specie movements were not large, and moved fairly consistently with the price of foreign exchange. The international movement of productive factors was not very large during this period. While America maintained a revolving credit with Great Britain that financed a good part of external trade, the net changes were less significant. There was some increase in indebtedness from 1795-1799, 1805-1808 and in 1815, with a decline in foreign debt in 1800-1805 and 1809-1811. Immigration was not large during the period, and consequently did not exert a significant influence upon the size of the population and labor force. Certainly the most important contribution to the supply of productive factors from international economic relations was the acquisition of land, specifically the purchase of Louisiana in 1803, which approximately doubled the land area of the United States [2; 32].

The hope of the South was in cotton. “Beginning with the end of the war of 1812, the really important shift in cotton production was to the west. Almost unerringly, the settlers first planted the loamy, fertile soils that extended in an arc from Georgia through Alabama into northeastern Mississippi. A second major cotton-growing area was the lower Mississippi River and its tributaries. Also, the culture was popular into western Tennessee and eastern Arkansas. But Alabama, Mississippi, and Louisiana were far in the lead than Georgia and South Carolina in 1860” [3; 170]. And owing to successful cotton plantation, the economy of the South had positive results. In this way, cotton production as a share of world production increased from 0.5 percent in 1791 to 68 percent in 1850.

Finally, one of the most important stages of the economic growth in America is transitional period, which was 1815. It was linked with growing of the re-export’s role, revival sea foreign trade transportation and industrialization in Britain. As a result of these circumstances, the decade between 1810 and 1820 was the only one in American history in which urbanization did not increase.

In this way, in the period between 1790 and 1814 economic development is seen primarily as a result of external influences. In the period of the war between Britain and France in 1793 -1815, Napoleon came to a decision about sell the Louisiana Territory to the United States in 1803. Owing to this deal, the land of America extended approximately in two times. And as a result, the trade and commerce increased in American ports. But all sea American ports lost their leader positions into a second war with Britain in 1812.

In the period between 1815 and 1860 occurred the westward movement and the transformation to an industrial economy provided accelerating influences on the nation’s growing prosperity.

The economic growth of the United States in that time was strategically influenced by the spread of a market economy, by the shifting of resources from lower-valued (subsistence) to higher-valued uses (production for market), and by the growth of specialization and divisions of labor in production. One of the most famous economists Adam Smith says that levels of productivity were vitally dependent on the size of the market, especially in manufacturing.

In fact, market size was limited by the costs of moving goods and negotiating exchanges, because transportation costs were the most important component of these costs. And that is why a special concentration on transportation is warranted and indeed vital to our, understanding of long-term economic growth and the location of people and economic activity.

Literature:

1. The Cambridge Economic History of the United States Volume 2: The Long Nineteenth Century,/ Edited by Stanley L. Engerman , Robert E. Gallman, 2000/.

2. The economic growth of the United States 1790-1060, /Douglass C. North, University of Washington, 1961/.

3. History of the American Economy, Gary |M. Walton, Hugh Rockoff, seventh edition, 1994.