1.1 The Economic Ascent of the US
In the last decades of the nineteenth century, the US had become the main economic power in the world. According to Maddisonās estimates of total Gross Domestic Product (GDP) in purchasing power parities (PPP), in 1872 the US surpassed the main industrial power of those years, the UK.1 Then it surpassed two poorer but much more populous countries such as India and China in 1876 and around 1886 respectively, becoming the country with the largest total GDP in the world.
While in 1870, China, India, and the UK had a total GDP in PPP larger than the US by 93%, 37%, and 18%, respectively; in 1913, the situation had radically changed: the US had a total GDP in PPPs 2.1 times larger than China, 2.3 times larger than the UK, 2.5 times larger than India.2
In the years 1870ā1913, the US had accomplished a great relative economic ascent. With this concept I mean a prolonged period (two decades at least), in which the rate of growth of the economy, measured by the average annual rate of change of per capita GDP, is significantly higher than the world rate of growth. In those years, the percent annual rate of change of per capita GDP of the US had in fact been 1.82, while the world average had been 1.3.3 The last quarter of the nineteenth century and the first years of the twentieth century saw the formation of the US economic dominance, which clearly manifested itself in the following years.
In that period, the perception of such a profound change in the world economic equilibria was, however, very limited. In those days, there were no synthetic economic indicators, such as GDP, and it was therefore very difficult to perceive and correctly assess the importance of world economic transformations. Moreover, the great Western European powers, the UK, France, and Germany had a vast colonial empire, so their economic strength was augmented by the important economic and financial links with their colonies.
There was, moreover, a remarkable ignorance of what was happening out of their national boundaries or out of their empires even in some of the prominent political leaders. Education at school was then, as it is today, strongly nationalistic, and in Europe, euro-centric, but its effects were not attenuated, as it now happens, by extensive travelling abroad, the massive diffusion of international media and the widespread use of internet.
In any case, the colonial empires, though vast and powerful, were giants with clay feet. They were destined, in the long run, to dissolve, as it happened in three-four decades after the Second World War. They were, in fact, undermined by four intrinsic weaknesses.
From the economic point of view, the European empires were substantially based on the principle center-periphery. The rapid growth of industry and of modern tertiary activities, and so a faster economic growth, was mainly concentrated in the center of the empire, while the periphery (the colonies) acted mainly as furnishers of raw materials and as a market for manufactured goods. It follows that there was a very unequal economic growth in the center and in the periphery of such empires and therefore large and growing tensions towards a social and economic resurgence of colonies.
Within colonial empires, there were, moreover, great ethnic, linguistic, and religious differences, which in the long-run contributed to undermine their existence.
The marked difference in citizenship status among the inhabitants of the center and of the periphery of the empires contributed to induce the discriminated or disadvantaged people of the colonies to rebellion and to a fierce search for independence.
Finally, there was a strong territorial discontinuity which made the movements of armies and security forces in all the empireās zones difficult, costly, and time-consuming. It is not by chance that in a few decades after the Second World War all colonial empires dissolved while the US, China, India, and Russia, which had a full or quasi-complete territorial continuity, could survive, although since 1947 India had suffered from the dramatic India-Pakistan partition, and in 1991 there had been the dissolution of the Soviet Union.
The prodigious economic ascent of the US in the years 1870ā1913 is mainly due to three elements:
- 1.The existence of the frontier until the beginning of the twentieth century
- 2.The consequent rapid expansion of population and of technical progress, and therefore of real productivity and real GDP
- 3.The activation, when the advantages of the frontier began to gradually shrink, of the fordist model of development that contributed to prolong the possibility of the rapid economic growth of the US economy
1.2 The Economic Consequences of the Frontier
After reaching independence, and in particular during the nineteenth century, the US fully utilized a crucial and peculiar growth determinant: the frontier, namely, the possibility to move west to exploit new natural resources.4
In the west, there were abundant arable lands, pastures, mines for gold and other important minerals, coal and oil fields, forests, water resources, buffaloes, furs, fish-rich lakes, rivers, and the ocean.
The existence of the frontier had permitted the US to dispose of enough food and national resources to be able to rapidly expand its population. The rapid growth of the US population was due to the acquisition of vast, new territories, often at the cost of the extermination of a large part of the preexisting indigenous tribes, and to the positive demographic natural rate and to the continuous large net inflow of immigrants.
While even in the richest European countries, such as the UK and France, the population was growing very slowly, in the US it was growing very fast. As we can see in Table 1.1, in 1820 the total US population was less than half of the UK population and less than one third of Franceās, but in 1870 it had already surpassed the level of the two great European powers, and in 1913, it had more than doubled.
Table 1.1
Population in the US and other selected countries: 1820ā1913 (in millions)a
Years | France | Germany | UK | Italy | US |
|---|---|---|---|---|---|
1820 | 31.3 | 24.9 | 21.2 | 20.2b | 10.0 |
1870 | 38.4 | 39.2 | 31.4 | 27.9 | 40.2 |
1913 | 41.5 | 65.0 | 45.6 | 37.2 | 97.6 |