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American Banking and the Transportation Revolution before the Civil War

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  • Atack, Jeremy
  • Jaremski, Matthew
  • Rousseau, Peter L.

Abstract

Studies have shown a connection between finance and growth, but most do not consider how financial and real factors interact to put a virtuous cycle of economic development into motion. As the main transportation advance of the 19th century, railroads connected established commercial centers and made unsettled areas along their routes better candidates for development. We measure the strength of links between railroads and banks in seven Midwest states using an annual transportation GIS database linked to a census of banking. These data indicate that those counties that already had a bank were more likely to see their first railroad go through over the next decade, while new banks tended to enter a county a year or two after it got a railroad. The initial banking system thus helped establish the rail system, while the rapid expansion of railroads helped fill in the banking map of the American Midwest.
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Suggested Citation

  • Atack, Jeremy & Jaremski, Matthew & Rousseau, Peter L., 2014. "American Banking and the Transportation Revolution before the Civil War," The Journal of Economic History, Cambridge University Press, vol. 74(04), pages 943-986, December.
  • Handle: RePEc:cup:jechis:v:74:y:2014:i:04:p:943-986_00
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    1. repec:jed:journl:v:42:y:2017:i:3:p:1-16 is not listed on IDEAS
    2. Jeremy Atack & Matthew S. Jaremski & Peter L. Rousseau, 2014. "Did Railroads Make Antebellum U.S. Banks More Sound?," NBER Chapters,in: Enterprising America: Businesses, Banks, and Credit Markets in Historical Perspective, pages 149-178 National Bureau of Economic Research, Inc.
    3. Lehmann-Hasemeyer, Sibylle H. & Wahl, Fabian, 2017. "Savings banks and the industrial revolution in Prussia: Supporting regional development with public financial institutions," Hohenheim Discussion Papers in Business, Economics and Social Sciences 18-2017, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    4. Rui Manuel Pereira, Alfredo Marvao Pereira and William J. Hausman, 2017. "Railroad Infrastructure Investments and Economic Development in the Antebellum United States," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 42(3), pages 1-16, September.
    5. repec:eee:juecon:v:104:y:2018:i:c:p:47-58 is not listed on IDEAS
    6. Howard Bodenhorn, 2016. "Two Centuries of Finance and Growth in the United States, 1790-1980," Working Papers id:11352, eSocialSciences.

    More about this item

    JEL classification:

    • N11 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: Pre-1913
    • N21 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: Pre-1913
    • N71 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - U.S.; Canada: Pre-1913
    • N91 - Economic History - - Regional and Urban History - - - U.S.; Canada: Pre-1913

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