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Technological diffusion and the Union blockade


  • Hetherington, Bruce W.
  • Kower, Peter J.


This paper answers the following question. If returns from smuggling cotton and contraband through the blockade of Confederate ports during the American Civil War were significantly lower than earnings from alternative investments, why did private firms so quickly adopt costly purpose-built steam ships in the face of the strengthening Northern blockade? First, we note that the rate of diffusion of steam ships, specially designed to run the blockade significantly exceeded any reported for innovations from the late 19th or early 20th century. Second, we correct an error in Stanley Lebergott's (1981) seminal work and conclude that that returns to infamous steamer, the Banshee (I) of 700% to be quite plausible. This finding of high returns is confirmed by two other historical sources, which have not been previously used. Additionally, we calculate that investors in the one of the leading blockade running firms, known as the Bee Company, earned in excess of 86% return on their investment, over double the profits previously reported. Finally, we demonstrate that adoption of purpose-built ships, significantly decreased the arrival rate of capture, thus increasing expected profits.

Suggested Citation

  • Hetherington, Bruce W. & Kower, Peter J., 2011. "Technological diffusion and the Union blockade," Explorations in Economic History, Elsevier, vol. 48(2), pages 310-324, April.
  • Handle: RePEc:eee:exehis:v:48:y:2011:i:2:p:310-324

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    References listed on IDEAS

    1. Robert B. Ekelund, Jr. & John D. Jackson & Mark Thornton, 2004. "The "Unintended Consequences" of Confederate Trade Legislation," Eastern Economic Journal, Eastern Economic Association, vol. 30(2), pages 187-205, Spring.
    2. Lebergott, Stanley, 1981. "Through the Blockade: The Profitability and Extent of Cotton Smuggling, 1861–1865," The Journal of Economic History, Cambridge University Press, vol. 41(04), pages 867-888, December.
    3. Richard C. K. Burdekin & Marc D. Weidenmier, 2001. "Inflation Is Always and Everywhere a Monetary Phenomenon: Richmond vs. Houston in 1864," American Economic Review, American Economic Association, vol. 91(5), pages 1621-1630, December.
    4. Atack, Jeremy & Bateman, Fred & Weiss, Thomas, 1980. "The Regional Diffusion and Adoption of the Steam Engine in American Manufacturing," The Journal of Economic History, Cambridge University Press, vol. 40(02), pages 281-308, June.
    5. Hetherington, Bruce W. & Kower, Peter J., 2009. "A Reexamination of Lebergott's Paradox About Blockade Running During the American Civil War," The Journal of Economic History, Cambridge University Press, vol. 69(02), pages 528-532, June.
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