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Harvests and Business Cycles in Nineteenth-Century America

Author

Listed:
  • Joseph H. Davis
  • Christopher Hanes
  • Paul W. Rhode

Abstract

Most major American industrial business cycles from around 1880 to the First World War were caused by fluctuations in the size of the cotton harvest due to economically exogenous factors such as weather. Wheat and corn harvests did not affect industrial production; nor did the cotton harvest before the late 1870s. The unique effect of the cotton harvest in this period can be explained as an essentially monetary phenomenon, the result of interactions between harvests, international gold flows, and high-powered money demand under America's goldstandard regime of 1879–1914.

Suggested Citation

  • Joseph H. Davis & Christopher Hanes & Paul W. Rhode, 2009. "Harvests and Business Cycles in Nineteenth-Century America," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(4), pages 1675-1727.
    • Handle: RePEc:oup:qjecon:v:124:y:2009:i:4:p:1675-1727.
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    File URL: http://hdl.handle.net/10.1162/qjec.2009.124.4.1675
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    1. Joseph H. Davis & Christopher Hanes & Paul W. Rhode, 2009. "Harvests and Business Cycles in Nineteenth-Century America," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(4), pages 1675-1727.
    2. Jaremski, Matthew & Wheelock, David C., 2025. "Interbank Networks and the Interregional Transmission of Financial Crises: Evidence from the Panic of 1907," The Journal of Economic History, Cambridge University Press, vol. 85(1), pages 152-179, March.
    3. Asaf Bernstein & Eric Hughson & Marc D. Weidenmier, 2008. "Can a Lender of Last Resort Stabilize Financial Markets? Lessons from the Founding of the Fed," NBER Working Papers 14422, National Bureau of Economic Research, Inc.
    4. Ritschl, Albrecht & Uebele, Martin & Sarferaz, Samad, 2008. "The U.S. Business Cycle, 1867-1995: A Dynamic Factor Approach," CEPR Discussion Papers 7069, C.E.P.R. Discussion Papers.
    5. Daniel Kaufmann, 2020. "Is deflation costly after all? The perils of erroneous historical classifications," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 35(5), pages 614-628, August.
    6. Hanes, Christopher & Rhode, Paul W., 2013. "Harvests and Financial Crises in Gold Standard America," The Journal of Economic History, Cambridge University Press, vol. 73(1), pages 201-246, March.
    7. Perez, Stephen J. & Siegler, Mark V., 2006. "Agricultural and monetary shocks before the great depression: A graph-theoretic causal investigation," Journal of Macroeconomics, Elsevier, vol. 28(4), pages 720-736, December.
    8. Bazot, Guillaume & Monnet, Eric & Morys, Matthias, 2019. "Taming the gobal financial cycle: Central banks and the sterilization of capital flows in the first era of globalization," IBF Paper Series 03-19, IBF – Institut für Bank- und Finanzgeschichte / Institute for Banking and Financial History, Frankfurt am Main.
    9. Albrecht Ritschl & Samad Sarferaz & Martin Uebele, 2016. "The U.S. Business Cycle, 1867-2006: A Dynamic Factor Approach," The Review of Economics and Statistics, MIT Press, vol. 98(1), pages 159-172, March.
    10. Selgin, George & Lastrapes, William D. & White, Lawrence H., 2012. "Has the Fed been a failure?," Journal of Macroeconomics, Elsevier, vol. 34(3), pages 569-596.
    11. Kupiec, Paul H. & Ramirez, Carlos D., 2013. "Bank failures and the cost of systemic risk: Evidence from 1900 to 1930," Journal of Financial Intermediation, Elsevier, vol. 22(3), pages 285-307.
    12. Ritschl, Albrecht & Sarferaz, Samad & Uebele, Martin, 2008. "The U.S. business cycle, 1867-1995: dynamic factor analysis vs. reconstructed national accounts," Economic History Working Papers 22305, London School of Economics and Political Science, Department of Economic History.
    13. Charles Calomiris, 2009. "Banking Crises and the Rules of the Game," NBER Working Papers 15403, National Bureau of Economic Research, Inc.
    14. John Landon-Lane & Hugh Rockoff & Richard H. Steckel, 2011. "Droughts, Floods and Financial Distress in the United States," NBER Chapters, in: The Economics of Climate Change: Adaptations Past and Present, pages 73-98, National Bureau of Economic Research, Inc.
    15. Bent, Peter H., 2020. "Recovery from financial crises in peripheral economies, 1870–1913," Explorations in Economic History, Elsevier, vol. 78(C).
    16. Bernstein, Asaf & Hughson, Eric & Weidenmier, Marc D., 2010. "Identifying the effects of a lender of last resort on financial markets: Lessons from the founding of the fed," Journal of Financial Economics, Elsevier, vol. 98(1), pages 40-53, October.
    17. Christopher M. Meissner, 2013. "Capital Flows, Credit Booms, and Financial Crises in the Classical Gold Standard Era," NBER Working Papers 18814, National Bureau of Economic Research, Inc.
    18. Monnet, Eric & bazot, guillaume & Morys, Matthias, 2019. "Taming the Global Financial Cycle: Central Banks and the Sterilization of Capital Flows in the First Era of Globalization (1891," CEPR Discussion Papers 13895, C.E.P.R. Discussion Papers.
    19. Joseph Davis & Marc D. Weidenmier, 2016. "America's First Great Moderation," NBER Working Papers 21856, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • N11 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: Pre-1913
    • N51 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - U.S.; Canada: Pre-1913
    • N61 - Economic History - - Manufacturing and Construction - - - U.S.; Canada: Pre-1913

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