IDEAS home Printed from https://ideas.repec.org/p/van/wpaper/0423.html
   My bibliography  Save this paper

Social Saving of the Panama Canal

Author

Listed:
  • William K. Hutchinson

    () (Department of Economics, Vanderbilt University)

  • Ricardo Ungo

    () (Department of Economic, Universidad Latina, Panama)

Abstract

At the time when the Panama Canal was handed over to Panama, most people believed that the Canal was of little material worth to the United States.� However, what was the value of this canal to the United States in the 1920s?� We estimate the social savings generated by the Panama Canal for the United States in 1924 in order to assess the contribution it made to the social welfare of the United States.� We estimate the direct social savings that resulted from lower shipping costs for both international and coastwise trade.� Additionally, we estimate the benefits from two sources of indirect social savings.� The first was generated as a result of the expansion of the feasible market area, due to reduced transport costs.� The second source of indirect social savings is what we refer to as the pro-competitive effect of the competition between the water shipping via the Panama Canal and shipping via the transcontinental railroad.� We argue that this competition resulted in lower freight rates for all railroad traffic due to the way in which the Interstate Commerce Commission regulated railroad freight rates.� Estimates of total social saving range from 0.58 percent of GNP to 1.97 percent of GNP in 1924.� Even the lower estimate of social saving is a value that is one quarter larger than the total cost of acquiring the land and constructing the Panama Canal.

Suggested Citation

  • William K. Hutchinson & Ricardo Ungo, 2004. "Social Saving of the Panama Canal," Vanderbilt University Department of Economics Working Papers 0423, Vanderbilt University Department of Economics.
  • Handle: RePEc:van:wpaper:0423
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/pubs/VUECON/vu04-w23.pdf
    File Function: First version, 2004
    Download Restriction: no

    References listed on IDEAS

    as
    1. Ransom, Roger L, 1970. "Social Returns from Public Transport Investment: A Case Study of the Ohio Canal," Journal of Political Economy, University of Chicago Press, vol. 78(5), pages 1041-1060, Sept.-Oct.
    2. Arthur E. Rockwell, 1971. "The Lumber Trade and the Panama Canal, 1921-1940," Economic History Review, Economic History Society, vol. 24(3), pages 445-462, August.
    3. Stuart Daggett, 1915. "The Panama Canal and Transcontinental Railroad Rates," Journal of Political Economy, University of Chicago Press, vol. 23, pages 953-953.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Canals; social saving; transport costs;

    JEL classification:

    • N72 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - U.S.; Canada: 1913-

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:van:wpaper:0423. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John P. Conley). General contact details of provider: http://www.vanderbilt.edu/econ/wparchive/index.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.