American Economics to 1900

To judge by the distribution of Nobel Prizes in economics over the past three decades or so, it would appear that American economics – for good or ill – has come to occupy a position of world preeminence. This has not always been so. To the contrary, if we roll the clock back to consider the “state of the art” during the first century of the nation’s existence, the United States was largely on the periphery of major intellectual developments in the discipline. Indeed, when the country’s centennial was celebrated in 1876, American economists had an inferiority complex. Writing on this occasion, Harvard’s Charles F. Dunbar – the first American to be accorded the title of “Professor of Political Economy” – observed that American scholarship as yet had contributed nothing to fundamental economic knowledge.

International realities – not just national ones – framed the context for American political economy up to 1900. After all, those wishing to acquire insight into the discipline did not need to rely on home production. They could look overseas and import ideas readymade. Given the absence of copyright protection for foreigners, it may even have been more cost-effective for American publishers to pirate ideas in book form from abroad than to sponsor local authorship. At the same time, there was always vigorous discourse on economic topics. Certainly colonial America did not lack for it. There were lively exchanges in public debates over such matters as the uses and abuses of paper money and over the “Mother Country’s” practices in shaping colonial trade patterns. In the run-up to the American Declaration of Independence, protests over Britain’s use of its taxing powers gathered considerable momentum. Moreover, the “Founding Fathers” in the first decades of the Republic had displayed a plenitude of ingenuity in crafting the instruments of a Federal political order and in establishing the credibility and creditworthiness of a novel form of government. Arguably, nothing in all this activity would qualify as a contribution to systematic economic analysis. Though a number of contemporary commentators took note of this shortcoming, the age of the economic treatise was not born until 1820.

By 1900, American economics had moved a long way from where it began. This reflected transformations in the structure of the economy, as well as changes in the character of the international marketplace for economic ideas (and America’s position within it). In the early going, American political economy had been heavily import-dependent, even though foreign ideas were altered to adjust their fit to circumstances in the “New World.” Domestic production – though sometimes strident in its assertions of originality – was then viewed by most of the rest of the world as naive and unsophisticated. By the close of the nineteenth century, the United States was about to become a net exporter of economic ideas.