A Cycle of Boom and Bust: The U.S.A., 1820-42
Notes by Mason Gaffney, May, 1993
(Pp. 4-13, starting from #8, could be extracted and read
separately, to give the gist of the macro and managerial
findings without the historical setting. However, the gain in
brevity would not be worth the loss of context.)
These notes are based in part on data presented in Chapters
3 and 4 of Carter Goodrich, Government Promotion of Canals and
They are most useful in conjunction with my notes on
the Chicago boom, 1830-40
These notes presume an overall
familiarity with major events of the times, and seek to extract
major principles at work.
The Canal Boom,
which crested in 1836-37, was one of several
in U.S. history, forming roughly an 18-year cycle.
crested in 1798, 1819, 1836, 1857, 1873, 1893, (1911 is
interestingly missing), 1929, and 1989.
World War II, and then
The Cold War, are probably what stopped the rhythm and muted
later cycles, until the peak of 1989.
We seem to be in another
serious slump now, 1993.
Rivalry among cities, and states, and with Canada, drove the
Control over hinterlands was fluid: they were viewed as
being up for grabs, with rich and permanent rewards in store for
the cities that grabbed them.
The result was "racing" to grab territory.
from "competition," as normally conceived:
Competition is ongoing; races end, winning is permanent.
Racers accept early losses, to win hinterlands to
It is like a franchise, a monopoly of trade.
Now theorists have rediscovered and named it "rent-seeking."
This boom is named for its most characteristic form of construction.
However, it also witnessed the beginnings of the r.r. era, part of the
steamboat era, etc., so not all references are to canals alone.