North's Export Base Thesis

Paper Summary:

This paper examines how the North export base thesis is an attempt to explain rapid U.S. economic growth, by examining the importance of raw material exports, mostly cotton to Europe. It looks how it presents a valid and to a large extent validated explanation to how and why the U.S. economy enlarged and diversified between 1790 and 1860.

From the Paper:

"According to North's thesis the importance of cotton exports as the basis for US economic growth is unparalleled. Cotton prices began to rise in 1812; by 1815 they were in excess of 20 cents a pound in New York. The continued growing demand of the English textile industry in Lancashire was not matched by an equal expansion in supply, therefore increasing the price of cotton. Prices reached a peak of 29 cents a pound in 1816 and remained high until 1818. The extensive waterways of the South allowed for a vast expansion of cotton growing land, not far removed from its only cheap method of transportation. The beginning of steam boats on the Mississippi (1816) further reduced transportation costs and prompted further investment in the cotton growing plantations of the South."

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