This paper has been greatly improved by the critical comments of Bob Brito and Donald McCloskey. I also happily acknowledge the helpful contributions of Allan Bogue, John Bowman, Stanley Engerman, Robert Gallman, Claudia Goldin, Theodore Groves, Donald Hester, Allen Kelley, Peter Lindert, Donald Nichols, Kenneth Smith and Joseph Swanson.

¹ McCloskey, D. N., “Did Victorian Britain Fail?” Economic History Review, 2nd Series, XXIII (1970), 446–59CrossRefGoogle Scholar.

² The comparability between British and American experience has been noted, but apparently forgotten in other writings, by many economic historians. See, for example, Weber, B. and Handfleld-Jones, S. J., “Variations in the Rate of Economic Growth in the U.S.A., 1869–1939,” Oxford Economic Papers, (June 1954), 101–32Google Scholar; Brown, E. Phelps and Handfield-Jones, S. J., “The Climacteric of the 1890's,” Oxford Economic Papers, N.S., IV (October 1952), 279–89Google Scholar; Coppock, D. J., “The Climacteric of the 1870's,” The Manchester School of Economic and Social Studies, XXIV (January 1956), 21–31Google Scholar; Fels, R., American Business Cycles (Chapel Hill: The University of North Carolina Press, 1959), Chapter 5Google Scholar.

³ Engerman, S., “The Economic Impact of the Civil War,” Explorations in Entrepreneurial History, III (Spring/Summer, 1966), 181Google Scholar.

⁴ Gallman, R., “Gross National Product in the United States, 1834–1909,” Output, Employment, and Productivity in the United States After 1800 (New York: NBER, 1966), Table A-l, p. 26Google Scholar. The underlying estimates are in 1860 prices.

⁵ Davis, L. E., Hughes, J. R. T. and McDougall, D. M., American Economic History (Homewood, Illinois: Irwin, 1969), Table 4–1, p. 86Google Scholar.

⁶ The per annum labor force growth rate during the 1870*s was 2.84 percent; the rate for the 1880's was 3.02 percent, for the 1890 s 2.36 percent, and for the 1900's 2.57 percent. United States labor force (age 10 and over) calculated from Lebergott, S., Manpower in Economic Growth (New York: McGraw-Hill, 1964), Table A-l, p. 510Google Scholar.

⁷ Sargent, T. J., “Interest Rates and Prices in the Long Run: A Study of the Gibson Paradox,” paper read to a Universities-National Bureau Committee for Economic Research,November 5–6, 1971 (New York), p. 1Google Scholar.

⁸ Ibid., p. 2. Fisher assumed in his empirical analysis that the real rate was independent of current and past rates of inflation. Fisher, I., The Theory of Interest (New York: Macmillan, 1930)Google Scholar. See also Cagan, P., “The Monetary Dynamics of Hyper-Inflation,” in Friedman, M. (ed.), Studies in the Quantity Theory of Money (Chicago: University of Chicago Press, 1956)Google Scholar; Friedman, M., A Theory of the Consumption Function (New York: National Bureau of Economic Research, 1956)Google Scholar.

⁹ The reference here, of course, is to Saul, S. B., The Myth of the Great Depression, 1873–1896, Studies in Economic History (New York: St. Martin's Press, 1969)CrossRefGoogle Scholar.

¹⁰ Observed nominal rates on, say, farm mortgages are converted to real rates, r(t), by the following expression:

where i(t) is the quoted nominal rate and (t) is the rate of change in prices. This expression assumes perfect foresight with regard to price expectations, and (t) is computed as an average rate of growth over the preceding five years.

¹¹ Temin, P., “General Equilibrium Models in Economic History,” Journal of Economic History, XXXI (March 1971), 70–74Google Scholar.

¹² Friedman, M. and Schwartz, A. J., A Monetary History of the United States, 1867–1960 (Princeton: Princeton University Press, 1963), p. 92Google Scholar.

¹³ See, for example, Kelley, A. C. and Williamson, J. G., “Writing History Backwards: Meiji Japan Revisited,” The Journal of Economic History, XXXI (December 1971), 729–76CrossRefGoogle Scholar; idem, Leading Issues in Early Japanese Development: An Analytical Economic History (Chicago: The University of Chicago Press, forthcoming), ch. 9.

¹⁴ Abramovitz, M., “Resource and Output Trends in the United States Since 1870,” American Economic Review, XLVI (May 1956), 5–23Google Scholar; Solow, R. M., “Technical Change and the Aggregate Production Function,” Review of Economics and Statistics, XXXIX (August 1957;, 312–20Google Scholar; Denison, E. F., The Sources of Economic Growth in the United States (Committee for Economic Development: New York, 1962)Google Scholar; D. N. McCloskey, “Did Victorian Britain Fail?,” pp. 449–59.

¹⁵ Kuznets, Weber and Handfield-Jones provide arguments in favor of this effect: Kuznets, S., Modem Economic Growth (New Haven: Yale University Press, 1966)Google Scholar; B. Weber and S. J. Handfield-Jones, “Variations in the Rate of Economic Growth in the U.S.A., 1869–1939.”

¹⁶ M. Abramovitz, “Resource and Output Trends in the United States Since 1870,” and R. M. Solow, “Technical Change and the Aggregate Production Function.”

¹⁷ Abramovitz, M. and David, P., “Towards Historically Relevant Parables of Growth,” paper presented to the Southern Economic Association Meetings, Miami Beach (November 4–6, 1971), Table 1, p. 12Google Scholar.

¹⁸ Kendrick, J. W., Productivity Trends in the United States (Princeton: Princeton University Press, 1961), pp. 137–40Google Scholar.

¹⁹ The declining rate of capital formation thesis appears in the literature much too frequently to cite here. See D. J. Coppock, “The Climacteric of the 1870's.”

²⁰ D. N. McCloskey, “Did Victorian Britain Fail?,” p. 458. The decadal rate of capital stock growth does not appear to decline from 1860 to 1910.

²¹ P. Temin, “General Equilibrium Models in Economic History,” pp. 70–74.

²² R. Gallman and L. Davis, “The Share of Savings and Investment in Gross National Product During the 19th Century, The United States of America,” Stanford Research Center in Economic Growth, Memorandum No. 63 (July 1968), Tables 1 and 2, pp. 2 and 5.

²³ For a detailed discussion of this point see A. C. Kelley and J. G. Williamson, “Writing Economic History Backwards: Meiji Japan Revisited,” pp. 737–38.

²⁴ Calculated from Kuznets, S., Capital in the American Economy: Its Formation and Financing (New York: NBER, 1961), Table 3Google Scholar, net of capital consumption in 1929 dollars.

²⁵ Calculated from J. Kendrick, Productivity Trends in the United States, Tables A-XXII and A-XXIII, pp. 333–5 and 338–40. These indices are exclusive of trade, construction, finance, forestry, fisheries and personal services.

²⁶ Engerman, “The Economic Impact of the Civil War,” p. 181.

²⁷ Higgs, R., The Transformation of the American Economy, 1865–1914: An Essay in Interpretation (New York: John Wiley and Sons, 1971), pp. 26 and 32, italics addedGoogle Scholar.

²⁸ J. G. Williamson, Late Nineteenth Century American Development: A General Equilibrium History (ongoing). Mimeographed materials on the model, empirical analysis, and historical applications will be made available upon request. An earlier version of the framework appeared in Swanson, J. and Williamson, J. G., “Explanation and Issues: A Prospectus for Quantitative Economic History,” Journal of Economic History, XXXI (March 1971), 43–52CrossRefGoogle Scholar.

²⁹ Easterlin's estimates are based on income originating in commodity production and distribution. Easterlin, R. A., “Interregional Differences in Per Capita Income, Population, and Total Income, 1840–1950,” in Trends in the American Economy in the Nineteenth Century (New York: NBER, 1960), Appendix A, pp. 97–104Google Scholar.

³⁰ The land stock series is for the Midwest alone and is calculated from Tostlebe, A. S., Capital in Agriculture: Its Formation and Financing Since 1870 (New York: NBER, 1957)Google Scholar.

³¹ J. W. Kendrick, Productivity Trends in the United States. The rate of TFPG for industry is assumed identical in the northeast and midwest.

³² The experiment does not assume constant total factor productivity growth for the economy as a whole, but rather for individual sectors. It was argued that industrialization itself would increase the relative importance of the sector enjoying more rapid rates of total factor productivity growth. From this source alone, aggregate growth rates still receive an increasing positive stimulus over time.

³³ Higgs, The Transformation of the American Economy, p. 26.

³⁴ The “monetarist” view can be found in Higonnet, R. P., “Bank Deposits in the United Kingdom,” Quarterly Journal of Economics, LXXXI (August 1957), 329–67Google Scholar; M. Friedman and A. Schwartz, A Monetary History of the United States; and Cagan, P., Determinants and Effects of Changes in the Stock of Money, 1875–1960 (New York: Columbia University Press, 1965)Google Scholar.

³⁵ T. Sargent, “Interest Rates and Prices in the Long Run,” p. 57.

³⁶ Meyer, J. R., “An Input-Output Approach to Evaluating British Industrial Production in the Late 19th Century,” Explorations in Entrepreneurial History, VIII (1955), 12–34Google Scholar. Conrad, A. H., “Income Growth and Structural Change,” in Harris, S. (ed.), American Economic History (New York: McGraw-Hill, 1961), pp. 29–60Google Scholar.

³⁷ McCloskey, “Did Victorian Britain Fail?,” p. 446.

³⁸ Ibid., p. 448.

³⁹ Conrad, “Income Growth and Structural Change,” p. 34. There are other aggregate demand explanations, of course, and Conrad's emphasis on capital-intensity is selected as only one example. Demand insufficiency, and retarding output growth, has also been linked to population growth decline and natural resource exploitation as they relate to “autonomous” investment.

⁴⁰ S. Lebergott, Manpower in Economic Growth, p. 187.

⁴¹ Ibid., p. 189. For the full employment decades in the 1880's and 1900's, the rate is about four percent.