Hostname: page-component-586b7cd67f-t8hqh Total loading time: 0 Render date: 2024-11-25T23:55:02.608Z Has data issue: false hasContentIssue false
  • English
  • Français

Testing for the Economic Impact of the U.S. Constitution: Purchasing Power Parity Across the Colonies versus Across the States, 1748–1811

Published online by Cambridge University Press:  01 March 2010

Farley Grubb
Farley Grubb*
Affiliation:
Professor, Economics Department, University of Delaware, Newark, DE 19716; and NBER Research Associate. E-mail: [email protected].
Get access Rights & Permissions [Opens in a new window]

Abstract

The U.S. Constitution removed real and monetary trade barriers between the states. By contrast, these states when they were British colonies exercised considerable real and monetary sovereignty over their borders. Purchasing power parity is used to measure how much economic integration between the states was gained in the decades after the Constitution's adoption compared with what existed among the same locations during the late colonial period. Using this measure, the short-run effect of the Constitution on economic integration was minimal. This may have been because the Constitution did not eliminate all the institutional barriers to interstate trade before 1812.

“No idea is more firmly planted in American history than the idea that one of the most difficult problems during the Confederation was that of barriers to trade between state and state. There had been such barriers in colonial times …”

Merrill Jensen1

“The ‘secret’ of American economic growth, English legal scholar Sir Henry Maine wrote in 1886, lay in ‘the [constitutional] prohibition against levying duties on commodities passing from State to State … . It secures to the producer the command of a free market over an enormous territory of vast natural wealth …’”

Charles W. McCurdy2

Type
ARTICLES
Information
The Journal of Economic History , Volume 70 , Issue 1 , March 2010 , pp. 118 - 145
Copyright
Copyright © The Economic History Association 2010

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Adams, Donald R. Jr., “Prices and Wages in Maryland, 1750–1850.” This Journal 46, no. 3(1986): 625–45.Google Scholar
Adams, Henry Carter “Taxation in the United States, 1789–1816.” Johns Hopkins University Studies in Historical and Political Science 2, nos. 5–6(1884): 267–341.Google Scholar
Bailyn, Bernard, ed. The Debate on the Constitution Volumes 1–2. New York: Literary Classics, 1993Google Scholar
Becker, Robert A.Revolution, Reform, and the Politics of American Taxation, 1763–1783 Baton Rouge: Louisiana State University Press, 1980Google Scholar
Bezanson, Anne, Gray, Robert D., and Hussey, MiriamWholesale Prices in Philadelphia, 1784–1861. Philadelphia: University of Pennsylvania Press, 1936.CrossRefGoogle Scholar
Bordo, Michael D., and White, Eugene N. “British and French Finance During the Napoleonic Wars.” In Monetary Regimes in Transition, edited by Bordo, Michael D. and Capie, Forrest, 241–73. New York: Cambridge University Press, 1994.Google Scholar
Brock, Leslie V.The Currency of the American Colonies, 1700–1764 New York: Arno, 1975Google Scholar
Brodhead, John Romeyn. History of the State of New York. Second Volume New York: Harper & Brothers, 1871Google Scholar
Bruchey, StuartThe Roots of American Economic Growth, 1607–1861 New York: Harper & Row, 1965.Google Scholar
Bullock, Charles T. “Historical Sketch of the Finances and Financial Policy of Massachusetts.” Publications of the American Economic Association, 3rd Series 8, no. 2(1907): 269–412.Google Scholar
Cecchetti, Stephen G., Mark, Nelson C. and Sonora, Robert J. “Price Index Convergence Among United States Cities.” International Economic Review 43, no. 4(2002): 1081–99.Google Scholar
Cole, Arthur HarrisonWholesale Commodity Prices in the United States, 1700–1861. Cambridge, MA: Harvard University Press, 1938.CrossRefGoogle Scholar
Cooper, Thomas, ed. The Statutes at Large of South Carolina, Volume 5 Columbia, SC: A. S. Johnson, 1839Google Scholar
Dickerson, Oliver MortonAmerican Colonial Government, 1696–1765 Cleveland, OH: Arthur H. Clark Company, 1912.Google Scholar
Dickinson, RodolphusA Digest of the Common Law, the Statutes Laws of Massachusetts Deerfield, MA: John Wilson, 1818Google Scholar
Dougherty, Keith L.Collective Action under the Articles of Confederation New York: Cambridge University Press, 2001Google Scholar
Edling, Max M., and Kaplanoff, Mark D. “Alexander Hamilton's Fiscal Reform: Transforming the Structure of Taxation in the Early Republic.” William and Mary Quarterly 61, no. 4(2004): 713–44.Google Scholar
Enders, WalterApplied Econometric Time Series New York: John Wily & Sons, 1995.Google Scholar
Engel, Charles, Rogers, John H.. “How Wide Is the Border?” American Economic Review 86, no. 5(1996): 1112–25.Google Scholar
Ernst, Joseph AlbertMoney and Politics in America, 1755–1775 Chapel Hill: University of North Carolina Press, 1973Google Scholar
Farrand, Max, ed. The Records of the Federal Convention of 1787 Volumes 1–4. New Haven, CT: Yale University Press, 1966Google Scholar
Froot, Kenneth A., and Rogoff, Kenneth “Perspectives on PPP and Long-Run Real Exchange Rates.” In Handbook of International Economics, Volume 3, edited by Grossman, Gene M., and Rogoff, Kenneth, 1647–88. Amsterdam: North-Holland, 1995.Google Scholar
Grubb, Farley “Creating the U.S. Dollar Currency Union, 1748–1811: A Quest for Monetary Stability or a Usurpation of State Sovereignty for Person Gain?” American Economic Review 93, no. 5(2003): 1778–98.CrossRefGoogle Scholar
Grubb, Farley “State ‘Currencies’ and the Transition to the U.S. Dollar: Reply—Including a New View from Canada.” American Economic Review 94, no. 4(2005): 1341–48.CrossRefGoogle Scholar
Grubb, Farley “The U.S. Constitution and Monetary Powers: An Analysis of the 1787 Constitutional Convention and the Constitutional Transformation of the U.S. Monetary System.” Financial History Review 13, no. 1(2006): 43–71.Google Scholar
Grubb, Farley “The Constitutional Creation of a Common Currency in the United States, 1748–1811: Monetary Stabilization versus Merchant Rent Seeking.” In Conflict Potentials in Monetary Unions, edited by Jonung, Lars, and Nautz, Jurgen, 19–50. Stuttgart: Steiner Verlag 2007.Google Scholar
Grubb, Farley “Testing for the Economic Impact of the U.S. Constitution: Purchasing Power Parity across the Colonies versus across the States, 1748–1811.” NBER Working Paper No. 13836, Cambridge, MA, March 2008.Google Scholar
Hanna, Hugh Sisson “A Financial History of Maryland (1789–1848).” Johns Hopkins University Studies in Historical and Political Science 25, nos. 8–10(1907): 355–481.Google Scholar
Hening, William WallerThe Statutes at Large; Being a Collection of All the Laws of Virginia, Volume 13 Philadelphia: Thomas Desilver, 1823Google Scholar
Herty, ThomasA Digest of the Laws of Maryland Baltimore, MD: Warner & Hanna, 1799Google Scholar
Hill, William. “The First Stages of the Tariff Policy of the United States.” Publications of the American Economic Association 8, no. 6(1893): 457–614.Google Scholar
Holton, WoodyUnruly Americans and the Origins of the Constitution New York: Hill and Wang, 2007Google Scholar
Hughes, J. R. T.Social Control in the Colonial Economy Charlottesville: University Press of Virginia, 1976Google Scholar
Jensen, MerrillThe New Nation: A History of the United States during the Confederation, 1781–1789 Boston: Northeastern University Press, 1981 [original 1950].Google Scholar
Journals of the Continental Congress, 1774–1789 Vols. 1–34. Washington, DC: GPO, 1904–1937.Google Scholar
Kaplan, Edward S.The Bank of the United States and the American Economy Westport, CT: Greenwood Press, 1999Google Scholar
Labaree, Leonard Woods. Royal Government in America New Haven, CT: Yale University Press, 1930.Google Scholar
Lakwete, AngelaInventing the Cotton Gin: Machine and Myth in Antebellum America Baltimore, MD: The Johns Hopkins Press, 2003CrossRefGoogle Scholar
Landon-Lane, John, and Rockoff, Hugh “From Monetary Union to Financial Union in the United States.” In Conflict Potentials in Monetary Unions, edited by Jonung, Lars, and Nautz, Jurgen51–72.Stuttgart: Steiner Verlag, 2007.Google Scholar
Levin, Andrew, Lin, Chien-Fu, and James Chu, Chia-Shang “Unit Root Tests in Panel Data: Asymptotic and Finite-Sample Properties.” Journal of Econometrics 108, no. 1(2002): 1–24.CrossRefGoogle Scholar
Mark, Nelson C.International Macroeconomics and Finance: Theory and Econometric Methods Oxford: Blackwell, 2001Google Scholar
Maryland [State of]. A Digest of the Laws of Maryland Washington, DCJ. C. O'Reilly, 1804Google Scholar
McCullough, A. B.Money and Exchange in Canada to 1900 Toronto: Dundurn, 1984.Google Scholar
McCurdy, Charles W. “American Law and the Marketing Structure of the Large Corporation, 1875–1890.” This Journal 38, no. 3 (1978): 631–49.Google Scholar
McCusker, John J.Money and Exchange in Europe and America, 1600–1775 Chapel Hill: University of North Carolina Press, 1978Google Scholar
McIvor, R. Craig. Canadian Monetary, Banking, and Fiscal Development Toronto: Macmillan, 1961Google Scholar
Newman, Eric P.The Early Paper Money of America, 4th EditionIola, WI: Krause Publications, 1997Google Scholar
North, Douglass C.The Economic Growth of the United States, 1790–1860 New York: W. W. Norton, 1966Google Scholar
Officer, Lawrence H.Between the Dollar-Sterling Gold Points. New York: Cambridge University Press, 1996.CrossRefGoogle Scholar
Owings, Donnell MacClure. His Lordship's Patronage: Offices of Profit in Colonial Maryland Baltimore: Maryland Historical Society and J. H. Furst Company, 1953Google Scholar
Paquet, Gilles and Jean-Pierre, Wallot “Some Price Indexes for Quebec and Montreal (1760–1913).” Histoire Sociale / Social History 62 (1998) 281–320.Google Scholar
Pennsylvania [State of]. The Statutes at Large of Pennsylvania from 1682 to 1809, Volumes 11–18 Harrisburg, PAState Printers, 1906–1915.Google Scholar
Perkins, Edwin J.American Public Finance and Financial Services, 1700–1815 Columbus: Ohio State University Press, 1994Google Scholar
Purdon, JohnA Digest of the Laws of Pennsylvania Philadelphia: Philip H. Nicklin, 1818Google Scholar
Rabushka, AlvinTaxation in Colonial America Princeton, NJ: Princeton University Press, 2008Google Scholar
Rogoff, Kenneth “The Purchasing Power Parity Puzzle.” Journal of Economic Literature 34, no. 2(1996): 647–68.Google Scholar
Rothenberg, Winifred B. “A Price Index for Rural Massachusetts, 1750–1855.” This Journal 39, no. 4(1979): 975–1001.Google Scholar
Rutland, Robert A. ed. Papers of George MasonVolume 2. Chapel Hill: University of North Carolina Press, 1970Google Scholar
Selgin, George “The Suppression of State Banknotes: A Reconsideration.” Economic Inquiry 38, no. 4(2000): 600–15.Google Scholar
Shepherd, James F., and Walton, Gary M.. Shipping, Maritime Trade, and the Economic Development of Colonial North America London: Cambridge University Press, 1972Google Scholar
Shepherd, SamuelThe Statutes at Large of Virginia, from October Session 1792, to December Session 1806. Volumes 1–3 New York: AMS Press, 1970 [original 1835].Google Scholar
Sowers, Don C.The Financial History of New York State from 1789 to 1912 New York: Columbia University, 1914Google Scholar
Tindall, George Brown. America: A Narrative History 2nd edition. New York: W. W. Norton, 1988Google Scholar
Walsh, Lorena. Personal communication. 1999.Google Scholar
Walton, Gary M. “New Evidence on Colonial Commerce.” This Journal 28, no. 3(1968): 363–89.Google Scholar
Walton, Gary M. and James, F. Shepherd. The Economic Rise of Early America New York: Cambridge University Press, 1979Google Scholar
Wolcott, Oliver Jr. “Direct Taxes.” American State Papers: Finances 1 414–17. Washington, DC: GPO, 1832 [original 1796].Google Scholar