That Japanese economic growth since the war has been spectacular is well known. Real net national income per head at the beginning of the 1960's was roughly twice that of the middle thirties, and four times the postwar low of 1946. In all sorts of ways—industrial structure, levels of regular employment, composition and level of consumption—Japan has made a decisive break from the economy of the 1930's. While the achievement is obvious, it is more difficult to know how to assess the performance, even when attention is directed solely toward the overall growth of the economy as measured by total output. What standards or measures can be applied to permit the answering of such questions as whether recent Japanese growth has been “fast” or “satisfactory”? There is a variety of ways in which this problem could be approached. One would be to compare Japanese growth with that of other countries; another would be to consider the potentialities of growth since the war and whether they have been used to maximum advantage. Here the question will be considered from an historical point of view: How does recent growth measure up against past performance of the economy?

In his classic paper on the significance of railroads to American economic development, Leland Jenks distinguished three principal avenues of influence: (1) The railroad was what Jenks called an “innovating idea” with important psychological impact “manifested in a wave-like profusion of new enterprise of many sorts.” (2) The railroad and railway construction and maintenance were a stimulus to the industrial and financial sectors of the economy. The railroad not only stimulated the iron and steel, timber, and other industries directly but “encouraged innovations in financial enterprise.” (3) Finally, the railroad contributed directly to the generation of national income through the rendering of transportation services. Although on this last point Jenks despaired that, “There appears to be no satisfactory technique for giving a precise measure to the extent of this contribution.”

At the close of the Napoleonic Wars in 1815 Prussia was an industrial backwater. By the mid 1860's Prussia had achieved a considerable degree of industrialization. In a sense, her economy had “taken off.” The turning point dates from around 1840 and was closely related to railroad building. Before 1840 industrial investment grew haltingly. The combination of inadequate markets and the lack of supporting enterprise made industrial investment—particularly in those lines in which Europe's industrial leader, England, was already specialized—too risky and/or its anticipated yields too low for most potential investors, who preferred to invest in real estate, commerce, and in foreign government bonds. As leading Prussian entrepreneurs argued, the country's industrial development required public investment in river improvements, roads, canals, railroads, banks, and other facilities which would generate external economies and make private investment, for example in metalworking enterprise, more profitable. Theoretically, such public investment could have been financed by curtailing other governmental expenditures, by taxing unproductive consumption, and/or by borrowing. The technical proficiency required by such investments was either domestically available or could be readily borrowed from abroad. Even Prussian political economy, through its interpretation of the Classicists, reflected these conditions and called for state assistance. The will, the means, and a rationale for a program of public investment were at hand: one could truly speak of an abundance of “advantages of backwardness” in Prussia after 1815.

Throughout the first hundred years of Canadian Confederation, an underlying problem in the struggle to “unite and integrate the separate regions” in a viable national economy has been the continuing interaction between disparate rates of regional economic growth and unequal levels of regional public services. This paper is an attempt to set out in a general way the extent and significance of differences in regional expenditures by government in Canada and to inquire into their possible relationships with variations in rates of growth and levels of regional per capita incomes. It also indicates a spatial distribution of public expenditures at all three levels of government and notes some implications for national and regional development policy currently in the forefront of public debate in Canada.

Casual perusal could easily lead one to conclude that “the government” represents one of the most thoroughly researched areas in American economic history; however, there is something quite unsettling about a more careful scrutiny of its historiography. While the list of historians who have made their reputations by studying the importance of government through its impact on land policy, transportation, business, etc., etc., etc., is almost too long to enumerate, those authors who have attempted to measure the dollar value of these contributions have come to the conclusion that they must have been quite small. This paper provides no final resolution to this apparent paradox, but it does suggest at least one possible solution. It examines the spatial distribution of governmental activity and indicates that while, in total, that activity was almost always small, there were significant differences between the level of activity in different regions, and these differences may have contributed to differentials in regional growth patterns.

Over a century ago the American economist Henry C. Carey wrote that the masters of slaves “feel that they consult their own interests in feeding, clothing, and lodging them well, because wealth increases faster than population, and their labor becomes daily more valuable.” The change in the wealth/labor ratio which Carey noted is a fundamental aspect of economic growth. Carey saw its consequences in terms of the better care bestowed upon the slave by his master, but with appropriate modifications the same consequences apply to the free worker in a maturing industrial society.