The Dependent Years: I
The question of colonial economic growth IN HIS recent testimony before the Joint Economic Committee of Congress, Raymond W. Goldsmith made some observations concerning early American economic growth which not only deserve to be taken into consideration in any discussion of the subject but also form a convenient point of departure for the present one. Goldsmith raises a basic question: is it possible for the economy to have grown at the same rate in its earlier years as that at which it has grown since the significant beginnings of industrialization? Apparently placing these beginnings in the later 1830's, Goldsmith calculates that in the 120 years between 1839 and 1959 the average annual rate of growth in gross national product per head amounted to 11%. He thinks it extremely unlikely this rate obtained much before 1839. The assumption that it did, he points out, implies a halving of national income every forty-three years, with devastating consequences for average income per person. Estimating the latter at about $400 (in present prices) in 1839, he shows the arithmetical necessity of its decline to about $145 in 1776, $80 in 1739, and less than $30 in 1676. Incomes of these sizes, he argues, even under the simpler conditions of colonial America, are too low to have sustained life. At present prices for individual commodities he doubts that an income below $200 would have been sufficient even in the early eighteenth century. Colonial incomes must therefore have been higher, and if they were the rate of growth must have been smaller than 11 %. Goldsmith questions whether it was as much as 1 % in any fifty-year period before 1839.