American Banking and the Transportation Revolution Before the Civil War

Jeremy Atack, Matthew Jaremski and Peter Rousseau

No 20198, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Studies have shown a connection between finance and growth, but most do not consider how financial and real factors interact to put a virtuous cycle of economic development into motion. As the main transportation advance of the 19th century, railroads connected established commercial centers and made unsettled areas along their routes better candidates for development. We measure the strength of links between railroads and banks in seven Midwest states using an annual transportation GIS database linked to a census of banking. These data indicate that those counties that already had a bank were more likely to see their first railroad go through over the next decade, while new banks tended to enter a county a year or two after it got a railroad. The initial banking system thus helped establish the rail system, while the rapid expansion of railroads helped fill in the banking map of the American Midwest.

JEL-codes: N11 N21 N71 N91 (search for similar items in EconPapers)
Date: 2014-06
New Economics Papers: this item is included in nep-his and nep-tre
Note: DAE
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Citations: View citations in EconPapers (13)

Published as Atack, Jeremy & Jaremski, Matthew & Rousseau, Peter L., 2014. "American Banking and the Transportation Revolution before the Civil War," The Journal of Economic History, Cambridge University Press, vol. 74(04), pages 943-986, December.

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