- Historic Sites
A CENTURY AND A HALF E U.S. ECONOMY, FRO RAILROAD REVOLUTION
June 2001 | Volume 52, Issue 4
Henry Luce, a founder of Time Magazine, coined the term “American century” to describe the twentieth century in which he lived and in which the United States became the world’s foremost power. But not even Luce could have foreseen America’s global position at the dawn of the twenty-first century, only 33 years after his death. Today, the United States is pre-eminent in the world militarily, technologically, scientifically, and culturally as no state has been since the apogee of the Roman Empire 1,800 years ago.
But this immense relative influence is possible only because the American economy makes it so. In 1998 the United States had a gross domestic product of $8.511 trillion. The second largest economy in the world, China’s, had just over half that, $4.420 trillion, if figured on a purchasing-power parity basis, which takes the local cost of living into account. Japan, which ranks number three in GDP, has an economy only about a third as large as that of the United States, $2.903 trillion. The greatest economic power of the nineteenth century, Great Britain, now ranks only seventh in GDP, at $1.252 trillion, only $152 million more than that of the state of California alone. Despite a recent modest slowdown and stockmarket tumble from once unimaginable highs, the American economy remains by far the strongest in the world.
It is tempting to say that the wealth machine called the American economy was inevitable. After all, the country is singularly blessed with a vast and fruitful national territory, immense natural resources, and a large and well-educated population. But Argentina has all these assets and was one of the leading nations economically a century ago, yet it has struggled through most of the twentieth just to avoid slipping to Third World status. Its GDP per capita is less than a third that of the United States.
How did the United States become the economic colossus it is today? To be sure, our natural assets had a great deal to do with it. But so too did our entrepreneurial spirit, perhaps an inheritance from our ancestors who had the courage to leave everything they had known and venture across the sea to a new land. Our faith in the capitalist system, respect for the rule of law, and usually stable politics are the gifts of England. And by no means the least of the reasons have been our great good luck and our singularly fortunate—but seldom remarked on—geographic position on the globe.
How we went from being a sprawling exporter of agricultural produce and raw materials, dependent on Europe for markets, manufactured goods, and technology, to the most advanced economy on earth is a story worth the telling. It makes sense to begin a century and a half ago, when the nation had evolved from a loosely joined collection of colonies to an equally loosely joined revolutionary enterprise, to a fledgling republic trying the levers of its newly invented government, to something any of us would recognize as the ancestor of the country we inhabit today.