Abstract

"Investment and Output Responses to Trade Policy Changes during the 1890s Depression: Evidence from the Massachusetts Woolen Industry"

Peter Bent, Trinity College (Hartford, Connecticut, United States) (peter.bent@trincoll.edu)

The 1890s depression was the most severe economic crisis faced by the United States through that point in its history. This decade was also notable for significant swings in tariff rates, from the McKinley Tariff Act of 1890 to the Wilson-Gorman Tariff of 1894 to the Dingley Act of 1897. Macroeconomic studies of this period trace the overall contours of the US economy from the 1893 panic to the eventual sustained recovery that began in 1897 (Steeples and Whitten, 1998; Stevens, 1894). Other research focuses more narrowly on the impact that tariffs had on growth, often employing an international comparative framework spanning several decades in the late-19th and early-20th centuries (O’Rourke, 2000; Lehmann and O’Rourke, 2011; Lampe and Sharp, 2013). More micro-level business history research is needed to connect these threads in the literature, to see how changes in tariff rates and broader macroeconomic conditions impacted particular industries during this crisis. In this paper, I focus on the woolen textile industry in Massachusetts, a prominent manufacturing sector and one of the main beneficiaries of protectionist policies at this time. I use newly compiled data from wool manufacturers’ financial statements and capital investment reports to assess the impacts that changes in tariff policies had on this key industry during this severe crisis. More broadly, this provides a deeper understanding of how policy changes affect the investment and output decisions that businesses make during crises.

(Full references available upon request)