Development of the American Economy.

• Author: Goldin, Claudia
• Position: Program Report

Claudia Goldin *

The NBER's Program on the Development of the American Economy (DAE) investigates long-run economic development and growth, with specific attention to the United States. The DAB'S broad mandate means that its members work on subjects studied in all the other NIBER programs combined, for example public finance, health, aging, trade, and productivity. The research of DAB members spans the full three centuries of American economic history and, for those studying comparative economic history, the temporal bounds are even wider.

Given DAE'S breadth of subject matter and time periods, this report must highlight only a few areas that have engaged DAB members during the past two years. Some involve government and the economy, whereas others are related to health, nutrition, and mortality. The report ends with research on the history of the NBER and information about the NBER's historical archives.

Government and the Economy

The Impact of New Deal Spending

Was New Deal spending consistent with Roosevelt's promise of the "3 R's: Relief, Recovery, and Reform"? The answer, according to Price V. Fishback, Shawn Kantor, William C. Horace, and associates, is that some projects were highly successful whereas others were not. (1)

Their reevaluation of the economic impact of the New Deal points to the importance of examining separate programs rather than aggregate spending. Expenditures on large-scale public works, including dams, roads, and major sanitation projects, were strong stimuli for local economies. An additional dollar of spending per capita on such projects raised per capita income by roughly two dollars and, not surprisingly, stimulated in-migration. Relief spending produced somewhat smaller income multipliers, contributed to increased home-ownership rates, and helped reduce infant mortality rates. (2) Not surprisingly, relief spending bore little relation to in-migration because of the residency requirements established by local relief administrators. Spending on crop reduction through the Agricultural Adjustment Act (AAA) benefited large landowners at the expense of farm workers, had no positive effect on retail sales, and was associated with extensive out-migration.

What of the geographic distribution of New Deal funds? Were funds doled out to states and districts that would assure and solidify the Democratic majority in Congress? In a program-by-program analysis at the county level, Fishback, Kantor, and John Wallis find that although relief programs were consistent with the Roosevelt administration's high-minded motives, other programs disproportionately distributed money to high-income districts. (3) In all cases though, the authors find that, at the margin, funds were used for presidential politicking. Roosevelt's re-election success in 1936 was based on developing specific programs for a wide range of constituents and delivering on stated goals, while also spending more at the margin for political advantage.

State Constitutions

In May 1776, a decade before the national government took up its constitutional form, the Continental Congress asked the states to write their constitutions, Throughout the nation's history, state constitutions have been written, rewritten, and amended. To date there have been 150 state constitutions, with more than 10,000 amendments. At the center of Wallis's project on state constitutions is the construction of an accurate, comprehensive record of these documents from 1776 to the present.

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