Trade Disruptions and America's Early Industrialization

Between 1807 and 1815, U.S. imports of manufactured goods were severely cut by Jefferson's trade embargo, subsequent non-importation measures, and the War of 1812. These disruptions are commonly believed to have spurred early U.S. industrialization by promoting the growth of nascent domestic manufacturers. This paper uses a newly available series on U.S. industrial production to investigate how this protection from foreign competition affected domestic manufacturing. On balance, the trade disruptions did not accelerate U.S. industrialization as trend growth in industrial output was little changed over this period. However, the unchanged trend in aggregate production masks a sharp divergence in the fate of infant industries (which boomed) and trade-dependent industries (which suffered). After the War of 1812, the composition of U.S. industrial output shifted from trade-dependent industries (such as shipbuilding) to domestic infant industries (such as cotton textiles), yet factors other than the trade disruptions themselves appear to have been responsible for this development. Acknowledgments: We thank participants at the NBER Summer Institute 2003 and the Dartmouth international lunch for very helpful comments. Irwin thanks the National Science Foundation for financial support.