736/2024 Alexander Klein, Peter Matthews

We construct county-to-county transport cost data set for each decade between 1820 and 1860 in the United States using time-, region-, and direction of transport specific freight rates and the historical transport networks. We document several stylized facts about the effects of canals and railways on the average county-to-county transport cost, market access, and the role of new transportation network in the shaping the direction of domestic trade. We show that by 1860, the canals and railways led to the shift of the highest market access region from the Atlantic coast and Mississippi region to the Midwest and the Great Lakes region, and their absence would have increased the transport costs by more than sixty percent in the Northeast and by almost fifty percent in the South. In addition, by 1840, canals had substantially lowered the costs of transporting goods from the Midwest to the east, making the northern route cheaper than the original route via the Mississippi River and the Atlantic coast.

Economic History