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Comment by roussanoff | Hacker News Reader

US economic historian here. The idea that the US government funded the construction of the first Transcontinental Railroad and Panama Canal to trade with China is very, very weird.

- 1850-1890 was a period of high protectionism, highest tariffs on imports in the US history.

- A good approximation of share of traded goods in the railroads would be the share of imports+exports in the GDP. Together, exports and imports were not more than 15% of GDP. Source: https://www.nber.org/system/files/working_papers/w4710/w4710..., Table 3.

- railroads transported a lot of agricultural products and also passengers, and were hugely profitable from that. I doubt they would recover any cost by transporting porcelain and whatever other goods China exported at the time.

- "But that answer is wrong, as can be shown by examining historical records of the time." - citation needed.

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Not a historian but possible other weird thing:

"(Bonus question: what did the U.S. give to China in exchange for its china?)" "(the answer to the question I posed above about what the U.S. traded to China in the 19th century is "fur")"

My understanding is that in this period, the most valuable China->US exports were tea, silk, and porcelain. The USA didn't produce anything the Chinese were interested in buying (unlike the Spanish, who had had torrents of silver coming from South American silver mines), and so British and American traders in the Canton System and Thirteen Factories period traded opium from British India to China, which of course led to the Opium Wars, British control of Hong Kong, etc.

I've never read anything about fur exports from USA to China being a big part of 19th century USA trade, but I have read a about mid-19th century booming East Coast and European demand for beaver pelts.

The answer to the bonus question is opium. In particular the Forbes family (not related to the magazine folks) traded about 20% of all the opium sold in China during this period with the other 80% coming from the British East India Company and other UK-based trading houses.

Fun fact, the Forbes family is still one of the wealthiest families in America, they own their own massive private island called Naushon Island right next to Martha's Vineyard. They also have their own family museum in Boston where you can learn about their trading history in Asia which I'm super eager to visit And the patriarch of the Forbes Family today is... wait for it... John Kerry. When Obama made Kerry his secretary of state the Chinese weren't super thrilled, they have a long memory.

Source for this is a book called Barons of the Sea: https://www.amazon.com/Barons-Sea-Worlds-Fastest-Clipper/dp/...

Great book if you're interested in America's history in large scale drug dealing.

(that was interesting, thank you)

> wealthiest families

The role of families in history is sadly under-reported.

I'll bet a lot of interesting stuff would come up if that angle were properly mined.

Probably hard to get funding for it, though.

FDR's grandpa also got rich trading opium. Great article here: "How Profits From Opium Shaped 19th-Century Boston"

https://www.wbur.org/news/2017/07/31/opium-boston-history

I don't know about the Panama Canal, but the rest is true (mainly UK).

" ... transporting porcelain and whatever other goods China exported at the time."

China exported Silk, porcelain and tea like the is no tomorrow but did not buy anything. At one point China accumulated a huge part of the world silver reserves, sucking liquidity out of the western economy. Opium "solved" this problem.

It was my understanding that the Opium trade was mainly a GB thing. I was not aware that the US was involved.

You may be interested in this article, "How Profits From Opium Shaped 19th-Century Boston" [0]

> Perkins' ships deposited tremendous wealth in Boston too. Chests of tea, bolts of silk, crates of porcelain and cakes of opium -- which was legal in the U.S. -- were hauled off ships onto giant scales outside Boston’s Custom House. The goods were tallied and taxed in basements and warehouses around Faneuil Hall and Quincy Market. Tax revenue from the trade funded Massachusetts police and fire departments, roads, bridges, courthouses and schools.

[0] https://www.wbur.org/news/2017/07/31/opium-boston-history

That wasn't a new problem, the Roman Empire was stripped of gold to pay for Chinese silks, to the point that several emperors made wearing silk illegal.

Fur exports from North America to China were the major reason for the European exploration of western North America in the 17th and 18th centuries, and into the earliest 19th century. The Chinese elite used fur pelts to line their robes. Sea otter, which has the highest follicle density of any mammal, was the most favored (and I believe imperially mandated for the highest ranking mandarins) and the pelts were incredibly valuable. The Spanish and English exploration of the Pacific Northwest was largely done by trade expeditions which would trade various goods for pelts with the various Native tribes, and then sail to Canton to trade the pelts for Chinese goods. The Russians more or less enslaved some of the tribes of the Aleutians (the Unangan people) and brought them as far south as central California in their trade ships; the Unangan hunters hunted from sea kayaks by day.

Both the North West Company (British) and John Jacob Astor (US) set up transcontinental overland trade networks in the late 18th and early 19th century focused on the fur trade, with China being a primary customer for pelts.

I think in the first few decades of the 19th century, Chinese Imperial fashions changed and much of this system collapsed, although not fast enough to prevent the near-eradication of the sea otter population.

A good pop history of the US Overland component is Astoria by Peter Heller. It is also addressed a bit in more scholarly work such as the Columbia's River: Voyages of Robert Gray, by J. Richard Nokes.

That’s fascinating I never considered before what the fur traders out west were doing. That’s an aspect of history left unexamined usually.

America exported things to China in the 19th century. One random example is many rickshaws used in Asia back then were made in Burlington NJ. New Jersey built up a huge light industrial base over the 17th & 18th centuries as they were the initial colonial iron source. They also had a special surface water high in tannic acid which was key to successful transoceanic navigation. That water stayed clean. So even as those two industries declined they had plenty of timber and steel machinery to make into finished products which were easy to ship on the rivers from there to the ports on the Delaware river.

If trading opportunities were the answer it would have been reported as much at the time imo. Here is the justification from the U.S. house of representatives about the project at the time, in 1856:

"The necessity that now exists for constructing lines of railroad and telegraphic communication between the Atlantic and Pacific coasts of this continent is no longer a question for argument; it is conceded by every one. In order to maintain our present position on the Pacific, we must have some more speedy and direct means of intercourse than is at present afforded by the route through the possessions of a foreign power" (1)

The reason seemed to be just geopolitics rather than trading opportunities. I'm curious if you know what route they were referring to in this quote that routed through a foreign power? An oversea route maybe? In 1856 we had territory coast to coast already so the caravan routes were within our possessions.

1. https://en.wikipedia.org/wiki/First_transcontinental_railroa...

They had to sail around the bottom of South America.

I am not that familiar with the history of railroads, but I will speculate:

- take the railroad as far west as possible, then a stagecoach (expensive, slow, uncomfortable). The land route was created after the Gold Rush: https://en.wikipedia.org/wiki/California_Trail

- ship to Panama, cross by land in Panama, ship from Panama to California (cheaper, slower, risk of disease like malaria)

- ship around South America. Yep, all the way to Antarctica, through Magellan Strait. (even cheaper, even slower, risks from travelling by the sea). This route seems crazy if you look at the map. However, for goods, it was very much in use before Panama Channel was built. Sea is so much easier than land.

I am not sure what "foreign power" this quote refers to though. Panama? Chile? Maybe you could also go through Mexico?

Magellan strait

> just geopolitics rather than trading opportunities

at that time geopolitics were completely intertwined with trading opportunities, as was "our position in the Pacific"

1853 is when Admiral Perry showed up in Japan with gun boats and said "You will trade with us." Whatever the confusing economics were of trade with East Asia, we were not only active over there, we were being rudely pushy about it.

I’ve always wondered if one of the reasons was to protect the Union. Would be a lot easier to prevent states from seceding, and defend US borders when you can quickly transport soldiers (plus equipment, food, etc.) to where they’re needed.

I would imagine so. The CN railroad was specifically built to transport soldiers from eastern Canada to BC to defend against American machinations. (Not for expansion, nope, no way, we didn't want Alaska anyways!)

I don't think there is a single answer to "why the US built railroads", but both the railroads and the Eisenhower's Interstate Highway System certainly had something to do with the military needs.

For the record, the idea that the transcontinental railway was built to link the east coast with China was not mine, it was Donald Gibbs's.

That's more or less how the railroad has since served the {Chinese-American, } people who worked so hard to build it. https://en.wikipedia.org/wiki/First_transcontinental_railroa...

That seems mostly irrelevant, aside from maybe providing credit. The way in which you "co-opt" it in this piece is not as some questionable hypothesis, whose veracity is unimportant - which seems to be your intent based on this comment and the rest of the actual piece. It's hard to see how you are not explicitly endorsing this hypothesis when you have unquoted lines like "but that answer is wrong, as can be shown by examining historical records of the time." You are not saying that Donald Gibbs thinks this is wrong, you are saying you think it's wrong.

Yes, that's a fair criticism. If I were to rewrite this article today I would try to make this clearer. I think at the time, having recently seen Gibbs speak, I found his argument compelling. But I clearly could (and should) have done a much better job communicating it. Mea culpa.

Also, for the record, I really enjoy/get a lot of value from your writing (if I didn't I probably wouldn't have criticized this tiny part of it).

Thanks for the kind words. And I always appreciate constructive criticism. It's the only way to improve.

Your post is written on a hard drive, not stone. You can still correct the error.

That's true, but my blog is not a peer-reviewed publication, it is a personal journal, and as such my policy is not to make substantial changes to posts after they're published. I want my blog to be a reliable representation of who I am (or, in this case, who I was) warts and all. Sometimes I'll post corrections and updates, and maybe I will in this case, but geez, it's a twelve-year-old post and this is the first time anyone has brought this up. This probably isn't be the most egregious uncorrected error I've ever made.

You're confidently propagating misinformation, and it would be a trivial fix but for "your policy". I don't know why you're making such a fuss.

I don't think it would be as trivial to fix as you think. I can't just say, "This is Gibbs's position, not mine" because I don't actually know that to be a fact. This happened 12 years ago, and my recollection could be wrong. It's entirely possible that this was actually my position at the time and I just don't remember. So before I can confidently attribute this position to Gibbs I'd have to verify that this was indeed Gibbs's position at the time, and that seems like a non-trivial undertaking.

I'll tell you what, though, if you can find a reference that this really was/is Gibbs's position I will make the correction.

It is trivial. No one's expecting you to find and state the exact current state of the literature, just to clarify that you were overstating the case at the time.

The problem is, you stated it as undisputed fact, when you didn't actually know it to be. Posters are only asking you to correct that overconfident "fake it til you make it" misrespresentation.

"Update: I was going off of my memory of the literature at the time, it turns out I was just parroting what I understood Gibbs's position to be; there are good reasons to believe China wasn't a major factor."

That didn't seem so hard. OTOH, if you're just optimizing for sounding confident and smart, I guess none of that matters. But you've spent at least as much effort complaining about changing as it would have taken to correct it.

Fair enough, I will fix this one way or another. Thank you for your patience. (Just out of curiosity, why do you care about this enough to put so much effort into persuading me? Surely this is not the most destructive bit of misinformation floating around on the internet?)

P.S. I decided to actually look into the actual fact of the matter, and it appears Gibbs's claim may actually have some merit:

https://www.loc.gov/collections/railroad-maps-1828-to-1900/a...

"[The] chief promoter of a transcontinental railroad was Asa Whitney, a New York merchant active in the China trade who was obsessed with the idea of a railroad to the Pacific. In January 1845 he petitioned Congress for a charter and grant of a sixty-mile strip through the public domain to help finance construction." [Emphasis added]

The article doesn't specifically say that China was the principal motivation, but in 1845, before the discovery of gold in California, there weren't many other reasons to build a transcontinental railway. And since the railroad didn't actually get built until long after the gold rush was well underway, the actual motivation is probably a mix of different factors. But given Whitney's role, the idea that China was a factor seems like it could turn out to be defensible after all.

Well that's the government intervening in the economy (protectionism) to support local corporations.

BTW you should check the work of economist Michael Hudson, I think he's the foremost expert in this realm.

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