Trains, trade, and transformation: A spatial Rogowski theory of America's 19th-century protectionism

Abstract

We study the effect of expanding trade on societal coalitions through its impact on development. We combine a majoritarian political model with a spatial model of trade to argue that trade-induced economic change—by bringing new workers to locations closer to world markets—can lead to losses rather than gains in political power for the factors of production advantaged by increased trade. We study how this phenomenon explains rising protectionism in the United States from 1880 to 1900. Using county-level changes in transportation costs induced by railroad expansion, our estimates indicate that falling costs increased population and farm values but reduced the proportion of farmers. Reduced transportation costs caused a reduction in vote shares for the Democratic Party, which favored liberal trade policies, and an increase in an original newspaper-based measure of protectionist sentiment. Expanding trade alters not only political interests but also the geographic distribution of those interests.