The origins of American industrial success: Evidence from the US portland cement industry

whose suggestions got this paper off the ground and gave it direction. The paper has also benefitted from comments from The contributions of innovations, factor endowments and institutions to American industrialisation are examined through analysing the rise of the American portland cement industry. Minerals abundance contributed in multiple ways to the spectacular rise during the 1890s. However, the results of a structural econometric analysis of entry suggests the state geological surveys, institutions highlighted by David and Wright, played a contributing rather than critical role in the American portland cement industry overcoming incumbent European cement and American natural cement producers. The origins of the American industrial success have long been debated. While early work emphasized the effects of the US Civil War, subsequent research focussed on the interaction between innovation, factor endowments, and other characteristics of the American economy. 1 The distinctively capital intensive and standardised American production technology was explained as resulting from relative labor scarcity and a relatively even distribution of income. The rate of innovation was encouraged by the increasing scale of markets due to immigration and falling transportation and communication costs. Most recently Gavin Wright has argued that the origins of the rise of the United States to international industrial leadership lay in its abundant mineral resources rather than scarce labor relative to capital or exogenous innovations. 2 This abundance resulted not from a more extensive endowment 1 but from a more extensive exploration and exploitation of that endowment. This resulted, argues Wright and Paul David, from a combination of liberal property rights, public geological research and extensive university-industry links. 3 How these insitutions (and to a lesser extent the factors highlighted by the earlier literature) created a competitive advantage for American firms, when competing with European firms, beyond presuming they lowered costs for American firms, has not been directly examined. The American portland cement industry is an excellent case study for such an examination. It is a minerals-intensive industry, being manufactured by burning, using mineral fuels, limestone and clay in large kilns. Secondly, the industry rose to prominence during the 1890s — the decade Wright identifies as the beginning of international leadership. Before the 1890s, American portland cement manufacturers supplied just 3% of the market, with the rest being supplied by American natural cement manufacturers and imports from Europe. By 1913, American portland cement production is the largest in the world and it supplied nearly 99% …