Edward Lotterman
Before his disastrous invasion of Russia, Napoleon Bonaparte said, “Geography is destiny!”
This assertion prompts thinking about how geography and topography influences development of economies over time and why apparently similar countries in climate and resources can have quite different economic outcomes.
Consider Brazil, Canada and the United States — three large continental countries with long coastlines, deep interiors and abundant endowments of natural resources, including those for agriculture, mining, energy and forestry.
All three began with settlement or conquest by Europeans that involved forcibly taking the lands of native peoples already decimated by European diseases. Immigration has long been an ongoing process for all. Two, Brazil and the United States, brought hundreds of thousands of enslaved Africans, creating deep social and economic fissures still open today.
All three began with coastal enclaves. The political and social organization of what became the United States was such that immigration from several European nations began early on. The early experience of Canada or Brazil was relatively smaller. Brazil was formed from a series of land grants to powerful individuals who developed plantation systems producing sugar, cacao and coffee for export. There was little manufacturing and few people who were free, white and working-class. This system was not all that different from some parts of the southern colonies in North America or the Dutch “patroons” with vast estates along the Hudson River in what is now New York.
But such concentration eroded over time. There was land available for smallholders in Georgia and the Carolinas when Scots-Irish refugees fleeing conflict with England sought new homes in the New World.
All three countries had resources extending into distant interiors. Exploration of these vast interiors would be a major theme in the origin myths and histories these nations adopted and still tell. For all three, conquest and displacement of native peoples would be a major theme, but larger-scale and more violent in the United States than that in Canada or Brazil.
Early on, the U.S. economy had some advantages. There were many good natural harbors on the coast, providing decentralized points for immigration, trade and access to fisheries. In many areas there were relatively fertile coastal plains extending a hundred or more miles west to Appalachia. Rivers from the interior, including the Connecticut, Hudson, Delaware, James, and others, provided avenues for varied forms of water transport as well as sites for developing waterpower in their basins as the industrial revolution began to unfold. Some, like the Missouri, provided direct access to the deep continental interior.
There are mountains in our country, but these were set back from the coast and had openings through them. The Delaware Water Gap from New Jersey into Pennsylvania was only 290 feet above sea level while the Cumberland Gap from Virginia into Kentucky and Tennessee is about 300. Once through these gaps, the land might trend upward, but there were no harsh mountain passes. From Pittsburgh, about 250 trail miles and 700 feet above Baltimore’s Chesapeake Bay, the Ohio River was navigable downstream all the way to New Orleans and the Gulf of Mexico. All that was ours after the 1803 Louisiana purchase.
All this meant that if European settlers found farmable land in the interior, it was feasible to transport output back to the Atlantic on wagons or canal boats or by driving livestock on foot. And, early on, it was possible to go downstream on flatboats or keel boats all the way to the Gulf where sailing ships could take it to east coasts ports or to Europe. After the first steamboat left Pittsburgh for New Orleans in late 1811, travel upstream as well as down was simplified.
In New York, a man-made canal from Lake Erie connected the Great Lakes with the Hudson River and New York Harbor, enabling a commercial water transport system from Chicago, Detroit and points west. This opened up vast areas of the U.S. interior for exporting farm and forest products to the east coast and overseas. Derided during construction as a doomed waste of money, the Erie Canal paid off its bonds from tolls in one year.
We in the U.S. take all this for granted. Canada also built canals around the Lachin Rapids on the St. Lawrence to reach Lake Ontario and then through a series of very expensive locks for the 326 foot rise up to Lake Erie. While there are very rich agricultural lands from Toronto west toward Detroit, their area was small compared with the Ohio River Valley and all the lands that led to it via rivers like the Tennessee or the Wabash.
The arc from Lake Huron around lower Michigan and down to Indiana, Illinois and Wisconsin opened up huge areas of prime farmland. First sailing and then steam vessels could haul wheat as far as Buffalo, N.Y. But the north, Canadian side of the Great Lakes was the largely rocky Laurentian Shield, eventually rich in copper, nickel and other metals, but not great for agriculture.
Brazil faced similar problems. The great Amazon in its north drains large areas as does the Parana-River Plate watershed to its south that reaches the Atlantic in the estuary between Argentina and Uruguay, The San Francisco flows north for hundreds of miles before hooking a right and dropping to the Atlantic. But these all have rapids or waterfalls that still impede transportation.
But the major continental divide for Brazil is close to the Atlantic coast and drains away to the west, south and north, making downstream shipping to the Atlantic open to a relatively small area of the country.
The city of Sao Paulo is only 35 miles inland from its port of Santos, but it is 2,500 feet higher in elevation. Yet nearly all the rain that falls on the city’s metro area flows west and south until reaching the River Plate south of Asuncion, Paraguay.
Curitiba is the capital of the state of Parana which is nearly as large as Illinois and Indiana put together and equally as fertile. But the city is at 3,066 feet elevation even though only 45 road miles from the Atlantic. Parana is where the Brazilian soybean boom started 60 years ago. Until 2000, virtually all the soybeans the country exported had to come from the west and northwest on straight trucks, coming uphill as much as 2,500 feet over 500 miles before dropping the 3,000 feet in 45 miles to its port of Paranagua on the other side of the watershed. Unloading traffic jams often stretched back as much as 50 miles.
This abrupt coastal escarpment meant that there were few good sites in Brazil for water-powered textile or metal-working mills like forges. There was little incentive to build railroads because until recently there was little exportable product to get to the coast. Railroads reached into coffee growing areas and sugar plantations of the northeast, but there never has been a national net. Production of many possible products was limited because there was no transportation out; railroads or roads were not built because there was nothing to haul. This unfortunate topography is shared with many poor countries from Congo in Africa to Laos in Asia.
Canada faced the same dilemma. Its prairie provinces are as rich agriculturally as the Dakotas and Montana. But those in the U.S. needed only relatively short railroads to reach the Missouri or Mississippi rivers for export. Moreover, such lines were extensions of a large existing rail network that had grown across the U.S. Midwest.
The vast development after 1849 of California, which shared equally if not greater riches in farmland, minerals and natural ports, gave reason for U.S. transcontinental railroads. But in Canada, there was little other than forest products and fish to ship from British Columbia at a time when there still were vast forests between there and eastern Canada. So the farmgate price of wheat or barley in many areas north of the Canadian border was lower than in our country until the Canadian rail net filled in.
Such problems persist in Brazil. Cargill built a large soybean-lading facility at Santarem, some 500 miles up the Amazon. Soy can come north to there by truck or on river barges from smaller ports. But the road, extending 2,000 miles north-south from the Paraguayan border to the Amazon, is largely unpaved and in the rainy season is a sea of mud. That boggles the mind until one learns that in the Amazon basin there often are gaps of 100 miles or more between gravel pits, rock quarries or any other source of aggregates.
There are many lessons here. One is that we don’t know how good we naturally have had it. Another is that idealized free markets seldom solved the “coordination problem” to overcome topographical challenges. And the role of state and national governments in fostering the construction of canals, railroads, river improvements and ports had substantial payoffs.
Related Articles
Real World Economics: Tales of economic growth speak volumes
Real World Economics: Banking, investment are great but need regulation
Real World Economics: A reminder on what the Fed rate cut really is
Real World Economics: Making the case for bank regulations
Real World Economics: Cavemen didn’t need banking regulations; we are not cavemen
St. Paul economist and writer Edward Lotterman can be reached at stpaul@edlotterman.com.
Leave a Reply