Chapter

The Adversity/Hysteresis Effect: Depression-Era Productivity Growth in the US Railroad Sector

Alexander J. Field

in The Rate and Direction of Inventive Activity Revisited

Published by University of Chicago Press

Published in print April 2012 | ISBN: 9780226473031
Published online February 2013 | e-ISBN: 9780226473062 | DOI: http://dx.doi.org/10.7208/chicago/9780226473062.003.0018
The Adversity/Hysteresis Effect: Depression-Era Productivity Growth in the US Railroad Sector

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This chapter takes a close look at the boom–bust pattern that characterizes many industries. During the boom period, there is a dramatic accumulation of physical capital—think of the huge efforts to lay broadband during the Internet boom of the late 1990s—followed by a contraction. The chapter examines the experiences of railroads during the Great Depression. This was a difficult period for the industry: the economic downturn, along with increased competition from automobiles and trucks, led to a sharp contraction in demand for railroads. Moreover, access to capital was largely cut off after a period of heavy expenditures. The industry undertook a major restructuring to utilize labor and capital resources more effectively. Both capital and labor inputs declined substantially. Yet logistical innovation enabled railroads to record slightly more revenue ton-miles of freight and book almost as many passenger miles in 1941 as they had in 1929. Adversity seems to have triggered a wave of innovation in this industry.

Keywords: boom–bust pattern; hysteresis effect; great depression

Chapter.  11862 words.  Illustrated.

Subjects: Economic Development and Growth

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