Question

The u.s. economy borrowed heavily from the british in the nineteenth century to build a railroad system. what was the principal debt instrument used? why did this make both countries better off

Answer 1

In the 19th century America borrowed money from Great Britain in order to build the railroad system. The main debt instruments used to borrow money were railroad bonds. This economic transaction was beneficial for both countries since the construction of railroads in America played a key role in the Industrial Revolution. This revolution helped develop the economy as it improved trade among different cities through the shipment of grains and cattle by railroad.  

As regards Great Britain, by investing in railroad bonds and later selling them, they were able to finance weapons and equipment for World War I.