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Prelude to the Dust Bowl: Drought in the Nineteenth-Century Southern Plains

Author(s):Sweeney, Kevin Z.
Reviewer(s):Arthi, Vellore

Published by EH.Net (January 2017)

Kevin Z. Sweeney, Prelude to the Dust Bowl: Drought in the Nineteenth-Century Southern Plains. Norman, OK: University of Oklahoma Press, 2016. xv + 283 pp. $35 (cloth), ISBN: 978-0-8061-5340-7.

Reviewed for EH.Net by Vellore Arthi, Department of Economics, University of Essex.

In Prelude to the Dust Bowl, an engaging new narrative history of the U.S.’s Southern Plains, Kevin Z. Sweeney adds to a growing literature that confronts the popular view that the Dust Bowl of the 1930s represented a moment unique in its devastation and unprecedented in the environmental history of the United States. Sweeney sets about overturning this persistent myth by casting his focus backward to a series of oft-overlooked nineteenth-century droughts. Having established a pattern of disaster and response that predates the 1930s, he then uses these events as lenses by which to examine the interaction between human populations, the environment, and politics more broadly.

The book is at its most compelling when it explores how the region’s popular image — which alternated between that of the “Great American Desert” and the land of milk and honey — came to be. Sweeney shows that which version of the Plains captured the public’s imagination at a given moment largely came down to chance timing and politics.

To start, notions about the environmental character of the Great Plains were formed in the midst of a drought more severe than that experienced during the Dust Bowl of the 1930s. Indeed, following the first official expedition to the recently-purchased territory in 1819-20, Major Stephen H. Long’s team famously pronounced the region a Great American Desert “uninhabitable by a people depending upon agriculture for their subsistence” (Long and James, 1823, p. 361). The expedition’s key mistake was to assume that their brief experience of the region’s climate represented its permanent state. This pessimistic assessment was intensified by happenstance: a series of delays and budget shortfalls led to privations which, Sweeney suggests, unduly exaggerated the expedition’s perceptions of the region’s inhospitability. These perceptions in turn became enshrined in the popular understanding of the region, one which has persisted even to this day — particularly as the usage of the word “desert” has evolved from that in Long’s time (a grassy region absent trees and humans; see, e.g. Sweeney, p. 17) to mean an arid or sandy region.

Although it would soon become verdant again, the cyclicality of the Plains’ climate was largely lost on early observers: amateur geographer Josiah Gregg, who traveled the Santa Fe Trail in the much wetter 1830s, described a Plains so lush, welcoming, and thoroughly at odds with that of the Long expedition “that it is hard to imagine that they [were] describing the same region” (p. 33). As with Long, Gregg appears not to have questioned the representativeness of his experience. Comparing these and other contemporary reports to systematic, long-run paleoclimatological evidence, however, Sweeney finds both views of the Southern Plains to be dangerously incomplete. Here, he rightly emphasizes the danger of extrapolation, particularly in a region so characterized by extreme weather cycles.

Nineteenth-century discussions of the region’s climate and natural resources were politicized, further biasing assessments of the environmental conditions there. Accordingly, and whatever their accuracy, each of these conflicting strains of contemporary assessment would prove politically convenient at one time or another in the century that followed — for instance, when justifying the forcible relocation of eastern Native American tribes to Plains lands deemed too treacherous for white settlers, or when eventually trying to entice these same settlers to the region, where they could act as human bulwarks to the spread of slavery while simultaneously raising the return to railway construction. Indeed, America’s short and selective memory is a theme Sweeney returns to throughout the book, although some readers may leave hungry for more in-depth explanations of related issues — such as why the government’s knowledge of the region’s environment remained poor despite extensive contact with the Plains’ long-standing native residents, or why prospective Boomers failed to incorporate new information into their assessments of the feasibility and economic returns to settlement.

Sweeney goes on to offer several chapters which detail the negotiations between the U.S. government, the newly relocated Native American tribes of the Eastern United States, and the long-standing Native American tribes of the Southern Plains. In this section, which may be of greater interest to political historians of the American West than to environmental and economic historians, climate plays only an incidental role: severe periodic droughts intensify the conflict, deprivation, and environmental degradation brought about by the constraints Federal Indian Policy placed on the traditionally sustainable and land-intensive lifestyles of the Great Plains.

Sweeney ends his story of the Southern Plains on the eve of the Dust Bowl. Along the way, he draws occasional comparisons and contrasts between the droughts of the nineteenth century and their more famous 1930s counterpart. Sweeney notes, for instance, that although the droughts of the mid-to-late 1800s shared many of the same features as the Dust Bowl (e.g., dust storms, insect infestations, livestock wasting, conflict over property rights and down-river externalities), these droughts were far more severe than that during the 1930s. What’s more, they prompted even larger migratory responses — perhaps because earlier Plains residents may not have owned or sentimentalized farms in quite the way subsequent Homesteaders would go on to do. Despite causing widespread suffering, however, the nineteenth-century droughts failed to inspire massive relief efforts of the like documented by Fishback (2016) in the 1930s. Instead, nineteenth-century policymakers largely declined to respond (in part because of Civil War-era resource constraints, in part because of fears that relief given to slave-holding Plains tribes would fall into Confederate hands, and in part to downplay the sort of destitution that would dissuade Plains settlement). This left any piecemeal attempts at relief efforts largely in private hands.

Although there is some discussion of these historical parallels, it should be noted that the book offers perhaps less systematic and substantive engagement with the literature on the environmental history of the 1930s than one might expect from its title. Themes of continuity and change could be made more explicit, and a more prominent link to the 1930s as a point of comparison would be a welcome addition, thus more firmly linking this work to ongoing debates on the degree to which human actions over the preceding century of intensive settlement and cultivation may have contributed to the Dust Bowl. At many points, Sweeney makes tantalizing allusions to the ongoing process of adaptation between humans and the environment, but there is less in-depth treatment of this rather central issue here than in other recent works of economic history (see, e.g., Cunfer (2005); Hornbeck and Keskin (2014); and Hansen and Libecap (2004)). To this end, Geoff Cunfer’s On the Great Plains (2005), which centers on precisely this man-nature arms race, would make an excellent technical, quantitative companion to this qualitative work of history — one in which Sweeney’s talents at coaxing nuance and historical richness from a wealth of disparate contemporary sources are on full display.

The droughts of the nineteenth-century Plains — and the lessons learned from them — have long been overshadowed by the environmental events of the 1930s. Prelude to the Dust Bowl should be commended for helping to raise these events from relative obscurity, and in so doing, enriching our understanding of even later processes of conservation, land management, and technological adaptation.


Geoff Cunfer (2005). On the Great Plains: Agriculture and Environment. College Station: Texas A&M University Press.

Price V. Fishback (2016). “How Successful Was the New Deal? The Microeconomic Impact of New Deal Spending and Lending Policies in the 1930s,” NBER Working Paper 21925.

Zeynep Hansen and Gary Libecap (2004). “Small Farms, Externalities, and the Dust Bowl of the 1930s.” Journal of Political Economy, 112 (3), 665–694.

Richard Hornbeck and Pinar Keskin (2014). “The Historically Evolving Impact of the Ogallala Aquifer: Agricultural Adaptation to Groundwater and Drought.” American Economic Journal: Applied Economics, 6 (1), 190-219.

Stephen H. Long and Edwin James (1823). An Expedition from Pittsburgh to the Rocky Mountains Performed in the Years 1819 and ’20, Volume II. Philadelphia: H.C. Carey and L. Lea.

Vellore Arthi is a Lecturer (Assistant Professor) in Economics at the University of Essex. Her work focuses on human capital formation, public health, and intra-household allocation in developing-country and historical settings, with particular attention to the impact of climate and environmental shocks on a range of outcomes including health and early-childhood development.

Copyright (c) 2017 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ( Published by EH.Net (January 2017). All EH.Net reviews are archived at

Subject(s):Agriculture, Natural Resources, and Extractive Industries
Geographic Area(s):North America
Time Period(s):19th Century
20th Century: Pre WWII

The Dust Bowl

Geoff Cunfer, Southwest Minnesota State University

What Was “The Dust Bowl”?

The phrase “Dust Bowl” holds a powerful place in the American imagination. It connotes a confusing mixture of concepts. Is the Dust Bowl a place? Was it an event? An era? American popular culture employs the term in all three ways. Ask most people about the Dust Bowl and they can place it in the Middle West, though in the imagination it wanders widely, from the Rocky Mountains, through the Great Plains, to Illinois and Indiana. Many people can situate the event in the 1930s. Ask what happened then, and a variety of stories emerge. A combination of severe drought and economic depression created destitution among farmers. Millions of desperate people took to the roads, seeking relief in California where they became exploited itinerant farm laborers. Farmers plowed up a pristine wilderness for profit, and suffered ecological collapse because of their recklessness. Dust Bowl stories, like its definitions, are legion, and now approach the mythological.

The words also evoke powerful graphic images taken from art and literature. Consider these lines from the opening chapter of John Steinbeck’s The Grapes of Wrath (1939):

“Now the wind grew strong and hard and it worked at the rain crust in the corn fields. Little by little the sky was darkened by the mixing dust, and carried away. The wind grew stronger. The rain crust broke and the dust lifted up out of the fields and drove gray plumes into the air like sluggish smoke. The corn threshed the wind and made a dry, rushing sound. The finest dust did not settle back to earth now, but disappeared into the darkening sky. … The people came out of their houses and smelled the hot stinging air and covered their noses from it. And the children came out of the houses, but they did not run or shout as they would have done after a rain. Men stood by their fences and looked at the ruined corn, drying fast now, only a little green showing through the film of dust. The men were silent and they did not move often. And the women came out of the houses to stand beside their men – to feel whether this time the men would break.”

When Americans hear the words “Dust Bowl,” grainy black and white photographs of devastated landscapes and destitute people leap to mind. Dorothea Lange and Arthur Rothstein classics bring the Dust Bowl vividly to life in our imaginations (Figures [1] [2] [3] [4]). For the musically inclined, Woody Guthrie’s Dust Bowl ballads define the event with evocative lyrics such as those in “The Great Dust Storm” (Figure 5). Some of America’s most memorable art – literature, photography, music – emerged from the Dust Bowl and that art helped to define the event and build the myth in American popular culture.

The Dust Bowl was an event defined by artists and by government bureaucrats. It has become part of American mythology, an episode in the nation’s progression from the Pilgrims to Lexington and Concord, through Civil War and frontier settlement, to industrial modernization, Depression, and Dust Bowl. Many of the great themes of American history are tied up in the Dust Bowl story: agricultural settlement and frontier struggle; industrial mechanization with the arrival of tractors; the migration from farm to city, the transformation from rural to urban. Add the Great Depression and the rise of a powerful federal government, and we have covered many of the themes of a standard U.S. history survey course.

Despite the multiple uses of the phrase “Dust Bowl” it was an event which occurred in a specific place and time. The Dust Bowl was a coincidence of drought, severe wind erosion, and economic depression that occurred on the Southern and Central Great Plains during the 1930s. The drought – the longest and deepest in over a century of systematic meteorological observation – began in 1933 and continued through 1940. In 1941 rain poured down on the region, dust storms ceased, crops thrived, economic prosperity returned, and the Dust Bowl was over. But for those eight years crops failed, sandy soils blew and drifted over failed croplands, and rural people, unable to meet cash obligations, suffered through tax delinquency, farm foreclosure, business failure, and out-migration. The Dust Bowl was defined by a combination of:

  • extended severe drought and unusually high temperatures
  • episodic regional dust storms and routine localized wind erosion
  • agricultural failure, including both cropland and livestock operations
  • the collapse of the rural economy, affecting farmers, rural businesses, and local governments
  • an aggressive reform movement by the federal government
  • migration from rural to urban areas and out of the region

The Dust Bowl on the Great Plains coincided with the Great Depression. Though few plainsmen suffered directly from the 1929 stock market crash, they were too intimately connected to national and world markets to be immune from economic repercussions. The farm recession had begun in the 1920s; after the 1919 Armistice transformed Europe from an importer to an exporter of agricultural products, American farmers again faced their constant nemesis: production so high that prices were pushed downward. Farmers grew more cotton, wheat, and corn, than the market could consume, and prices fell, fell more, and then hit rock bottom by the early 1930s. Cotton, one of the staple crops of the southern plains, for example, sold for 36 cents per pound in 1919, dropped to 18 cents in 1928, then collapsed to a dismal 6 cents per pound in 1931. One irony of the Dust Bowl is that the world could not really buy all of the crops Great Plains farmers produced. Even the severe drought and crop failures of the 1930s had little impact on the flood of farm commodities inundating the world market.

Routine Dust Storms on the Southern and Central Plains

The location of the drought and the dust storms shifted from place to place between 1934 and 1940 (Figure 6 [large]). The core of the Dust Bowl was in the Texas and Oklahoma panhandles, southwestern Kansas and southeastern Colorado. The drought began on the Great Plains, from the Dakotas through Texas and New Mexico, in 1931. The following year was wetter, but 1933 and 1934 set low rainfall records across the plains. In some places is did not rain at all. Others quickly accumulated a deep deficit. Figure 7 [large] shows percent difference from average rainfall over five-year periods, with the location of the shifting Dust Bowl over top. Only a handful of counties (mapped in blue) had more rain than average between 1932 and 1940. And few counties fall into the 0 to -10 percent range. Most counties were 10 percent drier than average, or more, and more than eighty counties were at least 20 percent drier. Scientists now believe that the 1930s drought coincided with a severe La Nina event in the Pacific Ocean. Cool sea surface temperatures reduced the amount of moisture entering the jet stream and directed it south of the continental U.S. The drought was deep, extensive, and persisted for more than a decade.

Whenever there is drought on the southern and central plains dust blows. The flat topography and continental climate mean that winds are routinely high. When soil moisture declines, plant cover, whether native plants or crops, diminishes in tandem. Normally dry conditions mean that native plants typically cover less than 60 percent of the ground surface, leaving the other 40+ percent in bare, exposed soils. During the driest conditions native prairie vegetation sometimes covers less than 20 percent of the ground surface, exposing 80 percent or more of the soil to strong prairie winds. Failed crop fields are completely bare of vegetation. In these circumstances soil blows. Local wind erosion can drift soil from one field into ridges and ripples in a neighboring field (Figure 8). Stronger regional dust storms can move dirt many miles before it drifts down along fence lines and around buildings (Figure 9). In rare instances very large dust storms carry soils high into the air where they can travel for many hundreds of miles. These “black blizzards” are the most spectacular and memorable of dust storms, but happen only infrequently (Figure 10).

When wind erosion and dust storms began in the 1930s experienced plains residents hardly welcomed the development, but neither did it surprise them. Dust storms were an occasional spring occurrence from Texas and New Mexico through Kansas and Colorado. They did not happen every year, but often enough to be treated casually. This series of excerpts from the Salina, Kansas Journal and Herald in 1879 indicates that dust storms were a routine part of plains life in dry years:

“For the past few days the gentle winds have enveloped the city with dust decorations. And some of this time it has been intensely hot. Imagine the pleasantness of the situation.”

“During the past few days we have had several exhibitions of what dust can do when propelled by a gale. We had the disagreeable March winds, and saw with ample disgust the evolutions and gyrations of the dust. We have had enough of it, but will undoubtedly get much more of the same kind during this very disagreeable month.”

“Real estate moved considerably this week.”

“Another ‘hardest’ blow ever seen in Kansas … Salina was tantalized with a small sprinkle of rain Thursday afternoon. The wind and dust soon resumed full sway.”

“People have just got through digging from the pores of the skin the dirt driven there by the furious dust storms which for several days since our last issue have been lifting this county ‘clean off its toes.’ Even sinners have stood some chance of being translated with such favoring gales.”

“The wind which held high carnival in this section last Thursday, filled the air with such clouds of dust that darkness of the ‘consistency of twilight’ prevailed. Buildings across the street could not be distinguished. The title of all land about for a while was not worth a cotton hat – it was so ‘unsettled.’ It was of the nature of personal property, because it was not a ‘fixture’ and very moveable. The air was so filled with dust as to be stifling even within houses.”

The Salina newspapers reported dust storms many springs through the late nineteenth century. An item in the Journal in 1885 epitomizes the local attitude: “When the March winds commenced raising dust Monday, the average citizen calmly smiled and whispered ‘so natural!'”

What Made the 1930s Different?

Dust storms were not new to the region in the 1930s, but a number of demographic and cultural factors were new. First there were a lot more people living in the region in the 1930s than there had been in the 1880s. The population of the Great Plains – 450 counties stretching from Texas and New Mexico to the Dakotas and Montana – stood at only 800,000 in 1880; it was seven times that, at 5.6 million in 1930. The dust storms affected many more people than they had ever done before. And many of those people were relative newcomers, having only arrived in recent years. They had no personal or family memory of life in the plains, and many interpreted the arrival of episodic dust storms as an entirely new phenomenon. An example is the reminiscence by Minnie Zeller Doehring, written in 1981. Having moved with her family to western Kansas in 1906, at age 7, she reported “I remember the first Dirt storm in Western Kansas. I think it was about 1911. And a drouth that year followed by a severe winter.” Neither she nor her family had experienced any of the nineteenth century dust storms reported in local newspapers, so when one arrived during a dry spring five years after they arrived, it seemed like a brand new development.

Second, this drought and sequence of dust storms coincided with an international economic depression, the worst in two centuries of American history. The financial stresses and personal misery of the Depression blended seamlessly into the environmental disasters of drought, crop failure, farm loss, and dust. It was difficult to assign blame. Were farmers failing because of the economic crisis? Bank failures? Landlords squeezing tenants? Drought? Dust storms? In the midst of these concurrent crises emerged an activist and newly powerful federal government. Franklin Roosevelt’s New Deal roared into Washington in 1933 with a landslide mandate from voters to fix all of the ills plaguing the nation: depression, bank failures, unemployment, agricultural overproduction, underconsumption, the list went on and on. And several items quickly added to that list of ills to be fixed were rural poverty, agricultural land use, soil erosion, and dust storms.

The drought and dust storms were certainly hard on farmers. Crop failure was widespread and repeated. In 1935 46.6 million acres of crops failed on the Great Plains, with over 130 counties losing more than half their planted acreage. Many farmers lived on the edge of financial failure. In debt for land, tractor, automobile, and even for last year’s seed, one or two years with reduced income often meant bankruptcy. Tax delinquency became a serious problem throughout the plains. As land owners fell behind on their local property tax payments, county governments grew desperate. Many counties had delinquency rates over 40 percent for several consecutive years, and were faced with laying off teachers, police, and other employees. A few counties considered closing county government altogether and merging with neighboring counties. Their only alternative was to foreclose on now nearly worthless farms which they could neither rent nor sell. Many families behind on mortgage payments and taxes simply packed up and left without notice. The crisis was not restricted to farmers, bankers, and county employees. Throughout the plains sales of tractors, automobiles, and fertilizer declined in the early 1930s, affecting small town merchants across the board.

Consider the example of William and Sallie DeLoach, typical southern plains farmers who moved from farm to farm through the early twentieth century, repeatedly trying to buy land and repeatedly losing it to the bank in the face of drought or low crop prices. After an earlier failed attempt to buy land, the family invested in a 177 acre cotton farm in Lamb County, Texas in 1924, paying 30 dollars per acre. A month later they passed up a chance to sell it for 35 dollars an acre. Within three months of the purchase late summer rains failed to arrive, the cotton crop bloomed late, and the first freeze of winter killed it. Unable to make the upcoming mortgage payment, the DeLoaches forfeited their land and the 200 dollars they had already paid toward it. One bad season meant default. Through the rest of the 1920s the DeLoaches rented from Sallie’s father and farmed cotton in Lamb County. In September, 1929, just weeks before the stock market crashed, William thought the time auspicious to invest in land again, and bought 90 acres. He farmed it, then rented part of it to another farmer. Rain was plentiful in 1931, and by the end of that year DeLoach had repaid back rent to his father-in-law, paid off all outstanding debts except his land mortgage, and started 1932 in good shape. But the 1930s were hard on the southern plains, with the extended drought, dust storms, and widespread poverty. The one bright spot for farmers was the farm subsidies instituted by Franklin Roosevelt’s New Deal. In 1933 DeLoach plowed up 55 acres of already growing cotton in exchange for a check from the federal government. Lamb County led the state in the cotton reduction program, bringing nearly 1.4 million dollars into the county in 1933. Drought lingered over the Texas panhandle through 1934 and 1935, and by early 1936 DeLoach was beleaguered again. When the Supreme Court declared the Agricultural Adjustment Act (AAA) unconstitutional it appeared that federal farm subsidies would disappear. A few weeks after that decision DeLoach had a visit from his real estate agent:

Mr. Gholson came by this A.M. and wanted to know what I was going to do about my land notes. I told him I could do nothing, only let them have the land back. … I told him I had payed the school tax for 1934. Owed the state and county for 1935, also the state for 1934. All tole [sic] about $37.50. He said he would pay that and we (wife & I) could deed the land back to the Nugent people. I hate to lose the land and what I have payed on it, but I can’t do any thing else. ‘Big fish eat the little ones.’ The law is take from the poor devil that wants a home, give to the rich. I have lost about $1000.00 on the land.

A week later:

Mr. Gholson came by. Told me about the deed he had drawn in Dallas. … He said if I would pay for the deed and stamps, which would be $5.00, the deal would be closed. I asked him if that meant just as the land stood now. He said yes. He said they would pay the balance of taxes. Well, they ought to. I have payed $800.00 or better on the land, but got behind and could not do any thing else. Any way my mind is at ease. I do not think Gholson or any of the cold blooded land grafters would lose any sleep on account of taking a home away from any poor devil.

For the third time in his career DeLoach defaulted and turned over his farm. Later that month Congress rewrote the AAA legislation to meet Constitutional requirements, and the farm programs have continued ever since. With federal program income again assured, DeLoach purchased yet another 68 acre farm in September, 1936, moved the family onto it, and tried again. Other families were not as persistent, and when crop failure led to bankruptcy they packed up and left the region. The term popularly assigned to such emigrants, “Dust Bowl refugees,” assigned a single cause – dust storms – to what was in fact a complex and multi-causal event (Figure 11).

Like dust storms and agricultural setbacks, high out-migration was not new to the plains. Throughout the settlement period, from about 1870 to 1920, there was very high turnover in population. Many people moved into the region, but many moved out also. James Malin found that 10 year population turnover on the western Kansas frontier ranged from 41 to 67 percent between 1895 and 1930. Many people were half farmers, half land speculators, buying frontier land cheap (or homesteading it for free), then selling a few years later on a rising market. People moved from farm to farm, always looking for a better opportunity, often following a succession of frontiers over a lifetime, from Ohio to Illinois to Kansas to Colorado. Outmigration from the Great Plains in the 1930s was not considerably higher than it had been over the previous 50 years. What changed in the 1930s was that new immigrants stopped moving in to replace those leaving. Many rural areas of the grassland began a slow population decline that had not yet bottomed out in 2000.

The New Deal Response to Drought and Dust Storms

Emigrants from the Great Plains were not new in the 1930s. Neither was drought, agricultural crisis, or dust storms. This drought and these dust storms were certainly more severe than those that wracked the plains in 1879-1880, in the mid 1890s, and again in 1911. And more people were adversely affected because total population was higher. But what was most different about the 1930s was the response of the federal government. In past crises, when farmers went bankrupt, when grassland counties lost 20 percent of their population, when dust storms descended, the federal government stood aloof. It felt no responsibility for the problems, no popular mandate to solve them. Just the opposite was the case in the 1930s. The New Deal set out to solve the nation’s problems, and in the process contributed to the creation of the Dust Bowl as an historic event of mythological proportions.

The economic and agricultural disaster of the 1930s provided an opening for experimentation with federal land use management. The idea had begun among economists in agricultural colleges in the 1920s who proposed removing “submarginal” land from crop production. “Submarginal” referred to land low in productivity, unsuited for the production of farm crops, or incapable of profitable cultivation. A “land utilization” movement emerged in the 1920s to classify farm land as good, poor, marginal, or submarginal, and to forcibly retire the latter from production. Such rational planning aimed to reduce farm poverty, contract chronic overproduction of farm crops, and protect land vulnerable to damage. M.L. Wilson, of Montana State Agricultural College, focused the academic movement while Lewis C. Gray, at the Bureau of Agricultural Economics (BAE), led the effort within the U.S. Department of Agriculture. The land utilization movement began well before the 1930s, but the drought and dust storms of that decade provided a fortuitous justification for a land use policy already on the table, and newly created agencies like the Soil Conservation Service (SCS), the Resettlement Administration (RA), and the Farm Security Administration (FSA) were the loudest to publicize and deplore the Dust Bowl wracking America’s heartland.

Whereas the land use adjustment movement had begun as an attempt to solve chronic rural poverty, the arrival of dust storms in 1934 provided a second justification for aggressive federal action to change land use practices. Federal bureaucrats created the central narrative of the Dust Bowl, in part because it emphasized the need for these new reform agencies. The FSA launched a sophisticated public relations campaign to publicize the disaster unfolding in the Great Plains. It hired world class photographers to document the suffering of plains people, giving them specific instructions from Washington to photograph the most eroded landscapes and the most destitute people. Dorothea Lange’s photographs of emigrants on the road to California still stand as some of the most evocative images in American history (Figures 12-13). The Resettlement Administration also hired filmmaker Pare Lorentz the make a series of movies, including “The Plow that Broke the Plains.”

The narrative behind this publicity campaign was this: in the nineteenth and early twentieth centuries farmers had come to the dry western plains, encouraged by a misguided Homestead Act, where they plowed up land unsuited for farming. The grassland should have been left in native grass for grazing, but small farmers, hoping to make profits growing cash crops like wheat had plowed the land, exposing soils to relentless winds. When serious drought struck in the 1930s the wounded landscape succumbed to dust storms that devastated farms, farmers, and local economies. The result was a mass exodus of desperately poor people, a social failure caused by misuse of land. The profit motive and private land ownership were behind this failure, and only a scientifically grounded federal bureaucracy could manage land use wisely in the interests of all Americans, rather than for the profit of a few individuals. Federal agents would retire land from cultivation, return it to grassland, and teach remaining farmers how to use their land more carefully to prevent erosion. This effort would, of course, require large budgets and thousands of employees, but it was vital to resolving a rural disaster.

The New Deal government, with Congressional support and appropriations, began to put reform plan into place. A host of new agencies vied to manage the program, including the FSA, the SCS, the RA, and the Agricultural Adjustment Administration (AAA). Each implemented a variety of reforms. The RA began purchasing “submarginal” land from farmers, eventually acquiring some 10 million acres for former farmland in the Great Plains. (These lands are now mostly managed by the U.S. Forest Service as National Grasslands leased to nearby private ranchers for grazing.) The RA and the FSA worked to relocate destitute farmers on better lands, or move them out of farming altogether. The SCS established demonstration projects in counties across the nation, where local cooperator farmers implemented recommended soils conservation techniques on their farms, such as fallowing, strip cropping, contour plowing, terracing, growing cover crops, and a variety of cultivation techniques. There were efforts in each county to establish Land Use Planning Committees made of local farmers and federal agents who would have authority over land use practices on private farms. These committees functioned for several years in the late 1930s, but ended in most places by the early 1940s. The most important and expensive measure was the AAA’s development of a comprehensive system of farm subsidies, which paid farmers cash for reducing their acreage of commodity crops. The subsidies, created as an emergency Depression measure, have become routine and persist 70 years later. They brought millions of dollars into nearly every farming county in the U.S. and permanently transformed the economics of agriculture. In a multitude of innovative ways the federal government set out to remake American farming. The Dust Bowl narrative served exceedingly well to justify these massive and revolutionary changes in farming, America’s most common occupation for most of its history.


The Dust Bowl finally ended in 1941 with the arrival of drenching rains on the southern and central plains and with the advent of World War II. The rains restored crops and settled the dust. The war diverted public and government attention from the plains. In a telling move, the FSA photography corps was reconstituted as the Office of War Information, the propaganda wing of the government’s war effort. The narrative of World War II replaced the Dust Bowl narrative in the public’s attention. Congress diverted funding away from the Great Plains and toward mobilization. The Land Utilization Program stopped buying submarginal land and the county Land Use Planning Committees ceased. Some of the New Deal reforms became permanent. The AAA subsidy system continued through the present and the Soil Conservation Service (now the Natural Resources Conservation Service) created a stable niche promoting wise agricultural land management and soil mapping.

Ironically, overall land use on the Great Plains had changed little during the decade. About the same amount of land was devoted to crops in the second half of the twentieth century as in the first half. Farmers grew the same crops in the same mixtures. Many implemented the milder reforms promoted by New Dealers – contour plowing, terracing – but little cropland was converted back to pasture. The “submarginal” regions have continued to grow wheat, sorghum, and other crops in roughly the same quantities. Despite these facts the public has generally adopted the Dust Bowl narrative. If asked, most will identify the Dust Bowl as caused by misuse of land. The descendants of the federal agencies created in the 1930s still claim to have played a leading role in solving the crisis. Periodic droughts and dust storms have returned to the region since 1941, notably in the early 1950s and again in the 1970s. Towns in the core dust storm region still have dust storms in dry years. Lubbock, Texas, for example, experienced 35 dust storms in 1973-74. Rural depopulation continues in the Great Plains (although cities in the region have grown even faster than rural places have declined). None of these droughts, dust storms, or periods of depopulation have received the concentrated public attention that those of the 1930s did. Nonetheless, environmentalists and critics of modern agricultural systems continue to warn that unless we reform modern farming the Dust Bowl may return.

References and Additional Reading

Bonnifield, Mathew P. The Dust Bowl: Men, Dirt, and Depression. Albuquerque: University of New Mexico Press, 1979.

Cronon, William. “A Place for Stories: Nature, History, and Narrative.” Journal of American History 78 (March 1992): 1347-1376.

Cunfer, Geoff. “Causes of the Dust Bowl.” In Past Time, Past Place: GIS for History, edited by Anne Kelly Knowles, 93-104. Redlands, CA: ESRI Press, 2002.

Cunfer, Geoff. “The New Deal’s Land Utilization Program in the Great Plains.” Great Plains Quarterly 21 (Summer 2001): 193-210.

Cunfer, Geoff. On the Great Plains: Agriculture and Environment. Texas A&M University Press, 2005.

The Future of the Great Plains: Report of the Great Plains Committee. Washington: Government Printing Office, 1936.

Ganzel, Bill. Dust Bowl Descent. Lincoln: University of Nebraska Press, 1984.

Great Plains Quarterly 6 (Spring 1986), special issue on the Dust Bowl.

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Citation: Cunfer, Geoff. “The Dust Bowl”. EH.Net Encyclopedia, edited by Robert Whaples. August 18, 2004. URL

The Economic History of the International Film Industry

Gerben Bakker, University of Essex


Like other major innovations such as the automobile, electricity, chemicals and the airplane, cinema emerged in most Western countries at the same time. As the first form of industrialized mass-entertainment, it was all-pervasive. From the 1910s onwards, each year billions of cinema-tickets were sold and consumers who did not regularly visit the cinema became a minority. In Italy, today hardly significant in international entertainment, the film industry was the fourth-largest export industry before the First World War. In the depression-struck U.S., film was the tenth most profitable industry, and in 1930s France it was the fastest-growing industry, followed by paper and electricity, while in Britain the number of cinema-tickets sold rose to almost one billion a year (Bakker 2001b). Despite this economic significance, despite its rapid emergence and growth, despite its pronounced effect on the everyday life of consumers, and despite its importance as an early case of the industrialization of services, the economic history of the film industry has hardly been examined.

This article will limit itself exclusively to the economic development of the industry. It will discuss just a few countries, mainly the U.S., Britain and France, and then exclusively to investigate the economic issues it addresses, not to give complete histories of the industries in those countries. This entry cannot do justice to developments in each and every country, given the nature of an encyclopedia article. This entry also limits itself to the evolution of the Western film industry, because it has been and still is the largest film industry in the world, in revenue terms, although this may well change in the future.

Before Cinema

In the late eighteenth century most consumers enjoyed their entertainment in an informal, haphazard and often non-commercial way. When making a trip they could suddenly meet a roadside entertainer, and their villages were often visited by traveling showmen, clowns and troubadours. Seasonal fairs attracted a large variety of musicians, magicians, dancers, fortune-tellers and sword-swallowers. Only a few large cities harbored legitimate theaters, strictly regulated by the local and national rulers. This world was torn apart in two stages.

First, most Western countries started to deregulate their entertainment industries, enabling many more entrepreneurs to enter the business and make far larger investments, for example in circuits of fixed stone theaters. The U.S. was the first with liberalization in the late eighteenth century. Most European countries followed during the nineteenth century. Britain, for example, deregulated in the mid-1840s, and France in the late 1860s. The result of this was that commercial, formalized and standardized live entertainment emerged that destroyed a fair part of traditional entertainment. The combined effect of liberalization, innovation and changes in business organization, made the industry grow rapidly throughout the nineteenth century, and integrated local and regional entertainment markets into national ones. By the end of the nineteenth century, integrated national entertainment industries and markets maximized productivity attainable through process innovations. Creative inputs, for example, circulated swiftly along the venues – often in dedicated trains – coordinated by centralized booking offices, maximizing capital and labor utilization.

At the end of the nineteenth century, in the era of the second industrial revolution, falling working hours, rising disposable income, increasing urbanization, rapidly expanding transport networks and strong population growth resulted in a sharp rise in the demand for entertainment. The effect of this boom was further rapid growth of live entertainment through process innovations. At the turn of the century, the production possibilities of the existing industry configuration were fully realized and further innovation within the existing live-entertainment industry could only increase productivity incrementally.

At this moment, in a second stage, cinema emerged and in its turn destroyed this world, by industrializing it into the modern world of automated, standardized, tradable mass-entertainment, integrating the national entertainment markets into an international one.

Technological Origins

In the early 1890s, Thomas Edison introduced the kinematograph, which enabled the shooting of films and their play-back in slot-coin machines for individual viewing. In the mid-1890s, the Lumière brothers added projection to the invention and started to play films in theater-like settings. Cinema reconfigured different technologies that all were available from the late 1880s onwards: photography (1830s), taking negative pictures and printing positives (1880s), roll films (1850s), celluloid (1868), high-sensitivity photographic emulsion (late 1880s), projection (1645) and movement dissection/ persistence of vision (1872).

After the preconditions for motion pictures had been established, cinema technology itself was invented. Already in 1860/1861 patents were filed for viewing and projecting motion pictures, but not for the taking of pictures. The scientist Jean Marey completed the first working model of a film camera in 1888 in Paris. Edison visited Georges Demeney in 1888 and saw his films. In 1891, he filed an American patent for a film camera, which had a different moving mechanism than the Marey camera. In 1890, the Englishman Friese Green presented a working camera to a group of enthusiasts. In 1893 the Frenchman Demeney filed a patent for a camera. Finally, the Lumière brothers filed a patent for their type of camera and for projection in February 1895. In December of that year they gave the first projection for a paying audience. They were followed in February 1896 by the Englishman Robert W. Paul. Paul also invented the ‘Maltese cross,’ a device which is still used in film cameras today. It is instrumental in the smooth rolling of the film, and in the correcting of the lens for the space between the exposures (Michaelis 1958; Musser 1990: 65-67; Low and Manvell 1948).

Three characteristics stand out in this innovation process. First, it was an international process of invention, taking place in several countries at the same time, and the inventors building upon and improving upon each other’s inventions. This connects to Joel Mokyr’s notion that in the nineteenth century communication became increasingly important to innovations, and many innovations depended on international communication between inventors (Mokyr 1990: 123-124). Second, it was what Mokyr calls a typical nineteenth century invention, in that it was a smart combination of many existing technologies. Many different innovations in the technologies which it combined had been necessary to make possible the innovation of cinema. Third, cinema was a major innovation in the sense that it was quickly and universally adopted throughout the western world, quicker than the steam engine, the railroad or the steamship.

The Emergence of Cinema

For about the first ten years of its existence, cinema in the United States and elsewhere was mainly a trick and a gadget. Before 1896 the coin-operated Kinematograph of Edison was present at fairs and in entertainment venues. Spectators had to throw a coin in the machine and peek through glasses to see the film. The first projections, from 1896 onwards, attracted large audiences. Lumière had a group of operators who traveled around the world with the cinematograph, and showed the pictures in theaters. After a few years films became a part of the program in vaudeville and sometimes in theater as well. At the same time traveling cinema emerged: cinemas which traveled around with a tent or mobile theater and set up shop for a short time in towns and villages. These differed from the Lumière operators and others in that they catered for the general, popular audiences, while the former were more upscale parts of theater programs, or a special program for the bourgeoisie (Musser 1990: 140, 299, 417-20).

This whole era, which in the U.S. lasted up to about 1905, was a time in which cinema seemed just one of many new fashions, and it was not at all certain that it would persist, or that it would be forgotten or marginalized quickly, such as happened to the boom in skating rinks and bowling alleys at the time. This changed when Nickelodeons, fixed cinemas with a few hundred seats, emerged and quickly spread all over the country between 1905 and 1907. From this time onwards cinema changed into an industry in its own right, which was distinct from other entertainments, since it had its own buildings and its own advertising. The emergence of fixed cinemas coincided which a huge growth phase in the business in general; film production increased greatly, and film distribution developed into a special activity, often managed by large film producers. However, until about 1914, besides the cinemas, films also continued to be combined with live entertainment in vaudeville and other theaters (Musser 1990; Allen 1980).

Figure 1 shows the total length of negatives released on the U.S., British and French film markets. In the U.S., the total released negative length increased from 38,000 feet in 1897, to two million feet in 1910, to twenty million feet in 1920. Clearly, the initial U.S. growth between 1893 and 1898 was very strong: the market increased by over three orders of magnitude, but from an infinitesimal initial base. Between 1898 and 1906, far less growth took place, and in this period it may well have looked like the cinematograph would remain a niche product, a gimmick shown at fairs and used to be interspersed with live entertainment. From 1907, however, a new, sharp sustained growth phase starts: The market increased further again by two orders of magnitude – and from a far higher base this time. At the same time, the average film length increased considerably, from eighty feet in 1897 to seven hundred feet in 1910 to three thousand feet in 1920. One reel of film held about 1,500 feet and had a playing time of about fifteen minutes.

Between the mid-1900s and 1914 the British and French markets were growing at roughly the same rates as the U.S. one. World War I constituted a discontinuity: from 1914 onwards European growth rates are far lower those in the U.S.

The prices the Nickelodeons charged were between five and ten cents, for which spectators could stay as long as they liked. Around 1910, when larger cinemas emerged in hot city center locations, more closely resembling theaters than the small and shabby Nickelodeons, prices increased. They varied from between one dollar to one dollar and-a-half for ‘first run’ cinemas to five cents for sixth-run neighborhood cinemas (see also Sedgwick 1998).

Figure 1

Total Released Length on the U.S., British and French Film Markets (in Meters), 1893-1922

Note: The length refers to the total length of original negatives that were released commercially.

See Bakker 2005, appendix I for the method of estimation and for a discussion of the sources.

Source: Bakker 2001b; American Film Institute Catalogue, 1893-1910; Motion Picture World, 1907-1920.

The Quality Race

Once Nickelodeons and other types of cinemas were established, the industry entered a new stage with the emergence of the feature film. Before 1915, cinemagoers saw a succession of many different films, each between one and fifteen minutes, of varying genres such as cartoons, newsreels, comedies, travelogues, sports films, ‘gymnastics’ pictures and dramas. After the mid-1910s, going to the cinema meant watching a feature film, a heavily promoted dramatic film with a length that came closer to that of a theater play, based on a famous story and featuring famous stars. Shorts remained only as side dishes.

The feature film emerged when cinema owners discovered that films with a far higher quality and length, enabled them to ask far higher ticket prices and get far more people into their cinemas, resulting in far higher profits, even if cinemas needed to pay far more for the film rental. The discovery that consumers would turn their back on packages of shorts (newsreels, sports, cartoons and the likes) as the quality of features increased set in motion a quality race between film producers (Bakker 2005). They all started investing heavily in portfolios of feature films, spending large sums on well-known stars, rights to famous novels and theater plays, extravagant sets, star directors, etc. A contributing factor in the U.S. was the demise of the Motion Picture Patents Company (MPPC), a cartel that tried to monopolize film production and distribution. Between about 1908 and 1912 the Edison-backed MPPC had restricted quality artificially by setting limits on film length and film rental prices. When William Fox and the Department of Justice started legal action in 1912, the power of the MPPC quickly waned and the ‘independents’ came to dominate the industry.

In the U.S., the motion picture industry became the internet of the 1910s. When companies put the word motion pictures in their IPO investors would flock to it. Many of these companies went bankrupt, were dissolved or were taken over. A few survived and became the Hollywood studios most of which we still know today: Paramount, Metro-Goldwyn-Mayer (MGM), Warner Brothers, Universal, Radio-Keith-Orpheum (RKO), Twentieth Century-Fox, Columbia and United Artists.

A necessary condition for the quality race was some form of vertical integration. In the early film industry, films were sold. This meant that the cinema-owner who bought a film, would receive all the marginal revenues the film generated. In the film industry, these revenues were largely marginal profits, as most costs were fixed, so an additional film ticket sold was pure (gross) profit. Because the producer did not get any of these revenues, at the margin there was little incentive to increase quality. When outright sales made way for the rental of films to cinemas for a fixed fee, producers got a higher incentive to increase a film’s quality, because it would generate more rentals (Bakker 2005). This further increased when percentage contracts were introduced for large city center cinemas, and when producers-distributors actually started to buy large cinemas. The changing contractual relationship between cinemas and producers was paralleled between producers and distributors.

The Decline and Fall of the European Film Industry

Because the quality race happened when Europe was at war, European companies could not participate in the escalation of quality (and production costs) discussed above. This does not mean all of them were in crisis. Many made high profits during the war from newsreels, other short films, propaganda films and distribution. They also were able to participate in the shift towards the feature film, substantially increasing output in the new genre during the war (Figure 2). However, it was difficult for them to secure the massive amount of venture capital necessary to participate in the quality race while their countries were at war. Even if they would have managed it may have been difficult to justify these lavish expenditures when people were dying in the trenches.

Yet a few European companies did participate in the escalation phase. The Danish Nordisk company invested heavily in long feature-type films, and bought cinema chains and distributors in Germany, Austria and Switzerland. Its strategy ended when the German government forced it to sell its German assets to the newly founded UFA company, in return for a 33 percent minority stake. The French Pathé company was one of the largest U.S. film producers. It set up its own U.S. distribution network and invested in heavily advertised serials (films in weekly installments) expecting that this would become the industry standard. As it turned out, Pathé bet on the wrong horse and was overtaken by competitors riding high on the feature film. Yet it eventually switched to features and remained a significant company. In the early 1920s, its U.S. assets were sold to Merrill Lynch and eventually became part of RKO.

Figure 2

Number of Feature Films Produced in Britain, France and the U.S., 1911-1925

(semi-logarithmic scale)

Source: Bakker 2005 [American Film Institute Catalogue; British Film Institute; Screen Digest; Globe, World Film Index, Chirat, Longue métrage.]

Because it could not participate in the quality race, the European film industry started to decline in relative terms. Its market share at home and abroad diminished substantially (Figure 3). In the 1900s European companies supplied at least half of the films shown in the U.S. In the early 1910s this dropped to about twenty percent. In the mid-1910s, when the feature film emerged, the European market share declined to nearly undetectable levels.

By the 1920s, most large European companies gave up film production altogether. Pathé and Gaumont sold their U.S. and international business, left film making and focused on distribution in France. Éclair, their major competitor, went bankrupt. Nordisk continued as an insignificant Danish film company, and eventually collapsed into receivership. The eleven largest Italian film producers formed a trust, which terribly failed and one by one they fell into financial disaster. The famous British producer, Cecil Hepworth, went bankrupt. By late 1924, hardly any films were being made in Britain. American films were shown everywhere.

Figure 3

Market Shares by National Film Industries, U.S., Britain, France, 1893-1930

Note: EU/US is the share of European companies on the U.S. market, EU/UK is the share of European companies on the British market, and so on. For further details see Bakker 2005.

The Rise of Hollywood

Once they had lost out, it was difficult for European companies to catch up. First of all, since the sharply rising film production costs were fixed and sunk, market size was becoming of essential importance as it affected the amount of money that could be spent on a film. Exactly at this crucial moment, the European film market disintegrated, first because of war, later because of protectionism. The market size was further diminished by heavy taxes on cinema tickets that sharply increased the price of cinema compared to live entertainment.

Second, the emerging Hollywood studios benefited from first mover advantages in feature film production: they owned international distribution networks, they could offer cinemas large portfolios of films at a discount (block-booking), sometimes before they were even made (blind-bidding), the quality gap with European features was so large it would be difficult to close in one go, and, finally, the American origin of the feature films in the 1910s had established U.S. films as a kind of brand, leaving consumers with high switching costs to try out films from other national origins. It would be extremely costly for European companies to re-enter international distribution, produce large portfolios, jump-start film quality, and establish a new brand of films – all at the same time (Bakker 2005).

A third factor was the rise of Hollywood as production location. The large existing American Northeast coast film industry and the newly emerging film industry in Florida declined as U.S. film companies started to locate in Southern California. First of all, the ‘sharing’ of inputs facilitated knowledge spillovers and allowed higher returns. The studios lowered costs because creative inputs had less down-time, needed to travel less, could participate in many try-outs to achieve optimal casting and could be rented out easily to competitors when not immediately wanted. Hollywood also attracted new creative inputs through non-monetary means: even more than money creative inputs wanted to maximize fame and professional recognition. For an actress, an offer to work with the world’s best directors, costume designers, lighting specialists and make-up artists was difficult to decline.

Second, a thick market for specialized supply and demand existed. Companies could easily rent out excess studio capacity (for example, during the nighttime B-films were made), and a producer was quite likely to find the highly specific products or services needed somewhere in Hollywood (Christopherson and Storper 1987, 1989). While a European industrial ‘film’ district may have been competitive and even have a lower over-all cost/quality ratio than Hollywood, a first European major would have a substantially higher cost/quality ratio (lacking external economies) and would therefore not easily enter (see, for example, Krugman and Obstfeld 2003, chapter 6). If entry did happen, the Hollywood studios could and would buy successful creative inputs away, since they could realize higher returns on these inputs, which resulted in American films with even a higher perceived quality, thus perpetuating the situation.

Sunlight, climate and the variety of landscape in California were of course favorable to film production, but were not unique. Locations such as Florida, Italy, Spain and Southern France offered similar conditions.

The Coming of Sound

In 1927, sound films were introduced. The main innovator was Warner Brothers, backed by the bank Goldman, Sachs, which actually parachuted a vice-president to Warner. Although many other sound systems had been tried and marketed from the 1900s onwards, the electrical microphone, invented at Bell labs in the mid-1920s, sharply increased the quality of sound films and made possible the change of the industry. Sound increased the interests in the film industry of large industrial companies such as General Electric, Western Electric and RCA, as well as those of the banks who were eager the finance the new innovation, such as the Bank of America and Goldman, Sachs.

In economic terms, sound represented an exogenous jump in sunk costs (and product quality) which did not affect the basic industry structure very much: The industry structure was already highly concentrated before sound and the European, New York/Jersey and Florida film industries were already shattered. What it did do was industrialize away most of the musicians and entertainers that had complemented the silent films with sound and entertainment, especially those working in the smaller cinemas. This led to massive unemployment among musicians (see, for example, Gomery 1975; Kraft 1996).

The effect of sound film in Europe was to increase the domestic revenues of European films, because they became more culture-specific as they were in the local language, but at the same time it decreased the foreign revenues European films received (Bakker 2004b). It is difficult to completely assess the impact of sound film, as it coincided with increased protection; many European countries set quotas for the amount of foreign films that could be shown shortly before the coming of sound. In France, for example, where sound became widely adopted from 1930 onwards, the U.S. share of films dropped from eighty to fifty percent between 1926 and 1929, mainly the result of protectionist legislation. During the 1930s, the share temporarily declined to about forty percent, and then hovered to between fifty and sixty percent. In short, protectionism decreased the U.S. market share and increased the French market shares of French and other European films, while sound film increased French market share, mostly at the expense of other European films and less so at the expense of U.S. films.

In Britain, the share of releases of American films declined from eighty percent in 1927 to seventy percent in 1930, while British films increased from five percent to twenty percent, exactly in line with the requirements of the 1927 quota act. After 1930, the American share remained roughly stable. This suggests that sound film did not have a large influence, and that the share of U.S. films was mainly brought down by the introduction of the Cinematograph Films Act in 1927, which set quotas for British films. Nevertheless, revenue data, which are unfortunately lacking, would be needed to give a definitive answer, as little is known about effects on the revenue per film.

The Economics of the Interwar Film Trade

Because film production costs were mainly fixed and sunk, international sales or distribution were important, because these were additional sales without much additional cost to the producer; the film itself had already been made. Films had special characteristics that necessitated international sales. Because they essentially were copyrights rather than physical products, theoretically the costs of additional sales were zero. Film production involved high endogenous sunk costs, recouped through renting the copyright to the film. The marginal foreign revenue equaled marginal net revenue (and marginal profits after the film’s production costs had been fully amortized). All companies large or small had to take into account foreign sales when setting film budgets (Bakker 2004b).

Films were intermediate products sold to foreign distributors and cinemas. While the rent paid varied depending on perceived quality and general conditions of supply and demand, the ticket price paid by consumers generally did not vary. It only varied by cinema: highest in first-run city center cinemas and lowest in sixth-run ramshackle neighborhood cinemas. Cinemas used films to produce ‘spectator-hours’: a five-hundred-seat cinema providing one hour of film, produced five hundred spectator-hours of entertainment. If it sold three hundred tickets, the other two hundred spectator-hours produced would have perished.

Because film was an intermediate product and a capital good at that, international competition could not be on price alone, just as sales of machines depend on the price/performance ratio. If we consider a film’s ‘capacity to sell spectator-hours’ (hereafter called selling capacity) as proportional to production costs, a low-budget producer could not simply push down a film’s rental price in line with its quality in order to make a sale; even at a price of zero, some low-budget films could not be sold. The reasons were twofold.

First, because cinemas had mostly fixed costs and few variable costs, a film’s selling capacity needed to be at least as large as fixed cinema costs plus its rental price. A seven-hundred-seat cinema, with a production capacity of 39,200 spectator-hours a week, weekly fixed costs of five hundred dollars, and an average admission price of five cents per spectator-hour, needed a film selling at least ten thousand spectator-hours, and would not be prepared to pay for that (marginal) film, because it only recouped fixed costs. Films needed a minimum selling capacity to cover cinema fixed costs. Producers could only price down low-budget films to just above the threshold level. With a lower expected selling capacity, these films could not be sold at any price.

This reasoning assumes that we know a film’s selling capacity ex ante. A main feature distinguishing foreign markets from domestic ones was that uncertainty was markedly lower: from a film’s domestic launch the audience appeal was known, and each subsequent country added additional information. While a film’s audience appeal across countries was not perfectly correlated, uncertainty was reduced. For various companies, correlations between foreign and domestic revenues for entire film portfolios fluctuated between 0.60 and 0.95 (Bakker 2004b). Given the riskiness of film production, this reduction in uncertainty undoubtedly was important.

The second reason for limited price competition was the opportunity cost, given cinemas’ production capacities. If the hypothetical cinema obtained a high-capacity film for a weekly rental of twelve hundred dollars, which sold all 39,200 spectator-hours, the cinema made a profit of $260 (($0.05 times 39,200) – $1,200 – $500 = $260). If a film with half the budget and, we assume, half the selling capacity, rented for half the price, the cinema-owner would lose $120 (($0.05 times 19,600) – $600 – $500 = -$120). Thus, the cinema owner would want to pay no more than $220 for the lower budget film, given that the high budget film is available (($0.05 times 19,600) – $220- $500 = $260). So the low-capacity film with half the selling capacity of the high-capacity film would need to sell for under a fifth of the price of the high capacity film to even enable the possibility of a transaction.

These sharply increasing returns to selling capacity made the setting of production outlays important, as a right price/capacity ratio was crucial to win foreign markets.

How Films Became Branded Products

To make sure film revenues reached above cinema fixed costs, film companies transformed films into branded products. With the emergence of the feature film, they started to pay large sums to actors, actresses and directors and for rights to famous plays and novels. This is still a major characteristic of the film industry today that fascinates many people. Yet the huge sums paid for stars and stories are not as irrational and haphazard as they sometimes may seem. Actually, they might be just as ‘rational’ and have just as quantifiable a return as direct spending on marketing and promotion (Bakker 2001a).

To secure an audience, film producers borrowed branding techniques from other consumer goods’ industries, but the short product-life-cycle forced them to extend the brand beyond one product – using trademarks or stars – to buy existing ‘brands,’ such as famous plays or novels, and to deepen the product-life-cycle by licensing their brands.

Thus, the main value of stars and stories lay not in their ability to predict successes, but in their services as giant ‘publicity machines’ which optimized advertising effectiveness by rapidly amassing high levels of brand-awareness. After a film’s release, information such as word-of-mouth and reviews would affect its success. The young age at which stars reached their peak, and the disproportionate income distribution even among the superstars, confirm that stars were paid for their ability to generate publicity. Likewise, because ‘stories’ were paid several times as much as original screenplays, they were at least partially bought for their popular appeal (Bakker 2001a).

Stars and stories marked a film’s qualities to some extent, confirming that they at least contained themselves. Consumer preferences confirm that stars and stories were the main reason to see a film. Further, fame of stars is distributed disproportionately, possibly even twice as unequal as income. Film companies, aided by long-term contracts, probably captured part of the rent of their popularity. Gradually these companies specialized in developing and leasing their ‘instant brands’ to other consumer goods’ industries in the form of merchandising.

Already from the late 1930s onwards, the Hollywood studios used the new scientific market research techniques of George Gallup to continuously track the brand-awareness among the public of their major stars (Bakker 2003). Figure 4 is based on one such graph used by Hollywood. It shows that Lana Turner was a rising star, Gable was consistently a top star, while Stewart’s popularity was high but volatile. James Stewart was eleven percentage-points more popular among the richest consumers than among the poorest, while Lana Turner differed only a few percentage-points. Additional segmentation by city size seemed to matter, since substantial differences were found: Clark Gable was ten percentage-points more popular in small cities than in large ones. Of the richest consumers, 51 percent wanted to see a movie starring Gable, but altogether they constituted just 14 percent of Gable’s market, while the 57 percent poorest Gable-fans constituted 34 percent. The increases in Gable’s popularity roughly coincided with his releases, suggesting that while producers used Gable partially for the brand-awareness of his name, each use (film) subsequently increased or maintained that awareness in what seems to have been a self-reinforcing process.

Figure 4

Popularity of Clark Gable, James Stewart and Lana Turner among U.S. respondents

April 1940 – October 1942, in percentage

Source: Audience Research Inc.; Bakker 2003.

The Film Industry’s Contribution to Economic Growth and Welfare

By the late 1930s, cinema had become an important mass entertainment industry. Nearly everyone in the Western world went to the cinema and many at least once a week. Cinema had made possible a massive growth in productivity in the entertainment industry and thereby disproved the notions of some economists that productivity growth in certain service industries is inherently impossible. Between 1900 and 1938, output of the entertainment industry, measured in spectator-hours, grew substantially in the U.S., Britain and France, varying from three to eleven percent per year over a period of nearly forty years (Table 1). The output per worker increased from 2,453 spectator hours in the U.S. in 1900 to 34,879 in 1938. In Britain it increased from 16,404 to 37,537 spectator-hours and in France from 1,575 to 8,175 spectator-hours. This phenomenal growth could be explained partially by adding more capital (such as in the form of film technology and film production outlays) and partially by simply producing more efficiently with the existing amount of capital and labor. The increase in efficiency (‘total factor productivity’) varied from about one percent per year in Britain to over five percent in the U.S., with France somewhere in between. In all countries, this increase in efficiency was at least one and a half times the increase in efficiency at the level of the entire nation. For the U.S. it was as much as five times and for France it was more than three times the national increase in efficiency (Bakker 2004a).

Another noteworthy feature is that the labor productivity in entertainment varied less across countries in the late 1930s than it did in 1900. Part of the reason is that cinema technology made entertainment partially tradable and therefore forced productivity in similar directions in all countries; the tradable part of the entertainment industry would now exert competitive pressure on the non-tradable part (Bakker 2004a). It is therefore not surprising that cinema caused the lowest efficiency increase in Britain, which had already a well-developed and competitive entertainment industry (with the highest labor and capital productivity both in 1900 and in 1938) and higher efficiency increases in the U.S. and to a lesser extent in France, which had less well-developed entertainment industries in 1900.

Another way to measure the contribution of film technology to the economy in the late 1930s is by using a social savings methodology. If we assume that cinema did not exist and all demand for entertainment (measured in spectator-hours) would have to be met by live entertainment, we can calculate the extra costs to society and thus the amount saved by film technology. In the U.S., these social savings amounted to as much as 2.2 percent ($2.5 billion) of GDP, in France to just 1.4 percent ($0.16 billion) and in Britain to only 0.3 percent ($0.07 billion) of GDP.

A third and different way to look at the contribution of film technology to the economy is to look at the consumer surplus generated by cinema. Contrary to the TFP and social savings techniques used above, which assume that cinema is a substitute for live entertainment, this approach assumes that cinema is a wholly new good and that therefore the entire consumer surplus generated by it is ‘new’ and would not have existed without cinema. For an individual consumer, the surplus is the difference between the price she was willing to pay and the ticket she actually paid. This difference varies from consumer to consumer, but with econometric techniques, one can estimate the sum of individual surpluses for an entire country. The resulting national consumer surpluses for entertainment varied from about a fifth of total entertainment expenditure in the U.S., to about half in Britain and as much as three quarters in France.

All the measures show that by the late 1930s cinema was making an essential contribution in increasing total welfare as well as the entertainment industry’s productivity.

Vertical Disintegration

After the Second World War, the Hollywood film industry disintegrated: production, distribution and exhibition became separate activities that were not always owned by the same organization. Three main causes brought about the vertical disintegration. First, the U.S. Supreme Court forced the studios to divest their cinema chains in 1948. Second, changes in the social-demographic structure in the U.S. brought about a shift towards entertainment within the home: many young couples started to live in the new suburbs and wanted to stay home for entertainment. Initially, they mainly used radio for this purpose and later they switched to television (Gomery 1985). Third, television broadcasting in itself (without the social-demographic changes that increased demand for it) constituted a new distribution channel for audiovisual entertainment and thus decreased the scarcity of distribution capacity. This meant that television took over the focus on the lowest common denominator from radio and cinema, while the latter two differentiated their output and started to focus more on specific market segments.

Figure 5

Real Cinema Box Office Revenue, Real Ticket Price and Number of Screens in the U.S., 1945-2002

Note: The values are in dollars of 2002, using the EH.Net consumer price deflator.

Source: Adapted from Vogel 2004 and Robertson 2001.

The consequence was a sharp fall in real box office revenue in the decade after the war (Figure 5). After the mid-1950s, real revenue stabilized, and remained the same, with some fluctuations, until the mid-1990s. The decline in screens was more limited. After 1963 the number of screens increased again steadily to reach nearly twice the 1945 level in the 1990s. Since the 1990s there have been more movie screens in the U.S. than ever before. The proliferation of screens, coinciding with declining capacity per screen, facilitated market segmentation. Revenue per screen nearly halved in the decade after the war, then made a rebound during the 1960s, to start a long and steady decline from 1970 onwards. The real price of a cinema ticket was quite stable until the 1960s, after which it more than doubled. Since the early 1970s, the price has been declining again and nowadays the real admission price is about what it was in 1965.

It was in this adverse post-war climate that the vertical disintegration unfolded. It took place at three levels. First (obviously) the Hollywood studios divested their cinema-chains. Second, they outsourced part of their film production and most of their production factors to independent companies. This meant that the Hollywood studios would only produce part of the films they distributed themselves, that they changed the long-term, seven-year contracts with star actors for per-film contracts and that they sold off part of their studio facilities to rent them back for individual films. Third, the Hollywood studios’ main business became film distribution and financing. They specialized in planning and assembling a portfolio of films, contracting and financing most of them and marketing and distributing them world-wide.

The developments had three important effects. First, production by a few large companies was replaced by production by many small flexibly specialized companies. Southern California became an industrial district for the film industry and harbored an intricate network of these businesses, from set design companies and costume makers, to special effects firms and equipment rental outfits (Storper and Christopherson 1989). Only at the level of distribution and financing did concentration remain high. Second, films became more differentiated and tailored to specific market segments; they were now aimed at a younger and more affluent audience. Third, the European film market gained in importance: because the social-demographic changes (suburbanization) and the advent of television happened somewhat later in Europe, the drop in cinema attendance also happened later there. The result was that the Hollywood off-shored a large chunk – at times over half – of their production to Europe in the 1960s. This was stimulated by lower European production costs, difficulties in repatriating foreign film revenues and by the vertical disintegration in California, which severed the studios’ ties with their production units and facilitated outside contracting.

European production companies could better adapt to changes in post-war demand because they were already flexibly specialized. The British film production industry, for example, had been fragmented almost from its emergence in the 1890s. In the late 1930s, distribution became concentrated, mainly through the efforts of J. Arthur Rank, while the production sector, a network of flexibly specialized companies in and around London, boomed. After the war, the drop in admissions followed the U.S. with about a ten year delay (Figure 6). The drop in the number of screens experienced the same lag, but was more severe: about two-third of British cinema screens disappeared, versus only one-third in the U.S. In France, after the First World War film production had disintegrated rapidly and chaotically into a network of numerous small companies, while a few large firms dominated distribution and production finance. The result was a burgeoning industry, actually one of the fastest growing French industries in the 1930s.

Figure 6

Admissions and Number of Screens in Britain, 1945-2005

Source: Screen Digest/Screen Finance/British Film Institute and Robertson 2001.

Several European companies attempted to (re-)enter international film distribution, such as Rank in the 1930s and 1950s, the International Film Finance Corporation in the 1960s, Gaumont in the 1970s, PolyGram in the 1970s and again in the 1990s, Cannon in the 1980s. All of them failed in terms of long-run survival, even if they made profits during some years. The only postwar entry strategy that was successful in terms of survival was the direct acquisition of a Hollywood studio (Bakker 2000).

The Come-Back of Hollywood

From the mid-1970s onwards, the Hollywood studios revived. The slide of box office revenue was brought to a standstill. Revenues were stabilized by the joint effect of seven different factors. First, the blockbuster movie increased cinema attendance. This movie was heavily marketed and supported by intensive television advertisement. Jaws was one of the first of these kind of movies and an enormous success. Second, the U.S. film industry received several kinds of tax breaks from the early 1970s onwards, which were kept in force until the mid-1980s, when Hollywood was in good shape again. Third, coinciding with the blockbuster movie and tax-breaks film budgets increased substantially, resulting in a higher perceived quality and higher quality difference with television, drawing more consumers into the cinema. Fourth, a rise in multiplex cinemas, cinemas with several screens, increased consumer choice and increased the appeal of cinema by offering more variety within a specific cinema, thus decreasing the difference with television in this respect. Fifth, one could argue that the process of flexible specialization of the California film industry was completed in the early 1970s, thus making the film industry ready to adapt more flexibly to changes in the market. MGM’s sale of its studio complex in 1970 marked the final ending of an era. Sixth, new income streams from video sales and rentals and cable television increased the revenues a high-quality film could generate. Seventh, European broadcasting deregulation increased the demand for films by television stations substantially.

From the 1990s onwards further growth was driven by newer markets in Eastern Europe and Asia. Film industries from outside the West also grew substantially, such as those of Japan, Hong Kong, India and China. At the same time, the European Union started a large scale subsidy program for its audiovisual film industry, with mixed economic effects. By 1997, ten years after the start of the program, a film made in the European Union cost 500,000 euros on average, was seventy to eighty percent state-financed, and grossed 800,000 euros world-wide, reaching an audience of 150,000 persons. In contrast, the average American film cost fifteen million euros, was nearly hundred percent privately financed, grossed 58 million euros, and reached 10.5 million persons (Dale 1997). This seventy-fold difference in performance is remarkable. Even when measured in gross return on investment or gross margin, the U.S. still had a fivefold and twofold lead over Europe, respectively.[1] In few other industries does such a pronounced difference exist.

During the 1990s, the film industry moved into television broadcasting. In Europe, broadcasters often co-funded small-scale boutique film production. In the U.S., the Hollywood studios started to merge with broadcasters. In the 1950s they had experienced difficulties with obtaining broadcasting licenses, because their reputation had been compromised by the antitrust actions. They had to wait for forty years before they could finally complete what they intended.[2] Disney, for example, bought the ABC network, Paramount’s owner Viacom bought CBS, and General Electric, owner of NBC, bought Universal. At the same time, the feature film industry was also becoming more connected to other entertainment industries, such as videogames, theme parks and musicals. With video game revenues now exceeding films’ box office revenues, it seems likely that feature films will simply be the flagship part of large entertainment supply system that will exploit the intellectual property in feature films in many different formats and markets.


The take-off of the film industry in the early twentieth century had been driven mainly by changes in demand. Cinema industrialized entertainment by standardizing it, automating it and making it tradable. After its early years, the industry experienced a quality race that led to increasing industrial concentration. Only later did geographical concentration take place, in Southern California. Cinema made a substantial contribution to productivity and total welfare, especially before television. After television, the industry experienced vertical disintegration, the flexible specialization of production, and a self-reinforcing process of increasing distribution channels and capacity as well as market growth. Cinema, then, was not only the first in a row of media industries that industrialized entertainment, but also the first in a series of international industries that industrialized services. The evolution of the film industry thus may give insight into technological change and its attendant welfare gains in many service industries to come.

Selected Bibliography

Allen, Robert C. Vaudeville and Film, 1895-1915. New York: Arno Press, 1980.

Bächlin, Peter, Der Film als Ware. Basel: Burg-Verlag, 1945.

Bakker, Gerben, “American Dreams: The European Film Industry from Dominance to Decline.” EUI Review (2000): 28-36.

Bakker, Gerben. “Stars and Stories: How Films Became Branded Products.” Enterprise and Society 2, no. 3 (2001a): 461-502.

Bakker, Gerben. Entertainment Industrialised: The Emergence of the International Film Industry, 1890-1940. Ph.D. dissertation, European University Institute, 2001b.

Bakker, Gerben. “Building Knowledge about the Consumer: The Emergence of Market Research in the Motion Picture Industry.” Business History 45, no. 1 (2003): 101-27.

Bakker, Gerben. “At the Origins of Increased Productivity Growth in Services: Productivity, Social Savings and the Consumer Surplus of the Film Industry, 1900-1938.” Working Papers in Economic History, No. 81, Department of Economic History, London School of Economics, 2004a.

Bakker, Gerben. “Selling French Films on Foreign Markets: The International Strategy of a Medium-Sized Film Company.” Enterprise and Society 5 (2004b): 45-76.

Bakker, Gerben. “The Decline and Fall of the European Film Industry: Sunk Costs, Market Size and Market Structure, 1895-1926.” Economic History Review 58, no. 2 (2005): 311-52.

Caves, Richard E. Creative Industries: Contracts between Art and Commerce. Cambridge, MA: Harvard University Press, 2000.

Christopherson, Susan, and Michael Storper. “Flexible Specialization and Regional Agglomerations: The Case of the U.S. Motion Picture Industry.” Annals of the Association of American Geographers 77, no. 1 (1987).

Christopherson, Susan, and Michael Storper. “The Effects of Flexible Specialization on Industrial Politics and the Labor Market: The Motion Picture Industry.” Industrial and Labor Relations Review 42, no. 3 (1989): 331-47.

Gomery, Douglas, The Coming of Sound to the American Cinema: A History of the Transformation of an Industry. Ph.D. dissertation, University of Wisconsin, 1975.

Gomery, Douglas, “The Coming of television and the ‘Lost’ Motion Picture Audience.” Journal of Film and Video 37, no. 3 (1985): 5-11.

Gomery, Douglas. The Hollywood Studio System. London: MacMillan/British Film Institute, 1986; reprinted 2005.

Kraft, James P. Stage to Studio: Musicians and the Sound Revolution, 1890-1950. Baltimore: Johns Hopkins University Press, 1996.

Krugman, Paul R., and Maurice Obstfeld, International Economics: Theory and Policy (sixth edition). Reading, MA: Addison-Wesley, 2003.

Low, Rachael, and Roger Manvell, The History of the British Film, 1896-1906. London, George Allen & Unwin, 1948.

Michaelis, Anthony R. “The Photographic Arts: Cinematography.” In A History of Technology, Vol. V: The Late Nineteenth Century, c. 1850 to c. 1900, edited by Charles Singer, 734-51. Oxford, Clarendon Press, 1958, reprint 1980.

Mokyr, Joel. The Lever of Riches: Technological Creativity and Economic Progress. Oxford: Oxford University Press, 1990.

Musser, Charles. The Emergence of Cinema: The American Screen to 1907. The History of American Cinema, Vol. I. New York: Scribner, 1990.

Sedgwick, John, “Product Differentiation at the Movies: Hollywood, 1946-65.” Journal of Economic History 63 (2002): 676-705.

Sedgwick, John, and Michael Pokorny. “The Film Business in Britain and the United States during the 1930s.” Economic History Review 57, no. 1 (2005): 79-112.

Sedgwick, John, and Mike Pokorny, editors. An Economic History of Film. London: Routledge, 2004.

Thompson, Kristin.. Exporting Entertainment: America in the World Film Market, 1907-1934. London: British Film Institute, 1985.

Vogel, Harold L. Entertainment Industry Economics: A Guide for Financial Analysis. Cambridge: Cambridge University Press, Sixth Edition, 2004.

Gerben Bakker may be contacted at gbakker at

[1] Gross return on investment, disregarding interest costs and distribution charges was 60 percent for European vs. 287 percent for U.S. films. Gross margin was 37 percent for European vs. 74 percent for U.S. films. Costs per viewer are 3.33 vs. 1.43 euros, revenues per viewer are 5.30 vs. 5.52 euros.

[2] The author is indebted to Douglas Gomery for this point.

Citation: Bakker, Gerben. “The Economic History of the International Film Industry”. EH.Net Encyclopedia, edited by Robert Whaples. February 10, 2008. URL

The Bus Industry in the United States

Margaret Walsh, University of Nottingham

Despite its importance to everyday life, historians have paid surprisingly little attention to modern road transportation. There have been some valuable studies of the automobile, its production and its impact on society and the economy. This article surveys the history of a branch of modern transportation that has been almost completely ignored — the history of motorized buses.

Missing from History

Why has there been such neglect? Part of the explanation lies in the image problem. As the slowest form of motorized transportation and as the cheapest form of public transportation buses have, since the middle of the twentieth century, been perceived as the option of those who cannot afford to travel by car, train or plane. They have thus become associated with the young, the elderly, the poor, minority groups and women. Historians have avoided contact with bus history as they have avoided contact with bus travel. They have preferred to pay attention to trains and rail companies especially those of the nineteenth century. Particularly in the United States where rail service has become geographically very limited an ethos of pathos and romance is still associated with the ‘Iron Horse.’ Indeed there is an inverse relationship between the extent of academic and enthusiast knowledge and the use of modes of transportation. But perhaps of equal importance in encouraging rail and air travel research and writing is the maintenance of business records. These materials have been made available in either public or company depositories and they offer ample evidence to write splendid volumes, whether as corporate histories or as general interest reading. Bus records have not been easily accessible. Neither of the two major American bus carriers, Greyhound and Trailways, has an available corporate archive. Their historical materials deposited elsewhere have been scattered and haphazard. Other company archives are few in numbers and thin in volume. Bus information seems to be as scarce as bus passengers in recent times. Nevertheless enough materials do exist to demonstrate that the long-distance bus industry has offered a useful service and deserves to have its place in the nation’s history recognized.

The statistics on intercity passenger services provide the framework for understanding the growth and position of the motor bus in the United States. In 1910 railroad statistics were the only figures worthy of note. With 240,631 miles of rail track in operation trains provided a network capable of bringing the nation together. In the second decade of the twentieth century, however, the automobile, now being mass-produced, became more readily available and in the 1920s it became popular with one car per 6.6 persons. Then two other motor vehicles, the bus and the truck emerged in their own right and even the plane offered some pioneering passenger trips. As Table 1 documents, by 1929 when figures for the distribution of intercity travel become available, the train had already lost out to the auto, though it retained its dominance as a public carrier. For most of the remainder of the century, except for the gasoline shortages during the Second World War, the private automobile accounted for over eighty percent of domestic intercity travel.

Table 1


Intercity Travel in the United States by Mode

(Billions of Passenger Miles, 1929-1999)



Year Amount % Amount % Amount % Amount % Amount % Amount % Amount % Amount %
1929 216.0 100 175.0 81.0 175.0 81.0 - - 40.9 18.9 7.1 3.3 32.5 15.0 - -
1934 219.0 100 191.0 87.2 191.0 87.2 - - 27.5 12.6 7.4 3.4 18.8 8.6 0.2 0.1
1939 309.5 100 275.5 89.0 275.4 89.0 0.1 - 34.0 11.0 9.5 3.1 23.7 7.7 0.8 0.3
1944 309.3 100 181.4 58.6 181.4 58.6 - - 127.9 41.4 27.3 8.8 97.7 31.6 2.9 0.9
1949 478.0 100 410.2 85.8 409.4 85.6 0.8 0.2 67.8 14.2 24.0 5.0 36.0 7.5 7.8 1.6
1954 668.2 100 598.5 89.6 597.1 89.4 1.4 0.2 69.7 10.4 22.0 3.3 29.5 4.4 18.2 2.7
1959 762.8 100 689.5 90.4 687.4 90.1 2.1 0.3 73.3 9.6 20.4 2.7 22.4 2.9 30.5 4.0
1964 892.7 100 805.5 90.2 801.8 89.8 3.7 0.4 87.2 9.8 23.3 2.6 18.4 2.1 45.5 5.1
1969 1134.1 100 985.8 86.9 977.0 86.1 8.8 0.8 148.3 13.1 24.9 2.2 12.3 1.1 111.1 9.8
1974 1306.7 100 1133.1 86.7 1121.9 85.9 11.2 0.9 173.6 13.3 27.7 2.1 10.5 0.8 135.4 10.4
1979 1511.8 100 1259.8 83.3 1244.3 82.3 15.5 1.0 252.0 16.7 27.7 1.8 11.6 0.8 212.7 14.1
1984 1576.5 100 1290.4 81.9 1277.4 81.0 13.0 0.8 286.1 18.2 24.6 1.6 10.8 0.7 250.7 15.9
1989 1936.0 100 1563.9 80.8 1550.8 80.1 13.1 0.7 372.3 19.2 24.0 1.2 13.1 0.7 335.2 17.3
1994 2065.0 100 1634.6 79.2 1624.8 78.7 9.8 0.5 430.4 20.9 28.1 1.4 13.9 0.7 388.4 18.8
1999 2400.2 100 1863.4 77.6 1849.9 77.1 13.5 0.6 536.8 22.3 34.7 1.4 14.2 0.6 487.9 20.3

Sources: National Association of Motor Bus Operators. Bus Facts. 1966, pp. 6, 8; F. A. Smith, Transportation in America: Historical Compendium, 1939-1985. Washington DC: Eno Foundation for Transportation, 1986, p. 12; F. A. Smith, Transportation in America: A Statistical Analysis of Transportation in the United States. Washington DC: Eno Foundation for Transportation, 1990, p. 7; and Rosalyn A. Wilson, Transportation in America: Statistical Analysis of Transportation in the United States, eighteenth edition, with Historical Compendium, 1939-1999. Washington, DC: Eno Transportation Foundation, 2001, pp. 14-15.

(1) Percentages do not always sum to 100 because of rounding up.

(2) Early figures take count of waterways as well as railroads, buses and airlines.

Although intercity bus travel climbed from nothing to over seven billion passenger miles in 1929, it was always the choice of a relatively small number of people. Following modest growth in the 1930s, ridership soared during World War II, peaking just above 27 billion passenger miles and attaining its highest-ever share of the market. After World War II, as intercity rail ridership plummeted, intercity bus ridership dropped by much less. Measured in billions of passenger miles, bus ridership plateaued in the last half of the twentieth century at a level close to its World War II peak. However, its share of the market continued to fall, decade by decade. From the 1960s the faster and more comfortable jet plane offered better options for the long-distance traveler, but most Americans still chose to travel by land in their own automobiles.

No particular date marks the beginning of the American intercity or long-distance bus industry because so many individuals were attracted to it at a similar time when they perceived that they could make a profit by carrying fare-paying passengers over public highways. Early records suggest bus travel developed from being an adventure into a realistic business proposition in the second decade of the twentieth century when countless entrepreneurs scattered throughout the nation operated local services using automobile sedans, frequently known as ‘jitneys.’ Encouraged by their successes, ambitious pioneers in the 1920s developed longer networks either by connecting their routes with those of like-minded entrepreneurs or by buying out their rivals. They then needed to acquire larger, more comfortable and more reliable vehicles and to meet the requirements of state governments who imposed regulations for safety, competition, financing road construction and accounting procedures. Competition from the railroads threatened the well being of promising bus companies. Some railroads decided to run subsidiary bus operations in the hope of squeezing out motor carriers. Others preferred to attack bus entrepreneurs through a propaganda campaign claiming that buses were competing unfairly because they did not pay sufficient taxes for road use. Bus owners fought back, both verbally and practically. Those who had gained enough experience and expertise to organize their firms systematically took advantage of the flexibility of their vehicles that did not run on fixed tracks and of the lower running costs of coaches to provide a cheaper service. By the late 1920s regional bus lines were visible and the possibility of national lines suggested increased prospects.

The Impact of the Great Depression

The onset of the Great Depression, however, brought painful changes to this adolescent service sector. Many small carriers went out of business when passengers and ticket sales declined as unemployment grew and most Americans could not afford to travel. The larger companies, experiencing both a cash flow and capital shortage had to reorganize their financial and administrative structures and had to ensure system-wide economies in order to survive. The travails of the only burgeoning national enterprise, Greyhound, are instructive of the difficulties faced. Much of the corporation’s rapid expansion in the late 1920s had been financed by short-term loans, which could not be repaid as income fell. Two re-capitalization schemes in 1930 and in 1933 were essential to meet current obligations. These involved loans from banks, negotiations with General Motors and a re-floatation of shares. The corporation then took constructive as well as defensive action. It rationalized its divisional structure to become more competitive and continued to spend heavily on advertising and other media promotions. The strenuous efforts paid off and Greyhound not only survived, but also gained in market strength. Smaller firms with less credibility and credit worthiness struggled to remain solvent and were unable to expand while the disposable incomes of Americans remained low.

Federal Government Legislation

The federal government had expressed concern about the extent and shape of the developing long-distance bus industry before the Great Depression shattered the national economy. Starting in 1925 a series of forty bills calling for the regulation of motor passenger carriers came before Congress. Congressional hearings and two major investigations by the Interstate Commerce Commission (ICC) of the motor transport industry, in 1928 and 1932, made other suggestions for legislation, as did the Federal Coordinator of Transportation. But legislators felt under pressure from varied interest groups and were uncertain how to proceed. Emergency and short-term solutions came in the shape of the bus code of the National Industrial Recovery Act (NIRA) of 1933. But dissatisfaction with the code and the Supreme Court’s judgement about the unconstitutionality of the NIRA (1935) rallied support for specific legislation. The ensuing Motor Carrier Act (MCA) of 1935 entitled existing carriers to receive operating permits on filing applications and granted certificates to other firms only after an investigation or hearing which established that their business was in the public interest. Certificates could be suspended, changed or revoked. All interstate bus operators now had to conform to regulations governing safety, finance, insurance, accounting and records and they were required to consult the government over any rate changes.

Under the new regulations of the MCA competition between long-distance operators was limited. Existing companies who had filed for permits protested against applications from new competitors on their routes. If it was established that services were adequate and traffic was light, new applications were often turned down. The general thrust of the new policy supported larger companies, which more easily met federal government standards. The Greyhound Corporation, with its structure reorganized and already providing a national service, held a virtual monopoly of long-distance service in parts of the country. The administrative agency, the Motor Carrier Bureau (MCB) was well aware of both the potential abuse of monopoly power and the economies of scale achievable by larger operations. It thus encouraged an amalgamation of independent carriers to form a new nationwide system, National Trailways. Ironically this form of competition, which was officially encouraged in the bus industry, created a duopoly in many markets because most other operators were small companies that conducted much of their business in short-haul suburban and intra-regional transport. Influenced by historic concerns about regulating the railroads, the government had created a new public policy that insisted on competition within an industry even though that competition favored a small number of large firms. And even more ironically by the mid 1930s competition among different modes of transportation meant that there was little constructive thought given to a new national transportation policy that might coordinate these modes efficiently and effectively to use their natural advantages to best public effect.

For Better or Worse in the Second World War

War brought expansion to the bus industry, but under stressful conditions and with consequences that would have long-term implications. The need to carry both civilians and troops, combined with gasoline, rubber and parts shortages, forced Americans to move from their automobiles and onto public transportation. New records were set for passenger transportation. Seats were filled to capacity, with standing room only. Long-distance bus passenger miles doubled from 13.6 billion in 1941 to 26.9 billion in 1945. This business was not achieved in a free market. A wartime administrative bureau, the Office of Defense Transportation (ODT) created in December 1941 managed traffic flows throughout the war. It used relatively simple devices such as the rationing of parts, rubber allocation, speed limits, fuel control and the restriction of non-essential services to distribute scarce resources among transportation systems. Assisted by trade associations like the National Association of Motor Bus Operators (NAMBO), the ODT issued directives encouraging full capacity use and rational use of passenger operations.

Though bus companies abandoned competition with each other and with their long-standing rival, the railroads, they were unable to gain long-term benefits from their patriotic efforts to help win the war. Earnings rose, but it was impossible to invest part or all of these into the industry because of government curtailment of vehicle production and building construction activity. Hence buses were kept in service beyond their normal life expectancy and terminals were neither improved nor renovated. Speed limits of thirty-five miles per hour, imposed in 1942, created longer man-hours for drivers and lengthened journeys for passengers, already frustrated and tired by waiting in crowded terminals. Despite the industry’s wartime propaganda exhorting Americans either not to travel or to do so at off-peak times and to be patient for the good of the country, the unfavorable impressions of inconvenience and discomfort of traveling by bus remained with many patrons.

Emerging from the wartime conditions, bus managers considered that they could build on their increased business provided that they could both invest in new vehicles and buildings and could persuade Americans that buses offered many advantages over automobiles for long-distance travel. They were essentially optimistic about the future of their business. But they had not reckoned on either post-war inflation or on a lengthy federal government inquiry into the conduct of the industry. Funds accumulated during the war had been earmarked for investment in a variety of terminals and garages and for replacing and increasing rolling stock. New vehicles were ordered as soon as wartime restrictions were lifted, but not only were there delays in delivery due to shortages of materials and strikes in production plants, but these cost more than had been anticipated. The abandonment of effective wartime controls in 1946 brought rapid increases in prices and rents as consumers with huge pent-up savings chased scarce goods and housing. Older buses, which would typically have been retired, were retained. The double burden of depreciation charges of both new buses and restyled buses delayed the acquisition of more modern cruiser-type vehicles until the early 1950s. The normal investment in buildings was also held in check.

Post-war financial adjustments alone were not responsible for the slow progress towards modernization. The federal government inadvertently delayed infrastructure developments. The ICC was worried about the honest, efficient and cost-effective management of the intercity bus industry, its profit margins during and after the war and the lack of uniform bus fares. In July 1946 the agency instigated a comprehensive investigation of bus fares and charges in order to establish a fair national rate structure. The hearings concluded that the industry had conducted its affairs justly and that variations in fares were a result of local and regional conditions. In the future profit margins were to be established through a standard operating ratio, taken as the ratio of operating expenses to operating revenues. Bus operators were thus given a clean bill of health and a rate structure that suggested success in a competitive inter-modal marketplace. But the hearings were very lengthy, lasting until December 1949. During these years bus operators hesitated to take major decisions about future expansion. State governments also contributed to this climate of uncertainty. Multiple state registration fees and fuel taxes for vehicles crossing state boundaries increased both running and administrative costs for companies. Furthermore the lack of uniform size and weight limitations on vehicles between states had a negative influence on the selection of larger and more economical coaches and delayed the process of modernizing bus fleets. Entrepreneurs faced unusual problems in the post-war years, at a time when they needed to be forceful and dynamic.

These structural problems dominated bus company discussions at the expense of developing improved customer relations. Certainly time, effort and money were put into a vigorous advertising campaign telling the public that buses were available for both regular service and leisure time activities. The latter offered great potential as people had money in their pockets and desired recreation and entertainment. Advertisements emphasized the reliability, safety, flexibility and comfort of bus journeys while bus company employees were exhorted to develop a reputation for courtesy. But more proactive efforts were needed if new and old clients were to get on and stay on buses. The 25.8 million car registrations of 1945 had become 40.5 million by 1950 and then increased again to 52.1million in 1955. The United States had achieved mass ownership and automobility. The federal government encouraged this personal mobility by promoting the construction of interstate highways in the Federal-Aid Highway Act (Interstate Highways Act) of 1956. Certainly buses also benefited from new high-speed roads, but increasingly the private automobile won the contest for short-distance travel under four hundred miles. Americans preferred to drive themselves whether or not the total cost of personal travel was higher than that of public transport. They valued the convenience of their own vehicles and as more became suburban dwellers they were unwilling to go to bus terminals, often located in downtown city centers.

What could bus operators do to either conserve their position as passenger carriers or to advance this position? Efforts to improve management and internal company restructuring offered some possibilities while new publicity campaigns suggested other avenues for progress. The Greyhound Corporation, as the industry’s largest operator took the lead in adopting a modern professional appearance. In the mid 1950s it sought to raise efficiency by reducing divisional groupings from thirteen to seven, thereby making more effective use of equipment, procedures and personnel. Managers and mechanics now had to undergo systematic training, whether at business schools or in engineering technologies. Theoretical learning was a necessary complement to practical experience. But these administrative changes were insufficient by themselves. Increased trade was sought in transport-related outlets, for example, in carrying small freight and mail, in developing van lines and car rentals and in making connections with airlines to offer surface travel. The closure of many railroad routes offered opportunities to seize their business while road improvements and expansion created the possibility of new business. Yet more openings were envisaged as Greyhound and its major rival, Trailways, participated in the conglomerate movement. Greyhound, for example, not only ventured into bus and auxiliary transport services, but also moved into financial, food, consumer, pharmaceutical, equipment leasing and general activities. Trailways diversified into real estate, accident insurance, restaurants, car parking and ocean cargo shipping operations. The aim was to realize substantial benefits through exchange of clients and economies of scale.

The bus industry also adopted a fresh approach to consumer relations in the late 1950s and the 1960s. Again the Greyhound Corporation led the way. Its new advertising agency, Grey Advertising, developed a novel and long-lasting campaign using a real dog, ‘Lady Greyhound,’ rather than the traditional silhouette in bus publicity. The corporation was able to portray ‘Lady Greyhound’ as a caring and sharing personality as she gave press and radio ‘interviews,’ opened bus stations, civic events and charity functions and replied to the members of her fan club. The implications were that Greyhound and the bus industry were equally concerned ‘people.’ Greyhound also became the official bus line in the annual contest to find Mrs. America, a contest that emphasized homemaking skills. This promotion was clearly an effort to appeal to women who comprised the majority of the bus industry’s passengers. More dramatic was the contemporary 1960s campaign to attract the young, foreign visitors, those who did not drive and the poorer groups in society. ‘Go Greyhound and Leave the Driving to Us’ and the offer of up to ninety-nine days bus travel for $99.00 were attractive proposals. By now the bus industry was differentiating among its clients. There was a market for regular route travel among those who did not have access to an automobile or who preferred not to drive. This market could be increased as a result of specific offers if these were well publicized. There was also a potential market for specialized travel in the leisure sector. While middle-class Americans might not want to experience the inconvenience of scheduled journeys, they could be persuaded to charter a bus for special trips, for example, outings by the church choir and the youth club or to sports events and art galleries. They could also be persuaded to join a tour group, as the price of the vacation would ensure like-minded and similarly well-off company. Indeed charter and special services’ income rose during the 1960s.

Not all passengers chose the national bus lines. Indeed there was considerable variety among American bus companies. In some ways smaller companies felt at a disadvantage, but in other ways they clearly won out. Regional operatives, like Jefferson Lines in the Midwest or Peter Pan in New England and New York State remained primarily in transportation services. They operated regular routes on an interstate basis, with charter and special services providing important financial returns. Their durability in business was related to their local reputation for service and their standing, which they were able to exploit. Local companies like Badger Coaches in Madison and Milwaukee, Wisconsin or Wolf’s Bus Line of York Spring, Pennsylvania frequently relied on charter and special work, often within a two hundred mile radius. When they ran regular services, these were on intrastate routes. They frequently filled the gaps left by their larger counterparts. The bus industry was diversified.

The bus industry in the United States had always offered its services to a minority of the traveling public, but by the 1960s it had settled on catering to a smaller proportion of the nation’s travelers. For the rest of the century it would struggle to retain these customers. More people took the bus than took the train because the bus, as a flexible and relatively low cost vehicle, was able to serve more urban and rural communities and to serve them economically. But in an era which was punctuated by economic crises and rising energy prices, the federal government first intervened to protect a special interest group and then stepped out of managing transportation policy in the public interest concerns of communal values and social infrastructure. Though never acting consistently, it became more susceptible to the economic concerns of free market competition and the personal concerns of Americans as individuals. The bus industry thus faced serious problems in its efforts to provide a well-run and effective service in a nation dominated by automobile owners and air travelers.

By the 1970s the economic difficulties faced by buses and more urgently by trains resulted in public investigations. The crisis in public ground transportation emerged first on the railroads because freight had been cross subsidizing passengers for years and the companies had withdrawn from unprofitable passenger services whenever possible. Pressured by an active rail lobby and concerned to ensure a minimum route network, Congress intervened with a subsidy in 1970 and created the National Rail Passenger Corporation, better known as Amtrak, to run passenger operations. Though train services improved continuing federal subsidies were required. Intercity bus operators were outraged both by the creation of Amtrak and the ensuing cheaper rail fares and complained about unfair competition throughout the decade. Their efforts to remain competitive with their long-standing rival, especially in the busy northeastern corridor of the United States, proved to be very tough and revenue from the large bus operators dropped. Losses, however, were not solely due to railroad activities. Airlines continued to enlarge their share of long-distance travel, stimulated by greater use of wide-bodied jet aircraft that increased speed and fostered a relative decline in the price gap between plane and bus fares. At the same time automobile ownership and use continued to grow with over a third of American households possessing two or more vehicles. Competition from both public and private modes of transport became very intense.

This competition, however, could not fully explain the plight of the American bus industry. The troubled economic conditions of the 1970s required organizational readjustments. In a period marked by high unemployment and high inflation rates the bus industry found that its receipts did not match its higher production costs. Higher labor costs, significant increases in fuel costs and mounting charges for new vehicles meant that bus companies were unable to finance their operations from their profits. Outside investment funds were needed. But these were slow to materialize because the bus industry was perceived to be in difficulties. Both the trade association, the American Bus Association (ABA) and the major carriers discussed possible solutions including cutting labor costs, finding methods of increasing productivity, promoting marketing drives — both for regular route and special services — and taking on more small freight business. But these efforts were of no avail if the industry as a whole lacked federal government backing. Any improvements made by carriers needed to fit into a national transportation infrastructure that recognized the value of bus services as the only source of public transport in some communities. Individual travel and transportation decisions might be considered to be private decisions but they had public value and consequences. Two main policies were possible in the 1970s, supporting the bus industry financially within the existing transportation structure or altering the framework to stimulate more bus competition and thus hope to create greater efficiency.

The bus industry initially favored government financial assistance as the way forward. In congressional hearings in 1977 bus delegates proposed a revitalization strategy that included capital grants, operating subsidies, tax concessions and regulatory reform aimed in particular at rate flexibility. The Surface Transportation Assistance Act (1978) authorized limited funds in the hope of some industry recovery. But this assistance had only a temporary impact in the late 1970s because by then many government representatives, their advisors, economists and business managers, were more interested in altering public policy to non-government intervention, whether in terms of management, grants or planning. In an era of conservative politics the mood of the country moved in favor of free market enterprise. Within a few years much of the nation’s transport was partially deregulated. In 1978 the Airline Deregulation Act gave airlines considerable freedom in pricing policies and in entry to and exit from routes. In 1980 both trucks and railroads were substantially deregulated. In 1982 it was the turn of the buses. The Bus Regulatory Reform Act of that year did not completely deregulate industry, but it did noticeably lessen governmental authority. Entry into business was liberalized, state regulations about exit from unprofitable routes were eased and price flexibility was granted on fares.

The long-distance bus industry now faced a highly competitive transportation environment. Not only did companies engage in price warfare over potentially profitable bus routes while abandoning marginal routes, but they also had to contest for passengers with the new low-cost deregulated airlines and for package freight with trucks. Companies made considerable efforts to adjust to the new conditions by lowering prices, improving facilities, especially terminals, investing in new coaches, making rural connections with independent feeder lines and in establishing computer systems to assist with ticketing and routing. Their most contentious adjustment came in the area of industrial relations. Here the larger operations ran into difficulties. Facing competition from smaller companies who had hired cheaper labor, they needed to negotiate wage reductions and new conditions with their unionized work force. In 1982 Trailways Lines agreed to a settlement with the American Transit Union (ATU) that froze wages at a level already considerably lower than that of Greyhound who then sought similar wage reductions. Resistance led to a seven-week strike in 1983. But the resulting settlement was relatively short-lived. Negotiations for a new driver’s contact broke down and ended in more strike action in 1990. Violence followed as the company hired replacement drivers and continued to operate its buses. The ensuing costs of countering the violence together with reduced income from services instigated a financial crisis. Greyhound filed for bankruptcy under Chapter 11 in June 1990 to re-order its affairs. The restructured corporation emerged as a smaller operation able to compete in the deregulated world of transportation.

In the 1990s the long-distance bus industry reshaped itself to cater to a variety of markets. Composed of hundreds of operators, ranging from large to small, but primarily small, it remained an essential, albeit minor, part of the United States’ transportation network. Motor coaches provided regular route services to some 4000 communities and had the capacity to serve all groups of people with their leisure, charter, small package, airport and commuter services. They were a vital ingredient to rural life and offered important intermodal links. Indeed for the country as a whole buses carried more commercial passengers than any of their transportation rivals. As a flexible and reasonably priced means of travel they found a niche catering to specific groups in society for scheduled routes and another niche for leisure activities. Though perceived to offer a secondary form of transportation, the bus industry in fact has provided and continues to provide crucial services for many Americans.

Crandall, Burton B. The Growth of the Intercity Bus Industry. Syracuse: Syracuse University, 1954.

Jackson, Carlton. Hounds of the Road: A History of the Greyhound Bus Company. Bowling Green, OH: Bowling Green University Popular Press, 1984.

Meier, Albert E. and John P. Hoschek. Over the Road. A History of Intercity Bus Transportation in the United States. Upper Montclair, NJ: Motor Bus Society, 1975.

Schisgall, Oscar. The Greyhound Story. From Hibbing to Everywhere. Chicago: J.C. Ferguson, 1985.

Taff, Charles A. Commercial Motor Transportation. Homewood, IL: Richard D. Irving Inc., 1951; 7th edition, Centreville, MD: Cornell Maritime Press, 1986.

Thompson, Gregory L. The Passenger Train in the Motor Age. California’s Rail and Bus Industries, 1910-1941. Columbus: Ohio State University Press, 1993.

Walsh, Margaret. Making Connections. The Long-Distance Bus Industry in the USA . Aldershot, UK: Ashgate Publishing, 2000.

Citation: Walsh, Margaret. “The Bus Industry in the United States”. EH.Net Encyclopedia, edited by Robert Whaples. January 27, 2003. URL

Pushing the Envelope: The American Aircraft Industry

Author(s):Pattillo, Donald M.
Reviewer(s):Dawson, Virginia P.

Published by EH.NET (March 1999)

Donald M. Pattillo, Pushing the Envelope: The American Aircraft


Ann Arbor, Michigan: University of Michigan Press, 1998. 459 pp. $45.00

(hardcover), ISBN: 0-472-10869-7.

Reviewed for EH.NET by Virginia P. Dawson, History Enterprises, Inc.,

Cleveland, OH.

Pushing the Envelope by Donald Pattillo is the

first comprehensive history of an industry not quite one hundred years old. Dr.

Pattillo is an educational consultant in Acworth, Georgia, who has spent many

years delving into primary sources and piecing together this intriguing,

convoluted and sometimes

unheroic story. To Pattillo, the “aviation men”

who built this industry were not short-sighted financiers, but risk-takers

willing to invest in innovation. Unlike the automobile industry it is often

compared to, the dependence of the aerospace industry on government

contracting, especially during the Cold War, left it insulated from market

forces and vulnerable to abuses triggered by human greed.

One of the main themes of the Pattillo’s book is how government support

influenced aircraft development during various periods of aviation history.

Pattillo discusses how in the industry’s early years, while European

governments seemed to understand the military significance to the Wright

brothers’ invention, their efforts were viewed with skepticism and indifference

in America. Capital was hard to come by for all the early pioneers of

flight. Glenn L. Martin, for example, used a flair for showmanship to build a

public following and sell aircraft to wealthy sportsmen. Even friendship with

Billy Mitchell could not assure him of military orders. Nevertheless,

government procurement and airmail contracts kept the fledgling industry alive

until Charles Lindbergh’s historic trans-Atlantic flight in 1927. The aviation

boom carried the industry through the Great Depression giving rise to new

firms and the emergence of the modern all-metal airliner. Up to 1938, however,

the aircraft industry as a whole was still small, with barely enough domestic

orders to stay viable.

All that would change with the coming of World War II when rapid expansion

made aircraft among the nation’s largest manufacturing industries.

Thereafter it remained an essential element of the defense establishment.

Pattillo regards the decade of the 1950s as among the most “exciting and

fruitful” for the industry–a decade when new models, the transition to jet

propulsion, and missile development reflected a “pace of progress” unequalled

in the history of the industry (p. 199).

The final chapters of the book are in many ways the most enlightening because

they break new historical ground. Pattillo discusses the difficulties and

abuses of defense procurement in the new aerospace industry during the Cold

War. “The inherent dilemma,” he writes, “was that contractors were financially

dependent upon government, while the government remained technologically

dependent upon a concentrated industry”

(p. 247). By the late 1960s the aerospace industry was the nation’s largest

employer, with 834,000 people directly involved in building aircraft.

However, it remained a highly competitive oligopoly, always dependent on the

government for survival. Profits were never high, the financial risks daunting,

and the opportunities for graft and corruption often irresistible.

The value of Pattillo’s work for historians of business is the synthesis that

he has produced. He provides the reader with the sweep of the development of

the industry from its beginning to the present. He has avoided technical

language while paying attention to technology, treated the financial aspects

without excessive detail, and has produced a balanced and critical commentary

on some of the more unsavory aspects of the industry. In addition to Pattillo’s

fine research and strong writing style,

the numerous tables throughout the book, along with a detailed chronology of

the aircraft industry make the book a valuable resource tool. It should be

required reading for all students of aerospace industry.

(Virginia P. Dawson is the founder of History Enterprises, Inc. She is author

of Engines and Innovation: Lewis Laboratory and American Propulsion

Technology and “E.G. Bailey and the Invention and Marketing of the Bailey

Boiler Meter,” in Technology and Culture (1996). She is currently

working on a book on a history of the Centaur program for NASA with co-author

and colleague, Mark D. Bowles.)

Subject(s):Industry: Manufacturing and Construction
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

Owens Valley Revisited: A Reassessment of the West’s First Great Water Transfer

Author(s):Libecap, Gary D.
Reviewer(s):Kanazawa, Mark

Published by EH.NET (March 2008)

Gary D. Libecap, Owens Valley Revisited: A Reassessment of the West’s First Great Water Transfer. Stanford, CA: Stanford University Press, 2007. vii + 209 pp. $65 (cloth), ISBN: 978-0-8047-5379-1.

Reviewed for EH.NET by Mark Kanazawa, Department of Economics, Carleton College.

Gary Libecap has had a long and distinguished career as one of our foremost economic historians working in the area of natural resources. Part of Libecap’s richly-deserved reputation derives from his uncanny ability to identify important resource topics surrounded by popular myths, and to perform careful analysis based upon hard data, to explode those myths. Thanks to Libecap’s research, we understand timber policy, oil and gas management, deforestation in the Amazon River basin, and the Dust Bowl ? to name only a few ? much better than we did pre-Libecap. In his latest book Owens Valley Revisited, Libecap takes on one of the most enduring myths in western water history ? the famous (or infamous, depending upon your point of view) transfer of water from Owens Valley to Los Angeles that occurred in the early part of the twentieth century. This particular myth holds enormous sway among water historians (which the average economic historian might be surprised to hear is a pretty sizable group), and continues to hold sway in the popular imagination thanks in part to its retelling in popular histories such as Marc Reisner’s Cadillac Desert and its popularization in movies such as Roman Polanski’s Chinatown.

In Owens Valley Revisited, Libecap refuses to fall under the popular sway. Rather, as in everything he does, he tries to get to the factual bottom of things by carefully marshalling theory and evidence to tell the most compelling story he can. The result is impressive: using extensive archival data, Libecap manages to convincingly demonstrate that the popular “rape and pillage” myth surrounding Owens Valley is in actuality much more complicated than generally perceived. The more compelling story that Libecap documents, and one that economists in general will find much more satisfying, is not one in which water was stolen in the middle of the night. Rather, Los Angeles and Owens Valley farmers engaged in a complex set of strategies and negotiations over the division of the surplus from use of Owens Valley water. The ability of Los Angeles to extract surplus ? and they did manage to extract quite a bit ? depended in large part on their monopsony status in the market for the water, given transactions costs that often (but not always!) impeded successful organizing by the Owens Valley farmers. And in the end, it all mattered little: Owens Valley was not reduced to a wasteland because of the diversion of its water to Los Angeles. Irrigated farming was likely not to last much longer in Owens Valley in any case and the diversion only had the effect of nudging the local economy towards grazing, which was much better suited to local conditions – all of which Libecap documents in the first two-thirds of the book with careful argumentation, data, and statistical analysis.

The remainder of the book gives a brief account of what happened afterwards, as Los Angeles continued to buy up land in Owens Valley and expanded and consolidated its water diversion system to send more water south to Los Angeles. Water deliveries gradually increased over time, and then jumped in 1970 when a second aqueduct to Los Angeles was completed. 1970 is, of course, a year that is quite familiar to environmental historians, a year known for the first Earth Day and the passage of the Clean Air Act, a year considered by many to be when the modern environmental movement was born. The expanded environmental consciousness also played out in the post-1970 struggle over diversions from Owens Valley and the neighboring Mono Basin that imposed new environmental consequences including the famous desiccation of Mono Lake and gave rise to litigation to fight the diversions ? none of which is completely new to water historians or legal scholars. Libecap, however, takes the occasion to reinforce a central message of his book; namely, the desirability of (more) freely operating water transfers. Far better, he argues, to allow Los Angeles and Mono/Owens interests to sit down and negotiate over division of the water resources than to engage in the contentious litigation that has plagued the ongoing struggle over the water for more than three decades. Far better than relying on the public trust doctrine to allocate the water, which weakened private rights and only increased the likelihood of contentious litigation.

Some economists will find the post-episode discussion, contained in chapters 6 though 8, a bit less satisfying than the earlier account and analysis of the episode itself. These arguments are not new, nor are they supported by data or new analysis. Libecap invokes arguments of impeccable economic pedigree, such as the danger of property rights attenuation under the public trust doctrine and the accompanying disincentives for investment. More satisfying, however, would be a more sophisticated treatment that went beyond what some might construe as (and I will say this way too strongly) blind free-market advocacy, and instead systematically considered factors such as transaction costs, litigation costs, rent dissipation, and interest group advocacy that have been stressed by legal scholars such as Carol Rose and Saul Levmore. The point is that just as the public trust doctrine is unlikely to work perfectly, neither is an unfettered market: under conditions that vary with regard to the above factors, each may have a role to play. There is no doubt in my mind that Libecap recognizes all this, and that the market orientation of the book is a conscious strategy to combat the “water is different” attitude that continues to pervade many discussions of western water. However, in my view scholars need to move beyond the black-and-white of current discussions of water markets and into the larger grey area where there is still a lot of work to be done.

None of these comments are to be interpreted as fatal criticism of this very fine book, in which Gary Libecap continues to cement his well-deserved reputation as one of our generation’s finest economic historians.

Mark Kanazawa (Department of Economics, Carleton College) is currently working on a book on the emergence of water rights during the California Gold Rush.

Subject(s):Urban and Regional History
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

On the Great Plains: Agriculture and Environment

Author(s):Cunfer, Geoff
Reviewer(s):Gregg, Matthew T.

Published by EH.NET (April 2006)

Geoff Cunfer, On the Great Plains: Agriculture and Environment. College Station, TX: Texas A&M University Press, 2005. xii + 292 pp. $28 (paperback), ISBN: 1-58544-401-4.

Reviewed by Matthew T. Gregg, Gabelli School of Business, Roger Williams University.

How have farmers in the Great Plains from the early settlement period (roughly 1870) to the present interacted with the natural world? Considering all the economic upheaval and environmental crises that have occurred over this time, can one feasibly characterize their agricultural practices as sustainable? If Great Plains agriculture can in fact be considered sustainable, has land use varied substantially over these 130 years? These evocative questions are tackled by Geoff Cunfer, associate professor at the Center for Rural and Regional Studies at Southwest Minnesota State University, in On the Great Plains. Though it may seem inconceivable to characterize the history of Great Plains land use as stable, Cunfer uncovers a persistent theme in his research: Great Plains farmers surprisingly found an optimal mix between agricultural uses (in particular, plowing vs. pasture) quickly and maintained this mix within the limits of the natural environment for a surprisingly long period of time. Only occasionally, in particular during the mid 1930s, did farmers push the boundaries of this regional environment; however, they quickly returned to a “steady-state” land-use equilibrium. Cunfer forms this thesis through the adoption of primary sources such as personal diaries and newspaper articles, but the bulk of his analysis relies on decennial county-level census data from 1870-2000 for the area spanning from North Dakota to the northern tip of Texas.

In terms of the historical literature on Great Plains agriculture, Cunfer provides a middle ground between the progressive and the declensionist approaches. Webb (1931) asserted the popular Turnerian claim that the physical endowments of the Great Plains forced farmers to adapt, which eventually led to the formation of a distinct and puissant regional culture. This view has been challenged by social historians like Worster (1979) whose declensionist narrative described Great Plains agriculture as an ecological failure with profit maximization as the leading culprit of over-cultivation. As discussed in the Introduction, Cunfer suggests a more suitable historical narrative should assimilate Malin’s (1944, 1946, 1961, 1984) work on Kansas agriculture which stressed farmers’ general ability to adapt and create innovative solutions to resource scarcity over time. In particular, Cunfer blends together these two extreme approaches and summarizes Great Plains agricultural history in three components: (1) the rapid build-up of farm settlements from 1870-1920, which substantially altered the surrounding environment; (2) relative land-use stability from 1920 to 2000; and (3) the occasional transition in agricultural techniques which resulted in a quick shift away from this land-use equilibrium.

One of Cunfer’s innovations to this literature is the use of publicly-available county-level census data for roughly 450 counties contained in ten states (MT, ND, SD, NE, WY, CO, KS, MN, OK, and TX) from 1870 to 2000. From these data, Cunfer finds some interesting statistical trends. For example, over 70 percent of this total area has never been plowed, as the peak occurred in 1978 when only 28 percent of available land was used for crops. In fact, this equilibrium (20 to 25 percent of the total area for cropland) between pasture and plowing was remarkable stable from 1925-1997 (see Table 2.2, p. 26). How was this possible? Despite the economic incentives built into federal government schemes such as the Homestead Act and farm subsidies, Cunfer concludes that environmental variables, in particular rainfall and to a weaker extent temperature and soil quality, were the driving force behind land-use decisions.

Along similar lines, Cunfer incorporates personal diaries from farmers in Rooks County, Kansas and Floyd County, Texas with a large-scale analysis of all 450 Great Plains counties to prove that crop diversity has changed little over the last one hundred years. By segmenting these farm data into acreage devoted to food, fiber, feed, forage, and pasture, Cunfer creates a crop diversity index with 1 representing the most diverse county to show that a crop diversity equilibrium (between 0.8 and 0.9) was reached in 1920s and persisted to the present. This stability in crop mixes was also consistent within this large region as the eastern boundary always maintained a higher degree of crop diversity than the sandier western counties. Given the diminishing farm population and increased governmental assistance programs, the lack of any regional trend towards monoculture is a surprising result. Perhaps more surprising is that no crop ever reached 5 percent of the total acreage in any county at any time (p. 111).

Besides crop diversity and land use, Cunfer addresses other land-use issues such as grazing, the substitution of tractors for horses, the Dust Bowl, and environmental problems like water scarcity and soil erosion. In short, Cunfer finds that water chiefly influenced the distribution of cattle across the grassland. Cunfer also finds that while initial tractor adoption was slow, tractor adoption became rapid after World War I and its adoption only marginally altered crop mixes across all these counties. However, unlike other land-use measures, the depletion of the Ogallala Aquifer and the resulting soil erosion does not fit in neatly with his stability thesis. However, Cunfer provides the classic optimistic assertion over the water scarcity problem: “Farmers will eventually use up their underground water supply and will then be pulled back within natural limits imposed by climate” (p. 200).

Yet, of these remaining chapters, economic historians will probably be most interested in Cunfer’s discussion of the Dust Bowl. The Dust Bowl still remains an important environmental crisis and it is often a rallying point for federal government conservation programs. Cunfer adds to this literature by applying GIS maps to the entire Great Plains and interpreting comparative sand, rainfall, and temperature differential data to conclude that “human land-use choices were less prominent in creating dust storms than was the weather” (p. 163).[1] The localized portion of the Great Plains where dust storms were magnified contained substantially more sandy soil, only a small percentage of land devoted for crops, and the greatest degree of rainfall deficits from past trends. This non-exploitative argument contradicts the conventional wisdom which maintains that a massive plow-up followed the trail of increasing wheat prices and low cost of farming.[2]

With any narrative that makes such sweeping conclusions, it is easy to find issue with certain points. Given Cunfer’s surprising results regarding land-use stability, one may question if county-level data are the best way to analyze land-use trends in Great Plains agriculture. It is commonly known that farm subsidies disproportionately benefit large farms and given the recent increase in regional poverty, an analysis that incorporates farm-level data may lead to a more behavioristic approach to changes in Great Plains agriculture. For example, Hansen and Libecap (2004) provide an alternative explanation for the Dust Bowl which is based on the inability of the great number of small-scaled farmers to coordinate and invest in soil erosion controls. Unfortunately, this conclusion can not be directly tested using Cunfer’s approach. Also, by looking at trends in county-level land use, this may in fact be a “back of the envelope” approach of assessing the sustainability of Great Plains agriculture. Land use was stable because the supply of fertile land was inelastic, yet is this evidence of sustainable farming practices? Maybe analyzing changes in farm sizes or better yet, changes in total factor productivity (a statistical measure not estimated by the author) at the farm-level can provide more direct evidence on the types of agricultural practices that are more sustainable.

Without the rigor of most cliometric analyses, economic historians may not be initially convinced of these conclusions; however, Cunfer does raise many important issues especially given the current emphasis on sustainability. This narrative is well-written and each topic is supported with statistical analyses and collaborative primary source documents. Certainly, for an overview of the history of land use in the Great Plains, this book is well-suited for both economic and social historians.

Notes: 1. This general result is consistent with recent work by NASA scientists (see Schubert et al. (2004)) who stimulated the impact of radical changes in sea surface temperatures on rainfall and wind levels on specific regions of the Great Plains. 2. This view is contained in Egan’s (2005) popular new book on the social history of the Dust Bowl.


Timothy Egan (2005). The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl. Boston: Houghton Mifflin

Zeynep K. Hansen and Gary D. Libecap (2004). “Small Farms, Externalities, and the Dust Bowl of the 1930s,” Journal of Political Economy 112: 665-94.

James C. Malin (1944). Winter Wheat in the Golden Belt of Kansas: A Study in Adaptation to Subhumid Geographical Environment. Lawrence: University of Kansas Press.

James C. Malin (1946). “Dust Storms, 1850-1900,” Kansas Historical Quarterly 14: 129-44, 265-96, 391-413.

James C. Malin (1946). Essays on Historiography. Ann Arbor: Edwards Brothers.

James C. Malin (1984). History and Ecology: Studies of the Grassland, edited by Robert P. Swieranga. Lincoln: University of Nebraska Press.

Siegried D. Schubert, Max J. Suarez, Philip J. Pegion, Randal D. Koster, and Julio T. Bacmeister, (2004) “On the Cause of the 1930s Dust Bowl,” Science 303: 1855-59.

Walter Prescott Webb (1933). The Great Plains. New York: Grosset and Dunlap.

Donald Worster (1979). Dust Bowl: The Southern Plains in the 1930s. Oxford: Oxford University Press.

Matthew Gregg researches all aspects of the Cherokee Indian economy during the nineteenth century. He is currently writing an article titled “The Economic Costs and Consequences of Cherokee Removal” (joint with David Wishart). Recent publications of this research include “Market-Orientation and Cherokee Multi-Factor Productivity” in Essays in Economic and Business History. He teaches several courses in applied microeconomics, such as U.S. economic history and environmental economics.

Subject(s):Historical Geography
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

The Politics of Property Rights: Political Instability, Credible Commitments, and Economic Growth in Mexico, 1876-1929

Author(s):Haber, Stephen
Razo, Armando
Maurer, Noel
Reviewer(s):Libecap, Gary

Published by EH.NET (May 2004)

Stephen Haber, Armando Razo, and Noel Maurer, The Politics of Property Rights: Political Instability, Credible Commitments, and Economic Growth in Mexico, 1876-1929. New York: Cambridge University Press, 2003. xx + 382 pp. $75 (hardcover), ISBN: 0-521-82067-7.

Reviewed for EH.NET by Gary Libecap, Department of Economics, University of Arizona.

A large body of research, summarized in Acemoglu, Johnson, and Robinson (2004) underscores the importance of institutions — property rights, rule of law, stable political structures — for economic growth. In this book, Haber, Razo, and Maurer examine what they claim is a puzzle in political economy: why is it that political instability does not necessarily translate into economic stagnation or collapse? As such, the book raises a challenge to the institutions and growth literature. By focusing on political instability in Mexico between 1876 and 1929 when some sectors, at least, advanced, the authors argue that governments in many less developed countries do not have to enforce property rights as a public good. Rather, they can enforce them selectively as private goods, with the resulting rents shared among politicians and the asset holders. Property rights enforcement allows for investment and trade to take place within the privileged sectors, and it occurs through a variety of commitments made by politicians, even in the presence of broad political instability. The book offers a well-written analytic economic history of this period in Mexico and the authors argue that they have provided a generalizable framework about the interaction of political and economic institutions for better understanding economic history and growth.

In Chapter 1, Haber, Razo, and Maurer claim the prediction that political instability will have strongly negative impacts on economic growth is not borne out empirically. This lack of fit sets the stage for the case study presented in their book. Especially during the period 1911-1929, when Mexico underwent extreme instability after the fall of Dictator Porfirio Diaz until the rise of the Partido Nacional Revolucionario, the economy should have performed badly. Investment and output should not have grown, and the rate of growth should have declined relative to the ten-year period before 1911. But many important industries, such as mining, petroleum, and textiles, performed well. The authors admit that they do not examine the difficult question of whether or not observed Mexican growth equaled what it might have been had there been political stability and broad enforcement of property rights. They advance two arguments in the chapter. One is how political and economic elites form coalitions to sustain economic activity on their behalf and how these coalitions endure political instability. I think that in this argument the authors are on solid ground. The second argument is that there is no necessary connection between political instability and economic stagnation. This is the key point of the book, but I am less convinced of this claim and not quite sure what lessons might be drawn from it for understanding the broader bases for sustained economic growth.

Chapter 2 outlines the analytical framework, drawn from political science and economics on instability, credible commitments, and economic growth. The authors describe various ways in which private commitments might work to constrain government from arbitrarily confiscating property rights and the rents associated with them. One option is third-party enforcement, such as by an outside government with an interest in a particular economic sector. Another is vertical political integration (VPI) whereby government officials and asset holders form coalitions, sharing the returns from protecting those assets, restricting entry, and barring (likely) disruptive technological change. Chapter 3 discusses VPI coalitions from 1876 to 1929 in Mexico, detailing how political and economic elites interacted to assist and constrain one another. Conditions during Porfirian Mexico, the revolution of 1910-1914 against Porfirio Diaz, the civil war of 1914-1917, and post civil war instability (1917-1929) are described. Chapter 4 begins the analysis with discussion of the Mexican financial system. Banks were protected from new entrants and segmented monopolies were enforced. State politicians with economic and political ties to the banks helped constrain the actions of the federal government. Forced loans nevertheless were required. Detailed measures of financial risk and return are provided in this chapter, characteristic of the empirical richness of the book. Chapter 5 turns to cotton textiles, paper, steel, brewing, cement, cigarettes, and power generation. Again the authors conclude that political instability did not bring about the collapse of manufacturing, but rather industry did well with protections provided through VPI coalitions. Chapters 6, 7, and 8 examine the all-important petroleum, mining, and agricultural sectors, where production and investment expanded. Mafia-like organizations protected the oil fields, refineries, and mines, and the U.S. government acted as a third-party source of guarantees. In agriculture staple production expanded and exports boomed. Major land reform did not take place until the more politically stable 1930s. Chapter 9 sums up the historical evidence and returns to the puzzle raised earlier. Haber, Razo, and Maurer conclude that the effects of political instability vary depending on which polity is affected, the technological and organizational features of the economy, and the nature of the political system that specifies and enforces property rights. In the case of Mexico the VPI networks sustained critical industries during political upheaval.

All in all this is an impressive volume with useful and clever statistical measurements of the performance of various parts of the economy, and it certainly is a valuable addition to the economic history of Mexico. The authors are persuasive when they conclude that key parties were able to do reasonably well during chaotic times. My concern is how this case study and the analytical framework associated with it fit within the literature on the institutional underpinnings of economic growth. The efforts of the VPI coalitions and U.S. intervention in Mexico did not place the country on the path for long-run development, as the authors admit. Rather, the descriptions provided in the book are similar to what is commonly refereed to as “gangster capitalism” in Russia after 1989. They also seem descriptive of the protections provided the Nigerian oil industry in the past twenty years, yet little broad-based growth improving the lives of the country’s population has taken place. And there are many other examples. This book provides an especially well-done description of political and economic maneuvering, or rent seeking, in Mexico. But the case for effective institutions and economic growth remains.

Reference: Daron Acemoglu, Simon Johnson, and James Robinson, Institutions as the Fundamental Cause of Long-Run Growth, May 2004 NBER Working Paper 10481, forthcoming in the Handbook of Economic Growth.

Gary D. Libecap is Anheuser Busch Professor of Economics and Law at the University of Arizona and Research Associate, NBER. Current publications include “The Allocation of Property Rights to Land: U.S. Land Policy and Farm Failure in the Northern Great Plains,” with Zeynep Hansen, Explorations in Economic History, April 2004 and “Small Farms, Externalities, and the Dust Bowl of the 1930s,” with Zeynep Hansen, Journal of Political Economy, June 2004. He is currently working on the Owens Valley water transfer to Los Angeles, 1905-1935, the source of Los Angeles’ growth and the background for the movie Chinatown. It is part of a broader study of the role of legal and political institutions in promoting or blocking development of water markets.

Subject(s):Markets and Institutions
Geographic Area(s):Latin America, incl. Mexico and the Caribbean
Time Period(s):20th Century: Pre WWII

Deforesting the Earth: From Prehistory to Global Crisis

Author(s):Williams, Michael
Reviewer(s):Libecap, Gary

Published by EH.NET (August 2003)

Michael Williams, Deforesting the Earth: From Prehistory to Global Crisis. Chicago: University of Chicago Press, 2003. xxvi + 689 pp. $70 (cloth), ISBN: 0-226-89926-8.

Reviewed for EH.NET by Gary Libecap, Department of Economics, University of Arizona.

Michael Williams is Professor of Geography at Oxford University and a Fellow of Oriel College. He is the author of numerous books and articles on forestry and historical geography.

Deforesting the Earth is valuable economic and environmental history. These two often do not go together, unfortunately. In much environmental history, humans (especially those from western industrial societies) are the problem. Nature in general and forests in particular, are often alleged to have been in a natural equilibrium with native peoples until both were ravaged by the onset of capitalist exploitation. With contemporary fears of globalization, global warming, species extinction, losses of biodiversity, deforestation, and depletion of many critical resources, advocacy groups and other special interests exaggerate environmental “crises” and fail to place them into their historical bases. In this setting it is difficult to find careful, reasoned examinations of key problems, their histories, complexities, and likely, long-term patterns and consequences. Deforestation, particularly of Amazon and other rainforests, certainly ranks at or near the top of any list of environmental crises. The issue is an impassioned one and a flood of alarmist books and articles have appeared on the subject, but they provide little understanding of the extent of deforestation, nature of regeneration, or of the underlying issues involved.

Michael Williams places deforestation into a broader historical and geographical context, and explores the linkages between forests and people since the end of the last Ice Age; identifies important economic forces; and provides estimates of the extent of forest clearing. He primarily examines Western Europe and North America, but also describes the extent and forces underlying deforestation in China, Japan, Australia, New Zealand, and parts of Africa and South America. There are extensive endnotes, figures, illustrations, and tables; an inclusive bibliography; and a complete index.

The book is divided into three parts: Clearing in the Deep Past, Reaching Out: Europe and the Wider World, and the Global Forest. Part I explores timber cutting from the end of the Ice Age through the medieval period. Williams points out that the thinning, changing, and elimination of forests is not a recent phenomenon, but rather is as old as the human occupation of the earth. Clearing, and indeed, deforestation, has been intricately tied to conditions of population growth and economic development for the past 14 to 15,000 years. He states that the book “is about how, why, and when humans eliminated trees and changed forests, and so shaped the economies, societies, and landscapes that lie around us.” He also provides some measures of the magnitude of deforestation. Chapter 1 describes the return of the forest as the ice sheets retreated some 16,000 years ago. Not only were Europe and North America affected by changes in the climate, but tropical regions as well — although less is known about the latter. As humans migrated to newly forested areas, they would have nearly as much impact on the forest over the subsequent 10,000 years as the glaciers had for 100,000 years. Chapter 2 points to fire as the main vehicle used by primitive peoples for deforestation. Williams argues that the manipulation and taming of nature by prehistoric and native peoples is commonly ignored and underestimated. Their actions have been romanticized and asserted to have been ecologically benign. But, according to Williams, natives never were “in perfect harmony” with nature, but attempted to transform it, and fire was the first great force. The combination of human predation and destruction of habitat through burning led to the extinction of many species across the planet, and Williams provides examples from Europe, North America, and Polynesia. He argues that the first Europeans to visit North America likely observed a profoundly disturbed landscape. At their peak around 1492, the Indian population of North America had long been transforming the forest for agriculture and hunting. Chapter 3 turns to the rise of agriculture, which involved both the domestication of animals and plant species and the removal of forest. The examination begins with the Neolithic period in the Middle East, Europe, and North and South America, and moves on to describe the gradual expansion of agricultural methods and clearing practices. Chapter 4 looks at agriculture and deforestation in the classical world of Greece and Rome. By this time three other factors in forcing timber cutting were becoming important, shipbuilding, urbanization, and metal smelting, and these were to become even greater forces in the harvest of trees in Europe by the fifteenth century. Williams provides some estimates of the amount of timber harvest necessary for ship construction and metal smelting. Chapter 5 turns to the medieval world, which brought new onslaughts on the forest. Population increases in Europe and the introduction of new plows and horsepower speeded the pace and extent of deforestation. Williams describes the complex relationship that medieval peoples had with the forest as a source of food, firewood, and other products. Forests were closely bound to everyday lives of ordinary people. At the same time, the forests were the enemy with dangerous animals and trees that blocked the paths of roads and fields. The Plague and the fall in population in the fifteenth century gave European forests some respite. The chapter ends with discussion of clearing in fourteenth century China.

Part II covers more modern factors in deforestation. Chapter 6 beings with the internal and external economic expansion of Europe between 1500 and 1750, with associated changes in cultural and economic forces affecting the forest. This was the age of discovery, and discovery needed ships of wood. Technological change brought new products and means of production and communication. Population growth surged, trade increased, and new sources of power were required. All of these dramatic changes impacted the forest. New views of nature arose, whereby trees and other natural resources became seen as instruments of human development. As described in Chapter 7, clearing accelerated in Europe during this period. The prices of firewood, charcoal, and timber stores increased sharply as population densities grew. This forced a turn to new, more distant, sources of supply, and importantly, for the first time, to a new concern with conservation. Plunder, preservation, and planting went hand in hand. Chapter 8 extends the analysis of this critical time, as the age of discovery, from Europe to the Americas, China, and Japan. Trade in timber products and clearing for European settlement in North and South America profoundly altered the landscape. In Chapter 9, Williams explores underlying driving forces that were eliminating primary forests across the world. These forces included industrialization, mechanization and motive power, population growth and migration, colonization, and improvements in transportation and communication. He illustrates the effect on the forest with a discussion of new, large-scale processes in timber harvest and industrial sawmilling. Steam power for cutting trees, sawing lumber, and transporting timber products changed the pattern and process of deforestation. As the eighteenth century began to end, however, the sense of inexhaustibility of the forest, at least temperate forests began to disappear. A new emphasis on conservation in Europe began to rise. Chapter 10 follows temperate deforestation from 1750 through 1920. In Europe and especially, the Americas, agricultural clearing was still viewed as “improvements.” The demands for shipbuilding, home fuel, construction, and charcoal continued to encourage timber harvest. Williams spends considerable time describing the path of clearing in the United States as frontier settlement expanded. Estimates of the extent and geographic pattern of clearing are provided. Experiences in Australia, New Zealand, and Japan are also included. Chapter 11 turns to clearing of tropical forests through 1920, beginning with an overview of the use of forest by indigenous peoples. As populations grew, indigenous agriculture expanded, with associated burning and clearing. Gradually, more permanent agriculture emerged. Precolonial forests were not untouched Edens or community resources shared equitably by all. Societies were stratified and elites had more forest. In any event, tropical forests were under siege even before Europeans arrived, and with European colonization, pressures grew. Experiences in India and Brazil receive considerable discussion in the chapter.

Part III, the Global Forest, turns to contemporary forest issues. Chapter 12 begins with early twentieth century scares and solutions to “timber famine.” By the turn of the century, the process of deforestation had been so relentless in many areas that fears arose that timber supplies, along with supplies of other natural resources, were soon to be depleted. Advocates for greater government ownership and regulation, such as Gifford Pinchot manipulated concerns about “the coming timber famine.” In America the National Forests were established and expanded and the Forest Service was created. Publications, such as The Forest Resources of the World, painted a bleak picture, not only in North America, but also in the less-developed world. Laissez-faire capitalism and self-interest became viewed as threats to the remaining forest. But in the Soviet Union, which certainly was not laissez-faire capitalist, timber removal moved into new areas with increased levels of exploitation. Chapters13 and 14 attempt to summarize the magnitude of the onslaught on the forest between 1945 and 1995. This modern period brought greater population growth in many previously relatively forested areas, new technologies, higher incomes in the developed world with greater demand for forest products. As forest cover dwindled, concerns arose not only regarding the impact of scarcity on prices, but on broader climatic and ecological effects. Biodiversity became an objective to be pursued, at least by influential populations in rich countries. Williams presents data on global land use through 1985 and the distribution of remaining forests. While forest harvest is regulated and/or moderated in most developed societies, disturbing rates of deforestation occur in tropical regions due to demand for teak, mahogany and other valuable species and due to agricultural settlement and a shift to cattle raising. In the Epilogue, Williams places these current concerns with deforestation into the historical context he has described earlier in the book. There is some optimism as he notes that reforestation occurs without gaining media notice. Nevertheless, pressures on the remaining forest are intense, and he is wary of much of the current literature on the issue prepared not only by advocacy groups, but also by the scientific community, whose interests are molded by funding agencies. Williams concludes with a call for more dispassionate analysis of the problem of deforestation and potential solutions.

Deforesting the Earth is a work of first-rate scholarship. Parts I and II are particularly impressive. The discussion of the more modern period and trends is somewhat less satisfying, in part because the underlying issues have become so complex that to address them in any detail would involve additional material for an already large book. Even so, some attention to the role of prices to encourage conservation and reforestation on private forests, as compared to the public National Forests, would have been useful. Further, discussion of secure property rights — the absence of which so critically affects harvests of tropical forests — also would have added to the analysis of contemporary conditions. In the end, however, this is an important and valuable book for economic and environmental historians for gaining a clearer understanding of the historical complex human relationship with forests.

Gary D. Libecap is Professor of Economics and Law at the University of Arizona and Research Associate with the National Bureau of Economic Research. Having just completed (for now) a project on homestead settlement, dryland farming, farm failure and the Dust Bowl on the American Great Plains, he is now turning to water. The project focuses on the history, law, and economics of water transfers from agriculture to urban and environmental uses. The initial task is to re-evaluate the Owens Valley water transfer to Los Angeles, 1905-1940, which was the subject of the movie Chinatown and which casts a dark shadow on all efforts to transfer water today.

Subject(s):Historical Geography
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

Sovereign Soldiers: How the U.S. Military Transformed the Global Economy after World War II

Author(s):Madsen, Grant
Reviewer(s):Taylor, Jason E.

Published by EH.Net (September 2018)

Grant Madsen, Sovereign Soldiers: How the U.S. Military Transformed the Global Economy after World War II. Philadelphia: University of Pennsylvania Press, 2018. xi +328 pp. $45 (hardcover), ISBN: 978-0-8122-5036-7.

Reviewed for EH.Net by Jason E. Taylor, Department of Economics, Central Michigan University.

Histories of war generally focus on the details of key battles, turning points, and heroes. Less examined is the economic aftermath of war. During the twentieth century, the United States employed its military to govern many defeated or troubled areas beyond its borders and these actions continued during the early twenty-first century as the U.S. military become involved in governing Iraq and Afghanistan. This is the motivation behind Brigham Young University historian Grant Madsen’s Sovereign Soldiers, as he documents the American military as an external state in the years just after World War II. These soldiers were not charged with defeating the enemy, but rather, getting civilian populations back on their feet. The book traces the steps of heavyweights such as Dwight D. Eisenhower, Lucius Clay, and Douglas MacArthur — important American generals who subsequently became military governors of postwar Germany and Japan. It also examines the roles of lesser known occupation officials such as General William Marquat, Joseph Dodge, and General William Draper, among others.

The failure to achieve a lasting peace after the First World War generally motivated American military governors to try to create a postwar environment in defeated nations that would not again lead to the rise of dictators. In fact, U.S. State Department planners who began to envision the postwar order in 1943 were determined to bring a healthy and prosperous Germany into the fold of the international community. Still, many back home objected to the notion of American help for defeated nations. When President Franklin Roosevelt was shown a draft of these plans he threw it on his desk saying, “Feed the Germans! I’ll give them three bowls of soup a day, with nothing in them…. Control industry … There’s not going to be any industry in Germany to control” (p. 69). Such attitudes were not unique to FDR.

Madsen shows that the military governors generally understood that they were effectively in no-win situations. If they tried too hard to help the populations of the defeated nations, they would likely be blamed for providing too much sympathy to the enemy. But if they left these populations to starve, history may blame them for creating the vacuum that lead to the next war. In the end, the idea of a “soft” peace in which the U.S. would wholeheartedly attempt to help the defeated economies recover won the day. Madsen does an excellent job of thoroughly documenting the many challenges that these “sovereign soldiers” faced in achieving their recovery objectives in postwar era Germany, as well as in postwar Japan where General MacArthur played a major role. Madsen has an impressive grasp of the key economic issues and the pros and cons of the economic models that were debated and tried at the time.

The final section of Madsen’s book focuses heavily on the creation of the postwar economic environment — and the “military-industrial complex” — in the United States, and specifically Eisenhower’s role in creating it during his own presidency. The background events that shaped Eisenhower’s views prior to taking the highest office, which are gleaned in the earlier chapters, give the reader important insights into Ike’s policies.

The archival research behind Madsen’s research is very impressive. This book will be of high interest to Eisenhower historians, in particular, and to those keenly interested in the postwar transitions in Germany and Japan. For the more casual reader, the book’s 325 pages may be a bit much. There were times when I wished for less detail and name dropping — keeping all the players straight became confusing at times — and for the author to offer more insight as to what important lessons or ideas we should take away from studying these events. I was searching for a major theme, finding, or conclusion from the book and was largely left wanting in that respect. The book ends very abruptly — honestly I did not see the end coming. I simply turned the page from the end of Chapter 13 and the book was over (there is a three-page epilogue). A concluding chapter that summarized the key events, lessons, and themes of the book would have been a welcome addition for this reader. In fairness, however, these critiques may be because of the differences in the ways that economists, of which I am one, and historians approach research. Overall, this is an impressive work of scholarship.

Jason E. Taylor is Professor of Economics at Central Michigan University. His book, Deconstructing the Monolith: The Microeconomics of the National Industrial Recovery Act, will be published by the University of Chicago Press in December 2018.

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Subject(s):Economic Planning and Policy
Military and War
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII