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Incorporating Women: A History of Women and Business in the United States

Author(s):Kwolek-Folland, Angel
Reviewer(s):Yeager, Mary A.

Published by H-Business@eh.net and EH.Net (April 1999)

Angel Kwolek-Folland. Incorporating Women: A History of Women and Business

in the United States Twayne’s Evolution of Modern Business Series. New

York: Twayne Publishers, Simon &

Schuster Macmillan, 1998. ix + pp. 275.

Bibliography and index. (cloth), ISBN 0-8057-4519-X.

Reviewed for H-Business by Mary A. Yeager, Department of History, University of

California, Los Angeles, California.

MAKING A DIFFERENCE: WOMEN AND BUSINESS HISTORY

Angel Kwolek-Folland’s Incorporating Women is the first survey to

synthesize the history of women and business anywhere in the world. Its

pioneering status raises a series of significant questions for the scholarly

and business communities and the public at large. Why have businesswomen in

America been the first women to have their history surveyed and synthesized?

And why now? In view of the fact that there is still a great deal that we do

not know about women in business, is the synthesis premature? What does the

synthesis offer historians of women and business and what is its significance

for future research? And finally, where do we go from here? [1]

ACCOUNTING FOR LEADERS

The practice of business and women’s history

in the United States has reached a historiographical cross-roads just when

demographic and economic changes are interacting to compel a dramatic

restructuring of American business. As we approach the millennium, old

certainties about the superior competitiveness of American business have given

way to the uncertainties of global capitalism run amok. Women, including those

with children, have become fifty-one percent of the labor force. They have

started more new businesses at a faster rate than men. T hey have earned more

baccalaureate and graduate degrees than have men across an increasing number of

professions. More women have climbed into the ranks of middle management,

while the small number of women at the very top has held its own.

For the first time in the history of American business, women who work have

begun to be perceived as a partial solution to the problems of competitiveness

rather than as a major social problem. No longer is the question whether single

or married women should work but

rather, how long women will work at a particular occupation and pay scale?

Will married women and men be able to juggle the kids and career demands to

suit personal and familial lifestyles?

The appearance of a historical synthesis of American women and

business at this time is significant because it has been pieced together from

two radically different historiographical traditions before a great deal of

substantive or systematic research on women in business has been completed.

Until relatively recently

, historians have used gender more often to exclude rather than to include the

opposite sex. American business history was generally written by and about men

in growth-oriented manufacturing firms.

American women’s history was written by and about women

who lived compartmentalized lives in private or public spheres.

More is known about women as workers than as businesspeople. Evidence on

women’s labor force-participation is abundant, quantifiable and relatively

accessible, embedded in government labor and occupational censuses, and

company records. As an activity, business confounds with multiple meanings and

definitions. It sweeps in production and trade, manufacturing,

agriculture and service, as well as producers, entrepreneurs, professionals,

workers and managers. As an occupation, it is notoriously ambiguous, often

swept into other occupational groupings, such as proprietors or administrators.

As a career or profession, it offers numerous choices, from clerks to

middle-level managers and corporate

executives.

Businesswomen have been hard to see and difficult to track. They have been

misfits in the male world of business and a privileged minority among women.

Their names have been erased in law and custom by those of husbands, fathers

and brothers.

Their economic activities have spilled across boundaries demarcating

households, families, firms and markets. Their multifaceted roles as wives and

mothers, daughters and widows have blurred their business identities. Most

female business activities have occurred in smaller corners and invisible

niches of the service sector rather than in growth-oriented manufacturing

industries, in family-oriented businesses and retail shops,

and in educational, philanthropic, and health-care and reform-oriented

institutions. The motives of businesswomen have involved a complex and changing

mixture of economic and non-economic factors. Their stories have tended to be

communal and familial, muffling individual decision-making strategies and the

competitive noises of

firms and industries.

Kwolek-Folland has learned from her subjects how to transform problems into

opportunities. She uses debates about working women as scaffolding for the

synthesis. Chapter titles evoke a succession of images about working women:

“Fem ale Economies,” “Mills and More,” “Difference at Work,” “Personal Work,”

“Crisis Management” and “Difference at Work.” Work offers women a way to gain

greater economic visibility. It expands opportunities to undertake business.

Indeed, women’s movement into white collar work in the late nineteenth and

earlier twentieth centuries marks, for her, one of the most important changes

for women in business in the past 300 years. Data on occupations and women’s

labor force participation are correlated generally with women’s increasing

involvement in business activities. Business activities are based on a gendered

division of labor. Women participate in business like workers participating in

the economy, as part of a proletariat, more often in feminized, sex-segregated

dead-end jobs and slower-growing niches of service-oriented industries.

Women’s status at work serves as a lightning rod for the debate over women’s

roles more generally. Debates about working women grow out of debates about

women’s place.

Businesswomen across the centuries have often adopted a work-oriented view of

business. Business has been a way to make a living and survive. So integral

has business been to women’s lives, that some women have steadfastly refused to

distinguish business from life. “You can never think of me as a business

woman,” one woman cautioned her daughter in 1910.

“That is because I make a business of life and living my business.”

“Business is just life,” American real estate entrepreneur Edith Mae Cummings

wrote in 1929, “and we had life long before we had business.”[2]

KWOLEK-FOLLAND, BRIDGE-BUILDER

Kwolek-Folland knows how to listen to women’s voices. She has designed the

synthesis to disrupt disciplinary boundaries that have kept women in separate

spheres a nd men the only players in a male-dominated business game.

Given that “Women have always been in business in America (p.1),”

Kwolek-Folland has defined her central challenge as one of “incorporation”:

how to bring “others,” particularly women of different

classes, races and ethnicities into American business history and how to bring

business into American women’s history.

Incorporation has the ring of a conservative project of integration. Cynical

feminists well-versed in the history of British legal traditions might well

hesitate. After all, English civil law recognized the man and wife as one,

but came to define the “one” as “male.” Who is incorporated into what? Who are

the “gatekeepers” of the incorporation process? What are the terms of

incorporation? And what are the results of the incorporation process, both

for those incorporated and for the incorporating body as a whole?

Kwolek-Folland does not ally with feminist theorists determined to tear down

business institutions in order to clear the playing field of businessmen.

Nor is she a neo-progressive reformer nipping at the heels of Charles and Mary

Beard. She is an artist in tone, style, and temperament, using conservative

colors to cover radical aims.

Double entendres bedevil the incorporation process. Incorporation is testily

political, both a form and process, interacting to constrain and liberate women

unevenly and unequally over time. Power is interpreted as direct authority and

indirect influence. Both the terms and outcome of the incorporation process

are contingent, dependent in part upon how societies regard and value “others”,

as reflected by women’s changing legal status and business activities.

Incorporation involves struggles over the meaning and significance of business

and its associated concepts of profit, risk,

entrepreneurship, and success. Kwolek-Folland defines business expansively as:

“engaging in economic activity in a market to seek profit and assuming the

financial responsibility for that activity.” (p.5). Profit is

often embedded in non-economic goals; risk is defined as much in personal and

familial as in monetary terms; entrepreneurship is defined broadly as “new”

areas of economic activity; success is linked to women’s emancipation and

autonomy.

To incorporate

women into the history of business Kwolek-Folland uses analytical tools derived

from political and women’s history. Social categories of race, gender,

ethnicity and class order human experiences along a continuum of differences

that reveal the dynamics of

power embedded in business activities and institutions. Kwolek-Folland regards

these social categories as a “force,” and more than occasionally, as an

“irrational force” which shapes “how businesses approach markets, make hiring

choices,

and create organizational forms.” (p.8). Women’s political struggles both

spearhead and reflect changes in business activities and structures,

shifting the meaning and influence of business in women’s lives.

Business is incorporated into women’s history through inequities and

asymmetries of power associated with different business structures and economic

activities and roles. Business organizations reinforce differences between men

and women and other women. Business imparts new meaning and significance to

these categories by serving as fickle emancipator of women’s roles and

conscious conservator of woman’s place. It bridges the divide that has

separated women’s private and public lives.

Underlying Kwolek-Folland’s assumptions about the importance of social

categories to the understanding and meaning of business is a reformer’s vision

of a

more equitable and just business system, one where gender differences are not

unequally valued, where social condition does not constrain business

opportunity, where a male standard is not synonymous with

a universal standard, and where men and women have equal chances to exploit

business opportunities. To liberate business from the shackles of a

male-dominated business history and to emancipate women from a private world of

love and ritual, she crafts a single, all-encompassing narrative to bestow

public and historical legitimacy on businesswomen.

SURVEYING THE SURVEY

The survey situates women within a chronological framework that evolves

primarily out of economic and business history. Except for the middle of the

twentieth century, when government policies take center stage, the

periodization scheme is based upon major changes in the nature and dynamics of

liberal, market-oriented capitalism, beginning with a pre-industrial period

and advancing jerkily with successive industrial revolutions across the

nineteenth and twentieth centuries. Women enter economic and business history

indirectly by way of their business activities and relationships with other

women and men in business and the larger society, as members of families, of

social-reform, educational, and political networks. Business enters women’s

history indirectly by way of opportunities and legal status,

through economic roles and activities that women assume as

producers,

entrepreneurs, managers and professionals.

Women jump start the business of colonization in the 1550s as dependent sexual

objects of colonizers’ imaginations. They end their business journeys in 1997,

still unevenly and unequally incorporated

into the business system as legal independents, on unequal terms relative to

men and to each other,

with laws that promise justice without protection. After four and a half

centuries of ever-diversifying business activities and at least three decades

of

debate and litigation about equal pay, businesswomen stand stalled in their

tracks. Women’s revolutionary breakthrough into the top tiers of management has

fizzled.

For Kwolek-Folland, the setbacks are more telling than the advances. As if to

underscore

how much and how little had changed with regard to women and their

relationship to business, she places powerful corporate tycoon Estee Lauder —

named “Outstanding Mother of the Year” in 1984,– atop the shoulders of Ojibwa

fur traders, market women, butter makers bankers, and factory girls. Gender

stereotypes have continued to dog women’s advance in the business world,

constructing their public personas even as women reconstruct the businessworld.

EVALUATING THE RESULTS

Kwolek-Folland’s survey and

synthesis have alerted us to power differentials embedded in difference.

Society’s unequal valuation of “others” nurtured a system of laws regarding

property rights, citizenship, suffrage, marriage and divorce that disadvantaged

women more than men and so me women more than others. Women’s status, as

reflected both in formal laws and informal customs, interacted with economic

conditions to shape women’s business opportunities and the manner of engaging

in business.

The framework enables us to see more clearly different women’s varying

experiences in the business world over time. Some businesswomen mimic the

monotonous and routine male shopkeepers and businessmen the world over, like

Rose Stolowy of Kansas City, Missouri, or Catherine Ferguson, a confectioner

shop-owner. Famous women, such as Rebecca Lukens, Amelia Earhart, and Oprah

Winfrey share brief appearances with their not-so famous contemporary

counterparts, like Phebe Cills, an African-American toy store owner, and the

infamous sisters Aida and

Minna Everleigh. Good businesswomen, like caterer Edith McConnell, coexist with

the less successful, such as Christina Barnes, who “negotiated the business

world with difficulty.” And then there are some who are larger than life, such

as the six-foot,

200 pound Sarah Bowman, who made money from prostitution AND the United States

Army,

only to die ungloriously of a tarantula bite in 1866.

Race opened opportunities for black businesswomen and professionals in

segregated niches of the economy and closed

them in areas dominated by whites. It imposed special social and economic

burdens upon black businesspeople as community builders and as economic

role-models. Black women undertook a variety of business roles even as slaves

and engaged in a range of business activities even though they gained both

property, voting and civil rights later than white women. Their work histories

were longer and more continuous than either white women or black men. Black

women boasted one of the nation’s first and most successful brothel-keepers,

the first female bank president, the first female self-made millionaire in

America, and one of the wealthiest celebrity queens in the entertainment

business.

Ethnicity affected whether women went into business at all. It proved

important to women’s control of property, as in the case of the early female

Dutch

settlers, and formative of entrepreneurial cultures, as in the case of Jewish

women, whom Kwolek-Folland celebrates as the most entrepreneurial of American

businesswomen. Len a Himmelstein Bryant (Lane Bryant Company),

Fanny Goldberg Stahl, Esther Mentzer (Estee Lauder) stand tall in the female

hall of business fame.

Class functioned as a marker of legal and economic status as well as a

gate-keeper of the incorporation process, promoting gender rules that

distinguished women from men and income bars that distanced lower from upper

income groups. It gave wealthier women an easier entree into politics and

educational institutions, which positioned them more strategically as leaders

in social reform and philanthropic institutions.

Business played a mixed role in the lives of women. On the one hand,

business structures operated to reinforce rather than undermine differences.

In the early 1800s textile owners hired young, single

white women because the skills associated with textile production were already

categorized as women’s work. Later, with the coming of managerial capitalism,

the gender coding of managerial and job rules kept women out of the

highest-paying highest status

jobs and paved the way for the feminization of clerical and personnel work. On

the other hand, business expanded women’s opportunities and control, empowering

women as owners and managers even as it reinforced differences between men and

women. Indeed, for some women in social-reform and political networks in the

late nineteenth century, business activities became a proto-feminist political

act.

Successive market-expanding industrial revolutions improved more than they

undermined business women’s economic well-being, generating more income and

greater autonomy and independence for businesswomen than was the case for women

who worked as employees of others. Only when the scope of government’s

involvement in women’s issues broadened across the 20th century

, did business assume a more threatening and ominous role as a major antagonist

in a series of sexual discrimination and affirmative actions cases. With regard

to some issues, such as paid family-leave, big business jumped ahead of the

government, offering its own assistance packages, while small business owners,

many of whom were women, protested on grounds that such legislation would

disadvantage them relative to larger rivals.

For Kwolek-Folland and the women whose experiences she surveys, business

activities generally were growth-enhancing and value-creating activities.

The historical purpose of business, after all, she concludes, has been “to

make people’s lives better or to raise the standard of living for as many as

possible.”(p.216).

Sighs of relief among business historians are likely to be matched by

discomfiting growls from feminists who have always seen more of the meanness

than the magic in the market and in business activities. Inevitably,

scholars in both camps will single out different

aspects of the survey and synthesis for praise and criticism. However, as a

business historian and free-farming feminist, with one eye on men and business

institutions, and the other on businesswomen and the world, I want to focus my

remarks on this unresolved paradox: Why has a study so steeped in the rhetoric

of power and difference not revealed more about how power and difference

actually operate in the business world? About what power means, how it is

expressed and used,

by whom for what ends? Why does a study about women and business so closely

resemble the histories of women at work?

A PARADOX and SOME PUZZLES

Social categories may well hide as much as they reveal about how power really

works in the world of business. Businesswomen have been swept into the history

of business armed with only one set of tools to differentiate them. Race,

ethnicity, class and gender have masked differences arising from women’s

individual capabilities and skills; they have made differences between and

among women of the same social categories difficult to see and to understand;

they have imposed an unnecessary uniformity upon women as a group.

The transformation of categories from inert, disembodied experiences into

causal forces, stalls early on. Business practices are overwhelmed by

cultural forces. Modern business tycoons stand atop the shoulders of Ojibwa

traders, but it is difficult to differentiate one businesswoman and business

from another or to account for differences in the performance and profitability

of business activities over time. Despite the fact that Indians held

dramatically different conceptions of gender roles, of property, autonomy and

responsibility, Indian women emerge as American history’s earliest

businesswomen and consumers.

Women as a group appear to share more similarities than differences but the

business experiences of men and women are allegedly more different than

similar. These hypotheses remain to be tested.

Women are described as having been more continuously and often

circumscribed in their choices and activities by the “family claim” then men

have been.

Yet, histories of businessmen in the pre-industrial period have suggested that

the family claim also structured the economic activity of men. We need to know

whether

women and men interpreted the claim differently and how their interpretations

influenced economic outcomes.

Kwolek-Folland’s definition of business is at war with business realities.

Why has business as “activity” been yoked to the claim of “financial

responsibility” rather than to market-and profit-oriented decisions, as has

been

customary in business history? The choice carries definite ethical and moral

connotations. It broadens the population of businesswomen and businesses but

pinches interpretive

possibilities. The price is operational imprecision and ambiguity.

Activities are different from decisions. Activities indicate little more than

a kind of busyness, industry or work; they are described by their properties.

Decisions are associated with

choices that businesspeople make in the course of doing business, in order to

remain in business. Financial responsibility literally refers to “a charge, a

trust, or duty for which one is responsible.” [3] If a reasonable understanding

of responsible

is that it has to be within the power of the one who is responsible, then how

is that determination to be made? What is meant by the assumption of financial

responsibility, and how is “responsibility” to be determined?

Kwolek-Folland does not consistently

or systematically apply the definition.

Instead, she offers an expansive interpretation whose meanings have to be

squeezed from an ever changing business context.

Kwolek-Folland regards “independence” to be the core of the legal definition of

business.

The ability to negotiate contracts and to acquire, use and dispose of

property is severely impaired without legal recognition and protection of those

rights. Without legal status as “independents,” women could do business as

dependents of others, but they could not profit from their own business

activities. Only as women gained legal recognition and protection as

“independents” and autonomous individuals with the right to their own bodies,

earnings and profits in the late nineteenth century, could they

exploit the same opportunities available to men who had those privileges and

rights.

The definition seems to deny that men and women have long strategized about the

ways in which they could shift, avoid or elide financial responsibility.

They have devised marriages and designed partnerships and firms with precisely

these goals in mind. The definition may be appropriately applied to women who

act as business proprietors, but how is it to be operationalized in a dynamic

world full of business activities undertaken by many individuals and groups

engaged in cooperative ventures, as members of family businesses,

partnerships or teams associated with single firms or corporate enterprise?

What if businesswomen assume financial responsibility but are not held

accountable?

By identifying women in business by their activities and roles as producers,

entrepreneurs, professional and managers, Kwolek-Folland constrains women’s

choices and robs them of the opportunity to exercise control or to assume

financial responsibility. Without interrogating activities or roles, it is

difficult to distinguish one businesswoman or type of business activity from

another, except insofar as production differs from trade and sales and service.

Managerial roles are gender coded but we need to know why and when the codes

took the form they did with respect to different businesses over time. To what

extent did individual women construct and re-construct managerial roles to suit

their own talents and capabilities?

In the 1950s entrepreneurial historians tried but generally failed in their

efforts to use role theory to link men in business to society. Roles represent

problematic psychological categories. Individuals and groups fulfill, perform

and create roles. Activities do not necessarily conform to prescribed roles.

Roles straight-jacket behavior but people also deviate from socially prescribed

roles. How is the historian to determine when women are performing roles

prescribed by society or crafting them as they proceed?

How have women conceived of their roles in business and how have they actually

behaved?

Racial and ethnic differences have also mattered to people’s conceptions of

business roles, activities and results. The survey builds upon studies of black

businesspeople to

suggest that their business strategies often were community-building strategies

as well. But not all of these interrelated strategies worked from the

standpoint of business longevity and profitability. What happened, for

example, when and if black businesswomen deviated from social expectations of

them as community builders?

Social categories need to be more systematically related to women’s

decision-making and organizational capabilities in particular businesses.

Kwolek-Folland surveys how some women

used skills developed in household and family or reform contexts to transform

socially-oriented businesses or non-profit institutions into profitable

businesses. However, we also need to know what kinds of decisions they made,

and which family or household decisions informed their business decisions.

Businesses differ according to operating rules and the short and long run goals

with respect to other institutions and society. Decisions and risks which

women undertake as owners or managers of hospitals

are likely to be different than the kinds of decisions made by women as family

partners, heads of families, or by businesswomen involved in the intensely

competitive cosmetic and restaurant businesses. Why were some women able to

transform household skills into effective business practices, when others

could not? Household production and consumption decisions of nineteenth century

middle-class women and twentieth century farm women gather social significance

primarily as gender dividing strategies. But

we also need to know how these decisions structured economic behavior and

outcomes.

The study suppresses the competitive forces that are at the heart of the

American business system. Although it argues from difference, it homogenizes

women as a group who seldom compete on the same playing field, either with men

or with other women in the same industry. Except in rare instances,

outcomes are seldom revealed nor evaluated. Individual female rodeo riders

compete with men, but we do not know whether they competed effectively or not.

We learn of Ellen Demorest’s pattern business but not of the competition she

experienced from Ebenezer Butterick, who eventually dominated the industry.

“Status” is another concept that creates problems for the survey and synthesis.

Kwolek-Folland employs status as a legal concept, as signifier of

reputation, of income and class, of women’s visibility and relative

equality/inequality in regard to men and other women. Yet indicators of status

do not always mesh with economic

realities. Given that social attitudes about women’s place have remained

stubbornly resistant to change,

Kwolek-Folland’s assertion that by the end of the nineteenth century, women had

achieved a legal status equal to that of men in business, is problematic.

Women could now do business and profit from their own endeavors but to what

extent did they? Data on female labor force participation and occupations pose

interpretive difficulties here. What are the causal lines of influence between

changes in legal

status and business activities?

The survey recognizes the difficulty of positioning irrational and rational

forces on the same economic stage. The problem is not simply a disagreement

about matters of meaning and definition. It also relates to the interpretive

tools that are used to analyze the evidence. To demonstrate how irrational

notions about race undermined the “myth of rationality” in business,

Kwolek-Folland offers a singular notable example, drawn from the history of

financial industries.

White providers of life insurance in the late nineteenth century refused to

sell insurance policies to black customers on the basis of actuarial

information which suggested that blacks had higher mortality rates than whites.

Citing evidence which linked higher mortality rates to environmental

conditions rather than to stereotypical notions about blacks as a group, she

concludes that white managers acted irrationally.

However, by allowing culture to subsume gender and race, and economic

rationalism to

define business practice, Kwolek-Folland misses an opportunity to examine how

and why notions of rationality, with respect to culture and economics,

sometimes complement rather than clash. If managers did not know what evidence

demonstrated, they are more

likely to make unilateral decisions on the basis of cultural predisposition

and habit. As long as other white competitors refused to market to blacks and

social attitudes condoned discrimination, then these actions may well have

produced economically efficient outcomes. Managers would have behaved

irrationally,

from an economic standpoint, only if they refused to sell to blacks when other

rivals were busily cashing in.

Determining why businesspeople do what they do has never been easy. But

economic tools of principal-agent theory are available to determine more

precisely when and why some individuals, rather than behaving act more like the

utility-maximizing automatons of neo-classical economics, act opportunistically

and with guile.

Kwolek-Folland’s

discourse about power is more tantalizing than effective.

Instead of directly confronting issues of power in the market, as business

historians have done when they analyze why some firms or businessmen wield

greater market power than others, she assumes that power adheres primarily in

social categories and institutional structures. Power floats ambiguously on the

surface of business life, seeping from institutional structures and emanating

from unequal relationships between people and things. What kind of

power is at issue is unclear. Kwolek-Folland defines power as direct authority

and indirect influence, yet it is unclear how power and influence operate with

regard to women in business. Is it the power and control that derives from

ownership status, from position, from skill, from unique talents in a

competitive market? Is it the power that comes from having more money and using

it to buy more capital to invest? Is it the competitive power that comes from

being in a technologically cutting-edge industry

at the right time? Is it he power that is embedded in women’s networks and

political activities, in the battle for suffrage and property rights? Is it the

power that derives from impotence and image, from gender and race, as the case

of government policies suggest?

Some businesswomen, like Oprah Winfrey, clearly have power. The survey suggests

that Oprah’s power derives from ownership of Harpo Entertainment Group.

“Winfrey’s control over this conglomerate,” reports Kwolek-Folland,

“gave her the ability

– rare in the business world – to shape the concern according to her personal

vision.”(p.196).

Mere ownership does not necessarily give control nor does it create an ability

to control. Businesspeople who own assets must also be skilled enough and

willing and able to use power to exert the kind of control that is necessary in

order to make money in an a high-stakes, intensely competitive game. Business

historians will want to know more about how Oprah acquired control and secured

the assets necessary to build and grow Harpo Productions. Why and when did

she choose the conglomerate form? Was this organizational form particularly

suited to the entertainment business and Oprah’s managerial style? The ability

to shape business according to one’s own vision may well be important to some

women and men in business, but some visions are likely to be more effective

than others in generating and sustaining returns.

The survey suggests several reasons why power is important in business.

Power seems to be important because women don’t have enough of it relative to

men, or because men have more of it than women and use it to keep women from

getting it and because more businessmen seem ready to wield it than

businesswomen. Power is also important with respect to

the ability to control business and influence government policy and legal

outcomes.

Yet, power is notable by its absence from legislative debates over economic

rights, suffrage, property and citizenship, from debates about regulatory

policies regarding

small and big businesses. The survey suggests that more women battled for

economic rights than for suffrage, but given that the nineteenth century

suffrage campaign proved more effective than the campaigns for economic rights,

we need to know why. Feminists and other leaders of women’s organizations put

in only brief appearances in the book,

and when they do, the survey reduces the infighting among feminist leaders

regarding different strategies to common goals. Business historians will want

to know more

about business’ roles in coalition building strategies. Which businesses and

businesspeople allied with female protagonists or antagonists in these

struggles?

In the twentieth century women’s leaders appear to have garnered more

legislative victories de spite the persistence of traditional attitudes

regarding women’s roles. Why? Kwolek-Folland attributes the results to a

massive social revolution. Other scholars have suggested that business may well

have had a hand in the “conquest of cool” that fueled

a cultural counter-revolution.[4] What was business’ role in these 20th century

revolutions compared to its role in nineteenth century women’s rights

campaigns?

The problem and the opportunity with the survey and synthesis at this stage is

that historians of women and business have focused upon a different set of

differences. Whereas business historians have studied the differences that

emanate from the structure, behavior, conduct and performance of businesspeople

and firms, historians of women have stressed the agency of individuals and

groups and the politics of liberation. Business historians have investigated a

different power dynamic, one associated with price and product competition,

with cost-saving technologies, and with decision-making strategies instead of

that associated with meaning and understanding.

Business historians have concerned themselves primarily with market power,

with the ability of firms to dominate industries and throw their weight around

without being held publicly accountable. They have studied regulatory

patterns to determine the extent to which government policies,

such as anti-trust, have clipped or augmented the market power of particular

firms in particular industries.

Kwolek-Folland expects other approaches and perspectives to increase the

scholarly returns from efforts to understand women and business. She

underscores how the American business system came to be built upon the notion

of difference while simultaneously revealing the dangers of arguments based on

difference. Beliefs about women’s differences from men in the late-nineteenth

century opened some doors for some women but closed others and barred women’s

continuous advance in the business world. Arguments on the basis of gender

differences kept women outsiders in the business world even as women made a

place for themselves in the businessworld.

Just as a business system built on gender difference is likely to crumble when

difference is no longer valued, so too is a synthesis built upon difference

likely

to unravel as women and men occupy the same historical stage. Kwolek-Folland’s

survey necessarily homogenizes women in order to emphasize the differences

between their experiences and those of men, in terms of business opportunities,

ownership and managerial rights, and access to credit, among other things.

Just how different those experiences were in fact remains to be determined by

more systematic comparison of their roles and activities with respect to a

variety of sectors and industries. Business historians are likely to see more

of the differences between iron-manufacturer Rebecca Lukens and prostitute

Sarah Bowman and more similarities between Rebecca Lukens and her male

competitor in Delaware.

Nevertheless,

only by constructing numerous bridges with a variety of tools are we likely to

understand precisely what difference men and women and business institutions

have made to the growth and development of various economic sectors over time.

If we are to turn problems of difference into exciting new

research opportunities, I caution against traveling alone down a separate but

equal road. Women and men in business have interacted throughout history inside

and outside of markets and firms, as family members, as marriage and business

partners, and as competitors, in different industries over time.

They have suffered asymmetries of power and inequities of income. Their

occupations as businesspeople have been jointly shaped by a structure of sexual

inequality. But they have both been engaged in a joint

enterprise that has as its ultimate objective, the generation of a higher

standard of living for everyone. Regardless of gender, race, ethnicity or

class,

business is still business and only survives in the long run if it generates

some income above its

costs. As a market-oriented activity and institution,

the study of business forces a focus on the interaction between men and women,

on the interconnections between families and firms, on the transgressing of

private and public boundaries. Bringing women into business raises new

questions about how business institutions deal with ideas of “masculinity” and

“femininity” and about how women deal with and view the business world. [5]

Kwolek-Folland has done more than grasp the possibilities. She has constructed

one bridge over troubled waters. It is up to others to undertake the

painstaking empirical research needed to build additional bridges. Only then

are women likely to undergo the transformation from workers in business to

businesspeople with different personalities, skills, competitive and

organizational abilities, business experiences, and institutional means of

support.

Mary Yeager Associate Professor of History Bunche Hall UCLA 405 Hilgard Avenue

Los Angeles, CA 90095-1473 310-273-6328 (h)

310

-825-3489 (0)

END NOTES

[1] For an illuminating discussion of the pros and cons of synthesis, see Eric

Monkonnen, “The Dangers of Synthesis,” in Notes and Comment, American

Historical Review, vol. 91, no.5 (December, 1986), 1146-1157.

[2] Zora Putn am Wilkins, Letters of a Business Woman to Her Daughter and

Letters of a Business Girl to Her Mother (Boston: Marshall Jones Company,

1923), p.4, and Edith Mae Cummings, Pots, Pans and Millions: A Study of

Woman’s Right to Be in Business, Her Proclivities and Capacity for Success

(National School of Business Science for Women: Washington, D.C.,

1929), p.100.

[3] The Compact Edition of the Oxford English Dictionary(New York:

Oxford University Press, 1971), r.v. “responsibility,” p. 2514.

[4] Thom as Frank, The Conquest of Cool: Business Culture, Counterculture,

And the Rise of Hip Consumerism (Chicago and London: University of Chicago

Press, 1997).

[5] See Mary A. Yeager, “General Introduction,” Vol. I, Women in

Business, 3 vols., The International Library of Critical Writings in

Business History (Aldershot, UK and Brookfield, US: Elgar Reference

Collection, forthcoming March 1999).

Subject(s):Social and Cultural History, including Race, Ethnicity and Gender
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

Socializing Capital: The Rise of the Large Industrial Corporation in America

Author(s):Roy, William G.
Reviewer(s):Levenstein, Margaret

H-NET BOOK REVIEW Published by H-Business@eh-net.muohio.edu (August, 1998)

William G. Roy. Socializing Capital: The Rise of the Large Industrial Corporation in America. Princeton, N.J.: Princeton University Press, 1997. xv + 338 pp. Figures, tables, notes, bibliography, and index. $35.00 (cloth), ISBN 0-69-104353- 1.

Reviewed for H-Business by Margaret Levenstein , University of Michigan

This book is extraordinarily ambitious and wide-ranging in its treatment of a very significant topic. At times Roy focuses specifically on the merger wave of the 1890s during which many large firms turned to public capital markets to facilitate mergers. But much of the book, and, from my perspective, the most interesting parts, take a much longer term view, examining changes in property rights and the use of those rights by railroads and then manufacturing firms over the course of the century. Most of the central points of the book I think are correct and many of Roy’s methodological points provide useful correctives to tendencies in business and economic hi story. There were sections of the book that I found insightful bordering on brilliant. There were also sections of the book that I thought were unconvincing, and others that were simply wrong.

The central points of the book can be summarized as follows :

1. The large, widely-held manufacturing corporation is a social creation, not a natural entity.

2. The corporation as it exists today is historically contingent and developed from pre-existing forms. In particular, it evolved from the public corporation, used by the state to accomplish public purposes and was given special privileges (monopoly, eminent domain, limited liability) in order to do so. The happenstance convergence of the economic crisis of 1837, the emergence of the railroad, and the po wer of the “anti-monopoly, anti-state” version of Jacksonian anti-corporatism privatized and democratized the corporation. Thus the corporate form retained many of its privileges (limited liability, alienability of ownership) but made those privileges available to all through general incorporation laws. In doing so, the corporation lost its public purpose and its public accountability (as well as its claim to monopoly).

3. There existed historical alternatives. Manufacturing could have continued to be conducted in firms that were not corporations. The corporate form could have retained its public purpose and its public accountability. The state could have remained a more active economic player in its own right — owning railroads or banks or manufacturing as today the state owns highways. It could have developed a stronger regulatory apparatus, developing the capability to administer public enterprises and assure that those who received the privilege of incorporation fulfilled a public responsibility. In other words, the boundaries between public and private could have been drawn quite differently in many dimensions.

4. Manufacturing firms followed the incorporation practices of railroads because that was required by investment banking firms to get access to large pools of capital, not because the corporate form was demanded by manufacturers to coordinate increasingly complex, large-scale, high-throughput technology.

5. Manufacturing firms (the “trusts”) turned to New Jersey’s incorporation law in order to legalize collusive activities, not to coordinate increasingly complex, large- scale, high-throughput technology.

6. The corporation was privatized – lost its public use and public accountability – and the corporation was socialized – its securities widely owned but no longer controlled by owners – not because this organizational form was the most “efficient” way to organize manufacturing production. Rather, manufacturing firms embrace and continuing use of the corporate form was the result of a “logic of power.”

Roy uses several methods to make his case. He first presents a theoretical argument that a “social logic based on institutional arrangements, including power” (p. 6) is more useful for understanding the dimensions and dynamics of the economy than is an analysis based on “the logic of efficiency.” The latter position he identifies with Chandler, and much of the book is cast as a polemic against Chandler. While I am very sympathetic to his historicizing and “de-naturalizing” of the corporation, I thought this framing of the issue was largely counter- productive. His presentation of Chandler sometimes bordered on caricature. Chandler’s point is not that managers are concerned only with efficiency or that clever managers always pi ck the most efficient organizational design. His point is that it was only in firms where managers made choices that gave the firm a competitive advantage that the firm survived. But Roy ignores the role of competition. He argues that “efficiency theorists” are functionalists, simply providing an ex post rationalization of whatever happened to emerge. While he is certainly correct that some business history is functionalist, and neo-classical economic historians are apt to fall back on “best of all possible worlds” descriptions of whatever institutions exist, the competitive model does provide a story of why it is that we should think that those that survive are different from those that didn’t; their survival is taken as an indication that they are better at competing. Thus it would have been useful to explain how power influenced who survived the competitive process and how power determined the rules of the competitive process. That is, it would have been useful to explain why the firms that survive the competitive process are not necessarily the most efficient. Instead, for the most part, Roy simply ignores competition as a significant force in capitalist economies, arguing that “the social arrangement that governed American industry could only vaguely be described as a market. American businessmen have always been aware that they share common interests at least as much as they compete over conflicting interests” (pp. 176-7). Roy is absolutely correct that American businessmen have often cooperated. But that does not mean that there is no market; it means that those who have been able to cooperate, and better yet, dominate cooperative agreements, are the firms that have survived and prospered. I would dispense with the word “efficiency” altogether. A more useful question is whether firms survived because they were good at inventing new, lower cost technology, good at getting workers to work harder, good at getting tax breaks from local governments, good at increasing demand for their product, good at getting access to others’ property through eminent domain, good at getting cheap capital because of connections to investment bankers. Whether or not any of these particular attributes improves efficiency or is a Good Thing for society as a whole (as if there is such a thing) is an altogether separate question.

Roy then turns to an econometric test of the “power” and “efficiency” explanations. He asks which industries were more likely to adopt the corporate form during the 1890s merger wave (which he measures by their use of publicly-traded securities, thus excluding incorporated firms that were not traded on public exchanges). He finds that average size of the firm and capital intensity are significantly and positively related to an industry’s use of publicly-traded securities. He also finds that labor productivity was negatively related to the use of such securities and that industry growth rates were insignificant. He concludes from this that Chandler and “the efficiency theorists” are wrong. Size matters even when controlling for other things. Labor productivity is lower in “incorporated” industries, so it must not be that incorporation makes firms more efficient. There are several problems with this analysis: he looks only at the 1890s and therefore conflates where the merger wave took place with where the corporate form endured. He groups “Chandlerian” causes of incorporation (growth and capital intensity) with effects (i.e. labor productivity); perhaps the negative relations hip between productivity and incorporation reflects the need for organizational change in low-productivity industries? His unit of analysis is the industry, which groups together large and small firms, and he treats large industries and small industries equivalently. Are we surprised that there are no large firms in the hammock or lapidary works industries despite a faster rate of growth than electrical machinery (p. 30)? Chapter two, which presents this econometric analysis, should be skipped entirely by anyone who has read Naomi Lamoreaux’s The Great Merger Movement (and if you haven’t read it you should). Lamoreaux presents a much more convincing and complete econometric rejection of the Chandlerian contention that the merger wave of the 1890s was motivated by the need for vertical coordination of inherently high-throughput technology. Save your time for the more edifying chapters to come.

In Chapters 3 and 6, Roy compares the history of public enterprise, the legal rights of corporations, and the emerging dominance of “socialized capital” in three states: New Jersey, Pennsylvania, and Ohio. He examines the evolution of the corporation from a tool used by states to encourage economic development and raise revenues to its emergence as a private agent, available to all through general incorporation statutes with no public responsibility or accountability. Roy argues that the differences in the experience of public investment during the canal and early railroad period, as well as the political interpretations placed on that experience, determined the rules under which corporations operated in each state at the end of the century. New Jersey had the most limited experience with public corporations, both quantitatively and qualitatively. It participated as an investor in the Camden and Amboy, and was able to keeps its taxes low as a result, but the railroad controlled the state rather than the other way around. Pennsylvania had both mixed corporations in which it invested and public corporations. Ohio had the most activist policy, both the most successful- the Ohio canal system developed the region and integrated it into the national economy – and the most spectacular failure when logrolling resulted in the expansion of public subsidization of canals and railroads and nearly bankrupted the state. Roy examines the implications of these different experiences for three aspects of corporate law: the permissibility of corporations owning other corporations, the powers of boards of directors (relative to shareholders), and the extent of limited liability. Roy finds that in all three aspects of corporate law, the experience with public and mixed corporations during the canal era shaped state attitudes such that New Jersey’s corporate law was the most “privatized,” allowing corporations broad flexibility in owning other corporations, giving power to corporate boards, and extending unlimited liability through both a general incorporation statute and special charters. Ohioans were at the other end of the spectrum, suspicious of the corporate form, retaining double liability and strictly limiting the activities of corporations to those for which they were chartered. Roy finds that these differences in corporate law led to differences in the importance of corporate capital in the three states. While some of this difference in corporate capital obviously reflects capital mobility – corporations with operations elsewhere chartered in New Jersey to take advantage of its lax laws – Roy’s fundamental point is that business in Ohio was simply less likely to be organized within a corporation. Thus, he suggests, economic activity need not have taken place within the socialized corporation, or at least not within a corporation with no social responsibility . Where the state legislature was unwilling to confer such generous benefits on the corporation, businesses made do with other forms of organization.

This empirical conclusion supports Roy’s argument that there were actually two distinct political responses to the canal crisis within the Jacksonian anti-corporate movement. One demanded more accountability on the part of the quasi-public corporation (i.e. more government) while the other demanded privatization (less government). Roy makes the interesting argument that the privatization ideology won out because it was self-fulfilling. Suspicion of the state led to weak oversight. With no oversight, projects were corrupt or failed; that failure was then interpreted as the failure of public investment (p. 74). But it is not clear from his comparison of the three states that strong state oversight was ever really in consideration. As he shows elsewhere in the book, the choices considered were either democratization of access to corporate privileges through general incorporation statutes or limitation of those privileges by statutes such as Ohio’s requiring double liability and strictly limiting the activities of corporations to those for which they were chartered.

Here and elsewhere, Roy compares the choices made in the United States to those made in France where a strong and competent state apparatus was created. This comparative perspective, though presented more casually than those between the U.S. states, is often very helpful. Unlike the U. S. case where states competed with one another and were, therefore, forced into a prisoner’s dilemma race to the bottom in terms of the social responsibilities of private actors, France was able to chart a very different course. Whether the “strong state ” approach was one that could ever have emerged in the United States will, of course, be debated by many. But that is not Roy’s point. The point is that there is nothing natural or inevitable about the present configuration of rights and responsibilities that constitute the corporation.

Chapters 4 and 5 examine the way that the railroad and investment banking influenced the construction of the corporation. Many of the generalizations he makes in his history of the railroads will not sit well with most economic and business historians. One could read these chapters and think that the railroads were a failure, both privately and publicly. For the most part, neither was the case. And the reader might understandably be confused when he presents Rockefeller’s demand for railroad rebates as an example of how the railroads exercised power. But try to ignore that and focus on the his fundamental point. The financing of railroads was not simply corrupt, or political, or determined by power games among the major players (though all that was certainly the case). The development of institutions to finance railroads determined the set of institutions that industrial corporations could choose from when they needed to finance growth and short term operations. The structure of those inherited institutions favored concentrated over unconcentrated industries, favored incorporation and management-owner separation, perhaps favored some technologies, organizations of work, and regions over others. This point is important and profound. The evidence he gives in its support is not always well organized to make his point. But the challenge that he lays out is clear. The observed choices of corporations are not necessarily the optimal ones in a global sense. They are the choices corporations made given the incentives created by institutions created for a different purpose and as part of deeply politicized process.

Chapters 7 and 8 return to the merger movement of the 1890s. He correctly argues that it is wrong to see this period as one of a shift from a competitive market to an administered or monopolized one. U.S. firms had been cooperating to control prices in many industries throughout the nineteenth century. In fact, he argues, it is only with the emerging dominance of a “free market” ideology that the state makes the strong distinction, now taken for granted in anti-trust law, between contracts promoting trade and those in restraint of trade. Others will argue that there was a long-standing tradition in common law not to enforce contracts in restraint of trade. But there is also a long-standing tradition of allowing quasi- public organizations, such as guilds and corporations, to engage in behavior that we would today think of as monopolistic. Roy perhaps takes this argument too far when he says, “If governments did not enforce contracts between buyers and sellers, markets would collapse by the same sort of opportunism that wrecked the pools” (p. 190). While the current state of the economy in Russia reflects the underlying truth of this statement, we should also recognize that there is not the same inherent incentive to deviate from a mutually beneficial contract to exchange that there is with a contract to restrict output or fix prices. It is true that the state creates and enforces markets, but there is a difference between a self-enforcing contract and one that is inherently a prisoners’ dilemma.

This chapter includes a very interesting section examining the interaction between the first use of the New Jersey incorporation statute and the terms of the statute. He not only shows that the writing of the statute was the result of a complex political process. He also shows that the way that it was used differed substantially even from the purposes of the first corporations for which it was written.

In these chapters he presents the histories of particular industries, arguing that their use of the corporate form cannot be explained by changes in their technology (i.e. by managerial demand). The histories of the sugar and tobacco industries, familiar to business historians, are re-told in a new light. Rather, he argues, the desire for monopoly control and the expectation of financiers that the corporate form would be used, led firms to incorporate. He also makes the interesting argument that the merger wave of the 1890s changed the expectations of investors so that “when a group of entrepreneurs wanted to establish a large-scale industrial enterprise, henceforth the standard procedure would be to mobilize the resources of the corporate institutions by recruiting investment bankers, brokerage houses, and the investment press in order to attract sufficient capital” p. 254. Prior to the 1890s it was deemed acceptable for Andrew Carnegie to operate his steel business as a limited partnership; after the merger wave of the 1890s investors perceived non- corporate firms as higher risk. Trying to operate outside the corporate sphere was now a more costly choice, but only because the prior history had changed investors’ (and investment bankers’ in particular) ideas about how business had to be organized.

The comparison of the three states is intended to suggest that there were various paths that the development of the corporation could have taken. But sin ce the corporation is now firmly ensconced in all three a more overarching point is that competition between the three states limited the power of any individual state to determine the structure of the corporation. The three states are also relatively similar in terms of their level of economic development, industrialization, and integration into the national economy. A slightly different story might have been told, and Roy’s argument made stronger, if he had looked at states that were less developed and continued to have more active state economic development policies throughout the century, including state investment in banks, railroads, and corporations. Did those states making post bellum public investments in corporations demand public accountability? Or had the prevailing ideology of the private corporation so come to dominate by the second half of the century that even where there was substantial and direct state investment the corporation was seen as an autonomous and privately responsible agent?

Roy makes several important methodological points that economic and business historians should heed. First, he emphasizes that actors can exercise power without power being the motivation for their actions. Individuals and groups exercise power when their actions determine the choice set or the constraints faced by others. I think this broad definition of power is very useful and would help economic and business historians to understand and analyze political movements, from late 19th century populism to late 20th century resistance to free trade. But defined this broadly we also have to recognize that the exercise of power is not inherently a bad thing. For example, in a capitalist economy with strong patent protection technological innovation gives the innovator power. Users of older technologies cannot simply continue to operate as they have in the past. This is the creative destruction that Schumpeter celebrated- and it is really does destroy something that someone values. That’s why the technocratic distinction between efficiency and distribution that economists cling to is silly. Any policy choice that has a significant impact on the “efficiency” of the economy will also have distributional consequences. That doesn’t mean that we don’t want technological change. Much of the time we probably do. But this perspective forces us to acknowledge that there are social decisions to be made, not simply private actors doing whatever they please, and that those social decisions require tradeoffs. Second, this book will serve as an enormously useful corrective to the tendency among economists studying the firm, property rights, and institutions generally (a growing trend that is very healthy in and of itself) to follow Oliver Williamson’s “In the beginning, there were markets” approach. Roy argues forcefully, and correctly, that both the market and the firm are social constructions. That does not mean that they are arbitrary or unreal. It means that their structure and their existence are the result of past political decisions and the outcome of social and political conflict. This is also a useful corrective to an approach that conflates the notion of the existence of a market with “rational” behavior by individuals. The existence of a market changes how rational individuals behave. Competitive pressure forces rational individuals to calculate more, and it increases the weight of monetary factors in those calculations relative to very real concerns for community and the quality of human inter action. Economic historians recognize this effect of the market on individual behavior when they can cast it in a positive light (see Sokoloff’s 1992 work on the spread of markets and the rate of patenting, for example), but tend to downplay it otherwise (see Rothenberg 1992, for example).

Third, Roy makes an interesting case for an interplay between contingency and determinacy in the book. He argues for contingency in order to make the case that there is nothing natural or inevitable about the current institution of the corporation. The current configuration of rights and responsibilities that constitute the corporation is the result of highly contingent events in the past. But he does not accept the standard version of path dependence and raises questions that I have long thought were problematic with that approach. He makes clear that while the current construction of the corporation is contingent and path dependent in the sense that it would and could have been different if different events had occurred at key turning points (particularly during the 1830s canal crises), he does not see this as simply the result of chance. The key events were themselves the result of who had power at the time. This approach opens up a whole line of fruitful research in this area. Why was it that the response to the canal crisis was privatization rather than increased regulation? Why was it that some state constitutions were modified to limit direct involvement in economic activity and others weren’t? These were explicitly political decisions that had long term economic ramifications. Understanding the political forces behind these decisions would be very useful. Roy also makes the point, applicable quite generally to the path dependence approach, that what matters is not simply the cost of shifting from one path to another (e.g. from one keyboard to another) but who bears that cost. If those who have the power to make the decisions about whether to switch paths do not bear the costs, then the switch will appear “costless” (see McGuire, Granovetter, and Schwartz, forthcoming).

In making the argument for the contingency of the corporation Roy plays down some forces – powerful forces I am sure he would agree – that led to its current incarnation. On a mundane level he downplays competition among states allowed by the federal structure that led to a spiraling down of public responsibilities for private actors. But on a more basic level, the transformation of assets from things that natural individuals own, use, and are responsible for, to capital personified in the corporation, responsible no longer to the state and barely to its nominal owners, seems to me not a happenstance, contingent event. The corporation gives agency to capital. It’s not for nothing that we call it a capitalist economy.

Finally, Roy’s “de-naturalizing” of the corporation is a giant step forward for business history. So is his problematizing of the boundaries between private and public, the economy and the state, and the rejection of the dichotomy of an “interventionist state” and a “natural market.” As Roy makes clear, the state creates the market, so it is meaningless to talk of it intervening in it. That language simply serves to de-legitimize some actions of the state relative to others. Finally, acknowledging that there are social choices to be made that influence how the economy will function in the future is important, and not simply for academics. Post-cold war ideology presents the corporation not only as natural but all- powerful. It is good to remind people that they can, through social and political action, make choices about how such social creations operate.

Bibliography

Lamoreaux, Naomi R. The Great Merger Movement in American Business, 1895-1904. Cambridge, England: Cambridge University Press, 1985.

McGuire, Patrick, Mark Granovetter, and Michael Schwartz. Forthcoming. The Social Construction of Industry: Human Agency in the Development, Diffusion, and Institutionalization of the Electric Utility Industry. New York, N.Y. and Cambridge, England: Cambridge University Press.

Rothenberg, Winifred (1992). From Market Places to a Market Economy: The Transformation of Rural Massachusetts . Chicago, Ill.: University of Chicago Press.

Sokoloff, Kenneth (1992). “Invention, Innovation, and Manufacturing Productivity Growth in the Antebellum Northeast” in Robert Gallman and John Wallis American Economic Growth and Standards of Living before the Civil War (Chicago, Ill.: University of Chicago Press), pp. 345-378 .

Williamson, Oliver E. (1985). The Economic Institutions of Capitalism. New York, N.Y.: The Free Press.

?

Subject(s):Markets and Institutions
Geographic Area(s):North America
Time Period(s):19th Century

Printers and Men of Capital: Philadelphia Book Publishers in the New Republic

Author(s):Remer, Rosalind
Reviewer(s):Scranton, Philip

Rosalind Remer, Printers and Men of Capital: Philadelphia Book Publishers in the New Republic. Philadelphia: University of Pennsylvania Press, 1996. xiv + 210 pp. Illustrations, map, bibliography. $34.95 (cloth), ISBN 0812233379.

Reviewed for EH.Net by Philip Scranton, Rutgers University .

This slender monograph, which originated as a UCLA dissertation, works toward filling a temporal and analytical gap in the history of American printing and publishing. Rosalind Remer rightly notes that previous, often antiquarian, research has focused on colonial printer/publishers, often heroizing them as masters of a complex and increasingly-politicized trade. More recent studies, particularly John Tebbel’s many volumes, examined book publishers from the mid-19th century through the 1960s – an age of national marketing initiated by railway networks and confirmed through extensive advertising to consumers, book retailers, department stores, et al. Remer asks, appropriately: how did the American book trade accomplish the double transition from local to national distribution and from printing/publishing generalists to a division of labor between publishing specialists and printers, with whom they contracted for book production? Philadelphia, which with Boston and New York constituted the early republic’s centers for book making, draws her close attention.

At its opening, this study reprises colonial printers’ multi-faceted activities as job work operators, newspaper editors, importers and publishers of books and pamphlets, and retailers of same. After 1783, Philadelphia printers moved aggressively into the new republic’s early political battles, creating a series of mostly-ephemeral newspapers supporting one or another of the emerging factions (while drawing revenues from patrons to sustain their vigorous prose). The shifting tides of political advantage boosted or destroyed these printers’ ambitions, for, in business terms, “the most practical patronage came directly from government printing jobs,” available only to those backing winners (34). Though newspaper controversies raged throughout the 1790s, once the federal seat (and its revenue stream) shifted from Philadelphia to Washington in 1800, area printer/publishers paid appreciably more attention to state and local government custom and to the commercial possibilities of books. For the latter, federal influence remained relevant. Under the nation’s first copyright regulations, works published by American authors or any foreign books revised by Americans for domestic use could be defended at law against infringers. As indiscriminate reproduction of English texts had long been both part of the printer/publisher’s repertory and a competitive problem, this provision shifted the terrain. Those making books hastened to adapt, rather than duplicate, “foreign” works of history and geography, school texts, dictionaries, etc. for American audiences, thereby securing copyright protection.

Yet multiple problems remained. Printing books meant little unless they could be distributed and sold, bringing in funds to cover costs and, with luck, generating profits. Moreover, there was clearly a learning curve in mastering book production and marketing. In the two decades after 1800, a cluster of Philadelphia printing masters gradually dropped job work and newspaper ambitions to specialize in creating and vending books, in time abandoning the mechanics of printing to become contracting publishers. By 1820, this core group negotiated with authors, commissioned printing and binding, ran city book shops (some with branches) and developed national networks for distribution, thereby defining publishing as an independent vocation. Key to this process of differentiation were a series of trade organizations and gradually-refined trade practices. Although a few journeymen tried to strike out on their own as publishing entrepreneurs and others formed a short-lived labor association (the Philadelphia Typographical Society), veteran master printers had far better chances for success. Following up on a mid-1790s effort, a group of nascent publishers created the Philadelphia Company of Booksellers in 1802, which encouraged cooperation among producers to limit duplication of reprinted titles, sponsored collective promotional literature, and sought “to bring growth to the trade by encouraging… risk-sharing” (61). Thus Company members co-published a series of schoolbooks, each contributing to the expenses and subscribing for a portion of print runs. Though, like the journeymen’s Society, the Company lasted only a few years, it did bring members of this emerging network into close and fraternal contact, both with one another and with more distant printer/publishers, the latter through a series of book fairs held alternately in New York and Philadelphia. At these twice-yearly sessions, booksellers arranged “exchanges” (trading at list price copies of their imprints for those of colleagues, thus broadening their stores’ stocks), debated distribution dilemmas, and solidified wider credit relationships. The fairs, too, foundered in a few years, but the business links and trade consciousness they fostered would endure, widening the gap between publishers and ” mere” printers.

As Philadelphia’s most prominent bookman, Matthew Carey addressed the distribution obstacle by dramatically expanding an older trade practice. To get books on store shelves beyond the coastal cities, publishers had at times used commission sales, acting as quasi-wholesalers who selected and shipped parcels of books to shops in interior towns, though retaining ownership. Frequent correspondence with hundreds of vendors enabled Carey to develop an information base about what moved and what didn’t, thus identifying local and regional reading tastes. Early on, Carey also employed “a full-time book peddler” to travel the back country, in this case the celebrated Parson Weems, who sold religious tracts and took orders throughout Maryland and Virginia (130). The city’s Woodward house ultimately engaged 47 such minister-salesmen, whereas McCarty and Davis hired “professional” travelers “who derived their whole living from selling books” (136). Carey and others also collaborated on extensive co-publishing ventures with up to a dozen colleagues along the Atlantic coast, in order to finance multi-volume sets (e.g., Shakespeare, the Waverly novels), often soliciting advance subscriptions and again sharing risks and rewards.

Collectively, these marketing tactics swelled the circulation of books throughout the early republic. However, the trade’s expansion depended upon “an extraordinarily delicate business structure,” centered on credit relationships (116). Publishers rarely had cash in hand to fund printing costs, hence printers often took payment in books or discountable notes, rather than wait for publishers to amass income from sales. At the other end of the pipeline, rural shops and peddlers were notorious slow-pays and, laterally, publishers usually had elaborate interfirm credits and debts, carried on their accounts. In this regard, Remer elegantly explicates publishers’ accounting practices and demonstrates that their complex credit networks reinforced a workable sense of community. Publishers routinely endorsed notes for printers and one another, and just as routinely, extended them, for protesting a default, much less instituting a lawsuit over a debt, could set off widening ripples of credit collapse. Indeed, when Carey refused to extend an endorsement for C. and A. Conrad, forcing their bankruptcy, the outcome haunted him for years, not least because his fellow creditors stripped the firm’s principal assets while Carey was out of town, leaving “not… a single dollar’s worth for me” (119). He lost $22,000 in the affair. Though Remer does not press the point, I’d consider this sequence a trade community’s exemplary revenge on a member who had broken unwritten compacts and threatened its fragile foundations of trust and credit.

Overall, Remer’s study provides a corrective to earlier scholars who dated the divorce of publishing and printing to the mid-nineteenth century and regarded publishers’ marketing efforts before the railroad age as minimal. Equally valuable is her reconstruction of the extensive interactions among publishers, of their business practices and networked credit relations, and of their growing self-awareness as a community promoting both entrepreneurship and “a national society and culture” (152). Though the writing is at times wooden (passive voice abounds), this work should be welcomed as a substantive contribution to understanding a crucial economic sector’s transformation in the early decades of the republic.

Philip Scranton Department of History Rutgers University at Camden

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Subject(s):Business History
Geographic Area(s):North America
Time Period(s):19th Century