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From Liberty to Democracy: The Transformation of American Government

Author(s):Holcombe, Randall G.
Reviewer(s):Dinan, John

Published by EH.NET (May 2003)

Randall G. Holcombe, From Liberty to Democracy: The Transformation of American Government. Ann Arbor: University of Michigan Press, 2002. xv + 336 pp. $52 (cloth), ISBN: 0-472-11290-2.

Reviewed for EH.NET by John Dinan, Department of Political Science, Wake Forest University.

Randall G. Holcombe is concerned in From Liberty to Democracy: The Transformation of American Government with “describing the changes in American government during its first two centuries,” and demonstrating that “the great transformation occurred at the end of the nineteenth century and the beginning of the twentieth century,” when “the overriding principle behind American government was transformed from the protection of individual rights to the principle of democracy” (p. xiii).

Holcombe, the DeVoe Moore Professor of Economics at Florida State University, argues that the founders “intended to create a government that would protect the rights of its citizens, ensure their freedom, and do little else” (p.1). As a result: “The role of democratic decision making was severely limited both by insulating the new government from direct voting and by constitutionally limiting the scope of the government” (p. 97). It is true, he notes, that the drafters of “the Constitution created a government more powerful and less constrained than the one that existed under the Articles [of Confederation],” and thereby “created an environment within which the U.S. government had a greater ability to grow than would have been the case under the Articles” (p. 78). Nevertheless, the founders were committed, in the main, to the proposition that “the role of a constitution was to guarantee the rights of individuals and to limit the powers of government” (p. 59).

Although the nineteenth century brought a gradual democratization of political institutions (particularly during the Jacksonian Era), as well as a major expansion of the power of the federal government (particularly with the passage of the Civil War Amendments), the major transformation of American government did not take place until the onset of Progressivism in the late-nineteenth and early-twentieth century. As Holcombe explains: “Liberty for the founders meant that the government would protect the rights of individuals but would have minimal involvement in their economic affairs. The Progressives viewed that notion as outmoded. The oppression that only the government could exert by force when the nation was founded was now being imposed by the trusts, and economic power had replaced political power as the oppressor of the people” (p. 171). To be sure, FDR’s New Deal also played a role in “establish[ing] the role of the federal government in promoting the nation’s economic well-being” (p. 219). And LBJ’s Great Society programs were critical in heralding “the ultimate triumph of democracy because for the first time there was a major expansion in the scope of government power, based on the demands of the electorate, with no extenuating circumstances” (p. 247). In the end, though, Holcombe concludes that the seeds for these twentieth-century developments “were sown in the Progressive Era prior to World War I,” (p. 208) and therefore the Progressive Era constituted the “explicit break with the past that redefined the role of government to include the protection of the economic welfare of its citizens” (p. 188).

Holcombe is certainly not alone in pinpointing the Progressive Era as the key period in the transformation of American government. A number of Progressives were quite open at the turn of the twentieth century about the extent to which they were prepared to challenge founding institutions and ideals. And a growing number of scholars in recent years have taken to reexamining the influence of Progressivism on the development of American political institutions. Holcombe’s principal contribution is to place the Progressive movement in the overall context of American political development (his sweeping survey stretches from Hobbes and Locke to Reagan and Clinton, and includes discussions of the Articles of Confederation and the Confederate Constitution along the way) and to provide a number of insightful details regarding these varied topics. In the course of tracing the development of American electoral practices, for instance, Holcombe notes that a number of states have deviated at times from the normal practice of electing members of the House of Representatives from single-member districts, and that general ticket representation and at-large representation were both used by several states as late as the 1960s. And through a careful comparison of the U.S. and Confederate Constitution, he highlights a number of ways in which the drafters of the Confederate Constitution modified or supplemented particular provisions in the U.S. Constitution, including eliminating the words “general welfare” from the tax and spend clause, prohibiting certain types of internal improvements, and granting the president the line-item veto for appropriations bills. These are just a few of the insights that Holcombe provides in the course of his survey of American political development.

These virtues having been noted, From Liberty to Democracy is not without its shortcomings. For one thing, this is a sprawling book that frequently takes up and then returns to the same topic on a number of different occasions in the course of the narrative. Another round of editing could have eliminated a certain amount of this repetition, though this is to some degree unavoidable when one is integrating several previously published articles with other chapters that appear here for the first time.

In addition, Holcombe is at his best when he is describing the transformation of American government, which is the principal focus of the book; he is somewhat less successful when he turns to evaluate this transformation, as he does at assorted points in the course of each chapter and then in a sustained fashion in a concluding chapter entitled “The Dangers of Democracy.” It is not that Holcombe’s critique of democratic decision making is without merit. In fact, he is squarely in the mainstream of public-choice scholarship when he highlights “the problems that occur with majority rule voting” (p. 257), and contends that “democratic political institutions favor policies that impose small costs on most people, who are rationally ignorant about the policies, to finance large benefits to smaller groups” (p. 263). But a comprehensive evaluation of democratic decision making would require even more attention to the advantages as well as the disadvantages of democratic institutions, and would benefit from a more extensive consideration of the leading alternatives in the contemporary era.

John Dinan is author of Keeping the People’s Liberties: Legislators, Citizens, and Judges as Guardians of Rights (Lawrence, KS: University Press of Kansas, 1998).

Subject(s):Government, Law and Regulation, Public Finance
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

Sowing Modernity: America’s First Agricultural Revolution

Author(s):McClelland, Peter D.
Reviewer(s):Hansen, Mary Eschelbach

Published by EH.NET (February 2000)

Peter D. McClelland,

Sowing Modernity: America’s First Agricultural Revolution. Ithaca:

Cornell University Press, 1997. xii + 348 pp. $45.00

(cloth), ISBN: 0-8014-3326-6.

Reviewed for EH.NET by Mary Eschelbach Hansen, Department of Economics,

American University, Washington, DC.

The Seeds of Agricultural Innovation

Sowing Modernity: America’s First Agricultural Revolution argues that

modern economic growth required discontinuities. The discontinuity that Peter

McClelland seeks is to be found

in everyday life: when did farmers begin to ask routinely, “Is there a better

way?” Professor McClelland finds the discontinuity, or revolution, in attitudes

in the years immediately following the War of 1812.

Not since Leo Rogin wrote his classic The

Introduction of Farm Machinery

(University of California Press, 1931) has an author packed so much information

about farm equipment into such a small space. Professor McClelland gives us a

reference work that should sit atop the desk of any serious scholar of

agriculture. The work goes well beyond tracing the time trend in the number of

new patents issued on farm equipment. McClelland traces the development of farm

equipment from antiquity through the Jacksonian era in order to demonstrate the

rapid rate

of innovation after 1812, which indicates to him that the search for a better

way began in earnest about that time.

The descriptive detail in Sowing Modernity is astounding. Of the

literature on Jethro Tull’s wheat drill, McClelland says: “Although every

history of the British agricultural revolution is sure to include a reference

to Tull’s machine, almost never does that literature make clear how it worked.”

(p. 70) A full page of text and two full-page illustrations do the job.

(Special congratulations are due to McClelland for convincing his publisher

that the purpose of the book could not be met without the many and detailed

illustrations.) Other innovations in equipment to plow, sow, cultivate, and

thresh receive equally detailed treatment. The

work is so thoroughly researched and uses such a wide variety of sources that

the 235 pages of text require 100 pages of notes and bibliography.

McClelland adopts the economist’s stance that farmers were rational, that is,

that farmers only deemed a new

way “better” if benefits were greater than costs. For some innovations an

estimate of costs and benefits is made with respect to initial outlay for

equipment and change in labor and animal requirements. Trends in prices of

output are rarely mentioned (excepting the discussion of reapers). This

omission does not distract from the descriptions of the innovations, but it

does lead the reader to wonder if there are regional stories to be told when

Professor McClelland extends the work, adding the “where” and

“why” questions to this volume’s answer to

“when.”

The reader would benefit from additional discussion of the sources used,

their merits and demerits, their limitations and biases. For example, might the

very existence of the agricultural papers be a lagged indicator of the

revolution in attitudes of farmers? That is, would there be a market for

information on innovation without the revolution in attitudes? If the

agricultural papers lag the revolution, Professor McClelland’s use of them to

date the revolution in attitudes might lead him to be a few years too late.

But these criticisms are minor compared to the contribution of the work.

Sowing Modernity gives economic historians an interface with the

disciplines of material culture and cultural history. The work should lead

other agricultural and economic historians to consider the 1812-1830 period

with greater interest.

Mary Eschelbach Hansen is author of numerous articles in agricultural history

including “Land Ownership, Farm Size, and Tenancy after the Civil War,”

Journal of Economic History (September 1998).

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

Spreading the News: The American Postal System from Franklin to Morse

Author(s):John, Richard R.
Reviewer(s):McGuire, Mary K.

EH.NET BOOK REVIEW

Published by H-Business

and EH.Net (August 1999)

Richard R. John. Spreading the News: The American Postal System from

Franklin to Morse. Cambridge and London: Harvard University Press,

1995. vii + 369 pp. Tables, endnotes, primary sources, and index.

$54.00 (cloth), ISBN 0

-674-83338-4; $18.95 (paper) ISBN 0-674-83342-2

Reviewed for H-Business and EH.NET by Mary K. McGuire, Department of History,

Southern Illinois University Carbondale.

The U.S. postal system has received surprisingly little historical attention

over the

years, and even less so in recent historical discussions of the state,

politics, political culture, and administration. Even in the latest turn

toward the state, notably among the “new institutionalists,” the postal system

has remained on the fringes of

historical inquiry. While there may be many reasons for this,

I suspect that part of the problem is a sense that it has all been said before.

After all, conventional wisdom knows that the history of the U.S. postal system

is the history of the “spoils sys tem,” of civil service reform, of the weak or

non-existent pre-New Deal federal state.

And for many historians, the study of large-scale political institutions such

as the Post Office Department is mired in the worst excesses of the

“old” political history-a place we have left behind and with good reason.

Despite some recent works that have attempted to reconsider the subject from

various perspectives, the history of the U.S. postal system seems remarkably

resistant to a sustained historical inquiry or interest.

In this work, Richard John not only directs our attention to this relatively

neglected area of study, but he does so from an innovative interpretive

position that opens new ways of approaching and understanding the subject.

Taking, as he terms it

, a contextualist approach, he examines the postal system within the historical

context of the early Republic and the role it played in important social,

political, and cultural changes taking place over a nearly seventy year period.

In an arena where too few have ventured to show the way, John has set himself

a large task-a task made larger by his insistence on understanding the postal

system as an agent of social change in its own right, with significant impact

on shaping the contours and outcome of certain critical moments.

Specifically, he is concerned “not merely to locate the postal system in

the social process, but to explore its role as a social process, and, in

particular, to consider some of the ways in which the communications revolution

that it set in motion transformed American public life” (p. 24). This is an

ambitious project equal to the size and significance of its subject, and John

does an impressive job of developing his thesis with a wealth of detailed

historical information and

deftly handled political, social, and cultural analysis.

Both symbol and reality of the federal government in the early decades of the

fledgling republic, John asks us to consider the postal system’s significance

as the centerpiece of a communications ”

revolution.” As John makes clear, this was a revolution with very decided

market implications and intentions, creating a network of federally designed

and funded transportation and communications links that drew together the

people, producers, and places

of an increasingly far-flung nation.

In the first chapters of this book, he examines the policy and structural

innovations that established and deepened federal postal dominance in this

communications revolution. But, true to his thesis,

John goes beyond a mere discussion of the politics behind this transformation

to the impact of the transformation itself on shaping a new, national, public

sphere for this new, democratic republic.

According to John, the Post Office Act of 1792 laid the cornerstone for postal

impact on American public life when it permitted the transmission of newspapers

through the mails, alongside laying the groundwork for a greatly expanded

postal network. It also protected the sanctity of the mails from surveillance

and other interference-a critically important innovation in a world context

where privacy in communications was far from a right in law or in practice.

Then, turning to one of the central political-administrative figures of the

early postal system, Postmaster General John McLean, John identifies the early

administrative innovations of this nascent bureaucratic enterprise under

McLean’s leadership. In so doing, John asks us to reconsider our assumptions

about national politics and the federal state in the early Republic

, which is an important addition to our understanding of the supposedly

“stateless” United States in the period before the New Deal. For historians of

bureaucracies and of business enterprises, John makes another significant

contribution when he identifies administrative and managerial innovations in a

time and a place where we would hardly have expected to find them. It is

virtually a commonplace among business historians to date the introduction of

middle management practices from the middle nineteenth century and the

creation of huge railway enterprises. In this study, John shows that middle

level management techniques and principles already existed in a well-defined

form within the postal system-a system which could not have functioned without

its

three-tiered administrative structure and its

“hub and spoke” distribution system.

Bringing together the federal level politics and the federal level

administrative developments that occurred under John McLean as Postmaster

General, John explores and ex plains the administrative structure being set in

place even as politics influenced and shaped the postal system that was being

developed-and more. As he concludes: “By greatly expanding the power of the

Postmaster General, the completion of the postal network threatened to tilt

the delicate balance between the postal system, the rest of the executive

branch, and the individual states” (p. 110). It was this consolidation of

political and administrative power in the federal state, in the form of the

Post Office Department, which would influence the political and administrative

battle over “spoils” and states rights in the Jackson presidential campaign and

administration. In his later chapter on the Jacksonians, John expands this

political analysis in a discussion of the efforts by Jacksonians to hold the

federal state administration accountable to their understanding of the

classical republican creed.

Rotation in office-the so-called “spoils” system-wreaked some havoc with the

administrative operations and structure of political institutions like the

Post Office Department, but it also laid the groundwork for building the mass

party system that the Jacksonians had brought into existence in the election of

1828.

This analysis of the spoils system is not altogether a new one, but John ties

it to the power of the postal system as the centerpiece of a central, federal

state-the very thing that states’ rights advocates like the Jacksonians were

concerned to limit. For political historians, the power of his analysis lies

here, by showing how the Jacksonians manipulated the power of appointment to

public office to bring together their political creed of the democratic

republic and their political

need to build the mass party that had brought them into power. In

other words, it might be said there was an internal logic to the spoils system

that, abuses notwithstanding, was not entirely at odds with earlier assumptions

about the role of the postal system in creating an informed and politically

active public among its widespread communities and citizens. The nineteenth

century notion of “the egalitarian ideal,

which held that every citizen had the necessary ability to hold public office

and in this way to participate directly in the affairs of state”

(p. 1 35), was widespread, but not until the Jacksonians would it become

policy.

But this policy, like the politics behind it, was limited to free, white men.

In one of his most fascinating discussions, John looks at the public spaces

controlled by the postal

system. Here he argues that the postal system facilitated “an imagined

community that incorporated a far-flung citizenry into the political process”

(p. 168)-and this despite, or perhaps because of, the constraints placed on

free blacks and on women in

that public space. This is a wide-ranging discussion,

which deals with the aristocratic tradition and influence in securing public

office, the introduction of the military model for public officers, the

exclusion of free blacks from mail delivery, and the problems faced by women

in the male-dominated public space of the post offices. Arguing that “official

norms helped to shape public attitudes regarding the boundaries of American

public life” (p. 142), he concludes that “(t)hrough a combination of customs,

laws, and social conventions,

the central government and ordinary Americans had together constructed a new

social type-the citizen as free, white, and male-and a new kind of social

space-an imagined community that was more or less congruent with the

territorial confines of the United States” (p. 168). As the only public

institution as widespread as the citizens of the nation it served, the postal

system was a central factor in creating and regulating that new social space.

However, it is also here,

as well as in his chapters on Sabbatarianism and on abolitionism, that some

may find it difficult to see the postal system as an agent of social

change with such powers to shape the emergent nation’s political culture and

social conflicts. John’s treatment of the Sabbatarian

controversy–transmitting the mails and opening the post offices on the

Sabbath-is compelling, as is his argument that this needs to be seen as “a

struggle over the proper role of the central government in American public life

and

not, as is often presumed, merely a struggle between competing social groups”

(p. 191).

Likewise, his discussion of the abolitionist controversy-the mailing of

unsolicited abolitionist literature to southerners-brings to light an important

incident in the

battle over states’ rights vs. federal authority in the years preceding the

Civil War. However, it is less convincing in these cases to see the postal

system as the agent of change. It seems more reasonable that the postal

system was the

medium used to provoke change, or was the space in which certain

battles over social change would be fought. John himself seems to suggest this

when he notes of the Sabbatarian controversy that “it demonstrated how easily

a small group of activists could take ad vantage of the communications

revolution

that had been wrought by the postal system, the stagecoach industry, and the

press to mobilize public support throughout the United States” (p. 202). Who

is agent and who is subject here?

I am not interested in splitting hairs, and I am more than willing to accept

the postal system as an agent of social change. And, certainly,

John seems to equate “agent of social change” with the “communications

revolution” he has so ably shown the postal system to have initiated in this

period. However, that seems to me less a clarification of “agency”

and more an opening to explore what it means for the state to act as an

agent of social change. Published in 1995, John’s study came out at a time

when new works on the state, ideology, law, policy, and institutions had

somewhat recently begun to appear-some in response to the much earlier effort

to “bring the state back in”. Many of these works take as their central

premise the notion of the state or its institutions as agents of social

change, and a vibrant discussion emerged among the political scientists,

sociologists, and historians who take the state seriously as an agent in its

own right. In a very important way, I believe John’s study contributes to that

discussion

,

although without directly engaging it, and that is to be regretted. For

example, his short conclusion takes us back all-too-briefly to the

“communications revolution” where, in his interpretation, it all began.

But after such a journey through administrative history, politics,

political culture, public life, and social conflicts, it would have helped

tremendously to tie it all together with some more generalized attention to how

the postal system acted as the agent of social change and in “shaping

the boundaries of American public life” (p. 283).

Even so, this does

not diminish the power of John’s study, or his astute

analysis of the postal system in this early period of U.S. history.

Situating this postal history in its larger historical context and political

significance, John has done a very fine job with a huge,

complex, and unwieldy subject. This is an exhaustively researched study and it

draws on a wealth of detail to make its case. More than that, it raises some

important new ways of under standing events, such as Sabbatarianism and

abolitionism, that should be of interest to historians of nineteenth century

America. Political historians will be especially interested in his treatment

of Jacksonian democracy in action and his attention to political culture and

American public life.

Business and economic historians will find his discussion of the communications

revolution and the expanding postal network useful additions to our knowledge

of government policy influences on the early development of the national

market in this period. And those of us who study the state and state formation

should find this a welcome contribution as well, not only for taking on a

neglected and important subject, but also for taking that subject in new

direction s.

Subject(s):Markets and Institutions
Geographic Area(s):North America
Time Period(s):General or Comparative

The Second Bank of the United States and Ohio (1803-1860): A Collision of Interests

Author(s):Brown, Marion A.
Reviewer(s):Schweikart, Larry

Published by EH.NET (January 1999)

Marion A. Brown, The Second Bank of the United States and Ohio

(1803-1860): A Collision of Interests. Lewiston, NY. Edwin Mellen Press,

1998. ix + 286 pp. $89.95 (cloth), ISBN: 0-7734-8352-3.

Reviewed for EH.NET by Larry Schweikart, Department of History, University of

Dayton.

Although controversy about the Second Bank of the United States–and Andrew

Jackson’s “war” on it (predating James Carville’s “war” on Ken Starr)–has

quieted down recently, there is still much work to be done,

especially at the local/state level. Marion Brown’s Second Bank of the

United States and Ohio helps fill some of that void.

Brown, who is a professor of history at the University of Cincinnati’s College

of Applied Science, traces the local reaction and responses in Ohio to the

First and Second Banks of the United States (BUS). She provides evidence,

mostly from local and regional newspapers, but also from manuscript sources, on

the citizenry’s view of events surrounding the “monster

.” While she supplies a great deal of evidence that Ohioans felt the impact of

the Banks, she does not make clear what the political and/or economic

perspective of the writers was. For example, one is often left wondering if the

editorialists and writers

in the newspapers were city fathers? respected leaders? “hotheads?” Were they

pro- or anti-bank people? And why?

In short, we have a book with considerable research that often does not provide

the underlying political or economic structure to determine what that research

means. One thing is clear: Brown has read many studies,

but does not necessarily understand them, or, at least, recapitulate them

accurately. For example, she refers to studies done by Charles Calormiris

(which she misspells both times)

and myself that showed that Ohio’s banks were relatively better off than those

of other northern states after the Panic of 1857 not because of the state

systems or the safety fund, but because of the widespread branch network.

Indeed, there is little discussion throughout of branching in the private

sector.

However, Brown adequately discusses the implications of the BUS’s branches and

their impact.

Throughout, however, in addition to the absence of context for many of the

statements by editorialists and

writers of the day, there is a complete lack of economic context, particularly

monetary and banking theory. For example, Brown cites Fenstermaker’s 1965 study

on Biddle and the BUS’s ability to influence the U.S. economy, but Peter Temin

and Richard Timberlake, writing more recently, have shown that the BUS’s

operations were too small to affect the economy. Now she may be right that

locals perceived things differently, but that is not her argument.

By attempting to portray the struggle as “vigilant Ohioans guard[ing] against

any incursions upon their independence and liberty,” she simplifies the

political debates that occurred not only in Ohio but throughout the nation.

The book would have benefited greatly from a solid discussion of monetary and

banking

principles of the day. There is nothing to explain what specie reserves meant

to local customers. Was a high reserve good?

How did people know that the bank was issuing too much money? What did people

expect out of banks? What was the difference between

note issue and loans? Why were branches opposed? Why was free banking not

considered a more enticing alternative to the BUS? Brown’s discussions of the

Second BUS would have benefited from a thorough reading of Timberlake and David

Martin, not to mention

writers of the day, such as William Gouge and William Leggett. In other words,

too often it is unclear what fundamental principles–what “mindset,” in modern

slang–the various actors worked from.

Her study is, however, exceptionally valuable when it comes to detailing the

interactions between the BUS and its branches, pointing out the critical value

of honesty in branch managers. Brown’s careful discussion of several scandals

shows that trust was a “symbol of safety” in antebellum banking. She also does

a fine job of showing the difficulty of evaluating talent–aside from

honesty–of the BUS administrators,

who had to deal with distant employees in an era when communications were, by

our standards, primitive. On the other hand, there is little appreciation for

how the politicization of the banking system, like the postal system, was

primarily a function of the Jacksonian Democrats and not the Whigs; or of how

the creation of mass parties by the Jacksonians made the BUS “evil” only when

it was controlled

by political opponents.

While Brown concludes that Ohioans were hostile to the BUS, it is ultimately

not clear if this is because they (mistakenly) blamed the BUS for problems in

the state economy that could have been mitigated by better state banking la ws

allowing private banks to branch, or because the critics were more effective

than the defenders.

The Second Bank of the United States and Ohio, in short, is a

contribution–and in some places an excellent contribution–but it fails to

explain how, and why, there was a “collision of interests” and whether both,

or either, or those “interests” were justified in their positions.

Larry Schweikart Department of History University of Dayton

Larry Schweikart specializes in financial and banking history. His forthcoming

book, The Entrepreneurial Adventure, from Harcourt Brace, is a study of

American business and the American economy from the 1600s to the present.

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

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.

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

The Many Panics of 1837: People, Politics, and the Creation of a Transatlantic Financial Crisis

Author(s):Lepler, Jessica M.
Reviewer(s):Rousseau, Peter L.

Published by EH.Net (September 2014)

Jessica M. Lepler, The Many Panics of 1837: People, Politics, and the Creation of a Transatlantic Financial Crisis. New York: Cambridge University Press, 2013. xvii + 337 pp. $30 (paperback), ISBN: 978-1-107-64086-3.

Reviewed for EH.Net by Peter L. Rousseau, Department of Economics, Vanderbilt University.

In this richly-detailed monograph, Jessica M. Lepler of the University of New Hampshire offers cultural context for the Panic of 1837 that earlier treatments have lacked. Navigating impressively through a wealth of business correspondence and private letters of various merchants and financiers, large and small, as well as the contemporary press, Lepler paints a vivid picture of the thoughts that passed through the minds of individuals as their fortunes took a fateful turn in the spring of that year. Individuals on both sides of the Atlantic “panicked” in anticipation of the bankruptcy and financial ruin that was to come, and their riveting stories illustrate how overextended financiers viewed their failures as both personal and a result of general economic conditions beyond their control.

When viewed as descriptions of many personal panics, the monograph is aptly titled. And so long as the reader approaches the monograph from this perspective, there is much to be learned. The reader quickly becomes acquainted with a number of merchant bankers employed by the major discount houses in the market for exchange bills, and in the process benefits from how Lepler makes the complex interactions of this market easy to understand. The monograph form is ideal for fleshing out details in a way that economic journal articles cannot. There is also a careful review of timelines and information paths within the United States and across the Atlantic over the two months that preceded the suspension of specie payments by banks in New York City on May 10, 1837. The timelines seem to reveal a less immediate role for the Bank of England in the crisis than earlier accounts, and the role of U.S. domestic policies is for the most part characterized as non-substantive Whig rhetoric.

It is important to understand from the onset that the monograph will not offer its own view on macroeconomic causes of the panic, and the book becomes a more pleasant read once this point is accepted. Indeed, economists will find it difficult to distill general principles from the detailed narratives. Some of this is due to Lepler’s focus on the two-month period between President Martin Van Buren’s inauguration on March 4, 1837 and the general suspension of payments. This sets the book apart from most economic analyses of the period, which suggest that factors leading to the suspensions were in motion by mid-1836 or before, and that the suspensions were all but inevitable before Van Buren ever took the oath of office.

The monograph sharply dismisses the role of economic analysis in explaining phenomena such as commercial failures and business downturns, yet two facts about the monetary pressure of 1836 are inescapable: 1) Jackson’s policies on public land sales (i.e., “Specie Circular”) drew more than $2 million of coin to the West; and 2) The Deposit Act of June 1836 further dislocated the monetary base by forcing the Treasury to move specie about the country in preparation for distributing the government’s $38 million surplus revenue to the states. Many economists would also agree that the removal of the government’s deposits from the Bank of the United States in 1833 and their wide disbursement into state banks led to their multiplication at a time when the base itself was rising due to specie flows from abroad. Given these observations, it is not surprising that domestic policies worked to drain eastern banks of their reserves, bringing the crisis to a head by March of 1837.

These facts also suggest that merchant bankers in New York and New Orleans would be unable to obtain the specie required to settle international obligations in the face of even a modest decline in cotton prices. But one can easily imagine other events that could have ignited the tinder already piled high in New York. Of course the merchants and bankers panicked, and did so for good reason! When the commercial and financial failures finally undermined the confidence of the working class, they initiated a run on the New York banks as a rational response to the deteriorating economic conditions.

The monograph emphasizes how personal and cultural factors led to the collective excesses of 1837 rather than the role of national and international events in the crisis. The thread seems to be that these individual “panics” are too complicated for aggregate economic analysts, both past and present, to adequately sort out. This echoes recent critiques of macroeconomics that have found currency in light of the recent financial crisis. And while these critiques ring far more true than many economists can readily accept, reliance on historical narrative from a selection of primary sources without the discipline of quantitative evidence is subject to its own perils.

Lepler does succeed, however, in illustrating how the transatlantic trade of the time depended upon a very complex system of local and international credits, and how the disruption, dysfunction, and ultimate failure of these mechanisms became proximate causes of the suspensions. Although these disruptions were also symptoms of political and real-side factors over which most individuals had little or no control, the monograph provides ample evidence of just how fragile the international economy was in the 1830s. It is in this respect that the book represents a useful contribution to our understanding of the cultural history of the 1830s, and reminds us of the potential of cross-disciplinary research in reaching more complete understandings of historical events as important as financial crises.

Peter L. Rousseau is the author of “Jacksonian Monetary Policy, Specie Flows, and the Panic of 1837,” Journal of Economic History (2002).

Copyright (c) 2014 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 (administrator@eh.net). Published by EH.Net (September 2014). All EH.Net reviews are archived at http://www.eh.net/BookReview

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):Europe
North America
Time Period(s):19th Century

Project 2000/2001

Project 2000

Each month during 2000, EH.NET published a review essay on a significant work in twentieth-century economic history. The purpose of these essays was to survey the works that have had the most influence on the field of economic history and to highlight the intellectual accomplishments of twentieth-century economic historians. Each review essay outlines the work’s argument and findings, discusses the author’s methods and sources, and examines the impact that the work has had since its publication.

Nominations were received from dozens of EH.Net’s users. P2K
selection committee members were: Stanley Engerman (University of
Rochester), Alan Heston (University of Pennsylvania), Paul
Hohenberg, chair (Rensselaer Polytechnic Institute), and Mary
Yeager (University of California-Los Angeles). Project Chair was
Robert Whaples (Wake Forest University).

The review essays are:

Braudel, Fernand
Civilization and Capitalism, 15th-18th Century Time
Reviewed by Alan Heston (University of Pennsylvania).

Chandler, Alfred D. Jr.
The Visible Hand: The Managerial Revolution in American Business
Reviewed by David S. Landes (Department of Economics and History, Harvard University).

Chaudhuri, K. N.
The Trading World of Asia and the English East India Company, 1660-1760
Reviewed by Santhi Hejeebu.

Davis, Lance E. and North, Douglass C. (with the assistance of Calla Smorodin)
Institutional Change and American Economic Growth.
Reviewed by Cynthia Taft Morris (Department of Economics, Smith College and American University).

Fogel, Robert W.
Railroads and American Economic Growth: Essays in Econometric History
Reviewed by Lance Davis (California Institute of Technology).

Friedman, Milton and Schwartz, Anna Jacobson
A Monetary History of the United States, 1867-1960
Reviewed by Hugh Rockoff (Rutgers University).

Heckscher, Eli F.
Mercantilism
Reviewed by John J. McCusker (Departments of History and Economics, Trinity University).

Landes, David S.
The Unbound Prometheus: Technological Change and Industrial Development in Western Europe from 1750 to the Present
Reviewed by Paul M. Hohenberg (Rensselaer Polytechnic Institute).

Pinchbeck, Ivy
Women Workers and the Industrial Revolution, 1750-1850 
Reviewed by Joyce Burnette (Wabash College).

Polanyi, Karl
The Great Transformation: The Political and Economic Origins of Our Time
Reviewed by Anne Mayhew (University of Tennessee).

Schumpeter, Joseph A.
Capitalism, Socialism and Democracy 
Reviewed by Thomas K. McCraw (Harvard Business School).

Weber, Max
The Protestant Ethic and the Spirit of Capitalism
Reviewed by Stanley Engerman.

Project 2001

Throughout 2001 and 2002, EH.Net published a second series
of review essays on important and influential works in economic
history. As with Project 2000, nominations for Project 2001 were
received from many EH.Net users and reviewed by the Selection
Committee: Lee Craig (North Carolina State University); Giovanni
Federico (University of Pisa); Anne McCants (MIT); Marvin McInnis
(Queen’s University); Albrecht Ritschl (University of Zurich);
Winifred Rothenberg (Tufts University); and Richard Salvucci
(Trinity College).

Project 2001 selections were:

Borah, Woodrow Wilson
New Spain’s Century of Depression
Reviewed by Richard Salvucci (Department of Economics, Trinity University).

Boserup, Ester
Conditions of Agricultural Growth: The Economics of Agrarian Change under Population Pressure
Reviewed by Giovanni Federico (Department of Modern History, University of Pisa).

Deane, Phyllis and W. A. Cole
British Economic Growth, 1688-1959: Trends and Structure
Reviewed by Knick Harley (Department of Economics, University of Western Ontario).

Fogel, Robert and Stanley Engerman
Time on the Cross: The Economics of American Negro Slavery
Reviewed by Thomas Weiss (Department of Economics, University of Kansas).

Gerschenkron, Alexander
Economic Backwardness in Historical Perspective
Review Essay by Albert Fishlow (International Affairs, Columbia University).

Horwitz, Morton
The Transformation of American Law, 1780-1860
Reviewed by Winifred B. Rothenberg (Department of Economics, Tufts University).

Kuznets, Simon
Modern Economic Growth: Rate, Structure and Spread
Reviewed by Richard A. Easterlin (Department of Economics, University of Southern California).

Le Roy Ladurie, Emmanuel
The Peasants of Languedoc
Reviewed by Anne E.C. McCants (Department of History, Massachusetts Institute of Technology).

North, Douglass and Robert Paul Thomas
The Rise of the Western World: A New Economic History
Reviewed by Philip R. P. Coelho (Department of Economics, Ball State University).

de Vries, Jan
The Economy of Europe in an Age of Crisis, 1600-1750
Review Essay by George Grantham (Department of Economics, McGill University).

Temin, Peter
The Jacksonian Economy
Reviewed by Richard Sylla (Department of Economics, Stern School of Business, New York University).

Wrigley, E. A. and R. S. Schofield
The Population History of England, 1541-1871: A Reconstruction

Project Coordinator and Editor: Robert Whaples (Wake Forest
University)

Transition to an Industrial South: Athens, Georgia, 1830-1870

Author(s):Gagnon, Michael
Reviewer(s):Majewski, John

Published by EH.Net (August 2013)
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Michael Gagnon, Transition to an Industrial South: Athens, Georgia, 1830-1870. Baton Rouge, LA: Louisiana State University Press, 2012. xvii + 290 pp. $49 (hardcover), ISBN: 978-0-8071-4508-1.

Reviewed for EH.Net by John Majewski, Department of History. University of California Santa Barbara.

Best known as the home of the state?s flagship public university, Athens, Georgia (located in Clarke County) spearheaded southern industrialization in the late 1820s and early 1830s when local businessmen started several textile mills.? Although small by northern standards, these mills are an important test case of the interaction of manufacturing and the South?s slaveholding economy.? Michael Gagnon?s fine study of early industrial enterprise in Athens is part political economy, part social history, and part business history.? Although he is interested in the broader manufacturing community ? he has short sections on workers, clerks, and managers ? the bulk of his analysis focuses on the planter-industrialists and their firms. The level of detail allows Gagnon to understand the considerable interest that southerners had in expanding manufacturing as well as the considerable limitations such efforts faced.

Gagnon makes clear the textile mills of Athens originated from energetic town boosters that made economic development a community affair.? His analysis reveals that the founders and officers of Athens? manufacturing enterprises were often significant slaveholders who had substantial investments in plantations, urban real estate, and railroads.? These enterprises, it appears, were efforts at further diversify investment portfolios rather than revolutionize the southern economy.? Almost all the machinery was imported from the North, as were many of the foremen. The principle products were coarse cotton and woolen yarns and cloth marketed to both plantations (for slave clothing) and to upcountry farmers.? The investors in Athens? mills also worked to insure that the town became a terminus for the Georgia Railroad, which would allow them to further extend their market.?? Athens? strategic location in northwest Georgia ? located on the border of the state?s plantation economy and its yeoman upland region ? gave the town important advantages as a railroad and manufacturing center.????

Gagnon also examines the wider culture that Athens? ?respectable? residents promoted.? While class tensions occasionally led to protests among workers and clerks, manufacturing did not seem to provoke conflict in this largely rural area.? As was the case in many thriving towns in Jacksonian America, a widespread culture of improvement ? which included schools, lyceums, churches, temperance organizations, and a mechanics? society ? took root in Athens.? Agricultural reform, which sought to bring scientific methods to the area?s planters and farmers, helped bring this ethos of improvement to the countryside.? Athens? role as a university town helped contributed to this ?improvement? culture, as many wealthy families relocated to Athens when a son attended the University of Georgia.

The success of Athens (and the reported profits of its factories) initiated a mini-boom in Georgia textiles during the late 1840s.? The boom, however, soon turned to bust.? Northern firms used Georgia?s railroad network to undercut local producers, and Georgia?s small, undercapitalized mills struggled to compete.?? Athens? entrepreneurs attempted to diversify into other industrial operations ? including a machine shop ? but these efforts hardly lived up to the heady days of the 1830s, when Athens seemed to point the way to a diversified economy that combined manufacturing with slave-based agriculture.? Despite these failures, Gagnon credits Athens? planter-industrialists with setting the stage for post-bellum growth, including ?market penetration into Georgia?s upcountry due to the development of a state railroad system? (p. 179).

Gagnon has produced a superbly researched and finely written case study.? One could draw a quite different lesson from Athens, though, than Gagnon?s somewhat optimistic portrayal.? It is not even clear, given the small scale of these enterprises, why Gagnon believes they constituted a ?transition to an industrial South.? Many of the owners, he makes clear, explicitly rejected the northern and English models of industrialization (p. 205).? So exactly what, then, was antebellum Athens transitioning toward?? Southerners clearly wanted more diversification ? if only to become somewhat less reliant on the North ? but it is not clear that they saw a balanced economy (with a mix of commerce, manufacturing, and slavery) as ?industrial? in the way the Gagnon implies.?

In many respects, the effort to free Georgia and the rest of the South from northern economic domination failed.? Georgia?s railroad network was one example of that failure.? While many of Athens? industrialists successfully fought to insure that the Georgia Railroad reached Athens, the small city represented the end of the line for the surrounding upcountry counties.? Upcountry famers in these counties would have to travel considerable distances to reach Athens, which undoubtedly prevented them from marketing agricultural surpluses and buying consumer goods such as textiles.? To be fair to Georgia?s planter entrepreneurs, part of the problem was geographic ? mountainous terrain made railroads particularly costly to build in the upcountry, and the thinly populated countryside hardly provided a rich market that could offset these higher costs.
While we might be inclined to let planter-industrialists off the hook for the significant gaps in Georgia?s railroad network, there were no excuses for the abysmal state of public education. A quick check of online census records reveals that slightly less than 27 percent of whites between 5-19 years old attended school in 1850.?? These school attendance rates were abysmally low compared to the rural North, where 61 percent of 5-19 year olds attended school in 1850.? Athens? ethos of cultural improvement apparently did not extend much beyond the sons and daughters of slaveholders and a smattering of others.? Gagnon might have usefully explored the implications of a relatively uneducated and unskilled job force, both for Clarke County and the South as a whole.? Did the top-down of approach of planter-industrialists in areas such as Athens lock the South into a pattern of low-wage manufacturing??? Reliance on a poorly educated and relatively unskilled workforce, perhaps, is the real continuity between the Old South and New South that Gagnon seeks to find in Clarke County.

John Majewski is the author of Modernizing a Slave Economy: The Economic Vision of the Confederate Nation (University of North Carolina Press, 2009) and serves as Associate Dean of the Division of Humanities and Fine Arts at the University of California Santa Barbara.

Copyright (c) 2013 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 (administrator@eh.net). Published by EH.Net (August 2013). All EH.Net reviews are archived at http://www.eh.net/BookReview

Subject(s):Economic Development, Growth, and Aggregate Productivity
Industry: Manufacturing and Construction
Geographic Area(s):North America
Time Period(s):19th Century

America?s First Great Depression: Economic Crisis and Political Disorder after the Panic of 1837

Author(s):Roberts, Alasdair
Reviewer(s):Rousseau, Peter L.

Published by EH.Net (September 2012)

Alasdair Roberts, America?s First Great Depression: Economic Crisis and Political Disorder after the Panic of 1837. Ithaca, NY: Cornell University Press, 2012. vii + 255 pp. $26 (hardcover), ISBN: 978-0-8014-5033-4.

Reviewed for EH.Net by Peter L. Rousseau, Department of Economics, Vanderbilt University.

In this entertaining monograph, Alasdair Roberts of Suffolk University?s Law School casts a long shadow on economic events near the end of the Jackson presidency. And while it is safe to say that the form of populism defined by Jackson influenced the nation?s course well beyond his term as President, it is challenging to build a model in which economic events of 1837 continued to drive domestic and international decisions a decade later. But Roberts makes the argument in a straightforward manner: hard times and repudiation of state debts heightened the level of rhetoric across the Atlantic and exacerbated territorial tensions between the United States and Britain. The United States, portrayed as being in no position to wage war directly with Britain, though it had been down that path several times before, responded to the apparent attack on national honor by starting the 1846-48 war with Mexico over Texas. Along the way, hard times produced civil unrest in Northeastern cities and in upstate New York, the former over voting rights and the latter over archaic land use policies. The ?long shadow? hypothesis goes beyond the standard economic analysis of the period that views the recession as turning around in 1843. This is thought provoking, but carrying the narrative forward through the Polk administration also requires moving from data to anecdote to speculation on causes and effects.

Roberts also intends to relate disturbances in the 1840s to current events in the United States and abroad. This is understandable. If hard times in the 1840s were driven by irresponsible excesses in state spending and an inability of the Federal government to broker a solution, parallels with the current U.S. crisis in personal debt and sovereign crises across the Eurozone seem almost immediate. Yet as economic historians we must be circumspect in viewing history as a simple series of repeating events devoid of learning in the interim.??

Using contemporary accounts to build a theory of the 1840s frees the author from standard economic analysis, which would rely strongly on empirical evidence to support its claims. Indeed, any economic motivation provided is conventional, drawing heavily but with little attribution from a number of important and more recent secondary works. Avoiding long-standing debates on the domestic and international causes of the financial panics of the 1830s, Roberts focuses on a narrative that places non-economic British headlines at the center of civil unrest and a rising nationalism in the United States. This Anglo-slanted view attributes the state bond defaults to bad investment decisions and rogue banking within the United States. British creditors are seen as indignant victims of U.S. actions, and the fact that British capital dried up well before the defaults is not considered as a possible cause of abandoned projects and debt repudiations. Rather, the United States is characterized as a federal state paralyzed by the realities of the world economic order and rife with the same types of reckless actors that many view as responsible for the 2008 recession.

Whether I agree with the emphasis applied in this interpretation or not, the book has led me to reconsider my priors about several important figures in the 1840s. For example, many financial historians think of the Tyler administration as both inept and ineffective. Tyler?s dismissal by his own party and veto of central bank legislation no doubt influence these views. But was the emergence from the recession just a cyclical rebound or the result of a strong nationalistic impulse and crackdown on civil disobedience set into motion by Tyler? Roberts makes an intriguing case that Tyler was actually a shrewd administrator who used the resources at hand to undo the unrest that came as direct consequences of actions by his predecessors.

The book gets a bit sidetracked as the Tyler administration closes and the narrative turns to territorial disputes taken up by President Polk. This is not to say that the stories are uninteresting! But linking them to the panics and state debt defaults is speculative at best. After all, to say that disparaging public statements by influential British creditors in the early 1840s caused the United States to lay claim to territory that seemed naturally within its domain reaches well beyond basic economics. And to say that the hard times of the 1840s were the reason why individuals in Philadelphia, Providence and upstate New York turned to violent protests and other unlawful acts is again not obvious. Indeed it seems just as likely that people who felt disenfranchised by the political process would rise against an unsustainable status quo recession or not.

At the same time, economists are sometimes too closely bound by the discipline of rigorous theories and the scanty data that often represent the only evidence available for testing them. If a narrative theory can be put forward that relies on anecdotal and contextual evidence, why worry that the argument is something less than airtight? In this respect Roberts does students of the period a service by thinking outside of the normal constraints to conjure a broad and international view of the decade that followed the Jackson presidency.

Peter L. Rousseau is Professor of Economics at Vanderbilt University and Secretary-Treasurer of the American Economic Association. He is author of ?Jacksonian Monetary Policy, Specie Flows, and the Panic of 1837,? Journal of Economic History 62:2 (2002), 457-88.
???
Copyright (c) 2012 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 (administrator@eh.net). Published by EH.Net (September 2012). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):Economic Planning and Policy
Government, Law and Regulation, Public Finance
Macroeconomics and Fluctuations
Geographic Area(s):North America
Time Period(s):19th Century

Unsettled Account: The Evolution of Banking in the Industrialized World since 1800

Author(s):Grossman, Richard S.
Reviewer(s):White, Eugene

Published by EH.Net (March 2011)

Richard S. Grossman, Unsettled Account: The Evolution of Banking in the Industrialized World since 1800. Princeton, NJ: Princeton University Press, 2010. xx +384 pp. $39.50 (cloth), ISBN: 978-0-691-13905-0.

Reviewed for EH.Net by Eugene White, Department of Economics, Rutgers University.

Another history of banking?? Isn?t the shelf crowded enough? Not quite. While there are thoughtful and not-so-thoughtful books that attempt to explain the origins of the current crisis, Unsettled Account provides us with a new and welcome history of the last three centuries of banking.?

Who should read this book?? A lot of people.? For the legions of political, social and cultural historians, if they have to read one book on the historical evolution of banking, this is it.? It will provide them with the needed theoretical background without an equation in sight, useful country studies, and the insights needed to instruct their students.? For the legions of economic theorists, if they have to read one book on the historical evolution of banking, this is it.? The book is a guide to every key stylized fact they might use for a model, identifying the broad parameters of institutions and history.? For the legions of policy makers, if they have to read one book on the historical evolution of banking, this is it.? Distanced from the crisis of the moment, Grossman nicely hits the key issues and distills some relevant lessons.? What about the specialists, those of us who also write financial history?? Well, we have a worthy successor to older histories of world banking — a subject so large that recent scholars have shied away from attempting a new synthesis.? The last comprehensive history is H. Parker Willis and B. H. Beckhart?s now ancient Foreign Banking Systems (1929). For us, Grossman has sifted through the vast literature (his bibliography is 55 pages) and produced a new and balanced synthesis.?

Given the vastness of the subject, Grossman must be selective and he will not please everyone.? Incorporated banks that were the premi?re financial institution (with important exceptions like the Rothschilds) from the late seventeenth century until the mid-twentieth century have center stage. Investment banks, insurance companies, savings banks, and the multitude of new organizations that grew up in the second half of the twentieth century are set aside.? Furthermore, financial markets that complement and substitute for financial institutions are outside the scope of his inquiry, although he provides a good account of the growth of universal banking.? His focus is on Western banking — with special attention for England, Sweden and the U.S. One might complain that Germany, France, Italy, and Japan should also be case studies, but the overview that Grossman gives us in less than 300 pages requires some hard choices.? Lastly, his focus on the formation of our modern banking systems up to the Great Depression will leave some unsatisfied.

How to approach the seemingly unapproachable topic of banking?? Grossman employs a historical or ?narrative? approach.? As such his book is a logical successor to Charles Kindleberger?s much read and admired books, but while the narrative sufficed for Kindleberger, Grossman guides us by introducing some useful taxonomies to create a structure for analysis.? His comparison of banking systems is arranged according to four key issues: crises, rescues, merger movements and regulation.? It is these elements that combine together to generate the life cycle of the banking industry.

Grossman defines crises occurring when either a very prominent bank or a high proportion of banks are on the brink of failure. These events are enormously costly, sometimes reaching 20 percent of GDP.? While it is generally believed that it is difficult to relate banking crises to fundamentals because of the self-fulfilling character of bank runs, Grossman points to three underlying causes of banking crises: boom-bust cycles, shocks to confidence (often from wars), and weaknesses (usually regulation-induced) in the structure of the banking system.? These three forces, sometimes combined together, enable him to categorize and analyze crises.? He shows that inflation and growth of real GDP were higher during cyclical expansions that were followed by crises, as one would expect in a boom-bust cycle.? For the Great Depression, countries with larger more diversified banks were much less likely to suffer banking crises.? The subprime crisis of 2008-09, which emerged as Grossman was writing his book, serves as an out-of-sample forecast — nicely fitting the story of a boom-bust cycle, exacerbated by regulatory distortions.?

Grossman defines a ?rescue? as ?an intervention by a party not directly involved in a crisis to extend some sort of crisis-averting or crisis-ameliorating assistance to those that are directly involved? (p. 84). His definition is purposely vague in order to encompass the response of bailouts, lender of last resort activity, and ?more extreme measures.? While these actions may reduce the losses suffered by affected financial institutions? stakeholders, their costs are apportioned by political economy.? Lurking behind all such rescues is the danger of moral hazard, potentially inducing worse behavior in the next crisis.? For those who think bailouts are a new phenomenon, the book is an eye-opener, describing rescues of this type in Australia in 1826, Belgium in 1838, and Cologne in 1848.?? Grossman chronicles the development and spread of lender of last resort responses, studying the limitations of the American clearing houses in contrast to the growing effectiveness of the Bank of England.? More extreme actions range from bank holidays and moratoria on payments to nationalizations and deposit insurance.? He analyzes the trade-offs involved in these responses, including the risks of an economic collapse versus moral hazard.

An unmistakable trend over the past 200 years has been consolidation of the banking industry propelled by occasional merger waves. The result may be better diversified banks with economies of scale and scope and increased stability.? Merger movements have been generated by changes in banking technology, general economic growth, and often financial crises when the government invites takeovers of weaker by stronger institutions?? This chapter might also point out the possibility that mergers may have created institutions that are so big that they become ?Too Big to Fail,? increasing their ability to obtain favorable rescue packages from the government.

The dialectic between crisis and regulation makes an analysis of the ills of a banking system particularly difficult.? Crises usually call forth new regulations that may be imposed by a wise government to correct for market failures and improve financial and monetary stability or may be obtained by rent-seeking special interests tilting the playing field in their favor.? Unfortunately, regulations may also sow the seeds of a new disaster.? This problem is amplified by the difficulty of understanding the interactions between various regulations and their consequences.??

Given these complexities, Grossman faces a challenge in describing the evolution of banking?s regulatory attributes and picks out four key types of intervention.? The control of entry first focused on the question of whether one or many banks would have the right of note issue.? Once note issue was monopolized by a central bank, freer entry by competitors was generally permitted, although he finds a pattern where the first countries to centralize note issue were the last to enact a banking code that made entry easy.? His second type of regulation governs capital requirements.? Typically, these regulations initially specified minimum requirements, also limiting entry.? Above these minimums, the market was the key determinant of capital-to-asset ratios for most of the nineteenth and twentieth centuries.? Increased banking sophistication led to a drop in the average ratio for all countries from around 40 percent in the mid-nineteenth century to under 10 percent by 1920. What was the effect of government-imposed capital requirements?? Grossman offers a graph showing that countries without these regulations had higher ratios before 1913 and that haves and have-nots converged after World War I.? Interpreting this is daunting but he posits that more conservative banking systems may not have tempted government regulation.?? The third regulation — whether universal banking should be permitted, is certainly one of the most hotly debated issues today.? Grossman finds that universal banking came into existence without government sanction or encouragement often responding to the pace at which securities markets developed.?? In contrast, its demise in the U.S., Italy, and Belgium during the Great Depression was the result of government response to the alleged contribution of universal banking to the economic collapse — although this remains highly contested.? Who will police or supervise government-imposed rules constitutes his last dimension of regulation.? Sometimes this authority was placed within a central bank and sometimes in one or more independent agencies.?? Grossman finds an intriguing regularity that should stimulate future research: younger central banks were more likely to be made bank supervisors than their older counterparts.? He hypothesizes that this may because younger central banks were more adaptable in their approach to operations and able to manage a dual role.

The next three chapters offer case studies of England, Sweden and the U.S., which Grossman feels exemplify three distinctive evolutions.? For England, it was the fiscal needs of the state that started joint stock banking, creating the Bank of England in 1694 to provide a large loan to the government.? It was rewarded with the privilege of note issue and limits on competition.? By 1826, the needs of finance for the country?s rapid industrialization led to easier entry, temporarily reversed following crises in 1844.? While the Bank of England ultimately obtained a monopoly of note issue, competition came from deposit-creating joint stock banks. At the same time, recurrent crises and? increasing concentration of banking brought the Bank of England to recognize its role as a lender of last resort,?? While it failed to adequately manage the Overend, Guerney crisis in 1866, it quickly handled the Baring failure in 1890, ensuring that it did not lead to a full-scale panic.??

Grossman uses Sweden?s history as a counterpoint to England?s evolution.? In Sweden, joint stock banking arose not from the fiscal needs of the state but from the need for a useful means of exchange — paper money was a vital substitute for the weighty copper coinage.? Easy entry and competition was ultimately ensured because of the struggle between the Diet and the King over control of the banking system. The founding of the Riksbank in 1656 was modeled on the banks of Amsterdam and Hamburg, permitting it to take deposits, effect transfers and make collateralized loans.? Modern banking took off after the repeal of interest rate ceilings and the permission of limited liability in the 1860s.? Following the English pattern, liberalization brought both mergers and instability that led to increased supervision and regulation, particularly after the World War I slump and the collapse of Ivar Kreuger?s industrial empire in 1932.

In contrast to England and Sweden, the U.S. experience was heavily shaped by the federal nature of U.S. government.? Grossman views the origins of U.S. central banking as lying between England and Sweden with the First and Second Banks of the U.S being partly private and partly government owned.? The strictly limited 20-year charters helped to politicize banking and led to the ultimate demise of these proto-central banks.?? But, their rivals, the state-chartered banks did not survive with their privileges intact.? The demand for finance and open entry in democratic Jacksonian America led to the ?free banking? era.? Grossman also highlights as particularly American the early detailed banking codes imposed by the Congress and states.? As is well known, the consequence of these regulations was a fragmented banking system prey to frequent panics with no lender of last resort.? The response, the Federal Reserve Act of 1913, was to create a federal central bank — reflecting the political fears of concentrating power.? Unfortunately, the design of this institution weakened its capacity to act as a lender of last resort at critical moments during the Great Depression.

Grossman?s last chapter leaps through the vastly complicated remainder of the twentieth century.? Across all countries, he sees events as governed by the ?lockdown? during World War II and the slow postwar deregulation that was accelerated by the breakup of the Bretton Woods System.? ?Lockdown? is an apt word for the corset of regulations imposed on banks during the Second World War.? Interest rates, entry, mergers and activities were controlled; yet the anti-competitive nature of these regulatory regimes kept banks profitable, stable, and safe.? However, the growing demand for finance and unexpected inflation guaranteed that these systems could not endure.? The individual character of each national regime produced very different implosions, including the U.S. savings and loan collapse, the Nordic crises and Japan?s prolonged banking disaster.? The regulatory responses, notably Basel I and II, did not enhance stability; and he briefly touches on the crisis of 2008, perhaps saving that for a future historian to place in its proper historical context.? In the end, there are no parting policy recommendations.? Instead, Grossman sees a continuing pas de deux between regulator and regulated.? Regulators will attempt to correct weaknesses in the system after each crisis, while the regulated institutions will struggle to circumvent the constraints that limit their ability to meet the demands for finance.

Eugene N. White is a Professor of Economics at Rutgers University and is currently visiting the Paris School of Economics.? He is co-author (with Andrew Crockett, Trevor Harris and Frederic Mishkin) of Conflicts of Interest in the Financial Services Industry: What Should We Do About Them? (CEPR, 2003).

Copyright (c) 2011 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 (administrator@eh.net). Published by EH.Net (March 2011). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):General, International, or Comparative
Europe
North America
Time Period(s):17th Century
18th Century
19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII