is owned and operated by the Economic History Association
with the support of other sponsoring organizations.

Southern Society and Its Transformations, 1790-1860

Author(s):Delfino, Susanna
Gillespie, Michele
Kyriadoudes, Louis M.
Reviewer(s):Wahl, Jenny

Published by EH.NET (November 2011)

Susanna Delfino, Michele Gillespie, and Louis M. Kyriadoudes, editors, Southern Society and Its Transformations, 1790-1860.? Columbia, MO:? University of Missouri Press, 2011.? vii + 260 pp.? $40 (paperback), ISBN: 978-0-8262-1918-3.

Reviewed for EH.Net by Jenny Wahl, Department of Economics, Carleton College.

Southern Society and Its Transformations, 1790-1860 contains wide-ranging micro-histories covering topics from lynching to corporate entrepreneurship in the antebellum American South.? The vignettes contained within various essays are often riveting, although the essays themselves are uneven in quality.? The strongest chapters — particularly Gary Edwards?s work on yeoman farmers in Southwestern Tennessee — intersperse case studies with aggregate data to illustrate temporal changes in a particular sector of antebellum Southern society.? The weakest offer sweeping assertions without much evidence; some barely relate to the general theme of the collection.

The opening piece is a case in point.? Keri Merritt claims that vagrancy laws controlled poor whites before the Civil War just as they ?were used to control blacks in the postbellum period? (p. 27).? She says little about any transformation that may have occurred during the antebellum period.? What is more, she presents only spotty information about cases involving whites from a few antebellum Georgia court records, offering nothing tangible to connect pre- and post-Civil-War vagrancy laws.?? Some inferences seem unsupported as well; for example, a person with $200 of personal property in 1850 was not necessarily impoverished, although Merritt seems to think so (p. 34).?

Michael Pfeifer?s essay on lynching is likewise a little slim.? His data consist of newspaper accounts that point to 55 mob executions of blacks — mostly slaves — between 1835 and 1862.? Although Pfeifer declares that this far exceeds the estimate Eugene Genovese suggested (30 lynching of blacks between 1840 and 1860), the numbers don?t seem that different.? Nor do they seem large enough (two lynchings per year, out of nearly four million slaves) to suggest that a ?practice of mob execution of blacks had emerged in the South by the 1830s? (p. 47) or that antebellum lynching ?forecast the wide-scale disavowal of formal law by many southern whites after emancipation? (p. 57).? Theory fails to support the latter contention as well:? antebellum lynching pitted the interests of white owners against white mobs.? The calculus was far different after 1865.

Jeff Bremer?s conclusion — that people embrace markets where available — isn?t terribly surprising to economists.? The best parts of his essay on markets in rural central Missouri are the details he offers from his own research, particularly about the activities of individual women (p. 93).? His description of the Missouri-Santa Fe trade (pp. 90-91) — apparently compiled from other sources — is interesting.

The Edwards chapter (mentioned in the opening paragraph of this review) nicely pulls together census data on acreage, landless population, number of slaves, livestock value, and cotton production by planters and yeomen farmers for several Tennessee counties in 1850 and 1860.? It also offers an intriguing look at the multiple jobs held by yeomen and makes the insightful point that successful small farms relied heavily on the presence of adolescent and adult males (p. 120).??

Max Grivno?s chapter on Baltimore-area wage laborers opens with the shocking account of child murder and suicide committed by a desperately poor man (p. 130).?? His investigation of county records — wills, statutes, letters, court papers, newspapers — leads him to conclude that poverty yielded similar harsh conditions for whites and free blacks (p. 147).? Grivno also claims that local landowners paid the same paltry wage to everyone, regardless of race, and cared little about the color mix of their labor force.? Laborers alternated between following the harvest and scrabbling for menial jobs (p. 136); free blacks had the added burden of binding out their own children to avoid having the authorities take them away (pp. 142-44).?? This essay is well-written and filled with fascinating stories.

Jonathan Wells and Jennifer Green discuss Southern professionals — particularly doctors, dentists, lawyers, and civil engineers — and their associations, journals, school curricula, and careers.? Wells notes that Southerners were responsible for creating a legal definition of dentistry as a subset of medicine (p. 171).? Green uses military-school alumni records and Colin Burke?s American Collegiate Populations for the 1840s and 1850s to trace subsequent career patterns of graduates.? Although these are informative chapters, I would have liked to see some comparison to the North to ascertain whether different regional patterns emerged and, if so, why.?

Robert Wright sets himself a goal: to document that many Southern states enjoyed a level of corporate entrepreneurship approaching that of the North and far exceeding the level in Europe (p. 199).?? His measures are the per capita number and minimum authorized capitalization of specially incorporated companies.? Although his reach falls somewhat short of his grasp — he focuses almost exclusively on Virginia and Pennsylvania — Wright presents some nice data on special charters by business type, as well as a few case studies.

The book finishes with a chapter by Elbra David, who examines collections suits filed in Natchez — mostly in the 1820s — to discover how a local credit market worked.? David determines that slavery and cotton could support complex financial arrangements, including unsecured loans and promissory notes. David observes a growing rate of default and increasing reliance on promissory notes over time (p. 224) but gives little explanation for the trend.

Viewing the past via micro-histories offers an intriguing alternative to cliometrics.? These essays can be seen as providing small, sometimes eye-catching, pieces in the kaleidoscope that is antebellum Southern history.?? But that is all they can do.? In short, this collection will appeal to some economic historians and leave others longing to look at a larger pattern.?

Jenny Wahl, Professor of Economics, Carleton College is currently working on an investigation of the connections between income and wealth for high-wealth taxpayers.?

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 ( Published by EH.Net (November 2011). All EH.Net reviews are archived at

Subject(s):Agriculture, Natural Resources, and Extractive Industries
Business History
Financial Markets, Financial Institutions, and Monetary History
Servitude and Slavery
Geographic Area(s):North America
Time Period(s):18th Century
19th Century

Labor?s Canvas: American Working-Class History and the WPA Art of the 1930s

Author(s):Hapke, Laura
Reviewer(s):Weber, Cameron M.

Published by EH.NET (May 2009)

Laura Hapke, Labor?s Canvas: American Working-Class History and the WPA Art of the 1930s. Newcastle: Cambridge Scholars Publishing, 2008. x + 301 pp. $53 (hardcover), ISBN: 978-1-84718-415-3.

Reviewed for EH.NET by Cameron M. Weber, New School for Social Research.

The art produced under the Works Progress Administration during Franklin Roosevelt?s New Deal has recently undergone a resurgence of interest as the fields of cultural economics and the political economy of art have grown. The WPA?s Federal Art Project (1935-1943) created more than 100,000 fine art canvases and more than two million prints, so there is quite a corpus. At any one time during the period artists were between 1 and 2 percent of those getting ?work relief? from the WPA, which reached its peak of 3.3 million people in 1938. Some of the artists who worked for government pay during the 1930s, creating mostly regionalist or social realism works, then became world-renowned in the 1950s during the hey-day of American abstract and expressionist art. There is an uncomfortable relationship between these early and later periods in American art as they represent two completely different philosophical and aesthetic outlooks. The early period is concerned with capturing the scenes of everyday life in a Depression-era America and depicting an image of America in its attempts to face or overcome economic hardship together as a people. The later period was one of the so-called ?American Century? when the ideals of individualism and Cold War dominance took hold, this latter period is the ?modernist? period when increasingly non-representational art was created for ?art?s sake? and not for the sake of social realism. These diametrically-opposed material conditions as expressed in each period?s art, as well as the sheer volume of WPA art, are the main reasons for the continued interest in the Federal Art Project of the 1930s.

Laura Hapke uses the WPA-era art for another reason ? to tell the story of the rise of mass unionization in the United States. In her latest book on the socio-cultural history of the U.S. in the 1930s, Labor?s Canvas, Hapke chooses thirty-seven ?prolabor Social Realism? works of art to tell her story of the period, the main thesis being that unions in the U.S. during the inter-war years transitioned from being predominantly ?male and pale? and representing only the skilled trades in the early 1930s to a more inclusive mass-unionization from the mid-1930s onward. Hapke?s approach is therefore novel and engaging for anyone interested in the many fields Labor?s Canvas encompasses; cultural studies, labor history, art criticism and economic history. Political biography is also a part of a Hapke?s palette in that an underlying narrative thread in Labor?s Canvas is the political affiliation, and thus implicit sympathy with the labor subject matter, of each of the more than thirty artists under study in the book.

The chapters are organized to support and justify the main thesis of the book. In the first two chapters we are introduced to labor art, the artist as cultural worker and a discussion of wage-labor in the capitalist state. Chapter 3 begins a study of the 1930s art and a parallel transitioning from the dominance of the skilled-labor American Federation of Labor (AFL) to the more inclusive Congress of Industrial Organizations (CIO). Chapter 4 focuses on ?white male? art depictions while Chapter 5 then moves beyond the individual into how crowds are depicted in 1930s art. Here we are introduced to Reginald Marsh?s iconographic Breadline ? No One Has Starved (1932) and other works depicting masses of job-seekers, strikers and labor rallies. The next two chapters are about how blacks and women are depicted in the 1930s art, respectively. In Chapter 6 Hapke uses the legend of John Henry as a metaphor for the black man?s adaptation to wage labor and industrial technology, whereas Chapter 7 applies feminist analysis to deconstruct the stereotyping of women in specific works of 1930s art.

The final chapter in Labor?s Canvas is perhaps the most valuable contribution to cultural and labor studies of the 1930s in that Hapke discusses the labor history of the artists themselves. We are introduced to each artist?s upbringing and ?class background? and to pre-1930s artworks as appropriate. We learn of an artist?s political affiliations, if any, including that of the Communist Party (CPUSA), and to varying degrees of political activism depending on the artist. We also learn of the educational programs of the John Reed Club, the formation and transformation of the Artist Union and its agitational Artists? Committee of Action, the artists? push for a continued federal arts program using labor activism, the AFL rejection of most artists and their subsequent acceptance into the CIO.

There is no doubt that the method and ambition for Labor?s Canvas are admirable, certainly for this reviewer whose fields are cultural economics and economic history, yet there are some serious drawbacks in the book?s realization. We can label these criticisms under ?Beard?s Lament?. Progressive historian Charles Beard in The Economic Interpretation of the Constitution of the United States (1913) lamented the fact that not enough history was written with adequate attention paid to economic and legal details. This ?lament? holds for Labor?s Canvas. In the first instance, not enough emphasis is given as to why ?mass-unionization? actually occurred in the 1930s (labor union membership more than doubled, from 11% of the workforce in 1935 to 24% of the workforce in 1940), a period Hapke describes as being ?when the labor movement was in turmoil? (p. 54) and when artists were willing to ?trade breadlines for marching bodies demanding labor rights and increased wages? (p. 138). It was the New Deal which created this labor activism to begin with.

The ?first? New Deal in 1933 created the National Industrial Recovery Act, whose Section 7(a) gave monopoly bargaining rights to labor unions and authorization for cartelized price-fixing for output to industry on condition that the monopoly rents be shared with the unions themselves and that the ?high-wage doctrine? originally encouraged by Hoover be maintained. Then the ?second? New Deal?s Wagner Act in 1935 removed harm done by strike actions from the civil court system and placed labor negotiations under administrative law, specifically the National Labor Relations Board. It was these political pay-offs to the unions? support of Roosevelt in the 1932 election which triggered the very cultural/structural changes in society that underpin Labor?s Canvas mass unionism narrative. It is therefore lamentable that Hapke?s analysis does not capture the NIRA and Wagner Act beyond a superficial level.

This lack of directly relevant legal and economic analysis then points to a larger criticism of Labor?s Canvas. In Hapke?s narrative we are given a critique of capitalism as a ?system.? Under this essentialist reading, cultural and economic change is viewed as a closed system with all change occurring in a power trade-off between capital and labor. In fact, one of the underlying narratives is that in the pre-Wagner Act period government and capital were aligned against labor while in the later 1930s it is labor and government who are aligned against capital. An essentialist reading of social relations under capitalism which sees government as a tool for enforcing the existing social order, be it even towards labor as opposed to capital, may not be able to capture the disaggregated power struggles between ?organized? labor and the laboring person who is not a member of a union.

If it is indeed the suffering of the ?forgotten? man and woman that we are concerned with in the Great Depression, we should be concerned not with the well-being of labor unions and how well the unions play any struggle over power, but of each worker herself (especially the unemployed worker who is not fortunate enough to get one of the cartelized high-paying union jobs). One should note though that Hapke does not always resort to an essentialist analytical lens. She states, ?Whether Party stalwart or severe critic, prounion or prolabor, tolerant of the AFL or not, artists on the FAP were not unconflictedly proworker? (page 7, emphasis added). Hapke here may recognize that the purpose of a union is to keep wages high, which helps those in the union but hurts those that are not in the union, and that mandated high wages decrease the number of jobs in the economy. Unionization itself is not necessarily good for all labor, just some labor.

The largest lament in a reading of Labor?s Canvas is the fact that it just does not contribute to our understanding of state cultural production during the build-up of the American welfare state. Of the 37 works of art reproduced in the book, only 22 are within the time period, 1935-1943, during which the Federal Art Project was operating and of these one is from the 1941 ILWU/CIO publication Storm Over Bridges (and thus of course not a government-financed work of art), one is the masthead from the Artists Union publication Art Front, one is identified in the text as not being within the period the artist worked for the WPA, one is a photograph, not a drawing or painting (e.g., not a ?canvas?), and unfortunately one, William Gropper?s Youngstown Strike (1936-1937), is missing altogether and in its place is a second reproduction of Thomas Hart Benton?s Trouble on the Picket Line (1930) which appears again later in the book and which could easily cause confusion for the uninitiated reader due to like subject matter.

Most importantly, the identifications for each (black and white) work of art on the full pages where the artworks are reproduced do not identify whether or not the work, if produced during the relevant time period, was actually painted while the artist was employed by the WPA-FAP nor whether the work was produced for the FAP or privately in ?off-hours.? Gropper?s Youngstown Strike, for example, is now owned by the Butler Institute for American Art in Youngstown, Ohio through a museum purchase which sends a signal that it was produced privately. All works produced for the WPA (those which were not lost or destroyed) were loaned by the federal government to state and local governments or not-for-profit organizations with ownership rights remaining with the U.S. Government. Additional work by Hapke with the Francis V. O?Connor papers at the Smithsonian Archives of American Art could have at least helped to identify an artist?s period of employment with the WPA and further work at the National Archives in College Park, MD may have identified specific works as produced for the WPA.

However, even if each work of art was specifically tracked to its individual funding source it would be hard to generalize from selected works an overall state cultural strategy for the New Deal. Local Federal Art Project administrators were given considerable leeway in their content and stylistic approvals for WPA-funded art, so perhaps no one ?official? style or thematic content can ever be deemed as the sanctioned New Deal art. (This of course can be juxtaposed with the USSR, where Stalin declared in 1932 that only artworks depicting Socialist Realism were allowed.) If we then view Labor?s Canvas as telling a labor history through the art of the 1930s, as opposed to one through the government art of the 1930s ? a story less ambitious than the one Hapke attempts ? we can find much to admire in the book.

Cameron M. Weber is a Ph.D. student in economics and historical studies at the New School for Social Research. Email:

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

From Higher Aims to Hired Hands: The Social Transformation of Business Schools and the Unfulfilled Promise of Management as a Profession

Author(s):Khurana, Rakesh
Reviewer(s):Stabile, Donald R.

Published by EH.NET (November 2007)

Rakesh Khurana, From Higher Aims to Hired Hands: The Social Transformation of Business Schools and the Unfulfilled Promise of Management as a Profession. Princeton, NJ: Princeton University Press, 2007. viii + 531 pp. $35 (cloth), ISBN: 978-0-691-12020-1.

Reviewed for EH.NET by Donald R. Stabile, Department of Economics, St. Mary’s College of Maryland.

Is management a profession? Are collegiate schools of business legitimate professional schools? The answers Rakesh Khurana’s book provides to both questions are “not yet” and “maybe never.” In reaching these answers, Khurana, associate professor of organizational behavior at Harvard Business School, provides a wealth of information about the history of collegiate business schools. His aim, however, is not to write a history of those schools. Rather, he is concerned with the process of legitimation. To him, the growth of big business in the U.S. created the new occupation of management, but managers did not attain the social authority of other professional occupations such as medicine and law. By providing university training in business on par with programs at law and medical schools, promoters of business schools intended at the outset to give managers the legitimacy of a profession. On Khurana’s account they have failed and managers have never been able to act from the “higher aims” of the book’s title instead performing more as “hired hands.”

To make his case, Khurana divides the book into three parts. Part one details the early years of business schools, 1881 to 1941, when they engaged in what he calls their “professionalization project.” The Wharton School at the University of Pennsylvania, an undergraduate program founded in 1881, was the first university business program. In 1901, Dartmouth established the Tuck School of Business as a five-year program that culminated in a master’s degree. Harvard followed in 1906 with its strictly graduate school of business and the MBA. Other universities joined the trend and by the 1920s the school of business became an established, if controversial, feature of many university campuses.

To attain their own legitimacy as professional schools, the business schools presented management as a science by following the pioneering work of Frederick W. Taylor, although Khurana questions whether those schools ever developed a science of management. Deans of those business schools recognized that the definition of professionalism went beyond science to include research, ethics and social responsibility ? the “higher aims.” To promote their definition of professionalism, those deans formed the American Association of Collegiate Schools of Business (AACSB) in 1916. It was to serve as both a professional association and an accrediting body to ensure that business programs had high standards consistent with a professional education. The AACSB promoted the “professionalization project” for the next half century and Khurana’s use of the AACSB archives to tell its story is a notable scholarly achievement.

Part two describes a period of institutional acceptance of business schools, 1941-1970, when they began adopting a standardized curriculum. During World War II, academics contributed a range of technical innovations such as linear programming and statistical quality control to help the government plan and coordinate its wartime activities. After the war, the federal government used the GI Bill to send a large cohort of returning soldiers to college. These soldiers provided an expansion in higher education, especially in business schools. Consequently many business schools reduced their standards in terms of the academic credentials of their students and the quality of their courses. The AACSB tried to uphold its standards but, on Khurana’s account, it went into decline. The large national foundations such as Carnegie, Rockefeller and Ford replaced the AACSB as the main influence on business schools. These foundations used their money to promote a business school curriculum that stressed quantitative methods at the cost of ethics and social responsibility.

This approach removed business faculty from concern with the actual operation of a business but left them vulnerable to market forces, the concern of part three of the book. Here Khurana finds the main influence to have been in the discipline of economics, particularly the neoclassical school that had a project to transform economics into a methodology of high theory that abstracted from the events of the real world and focused on how pure markets worked. The school dominated economics in the 1980s and their view that markets remained the best way to organize economic activities began to take over social discourse in the U.S. Khurana construes this market orientation as leading to the view that managers are free agents who should continually seek their highest incomes with no loyalty to their employers and no social responsibility. At the same time, in the late 1980s Business Week began a trend in ranking MBA programs using ratings from students and their employers, that is, a market standard. Business schools responded to those ranking by changing their programs to offer what the market wanted rather than what a “profession” of management should have. Khurana leaves it an open question whether business schools can regain their spirit of the “professionalization project,” although he offers some suggestions as to what they might do to regain it.

Khurana presents his argument in rich detail and the book is worth reading by anyone interested in the current trends in the commercialization of academia. At the same time, he is raising an issue that is as old as higher education. The beginnings of higher education in ancient Greece saw a debate over its nature between the classic philosophers and the sophists. The sophists earned their living by teaching practical subjects as determined by the marketplace, while Plato and Aristotle, with the advantage of personal wealth, opened schools that aimed at the discovery of virtue. The problem then and now is defining virtue or what Khurana refers to the “higher aims.” In the secular and culturally diverse world of U.S. universities many disciplines have tried to claim the privilege of defining virtue but none have succeeded. The discipline of business has not yet sought this privileged place in academia. Still, the market system has given business a privileged place in society. The future may well see business schools attaining the “professionalization project” not to confer legitimacy on managers but from the legitimacy of managers. That is how the older professions conferred legitimacy on their professional schools, as Khurana clearly understands.

Donald R. Stabile is Professor of the College at St. Mary’s College of Maryland. His latest book is Economics, Competition and Academia: An Intellectual History of Sophism versus Virtue (Edward Elgar, 2007).

Subject(s):Education and Human Resource Development
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

American Railroads and the Transformation of the Ante-bellum Economy

Author(s):Fishlow, Albert
Reviewer(s):Majewski, John

Classic Reviews in Economic History

Albert Fishlow, American Railroads and the Transformation of the Ante-bellum Economy. Cambridge, MA: Harvard University Press, 1965. xv + 452 pp.

Review Essay by John Majewski, Department of History, University of California – Santa Barbara.

Albert Fishlow and the Road to the New Economic History

Albert Fishlow’s 1965 book, American Railroads and the Transformation of the Ante-bellum Economy, received widespread praise when it was initially reviewed. Jeffrey Williamson considered it “as the ripest fruit thus far to come from the vineyard of the new economic historian.”[1] Stuart Bruchey similarly ranked American Railroads as “the finest product of the ‘new’ economic history.”[2] Fishlow’s impressive evidentiary base and his carefully drawn conclusions have made American Railroads an enduring classic that is still cited today. There is more to the story of American Railroads, though, than that of well-crafted scholarly work. The book’s forty-year career is a window from which one can glimpse the transition from the “Old Economic History” to the “New Economic History.”

American Railroads is Fishlow’s award-winning Harvard dissertation written under the supervision of Alexander Gerschenkron. Fishlow’s project was, to say the least, ambitious for a graduate student: he wanted to systematically evaluate the impact of railroads on the antebellum economy. Fishlow started by calculating the social savings of railroads, which can be roughly defined as the railroad’s reduction in freight and passenger rates over the next best alternative. Calculating the social savings of antebellum railroads, given the period’s uneven statistical sources, presented Fishlow with an immense challenge. His statistical appendices, which totaled more than 150 pages, indicate how rigorously he tackled the problem. The quantitative element of American Railroads reflected the rise of the New Economic History, which was transforming their field through the use of formal models and sophisticated statistical techniques. Gerschenkron, in fact, also served as mentor for Paul David and Peter Temin, two other distinguished contributors to the New Economic History.[3]

Fishlow’s conclusions, though, differed significantly from those of Robert Fogel, often considered the leading figure of the cliometrics revolution. Fogel famously argued that railroads made a relatively small contribution to U.S. economic growth in 1890. Fishlow, on the other hand, estimated the social savings of railroads in 1859 was 4 percent of GNP. Extrapolating to 1890, Fishlow calculated, produced social savings of least 15 percent of GNP, far higher than Fogel’s estimate of 5 percent. The key difference rested on the way each defined social savings. Fishlow estimated the social savings by comparing railroads to actual alternatives available in the antebellum period. Fogel, on the other hand, calculated the social savings of railroads to a vast system of improved roads and canals that nineteenth-century Americans might have built in the absence of railroads. Fogel, in essence, compared railroads to an economy that did not exist. What William R. Summerhill calls “Fishlovian” and “Fogelian” counterfactuals have different strengths and weaknesses.[4] Fishlow’s method generally results in upper-bound estimates of social savings, but avoids what Fishlow called “[t]he inherent difficulties of measuring what never occurred” (p. 58).

If Fishlow and Fogel philosophically disagreed over the nature of social savings, their work nevertheless had much in common. Both criticized W. W. Rostow, who claimed that antebellum railroads constituted a “leading sector” that induced widespread industrialization via backward linkages to coal, iron, and machinery. Such bold claims, in fact, initially sparked Fishlow’s interest in railroads, and his book provides a devastating critique. Fishlow shows, for example, that most locomotives in the antebellum period burned wood, which meant that railroads used a surprisingly little coal. As for iron, Fishlow demonstrates that railroads accounted for only 20 percent of net consumption in the 1850s. Twenty percent was certainly significant, as Fishlow notes, but hardly revolutionary. Nor did railroads single handily create the machinery industry. Fishlow argues that the production of locomotives created “no strategic breakthroughs” in steam engine design and production (p. 152). Steamboats, in fact, demanded far more in the way of large, sophisticated engines.

In Fishlow’s account, Midwestern farmers and agricultural processing industries (such as flour milling) benefited the most from railroads. Railroads led to the creation of new farms and the growth of towns and cities that could market and process the growing surplus of grains, hogs, and cattle. Fishlow persuasively argued that these railroads were not built ahead of demand. Midwestern railroads, in fact, ran through densely populated areas, which intensified development in locales best suited for commercial agriculture. Almost from the very beginning, these railroads made substantial profits, which one would not expect from developmental enterprises built ahead of demand. Private capital markets (with occasional help from local governments) financed most Midwestern railroads, thus confirming that investors expected these companies to make money sooner rather than later.

Fishlow’s argument has important implications for understanding the relationship between government policy and economic development. Since antebellum railroads generally made money, investment from the national or state governments was not important. To the extent it occurred at all, government investment led “to excess and wasteful construction” (p. 310). The U. S. case showed that investment in railroads — an example of “social overhead capital” — produced high social rate of returns, but only in the context of a vibrant market economy. Fishlow presciently warned that underdeveloped nations — especially those “wracked with large and unproductive agricultural sectors, illiteracy, concentrations of wealth, frequently wasteful government intervention” — should avoid mechanistically investing in “social overhead capital” to magically replicate the U. S. experience (p. 311). The generally poor record of large-scale infrastructure projects in many parts of Africa, Asia, and Latin America underscores the salience of Fishlow’s point.[5]

Fishlow’s conclusion foreshadowed a shift in his research to contemporary development issues, where he often focused on Brazil and other Latin American nations. The influence of American Railroads, not surprisingly, subtly waned. The comparison with Fogel’s Railroads and American Economic Growth is instructive. Whereas Fishlow’s book remained an expensive hardback, Fogel’s book was published in paper, suggesting a wider readership in undergraduate courses and graduate seminars. Fogel, of course, never shied away from debate and controversy. His 1979 article “Notes on the Social Saving Controversy” — which defended his previous arguments with new evidence and new models — effectively gave him the last word in the debate.

That Fogel’s book received more sustained attention than Fishlow’s attests to its greater appeal to up-and-coming cliometricians. Fogel formally modeled his conception of social savings. Equations fill entire pages of Railroads and American Economic Growth, and even the book’s subtitle, Essays in Econometric History, has a strong cliometric flavor. Fishlow, on the other, eschewed formal models expressed as algebraic equations. Instead of running regressions, Fishlow presented most of his statistical evidence in descriptive tables. As D. McCloskey has argued, Fogel’s provocative rhetorical approach — which combined the confrontational approach of a courtroom lawyer with the technical apparatus of a cutting-edge scientist — appealed to new generation of economic historians.[6]

One might think that the practitioners of the old economic history would embrace Fishlow’s work as a more conservative alternative to Fogel’s aggressive counterfactual models. Alfred Chandler, for one, certainly found Fishlow’s approach more compatible with own view that railroads fundamentally transformed the American economy. Many other traditional economic historians, though, criticized Fishlow’s conclusions. Carter Goodrich, in particular, believed that Fishlow had underestimated the importance of government action. Goodrich considered himself part of the “American System” synthesis that stressed the importance of government investment in the early American economy. Goodrich seriously questioned few of Fishlow’s specific findings, but argued that the broader history of internal improvements — whether the canals of the Early Republic or the transcontinental railroads of the Gilded Age — showed the necessity of government investment.[7] Goodrich’s critique subtly changed the question from the role of railroads in the antebellum period to the role of government in the nineteenth century economy. That, of course, is a far different question than Fishlow asked, and one that has still not been fully answered to this day. If Goodrich’s critique did not undermine Fishlow’s evidence or analysis, it highlighted the profound differences between cliometricians and those using more traditional historical methods. Politics, ideology, and culture — not counterfactuals and social savings — most interested Goodrich and his intellectual heirs.

Here, then, is the bittersweet career of American Railroads. Fishlow’s impressive scholarship was not quite econometric enough to hold the attention of economists, yet proved too statistical to appeal to the more traditional economists and historians. One might interpret the fate of American Railroads as a cautionary tale of the troubles that befall interdisciplinary scholarship in an age of specialization. Such a dire assessment is unwarranted. Fogel may have grabbed the headlines, but Fishlow’s careful analysis and extensive research have provided scholars with a treasure trove of hard-earned knowledge. That Fishlow’s book is included in this series testifies to its significance. In his preface to American Railroads, Fishlow apologized (in 1965!) for writing yet another book about railroads. Future generations will certainly acknowledge their debt to Fishlow’s work as they write their own histories of railroads and government policy.


1. Jeffrey G. Williamson, Economic History Review, (April 1967): 196.

2. Stuart Bruchey, American Historical Review, (April 1967): 1098.

3. For more details on Gerschenkron’s Harvard workshop, see Eugene N. White’s interview of Fishlow in Samuel H. Williamson, John S. Lyons, and Louis P. Cain (eds.), Reflections on the Cliometric Revolution: Conversations with Economic Historians (forthcoming, 2006).

4. William R. Summerhill, Order against Progress: Government, Foreign Investment, and Railroads in Brazil, 1854-1913 (Stanford: Stanford University Press, 2003), 215-16.

5. William Easterly, The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics (Cambridge, MA: MIT Press, 2001), 25-44.

6. D. N. McCloskey, The Rhetoric of Economics (Madison: University of Wisconsin Press, 1985), 113-137.

7. Carter Goodrich, “Internal Improvements Reconsidered,” Journal of Economic History, (June 1970): 289-311.

John Majewski is an associate professor in the history department at UC Santa Barbara. He is the author of A House Dividing: Economic Development in Pennsylvania and Virginia before the Civil War (Cambridge University Press, 2000), and is currently writing a book on the political economy of Confederate secessionists. He thanks John Lyons and Robert Whaples for their helpful comments on this review.

Subject(s):Transport and Distribution, Energy, and Other Services
Geographic Area(s):North America
Time Period(s):19th Century

Manpower in Economic Growth: The American Record since 1800

Author(s):Lebergott, Stanley
Reviewer(s):Margo, Robert A.

Classic Reviews in Economic History

Stanley Lebergott, Manpower in Economic Growth: The American Record since 1800. New York: McGraw-Hill, 1964. xii + 561 pp.

Review Essay by Robert A. Margo, Department of Economics, Boston University.

Manpower after Forty Years

During the first half of the twentieth century classical musicians routinely incorporated their personalities into their performances. One recognizes immediately Schnabel in Beethoven, Fisher in Bach, Cortot in Chopin, or Segovia in just about anything written for guitar. As the century progressed performance practice evolved to where the “text” — the music — became paramount. The ideal was to reveal the composer’s intent rather than putting one’s own stamp on the notes — the performer as conduit per se rather than co-composer.

Personal style played a major role in the early years of the cliometrics revolution. Hand a cliometrician an unpublished essay by Robert Fogel or Stanley Engerman, and I am quite sure she could identify the author after reading the first couple of paragraphs (if not the first couple of sentences). No one can possibly mistake a book by Doug North for a book by Peter Temin or an essay by Paul David for one by Lance Davis or Jeffrey Williamson. To some extent this is because personal style mattered at the time in economics generally — think Milton Friedman or Robert Solow. But mostly it mattered, I think, because these cliometricians were on a mission. Men and women on a mission put their personalities up front, because they are trying to shake up the status quo.

So it is with Stanley Lebergott. Indeed, of all the personalities who figured in the transformation of economic history from a sub-field of economics (I am tempted to write “intellectual backwater”) that eschewed advances in economic theory and econometrics to one that embraced them (I am tempted to write “for better and for worse”), Lebergott’s style was perhaps the most personal. In re-reading Lebergott’s most famous book — his Manpower in Economic Growth: The American Record since 1800 (1964) — one sees that style front and center on nearly every page, as well as the conflicting emotions as its author tried, not always successfully, to marry the anecdotal and archival snippets beloved by historians with the methods of economics. Manpower was (and is) substantively important for two reasons. First, prior to Manpower, the “economic history of labor” meant unions and labor legislation. By contrast, Lebergott made the labor market — the demand and supply of labor — his central focus and in doing so elevated markets and market forces to a central tendency in the writing of economic history. Second, Lebergott produced absolutely fundamental data — estimates of the labor force, industrial composition, unemployment, real wages, self-employment, and the like — that economic historians have relied on (or embellished) ever since.

These two accomplishments aside, I emphasize style not because, in Manpower‘s case, it is light years from the average article that I accept for publication in Explorations in Economic History. Economic history, like all economics, is vastly more technical than it was in the early 1960s. Burrowing into the style of Manpower reveals an author transfixed with what he perceived to be the grandness of the American experiment, the transformation of a second-rate colony into the greatest economy the world had yet seen. The core of Manpower would always be its 33 appendix tables and 252 (!) pages of accompanying explanatory text lovingly produced and so relentlessly documented as to drive any reader to distraction (or tears). So much the line in the sand, daring — indeed, taunting — the reader to do better. Lebergott knew that, in principle, one could do better, because he did not have ready access to all the relevant archival materials. I would conjecture, however, that he would always be surprised if anyone did, in fact, do better. Tom Weiss, himself one of the great compilers of American economic statistics, spent several years redoing Lebergott’s labor force estimates using census micro data rather than the published volumes that Lebergott relied on (Weiss 1986). In commenting on Weiss’s work, Lebergott (1986) characterized the differences between his original figures and the revisions as “very small beer” and then took Weiss to task for failing (in Lebergott’s) view to fully justify the revisions. “One awaits with interest,” he concluded, “further work by the National Bureau of Economic Research project of which this is a part.” When Georgia Villaflor and I (Margo and Villaflor 1987) produced a series of real wage estimates for the antebellum period drawing on archival sources that Lebergott did not use, I received a polite letter congratulating me but requesting more details and admonishing me to think harder about certain estimates that Lebergott felt did not mesh fully with his priors. There are thousands of numbers in those 33 appendix tables and one’s sense is that each number received the undivided attention of its creator for many, many, many hours.

But numbers do not a narrative make. Chapter One, “The Matrix,” has little in common with the archetypal introduction that gives the reader a roadmap and a flavor of the findings. It begins rather with an 1802 quote from “The Reverend Stanley Griswold” about the frontier that lay before the good minister. “This good land, which stretches around us to such a vast extent … large like the munificence of heaven … [s]uch a noble present never before was given to any people.” (Reviewer’s note: any people? Which people?) The first sentence goes on to describe an incongruous scene from Kentucky in 1832, “a petit bon homme” and his wife and their “little pile of trunks” sitting in a restaurant in the middle of (literally) nowhere. We then learn of a “great theme” of American history, that which motivated those who wrested the land from the “wilderness” — a belief in an open society, of which there were three elements. First, “hope” — an unabashed belief that things will always get better, and were better in America than in Europe. Second, “ignorance” — Americans were always willing to try something new, no matter how crazy. Third, America had a huge amount of space for people to spread out in. OK, the reader says, but where’s the economics? Ca. page 13 Lebergott emphasizes that the three elements made Americans unusually restless people, willing to move all the time. Ordinarily, Lebergott opines, it is the smaller (geographically-speaking) countries that have higher labor productivity because, ordinarily, people do not like to move. But Americans liked to move, he claims, and they did so on the slightest provocation. Excessive optimism, misinformation, and folly are core attributes of the American spirit and key factors in the American success story. In the end, the errors didn’t matter anyway (“small beer” indeed) because the land was so rich. More people moved to California in 1850 than could be rationally justified by the expected returns to gold mining but, as a result, California entered the aggregate production function sooner than otherwise. Labor mobility per se was a Good Thing, and American had it in abundance.

Chapter Two asks where all the workers would come from. Lebergott notes that certain labor supplies were highly predictable — slaves, for example. But once the slave trade was abolished the supply of slave labor grew at whatever the natural rate of increase. If the riches of America were to be tapped, free labor would have to be found — all the more difficult if the required number of workers to be assembled in any given spot was very large.

Another element of the Lebergott style is a dry wit, as evidenced in his exchange with Weiss. In a section on “[t]he Labor Force: Definition” we are told that ‘[t]he baby has contributed more to the gaiety of nations than have all the nightclub comics in history. We include the comic in the labor force … as we include [his] wages in the national income but set no value on the endearing talents provided by the baby.” In discussing the then-fashionable notion that the aggregate labor force participation rate (like other Great Ratios) was “invariant to economic conditions” Lebergott notes that small changes can nevertheless have great import. “The United States Calvary,” he observes, “was sent to the State of Utah because of the difference between 1.0 wives per husband and a slightly greater number.” The remainder of the chapter considers segments of the labor force whose labor was, indeed, “responsive to economic conditions” — European immigrants, internal migrants, (some) women and children as well as the impact of social and political factors on labor supply; it demonstrates the extraordinary flexibility of the American labor force and its responsiveness to incentives. While this conclusion would not surprise anyone today it was, I think, quite revolutionary at the time. It is as good an example of any I know of the power of historical thinking to debunk conventional wisdom derived from today’s numbers.

By now the reader is accustomed to Lebergott’s modus operandi — the opening paragraph that sometimes seems to be beside the point but really isn’t; quotations in the text from travelogues, diaries, plays, literature and what-not; obscure (to say the least) references in the footnotes; all interspersed with economic reasoning that has more than a tinge of what would be called today “behavioral” economics. In Chapter Three Lebergott talks about the “process” of labor mobility, which is really one extended probing into the relationship between mobility of various sorts and wage differentials. We get to see some univariate regression lines, superimposed in scatter-plots of decade-by-decade changes in the labor force at, say, the state level, against initial wage rates. Generally, labor flows were directed at states with higher initial wage rates, although Lebergott is quick to assert that “[m]igrants suboptimized” because the cross-state pattern was far less apparent at the level of regions. Next, Lebergott takes on the notion that economic development is an inexorable process of labor shifting out of agriculture. The American case, Lebergott claimed, challenges this notion. American workers shifted out of agriculture when the economic incentives were right; that is, when the value of the marginal product of labor was higher outside of agriculture.

The remainder of Chapter 3 is divided into two brief sections, both of which contain some of the most interesting writing in the book. In “Social Mobility and the Division of Labor,” Lebergott examines the relationship between occupational specialization and growth. In the nineteenth century most workers possessed a myriad of skills, farmers especially. They were jacks of all trades, masters of none. Lebergott speculates that this was a good thing because the master of none was more inclined to try something new, rather than assume he was, well, the master and therefore knew everything. If some fraction of novel techniques were successful, this could (under strong assumptions) lead to a higher rate of technical progress. “Origins of the Factory System” considers the problem posed earlier in the book of assembling large numbers of workers at a given location. Rather than pay higher wages, manufacturers turned to an under-utilized source of labor, women and children. Some years later, the ideas presented in this section would develop in full bloom in a celebrated article by Claudia Goldin and Kenneth Sokoloff (Goldin and Sokoloff 1982) on the role of female and child labor in early industrialization.

At 89 pages, Chapter Four, “Some Consequences,” is the longest chapter in the book. The first few pages, highly influential, are given to the formation of a national labor market, revealed by changes over time in the coefficient of variation of wages across locations. We are then given an extended tour of the history of American real wages, back and forth between the relevant tables in the appendix, quotations from contemporaries and other anecdotal evidence. The “Determinants of Real Wage Trends” comes next. The first, productivity, is no surprise. The second, “Slavery,” isn’t really either, but here Lebergott’s contrarian instincts, I think, get the better of him. Lebergott would have the reader believe that, first, free and slave labor were close to perfect substitutes; and, second, slave rental rates contained a premium above what the slave would have commanded in a free labor market. Consequently, when slavery ended, wages fell and there was downward pressure on real wage growth for a time. No question that wages fell in the South after the Civil War but Lebergott’s analysis is incomplete at best. Slave labor was highly productive before the Civil War because of the gang system, and when the gang system ended, the demand for labor fell in the South. Because labor supplies were not perfectly elastic, wages fell too. “Immigration,” the third purported influence, had negative short run effects on wages but positive long run effects via productivity growth.

What follows next is a 25-page section that years later produced two high-profile controversies in macroeconomics. This is the (celebrated) section where Lebergott presents his long-term estimates of unemployment. In thinking today about his work, we would do well to remember that, at the time he prepared his estimates, the United States had only a relatively brief experience with the direct and regular measurement of unemployment, courtesy of the 1940 Census and the subsequent Current Population Survey (CPS). (By “direct” I mean answers to questions about a worker’s time allocation during a specific period of time — if you did not have a job during the survey week, were you looking for one?)

Like all the estimates in the book, Lebergott’s unemployment figures were the product of detailed, painstaking work that, inevitably, required strong assumptions. The fundamental problem was that, if one wanted annual estimates of unemployment, there was no way to obtain these directly from survey evidence prior to the CPS. For some benchmark dates one could produce tolerable direct estimates from the federal census, but the federal census was useless if one wanted to generate an estimate, say, for 1893 or, for that matter, 1933.

Lebergott’s solution was to rely on an identity. By definition, the labor force was the sum of employed and unemployed workers. One might not know the number of unemployed workers but perhaps one could extrapolate between benchmark dates the number of workers in the labor force and employment, one could estimate unemployment levels via subtraction.

The first high profile controversy involved Lebergott’s estimates for the 1930s, which included in the count of unemployed workers persons on work relief. After 1933 there were many such workers, and so, by historical standards, unemployment looks, of course, rather high. This generated a lot of theoretical work for macroeconomists who thought they had to explain how unemployment rates could remain above 10 percent while real wages were rising (after 1933).

Michael Darby (1976) suggested that this effort was misplaced because Lebergott “should” have included the persons on work relief in the count of employed workers. Darby showed that doing so made the recovery after 1933 look much more normal. I’ve written a few papers on this issue, and my view is somewhere in-between Darby and Lebergott (Margo 1991; Finegan and Margo 1994; see also Kesselman and Savin 1978). Ideally, in constructing labor force statistics we should be consistent over time, so if persons on work relief were “employed” in the 1930s we should consider adding, say, “workfare” recipients to the labor force (or, possibly, prisoners making license plates) today, but this ideal may not be achievable in practice. The real issue with New Deal work relief is not the resolution of a crusty debate between competing macroeconomic theories but whether the program affected individual behavior. Here I think the answer is a resounding yes — unemployed individuals in the 1930s did respond to incentives built into New Deal policies. Wives were far more likely to be “added workers” if their unemployed spouses had no work whatsoever, than if the spouse held a work relief job, so much so that, in the aggregate, the added work effect disappeared entirely in the late 1930s, because so many unemployed men were on work relief.

The second high-profile debate involved Christina Romer’s important work on the long-term properties of the American business cycle. Prior to her work it was (and in some quarters still is) a “stylized fact” that the business cycle today is less volatile than it was in the past. Lebergott’s original unemployment series combined with standard post-war series were often used to buttress claims that the macroeconomy become much more stable over time. Statistical measures of volatility estimated from the combined series clearly suggest this, whether volatility is measured by the average “distance” (in percentage points) between peaks and troughs or standard deviations.

Romer (1986) argued that, to a large degree, this apparent decline in volatility was a figment of the way the original data were constructed. In particular, in constructing his annual series, Lebergott assumed (among other things) that deviations in employment followed one-for-one deviations in output. Romer invoked Okun’s law, arguing that the true relationship was more like 1:3. Constructing post-war series by replicating (as close as possible) Lebergott’s procedures produced a new series that was not less volatile than the pre-war series, thereby contradicting the stylized fact that the macroeconomy became more stable over time. This was, needless to say, a controversial conclusion, with many subsequently weighing in. Now that the dust is settled, my own view — a view I think that many share, although I could be wrong — is that there is definitely something to Romer’s argument; at the very least, she demonstrated (as she claimed in her original article) that before one draws conclusions from historical time series, one should be very familiar with how the series are constructed. Chapter Four ends with another of Lebergott’s meditations on the alleged constancy of aggregate parameters — in this case, factor shares.

Chapter Five (“Some Inferences”) concludes the narrative portion of the book. It repeats the book’s earlier mantra that “Yankee ingenuity” and initiative, especially that embodied in immigrants, were central to American success as opposed, say, to “factor endowments.” It ruminates on how highly mobile labor influenced the choice of technique, in ways familiar to the first generation of cliometricians, especially those who found H.J. Habakkuk a source of (repeated) inspiration. It notes how “thickening markets” made finding continuous work easier over time, reducing the wage premium associated with unemployment risk. Today’s economic historians, infatuated with “institutions” v. “geography” would probably disagree with the emphases in the chapter but I think there is much to admire in Lebergott’s “inferences.”

Some economic historians make their mark as much through their graduate students as their writings. Lebergott spent his academic career in a liberal arts college and did not, therefore, directly produce graduate students like a William Parker, Robert Fogel or (more recently) Joel Mokyr. In certain ways he was an outsider to economic history, an economist with a vast and deep appreciation for history in all of its flavors, who saw the past for what it can say about the present, not as an end in itself like a more “traditional” historian would. Compared with other classic works of cliometrics such as Fogel’s Railroads and American Economic Growth or North and Thomas’s The Rise of the Western World, Manpower‘s quirkiness can be a frustrating, more suitable for dabbling than a sustained read. By today’s standards the book falls short in its treatment of racial and ethnic differences (gender is more balanced) although this would hardly distinguish it from most other work in economics and economic history at the time. Yet Lebergott’s influence on economic history has been profound. There are few activities that economic historians can engage in of greater consequence than reconstructing the hard numbers. In this line of work Lebergott had few peers. Manpower put the labor force — people — at the center of economic history, not the bloodless “agents” of economic models but real people. As if to underscore this, the style asserts, like a triple fff in music: a real person not a (bloodless) “social scientist” wrote this book, one in deep and abiding awe of the economic accomplishment of his forbearers.


Darby, Michael. 1976. “Three and a Half Million US Employees Have Been Mislaid: Or, An Explanation of Unemployment, 1934-1941,” Journal of Political Economy 84 (February): 1-16.

Finegan, T. Aldrich and Robert A. Margo. 1994. “Work Relief and the Labor Force Participation of Married Women in 1940,” Journal of Economic History 54 (March): 64-84.

Goldin, Claudia and Kenneth Sokoloff. 1982. “Women, Children, and Industrialization in the Early Republic: Evidence from the Manufacturing Censuses,” Journal of Economic History 42 (December): 741-774.

Kesselman, Jonathan R. and N. E. Savin. 1978. “Three and a Half Million Workers Were Never Lost,” Economic Inquiry 16 (April): 186-191.

Lebergott, Stanley. 1964. Manpower in Economic Growth: The American Record since 1800. New York: McGraw-Hill.

Lebergott, Stanley. 1986. “Comment,” in Stanley Engerman and Robert Gallman, eds., Long Term Factors in American Economic Growth, pp. 671-673. Chicago: University of Chicago Press.

Margo, Robert A. 1991 “The Microeconomics of Depression Unemployment,” Journal of Economic History 51 (June): 333-341.

Margo, Robert A. and Georgia Villaflor. 1987. “The Growth of Wages in Antebellum America: New Evidence,” Journal of Economic History 47 (December): 873-895.

Romer, Christina. 1986. “Spurious Volatility in Historical Unemployment Data,” Journal of Political Economy 94 (February): 1-37.

Weiss, Thomas. 1986. “Revised Estimates of the United States Workforce, 1880-1860,” in Stanley Engerman and Robert Gallman, eds., Long Term Factors in American Economic Growth, pp.641-671. Chicago: University of Chicago Press.

Robert A. Margo is Professor of Economics and African-American Studies, Boston University, and Research Associate, National Bureau of Economic Research. He is also the editor of Explorations in Economic History.

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

From Prairie Farmer to Entrepreneur: The Transformation of Midwestern Agriculture

Author(s):Nordin, Dennis S.
Scott, Roy V.
Reviewer(s):Danbom, David

Published by EH.NET (February 2006)

Dennis S. Nordin and Roy V. Scott, From Prairie Farmer to Entrepreneur: The Transformation of Midwestern Agriculture. Bloomington: Indiana University Press, 2005. xvi + 376 pp. $65 (cloth), ISBN: 0-253-34571-5.

Reviewed for EH.NET by David Danbom, Department of History, North Dakota State University.

The changing nature of Midwestern agriculture is not a fresh topic. It has been addressed frequently over the past quarter century or more, both specifically [1], and as part of larger treatments of change in American agriculture generally.[2] Usually chronicles of agriculture’s evolution — or devolution — express regret that the world of small family farms, close neighborhoods, and one-room schools has passed from the scene.

In From Prairie Farmer to Entrepreneur, however, Dennis S. Nordin and Roy V. Scott take a path less traveled, generally avoiding expressions of nostalgia for traditional farming and regret for agriculture’s relative demographic and economic decline, and praising agriculture’s survivors as sophisticated entrepreneurs.

The origins of this book are noteworthy. Over the course of his long and distinguished career in the Department of History at Mississippi State University, Roy Scott “accumulated an extensive collection … on twentieth-century Midwestern agriculture” (p. xiii), which he hoped to make the basis for a book. Unable to carry out this task alone, he called on Dennis Nordin to serve as co-author. Nordin ended up doing most of the writing.

The authors define the elusive “Midwest” as “states that grow corn” — specifically, Iowa, Wisconsin, Indiana, Illinois, Missouri, and Minnesota, along with eastern portions of Kansas, Nebraska, and the Dakotas, and the western part of Ohio (p. 1). They present the story of change in agriculture and, to a lesser extent, rural life in this region, guided by their thesis that “the 1900s can be considered a century of struggle on North Central farms, a period when a grower either invested wisely and succeeded or squandered opportunities and left the profession” (p. xv).

Most of the book details that struggle and how successful farmers overcame the myriad problems confronting them. Among the topics the authors emphasize are the challenges presented by the environment and the economy, technological change (toward which they take a decidedly whiggish view), shifting government programs (usually discussed in an administration-by-administration manner), and the increasing sophistication of farmers as producers and “entrepreneurs.” By the end of the century, “entrepreneurial agriculture” had triumphed, bringing forth the “Midwestern agricultural miracle, a blessing that continues to provide an ever-growing population of consumers with abundant food at low prices” (pp. 204-05).

The combination of techno-capitalist triumphalism and Social Darwinism within this book will be deeply offensive to many, particularly those with a romantic view of agriculture and rural life. But the main problem with From Prairie Farmer to Entrepreneur is not the destination so much as the journey. Indeed, readers will find this a deeply flawed book which lacks sophistication and nuance and which does not, in the end, defend its point of view effectively.

Let’s begin with the thesis. Can farmers really be divided into “those who invested wisely and succeeded or squandered opportunities and left the profession?” I would argue that most of those who left agriculture after 1945 were not failures who “squandered opportunities.” Most were commercial producers who saw better ways to deploy their capital or who grew too old to farm and lacked children interested in succeeding them. In my state of North Dakota half of the farm land is owned by out-of-staters, mostly heirs of commercial farmers who “left the profession,” but not because they “squandered opportunities.” In addition to ignoring the complex reasons why some farmers stay while others leave, Nordin and Scott embrace the false notion held in the least-sophisticated precincts of the discipline of agricultural economics that good managers succeed and poor managers fail. Well, poor managers succeed sometimes and good ones don’t. Real life is complicated.

Then there’s the problem of the focus on the Midwest. Even if we accept the definition of the Midwest as “states that grow corn,” we must recognize — as the authors too frequently fail to do — that other states and nations also grow corn, soybeans, beef, and pork. We have to recognize that their production decisions, and the production decisions of those who raise competitive meat animals and/or feed grains, have an impact on the farming economy of the Midwest. And we have to recognize that their experiences with technology, trade, and government agricultural policies are similar to those of the Midwest. The Midwest is unique only if similar places under similar conditions are ignored. Not always, but often, that is the course the authors take.

What is even more disturbing, however, in a book that celebrates farmers’ business sense, is the weak understanding the authors demonstrate of many of the fundamental economic realities of twentieth-century agriculture. Among other errors of commission and omission, the authors show little understanding of the significance of export markets to the well-being of Midwestern agriculture; they confuse increases in production with increases in productivity; they suggest that farm operators were actually harmed by rising farm prices; they fail to recognize how the United States’ new status as the world’s leading creditor after World War I diminished export markets; they seem not to understand that overproduction occurs when consumers are unable or unwilling to consume whatever is produced, regardless of what they consumed previously; they fail to note that the inelasticity of agricultural commodity prices contributes to disproportionate price swings; and they do not recognize the centrality of dollar devaluation in 1971 to the agricultural boom of the ensuing decade. The agricultural economy is complex, and is shaped by numerous forces beyond the ability of “entrepreneurs” to control, regardless of how advanced their management skills may be. Too often that complexity is lost or ignored in this book.

A series of misunderstandings, confusions, and contradictions further mars the book. The authors assume, incorrectly, that tenancy necessarily connotes economic disadvantage or hardship (p. 9). They fall into the farmer’s habit of blaming others (e.g., the government, the banks, and even vegetarians) for agriculture’s troubles. They misunderstand the nature of rural-urban population shifts during the 1930s. They contradict themselves, as when they argue that the Golden Age of Agriculture was and wasn’t. They impart “self-sufficiency’ to Midwestern farms in 1900, when they weren’t, and in 1945, when farmers couldn’t even remember being self-sufficient. And they overstate, as on page 172 when they contend that, after 1945, “farmers placed blind faith in science and technology.” The authors put sixty charts in the book to help make their points. Usually these help, but sometimes they are senseless, pointless, or simply curious. For example, what is a chart on stress in rural life in 1974 doing in a chapter on the 1900-1920 period? And why does a chart on the number of radios on Midwestern farms count the devices only in 1925 and 1927?

Adding to the confusion are infelicitous prose choices. The authors sometimes jump into the future tense, or mix it with the past tense, for no apparent reason. They believe that “distances from farms to … consumers increased as roads … improved” (p. 66). And they argue that hog producers “increasingly stopped” selling animals on open markets (pp. 184-85). Enough said.

Nordin and Scott have a lot of good material here and a valid point to make. Unfortunately, the numerous flaws in From Prairie Farmer to Entrepreneur prevent them from making a significant contribution to our understanding of agricultural change in the Midwest.

Notes: 1. See, for example, Jane Adams, The Transformation of Rural Life: Southern Illinois, 1890-1990 (Chapel Hill: University of North Carolina Press, 1994), and Mary Neth, Preserving the Family Farm: Women, Community, and the Foundations of Agribusiness in the Midwest, 1900-1940 (Baltimore: Johns Hopkins University Press, 1995).

2. See, for example, David B. Danbom, Born in the Country: A History of Rural America (Baltimore: Johns Hopkins University Press, 1995), Hiram M. Drache, History of U.S. Agriculture and Its Relevance to Today (Danville, IL: Interstate Publishers, 1996), Gilbert C. Fite, American Farmers: The New Minority (Bloomington: Indiana University Press, 1981), R. Douglas Hurt, Problems of Plenty: The American Farmer in the Twentieth Century (Chicago: Ivan R. Dee, 2002), John T. Schlebecker, Whereby We Thrive: A History of American Agriculture, 1609-1972 (Ames: Iowa State University, 1975), and John L. Shover, First Majority, Last Minority: The Transforming of Rural Life in America (De Kalb: Northern Illinois University Press, 1976).

David Danbom is professor of history at North Dakota State University. His most recent book is Going It Alone: Fargo Grapples with the Great Depression (2005).

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

The Transformation of Scotland: The Economy since 1700

Author(s):Devine, T.M.
Lee, C.H.
Peden, G.C.
Reviewer(s):Whatley, Christopher A

Published by EH.NET (August 2005)


T.M. Devine, C.H. Lee and G.C. Peden, editors, The Transformation of Scotland: The Economy since 1700. Edinburgh: Edinburgh University Press, 2005. vi + 279 pp. ?17.95 (paperback), ISBN: 0-7486-1433-8.

Reviewed for EH.NET by Christopher A Whatley, Department of History, University of Dundee.

This book will be welcomed by economic historians of Scotland and should be of interest generally to academics and students of economic development, regional economics, and the role – and limitations – of governments in economic management. The book is an edited collection, but a strong narrative runs through the nine chapters (eleven including the Introduction and the Conclusion), and the reader unfamiliar with the economic history of Scotland over the past three centuries is provided with sufficient signposts with which to follow the main phases and features of Scotland’s development since 1700. From being a relatively under-developed economy, Scotland after the Union was transformed into a heavily industrialized society underpinned by a remarkably efficient agricultural sector. The Victorian and Edwardian economy, however, was encumbered by low pay, underemployment and the widespread use of casual labour and piecework, with resultant social inequalities that would continue to have an adverse effect on both the economy and Scottish society well into the twentieth century. From the later Victorian period the foundations of earlier achievement began to be loosened and in some cases swept away altogether – or mined out – and the country has had to rely rather more heavily than much of the rest of the UK on state support, in a variety of guises but mainly transfer payments and microeconomic policy – designed to assist Scottish industry and create employment.

Seven chapters have been written by senior economic historians, one of whom, George Peden of the University of Stirling, is better known for his admirable work on the British Treasury. Two of the contributors are more recent recruits to the field. Ewen Cameron has bravely tackled the comparatively little-investigated subject of Scottish agriculture in the twentieth century; his focus and theme is ‘modernisation,’ for which we can read a massive drop in employment, and, by and large, the marginalization of rural issues in Scotland, although the development of tourism and the retreat from the towns on the part of those seeking a quieter life but little direct involvement in agricultural pursuits are the exceptions. The thrust of David Newlands’ chapter is that, contrary to neoclassical economic theories about ‘the equalising role of prices within the market mechanism,’ regional differences in Scotland were more strongly marked at the end of the twentieth century than in the immediate post-World War Two period, an observation based on employment structures, unemployment rates and sharp variations in the incidence of poverty.

The editors have written the most substantial sections of the book. Some of this work is new or consolidated from monographs, journal articles and chapters in edited works. Aberdeen-based Clive Lee’s chapter on the financial network in the eighteenth and nineteenth centuries throws up much important information that might otherwise be concealed from the non-specialist. The place and importance of financial institutions like Standard Life and Scottish Widows, and of firms such as the Scottish American Investment Trust are explored and emphasised. Notwithstanding the depiction of the Scottish Victorian economy as ‘flawed’ (p. 64), throughout the period investigated, there is ample evidence of the capacity of Scots to follow and exploit market opportunities. An age-old problem has been that these opportunities were often to be found overseas, and thus the ‘enterprising Scot’ of the eighteenth century was harder to find in Scotland in the later nineteenth century, and in fact the rate of new firm formation is still less than the UK average. Nor, until recently, did investment opportunities include working class housing. The housing deficit in Scotland runs like an open wound throughout modern Scottish history, with the much lower level of owner-occupancy in Scotland (a function of lower wage levels) being reflected in the small proportion of the UK’s building societies founded north of the border. George Peden’s chapter on the managed economy successfully places Scotland within the wider UK and international contexts, and traces the efforts of the central government and the Scottish Office, aided by the work, for example, of the influential Toothill Report (1961), to tackle Scotland’s economic and social difficulties of the twentieth century. This they did with a fair measure of success during from the 1940s through to the 1970s. It will be salutary for Tories in Scotland in 2005, with their political influence having been reduced to virtually zero, and who under Margaret Thatcher retreated from direct involvement in economic development, to read of the interventions in Scottish economic affairs of the Conservative governments of the later 1950s and early 1960s, and the real if modest achievements of the then Secretary of State for Scotland, John Maclay.

Readers looking for the promised fresh interpretations of ‘key and controversial issues,’ such as the impact of the Union of 1707 and the Highland Clearances, may be a little disappointed. The chapters that deal with these topics are largely based on the substantial work of their author, Tom Devine, completed some years ago, although the newly-appointed University of Edinburgh historian does incorporate some recent scholarship (there is less formal acknowledgement of this, however, than with the other contributors). His ‘speculative counterfactual’ (p. 27) – what would have happened if England had invaded Scotland in 1706 – is interesting enough, but is an odd question about an unlikely scenario. The Union did open up new markets, legally, even if the Scots sometimes needed state assistance to enter them. The period during which this happened was short, but crucial in creating the platform for future development. But whatever the effect of the Union in the short-run, and if there is agreement that it was economically neutral from the later eighteenth century through to the early 1900s, Lee (and Peden) are pretty certain about the value to Scotland of the country’s UK status in the second half of the twentieth century, particularly through the operation of the so-called Barnett funding formula, devised in 1978.

This is a useful book that, by and large, brings the historiography of the post-1700 Scottish economy up to date. As usual with surveys of this nature, it reveals under-researched topics and debates that are still unresolved, but that is no bad thing.

Christopher A Whatley (University of Dundee) is Professor of Scottish history and the author of Scottish Society, 1707-1830 (2000). He is currently working on The Scots and the Union, a study of the political, economic and religious causes and immediate consequences of the Union of 1707, which formed the United Kingdom of Great Britain. This is to be published by Edinburgh University Press in 2007.


Subject(s):Economywide Country Studies and Comparative History
Geographic Area(s):Europe
Time Period(s):20th Century: WWII and post-WWII

The Marketplace of Revolution: How Consumer Politics Shaped American Independence

Author(s):Breen, T. H.
Reviewer(s):Grubb, Farley

Published by EH.NET (December 2004)

T. H. Breen, The Marketplace of Revolution: How Consumer Politics Shaped American Independence. New York: Oxford University Press, 2004. x + 380 pp. $30 (cloth), ISBN: 0-19-506395-3.

Reviewed for EH.NET by Farley Grubb, Department of Economics, University of Delaware.

T. H. Breen presents two propositions. (1) During the middle fifty years of the eighteenth century nothing short of a revolution occurred in colonial consumerism. Colonists became awash in imported British consumer goods that in turn transformed their world materialistically, socially, and conceptually — even down to the meanest members of colonial society. And the colonists were self-aware or conscious of this transformation. (2) This new consumerism influenced revolutionary politics not merely by giving the colonists a weapon to use against the British — the boycotting of British imports — but by providing the colonists a tool with which to assess the degree of patriotic commitment not only of one’s neighbors but of fellow colonists in distant colonies. Those who did not adhere to the cause against the British by boycotting British goods, such as tea, either because they were free riders or because they did not believe in the cause, could be easily spotted by their outward consumerism. They could then be chastised in some way thus stopping free riding from destroying concerted action against the British and, by identifying the “traitors” in their midst, driving the traitors off or silencing them. The end result was that the new consumerism provided the vehicle that allowed cohesive and concerted cross-colony action on a mass-mobilization level against the British.

Now, in some ways this is all old news. That colonial imports of European consumer goods in the fifty years before the revolution rose substantially is well known. That the colonists used the boycotting of British imports as a political weapon, from the Stamp Act through the Townsend Duties and Tea Act, is well known. That colonists who did not tow the line on the boycotts were spotted and threatened is also reasonably well known. So what is new here? Well it is the rich detail with which Breen makes his case. If you ever doubted any of these things or doubted their pivotal importance, then that doubt will be wiped away by Breen’s thorough and detailed presentation.

The first 200 pages of the book are given over to demonstrating proposition (1). Not “how” or “why” this revolution in consumption occurred, but merely “that” it occurred — from every conceivable angle using every possible type of evidence. Breen uses evidence from traveler accounts, from official government correspondence, from government customs records, from newspapers, from probate inventories, from archaeological digs, from museum artifacts, and so on to make his case. This section also has my favorite sentence in the book, “From museums, we move to trash.” The material is presented in a seemingly endless set of individual stories that after awhile start to seem all the same. Faced with this tediously turgid presentation, my eyes glossed over, and only masochistic perseverance got me through. While reading this section all I could think of were images of the author going from archive to archive, library to library jotting down stories on note cards or into computer files and then feeling compelled to tell us every single story he had found. A few stories are entertaining in their own right, but only a few. But there is a reward for perseverance. Breen’s methodology is more like that of an impressionist artist than an economic scientist. Using this analogy, Breen is applying the technique of Pointillism, such as that used by Georges Seurat in his painting “A Sunday Afternoon on the Island of La Grande Jatte.” If you stand too close it looks just like a seemingly endless mess of points with each point looking somewhat the same and conveying little individually. But when you step back and take in the whole, all of a sudden an undeniably powerful, yet fuzzy, truth appears — namely proposition (1).

While Breen does not talk about this, for economists his finding presents an important challenge — namely how to reconcile Breen’s undeniable revolution in consumption behavior with even the most liberal estimates of the rate of economic growth in colonial America. That colonists, even the meanest of them, on a per capita basis were incredibly better off in some utility sense in 1770 than they were in 1700 from this revolution in the consumption of imported goods seems undeniable. Yet economists typically find per capita economic growth to be miniscule. This is a puzzle that economists need to address better or reconcile more sensibly than what they have yet done.

The final 125 pages of the book are given over to demonstrating proposition (2). While Breen uses the same technique or methodology here as he used for proposition (1), the nature of proposition (2) makes the outcome less satisfying and more speculative. At best we can say that consumer politics went on, or somehow “shaped” or “influenced” American independence, but by how much is harder to pin down. At one point Breen asserts that this consumer revolution was a “necessary” but not a “sufficient” condition for success in marshalling forces to American independence. But this is undemonstrated, and I don’t think it was even a “necessary” condition. That the course of events took this particular shape is interesting and noteworthy, but it was not necessary in some grander sense, at least not well demonstrated as such. What Breen does convey well is that it wasn’t just the power of consumer boycotts in an economic sense that mattered, but the power to affect collective consciousness over some common issue by the marshalling of mass-participation that came with this particular application of consumer boycotts that was important.

While Breen does not use this language or present it in this way, an economist will readily see the issue as how to marshal and maintain collective action in the face of free-rider incentives when using consumer boycotts as a political tool. Breen clearly demonstrates the prevalence of the incentive to free ride and the response to it via the rise of extra-legal devices to enforce compliance. While Breen illustrates the intrusive power of these compliance devices, he probably underplays the terror inflicted not just on the free-riders and fence-sitters, but also on those who did not agree with this action and legally wanted not to go along, by the extra-legal patriotic committees and mobs who seemingly scrutinized and publicized every outward action of consumption and even invaded peoples’ homes to scrutinize their non-public behavior in consumption. But even after two hundred years it is hard to openly talk about the terror used by patriots in the name of a cause we still hold dear.

In general the evidence is heavily weighted toward the New England, New York, and Philadelphia regions. It would have been nice to have more evidence from a broader swath of colonial locations. Finally, it would have been nice if Breen would not have presumed that the “13” colonies were the only colonies. Why did this story of consumer revolution shaping the politics of revolution and knitting the colonies together into concerted action somehow stop at New Hampshire and Georgia and not affect Montreal, Halifax, Kingston, Bridgetown, and so on? Or if it did, why did it yield a different outcome? Illuminating such would make a nice extension to, or even a test of, the importance of Breen’s propositions.

Farley Grubb is Professor of Economics, University of Delaware. His two most recent publications are “The Circulating Medium of Exchange in Colonial Pennsylvania, 1729-1775: New Estimates of Monetary Composition, Performance, and Economic Growth,” Explorations in Economic History 41 (Oct. 2004), pp. 329-360 and “Creating the U.S.-Dollar Currency Union, 1748-1811: A Quest for Monetary Stability or a Usurpation of State Sovereignty for Personal Gain?” American Economic Review 93 (Dec. 2003), pp. 1778-98.

Subject(s):Social and Cultural History, including Race, Ethnicity and Gender
Geographic Area(s):North America
Time Period(s):18th Century

Manufacturing Revolution: The Intellectual Origins of Early American Industry

Author(s):Peskin, Lawrence A.
Reviewer(s):Meyer, David R.

Published by EH.NET (July 2004)

Lawrence A. Peskin, Manufacturing Revolution: The Intellectual Origins of Early American Industry. Baltimore: Johns Hopkins University Press, 2003. xi + 294 pp. $49.95 (cloth), ISBN: 0-8018-7324-X.

Reviewed for EH.NET by David R. Meyer, Department of Sociology, Brown University.

Lawrence Peskin provides a significant contribution to our understanding of the discourse and activities of the promoters of manufacturing who made their views known from the late colonial period to around 1830. From Peskin’s vantage point, the turn from agriculture to industry after the American Revolution was sufficiently rapid to claim that a manufacturing revolution had occurred. Following the concerns of social historians, he sees the decline of traditional craft-based production and the shift to the new factory processes as providing the context and motivation for the efforts of promoters of manufacturing. The debate over the future of manufacturing was sufficiently complex that these individuals cannot be neatly pegged as either “republican” or “liberal.” They were attracted to republican virtues of simplicity and independence, associated with the mostly self-sufficient yeoman farmers, and the liberal concern with individualism, self-interest, and markets infused their efforts. They organized into societies and other institutions to promote their ideas, thus refuting simple notions that individualism and community were incompatible behaviors. The positive role of government as defender and promoter of the public good was welcomed by republicans and liberals alike, even as the specific context in which government efforts might occur was debated.

The book has three parts, each with three or four chapters. In “The Revolutionary Era,” Peskin details the breakdown of the seemingly comfortable complementary position of the American colonies in the British system as suppliers of raw materials to Britain and consumers of its manufactures. When Britain added taxes, the logic of this complementarity was challenged. Alternative approaches to the colonial economy arose during the years leading up to 1776: urban merchants wanted to return to the British system of complementarity which prevailed before 1765 and manufacturing was a means to that end, whereas urban mechanics saw manufactures as a developmental force and a means to become economically independent of Britain. Alas, the Revolution and immediate aftermath did not resolve the role of manufacturing, and, significantly, the new nation no longer had an assured place in the British imperial system.

In the “Critical Period” covering the 1780s and 1790s, voluntary associations emerged which promoted domestic production. Although their influence would wane by the start of the next century, their rhetoric created an atmosphere which was conducive to manufacturing development. During the 1780s, urban mechanics organized in committees to actively promote protectionism for their production, but by the next decade urban merchants took the lead in associations which advocated tariffs as a means to allow domestic manufacturing to flourish. These associations appealed to the positive good of a balanced self-sufficient economy comprised of mechanics, farmers, and merchants. Nonetheless, these groups could not rest in comfortable combinations. Merchants favored government support of their trade, but they did not benefit from high tariffs which hurt trade, and farmers who aimed for commercial production did not want foreign markets closed to their output. Agricultural societies promoted a harmony of interests between a productive agriculture (not self-sufficient) and manufacturing, and they saw government as a vehicle for supporting better agricultural practices.

The final part, “Toward Industrialization,” details the shift of manufacturing promotion from the concerns of urban mechanics to the efforts of large-scale industrialists, allied with politicians, to use associations to promote manufactures and to advocate protection for them. As industry expanded in rural areas away from the biggest cities, sometimes as large factories (such as cotton mills), and factory production grew, urban mechanics became increasingly peripheral to efforts to promote manufacturing. The harmony of interests between agriculture and manufactures remained a theme of manufacturing promoters, and the self-sufficient domestic market was seen as supporting industry. However, this harmony would not last as sectional interests such as southern plantation agriculture versus northern manufactures would come to the forefront.

Peskin rests his interpretations of manufacturing promoters on extensive archival evidence, which includes records of speeches and of other activities of these promoters, and he also draws heavily on the leading magazines and journals which were published during the period he covers. Scholars are indebted to his careful, thorough research, and this book will be a major baseline for our understanding of this early industrial period. As Peskin rightly notes, this period leading up to 1830 has too often been seen as a prelude to the more important time of large-scale, rapid industrial growth beginning in the early 1840s.

That view, Peskin demonstrates, is mistaken. Manufacturing promoters engaged in vigorous debates about the future of industry, the role of urban mechanics whose livelihoods were being threatened, and the types of government policies (e.g., tariff protection) which were needed. The growth of factory production, in Peskin’s view, defined the transformation of manufacturing after about 1800. This included the expansion of large urban manufactures, such as sugar refining and breweries, and increased rural industrialization, especially the growth of cotton mills. At the same time, the influence of urban mechanics eroded as their crafts declined in the face of competition from the rising manufacturing firms.

Nonetheless, there was much more to this industrialization than Peskin indicates. Shoe manufacturers in Massachusetts devised an elaborate division of labor and a sophisticated marketing apparatus which allowed them to capture large market areas in the East by the 1820s, firms in a range of metal and wooden manufactures in Connecticut innovated production techniques and built a regional and east-coast sales force using peddlers, and numerous mechanics/machinists moved among firms, diffusing metal working techniques widely. By 1830, these firms had established some of the most important industrial agglomerations in the eastern United States, and many of these clusters were the seedbeds of the late antebellum industrial surge.

At the same time, a large number of small, nonmechanized workshops expanded in areas of agricultural prosperity, and these included wagon shops, small machine shops, and woodworking shops making components for housing and businesses (e.g., latches and window frames). Many of these firms had only a half dozen employees and the larger ones had, perhaps, fifteen workers, and most of the owners did not participate publicly in the debates of the promoters of manufacturing which Peskin examines. Thus, the debates may have had little impact on a large segment of the broad-based manufacturing developments in areas of prosperous agriculture. This is not to dismiss Peskin’s points about these debates; after all, they were important to the tariff policies which emerged and they impacted some key manufacturing, especially the protections provided to cotton textiles. Nevertheless, these other, more numerous manufacturers went about their business even as more vocal promoters in other sectors mobilized.

This book offers strong support for interpreting the late eighteenth and early nineteenth century as setting a solid foundation for American manufacturing. Peskin provides valuable documentation that this period witnessed ferment in the debate and promotion of manufacturing. Thus, we know that the broad-based expansion of small workshops and nonmechanized factories, the rise of small factories in a variety of sectors, and the emergence of large factories, such as big merchant-financed cotton mills and urban processing factories (e.g., sugar refining), were embedded in a wide social, political, and economic debate about the future of the new nation. Manufacturing entrepreneurs, whether or not they participated in this debate, certainly knew about it, and information which they gleaned must have entered their calculus regarding the opportunities and risks of becoming manufacturers and of expanding their commitments.

David R. Meyer is Professor of Sociology and Urban Studies at Brown University. His recently published book is, The Roots of American Industrialization (Johns Hopkins University Press, 2003), and he has just completed a book manuscript on antebellum machinist networks. His new research focuses on the challenges to Hong Kong as a global metropolis and on business networks in Asia.

Subject(s):Industry: Manufacturing and Construction
Geographic Area(s):North America
Time Period(s):19th Century

The Price of Progress: Public Services, Taxation, and the American Corporate State, 1877 to 1929

Author(s):Higgens-Evenson, R. Rudy
Reviewer(s):Brownlee, W. Elliot

Published by EH.NET (November 2003)

R. Rudy Higgens-Evenson, The Price of Progress: Public Services, Taxation, and the American Corporate State, 1877 to 1929. Baltimore: Johns Hopkins University Press, 2003. x + 168 pp. $39.95 (cloth), ISBN: 0-8018-7054-2.

Reviewed for EH.NET by W. Elliot Brownlee, Department of History, University of California, Santa Barbara.

R. Rudy Higgens-Evenson analyzes an important aspect of the history of government between Reconstruction and the New Deal: the delivery and financing of public services by state and local governments. This is well-ploughed terrain, but he surveys it from an unusual perspective: the relationship between public services and the taxation of corporations.

He begins by discussing calls in the 1870s for reform of the property tax, the backbone of state and local finance. He focuses, in particular, on the charges that the property tax did not reach corporate wealth, particularly in the form of stocks and bonds, and proposals for states to replace local taxation of corporations, especially railroads, with special state-level taxes. Pressure to reform increased after 1880, he suggests, as a result of the incremental growth of spending for public schools and insane asylums. In the author’s interpretive model, the driving force in the expansion of state and local government was “activist government” (p. 2).

“Only the deep pockets of the corporations could support the new functions undertaken by state and city governments,” the author claims (p. 9). Pressure to reform public finance by taxing corporations was especially acute in the industrial Northeast. During the 1880s, many states enacted modest, state-level taxes on corporations but provided corporations relief by providing exemptions from local property taxes, which were increasing in cities making new infrastructure investments. Subsequently, state governments raised their corporate taxes to fund new public services and, at the same time, to crack down on “corporate tax-dodging” (p. 48). Corporations, in response, cooperated and tried to guide public policy. The result was the emergence of what he calls the “corporate state.” Higgens-Evenson explains: “Corporation taxes funded new public services in a cooperative arrangement between business and government along the lines laid out by Alexander Hamilton in the 1790s” (p. 9).

In contrast, within what the author calls “the Jeffersonian republics of the South, Great Plains, and Far West,” state governments focused more on regulating corporations (primarily the railroads) rather than taxing them. He explains that these states were less industrial and were “guided by political ideas that were more in line with those of Thomas Jefferson.” These states adhered to “local government, property taxation, and minimal state-level services” (p. 10).

Subsequent public investment, particularly on highways, tested the revenue systems of states throughout the nation. Between 1907 and 1929, largely because rising expenditures stressed the property-tax system, the states that Higgens-Evenson describes as the “most progressive” adopted general or corporation income taxes. Almost all states turned as well to gasoline taxes, but the taxes turned out to be most important to the “Jeffersonian republics.” There, the author finds, gasoline taxes allowed some of these states to build roads “without upsetting the older order of property taxation” (p. 91).

Corporation and income taxes, he argues, prompted the creation of the final element in the corporate state. These taxes “brought business officials into government in new roles, formal and informal.” The representatives of corporations promoted the rise of government research bureaus, directed state government reorganizations, and advised on tax administration “The new relationship between business and government, particularly in the states where corporation and income taxes supplied a significant share of revenues, completed their transformation into corporate states” (p. 93).

Much of the story that Higgens-Evenson relates will be familiar to students of the fiscal history of the United States between the Civil War and the Great Depression. Nonetheless, they will find his book interesting and useful. He understands the importance of connecting the history of taxation with the history of public expenditures; he mobilizes some valuable new data on state government expenditures; and he provides important suggestions as to the precise relationship between spending and taxing in some key states.

The author covers a great deal of intellectual ground in this stimulating book. As a consequence of its ambitious scope and relative brevity, he cannot develop some of his key ideas, such as the role of “Hamiltonian” and “Jeffersonian” philosophies. His “brief survey” of the financial systems of the states, he writes, “applies the comparative method to state revenues and expenditures to explore why some states became corporate and some became Jeffersonian” (p. 11). But he never assesses the extent to which ideas either played an autonomous role in the formation of fiscal policy or simply reflected underlying economic structures. A related problem is a rather thin exploration of the sources of “activist government.”

Higgens-Evenson also neglects important topics in the realm of institutional history. For example, he ignores some important administrative problems that shaped the taxation of corporations by states. In his emphasis on the failure of the general property tax to reach “intangible” property like stocks and bonds he neglects what was the biggest problem that state governments had with the tax. This was the control that county governments exercised over property tax assessment. As a consequence of this control, they generally engaged in a competitive under-valuation of assessment that resulted in significant inequities and growing distrust of property taxation. States concluded that they had to develop their own tax base, separate from that of local government. But they then immediately faced other administrative problems. These blocked adoption of either income or sales taxes that were general in scope. It was often for administrative convenience, as well as previous failures to tax corporate wealth, that states turned to, or expanded, taxation of corporate property, franchises, and income.

Also in the institutional realm, the author neglects analysis of corporate goals and strategies. He tends to regard corporations as engaged in the single-minded pursuit of reductions in taxing and spending. Corporations, however, often had strong interest in building public infrastructure and expanding various public services, especially education. Corporations were often willing to accept, and sometimes promoted, higher taxes as an inexpensive alternative to making private investments but reaping little or no return on those investments because of free-riding competitors.

Finally, he might have developed further his suggestions regarding the way in which variations in economic structure (and, in turn, the distribution of political power) across the states and regions produced variations in tax policy. To do so would have required more attention to variations in corporate strategies and structures. For example, an explanation of why Wisconsin and California taxed manufacturing corporations more heavily than did corporation taxes in New York would require paying attention to not only the small size of the manufacturing sector in Wisconsin and California but also the relatively small scale of manufacturing corporations in those two states, and to important disagreements over taxes within the business community (including commercial agriculture).

In sum, Higgens-Evenson’s book is a very welcome addition to scholarship on the history of public finance. Its ambitious reach and interpretive framework may well stimulate much needed research on the political economy of business taxation during the period in which the modern corporation, and perhaps the “corporate state,” emerged.

W. Elliot Brownlee is Professor Emeritus in the Department of History, University of California, Santa Barbara. His latest book is The Reagan Presidency: Pragmatic Conservatism and Its Legacies (Lawrence, KS: University Press of Kansas, 2003), which he co-edited with the late Hugh Davis Graham. Included in the volume is an essay by Brownlee and C. Eugene Steuerle of the Urban Institute on Reagan tax policy. Later this year, Cambridge University Press and the Wilson Center Press will publish the second, expanded edition of Brownlee’s Federal Taxation in America: A Short History.

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