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Franklin D. Roosevelt and the Great Constitutional War: The Court Packing Crisis of 1937

Author(s):McKenna, Marian C.
Reviewer(s):Hudspeth, Harvey G.

Published by EH.Net (May 2003)

McKenna, Marian C., Franklin D. Roosevelt and the Great Constitutional War: The Court Packing Crisis of 1937. New York: Fordham University Press, 2002. xxvi + 612 pp. $60.00 (cloth), ISBN: 0-8232-2154-7.

Reviewed for EH.NET by Dr. Harvey G. Hudspeth, Department of Social Sciences, Mississippi Valley State University, Itta Bena, MS.

As a young graduate student at the University of Mississippi, I had originally planned to devote my dissertation to the subject of the Roosevelt Court and the Court Packing Plan of 1937. Having just read professor McKenna’s study on that very subject, I am frankly relieved that my graduate advisor talked me out of it. Franklin Roosevelt and the Great Constitutional War is a brilliantly researched, thoroughly documented book. It is probably the most definitive work ever written on the entire 1937 controversy.

In her introduction, Dr. McKenna, Professor Emeritus of Alberta’s University of Calgary, clearly outlines the points she intends to establish, namely:

1) How a “popular political leader can climb to dizzying heights” only to plunge within a short time to “an all-time low”; 2) How presidents can often assert even less influence over domestic affairs than exercise over foreign affairs; 3) How FDR was not the “master politician” that most historians have made him out to be; 4) How FDR’s Court Packing Plan, far from being a last-minute reaction to an “obstructionist Supreme Court,” was instead, “a long time in the making”; and 5) How FDR’s threat to remake the Court ultimately had no effect on subsequent Court decisions.

McKenna’s argument that neither Owen Robert’s notorious “Switch in Time that Saved Nine” vote in Parrish and Willis Van DeVanter’s subsequent decision to retire had not in any way been influenced by constitutional concerns as to the future political integrity of the High Bench are at best half-hearted. Even if these decisions were reached before Roosevelt’s formal announcement of his judicial scheme, neither justice could have possibly been unaware of the president’s ultimate intent. As McKenna repeatedly points out, the Roosevelt Administration had been working on a plan for “judicial reorganization” even before it took command of the government in 1933.

Nevertheless, McKenna does an excellent job in establishing her other points. In much the same way as Julius Caesar clearly yearned to become Emperor of Rome (before his assassination at the hands of senators concerned for the future of the Republic), Franklin Roosevelt’s de facto control of both executive and legislative branches of the federal government obviously were not enough to satisfy his perceived desire for absolute power. His “judicial reorganization bill” was consequently seen by most Americans (even his most devoted admirers of that time and afterwards) as a bald-faced attempt to achieve his final goal. In his effort to accomplish this, he single-handedly demonstrated McKenna’s point that a political leader can sacrifice his popularity without need of a Vietnam or a Watergate. He can also prove to be as ineffectual in domestic maters as a Bill Clinton with universal health care.

Dr. McKenna has also more than successfully established the fact that while Franklin Roosevelt may have been a “master politician,” he was apparently not the master politician that he thought he was – at least not to the extent that he could manipulate both the Congress and the American people into allowing him to take personal control over the judicial branch of the government. No matter how out-of-touch it might have seemed to most Americans with regard to their current economic and social problems, the idea of a future Court being at the mercy of Roosevelt or a future less-enlightened despot cut against the grain of American Democracy. As McKenna makes clear, patrician elitist that he might have been, even Franklin Roosevelt should have recognized this basic reality and responded accordingly. Coming at a time when such erstwhile tyrants as Adolf Hitler and Benito Mussolini were demanding similar “emergency” powers so as to allow them absolute power in Germany and Italy respectively, this was especially true for Roosevelt.

The book, regrettably, is not without its technical flaws. To my knowledge, Jim Farley was never secretary of the treasury (page three – of course, a simple comma could have avoided that error). Additionally, Olin T. Johnson was never governor of Alabama, but even if he had been as McKenna suggests (page 545), he never could have legally contested “Cotton Ed” Smith’s 1938 re-election bid to the US Senate from South Carolina. All of that notwithstanding, McKenna has made an excellent contribution to both the political and constitutional history of the United States – not to mention to a new understanding of our heretofore Teflon-like thirty-second president. Apparently, not even our so-called “gods” are quite as bullet-proof as some of us would seem to prefer.

In her epilogue, Dr. McKenna makes no bones in her by-now well-established contention that, as beloved and as talented and as well-intentioned as he might have been, America’s would-be emperor essentially had no clothes. In her final analysis of the President’s performance, she shines “a different and far less flattering light on Roosevelt’s political leadership, personal integrity, and character from that presented in previous accounts.” Citing both FDR and his advisors for “a series of political mistakes, bad miscalculation, and failures of judgment,” McKenna concludes that the Court-Packing fiasco constituted “the worst political defeat ever endured by a president at the pinnacle of his power.” Excluding scandals and wars, it is difficult to find fault with her conclusions.

Dr. Harvey G. Hudspeth is past president of the Economic and Business Historical Society. His essay, “The Roosevelt Court and the Changing Nature of American Liberalism: An Uncertain Legacy,” is scheduled for publication as part of Franklin D. Roosevelt and the Transformation of the Supreme Court in March 2003.

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

Consumerism in World History: The Global Transformation of Desire

Author(s):Stearns, Peter N.
Reviewer(s):Aimaq, Jasmine

Published by EH.NET (January 2003)

Peter N. Stearns, Consumerism in World History: The Global Transformation of

Desire. London and New York: Routledge, 2001. xii + 147 pp. $17.95

(paperback), ISBN: 0-415-24409-9; $60 (hardcover), ISBN: 0-415-24408-0.

Reviewed for EH.NET by Jasmine Aimaq, Department of History, University of

Southern California.

According to author Peter Stearns (George Mason University), the rationale

behind writing Consumerism in World History: The Global Transformation of

Desire is that our world is currently “permeated by consumerism” — hence

the importance of understanding why consumerism developed and what causes have

sustained it. Stearns, well established as a leading voice in World History,

argues that his study of consumerism will allow a better grasp of various

international issues, and offer some readers new perspectives on themselves. He

then presents a succinct, brief analysis of the evolution of consumerism in a

142-page volume broken into three main parts. The first part analyzes the

emergence of consumerism in the West; the second, the globalization of

consumerism; and the third, the future of consumerism.

A review of this work first requires an establishment of perspective. It

appears that the book is intended for a general readership, since it cites no

primary sources, nor makes references to secondary sources, and can therefore

not be evaluated primarily on the grounds of scholarly rigor and original

research. Stearns’ book must instead be reviewed in terms of the contribution

it makes in broader terms, namely, as a general, insightful presentation of

ideas and perspectives on the emergence of consumerism in human society. To

that end, Stearns proposes to focus on two phenomena: the historical

development of the consumer apparatus, and the emergence of needs and goals

from the customer side. He notes particularly that the book is value-neutral,

treating consumerism as neither inherently good or evil.

In his preface, Stearns explains that Consumerism in World History rests

on a fairly recent strand of research, which shows that contrary to what was

previously thought, the phenomenon of consumerism predates the Industrial

Revolution. Stearns does not, however, identify in what manner his work either

complements or challenges existing research. There is no direct link to

previous scholarship, making it impossible to evaluate the full value of

Stearns’ contribution. Also in his preface, Stearns signals that his work “…

rests on several assumptions, which of course need to be tested in the chapters

to come …” Here, Stearns risks the pitfalls of circular reasoning, namely,

the adoption of ideas that are at once assumptions and cases to be tested.

What follows, however, is a lucid, insightful and highly readable discussion on

the rise and nature of consumerist society, i.e. society in which many people

formulate their goals in life partly through acquiring goods that they clearly

do not need for subsistence or for traditional display. Since consumerism is

predominantly associated with “Western” civilization, Stearns spends a third of

the book discussing the emergence of consumerism in Europe, and its eventual

spread to the United States. Stearns argues that consumerism represented

compensation in a modernizing society — compensation for the disruption of

traditional social channels, a means of demonstrating modest achievement in new


While this point is illuminating, the argument would have greater depth if the

facets of traditional life, and exactly which facets were disrupted and

replaced with consumerism, were explored more fully. Stearns notes the decline

of traditional religion, for instance, but does not analyze the concept of

consumerism as a religion of its own. This has been one of the interesting

contributions of recent studies outside of history — in sociology,

environmental studies, and religious studies, for instance. The emergence of

consumerism parallels the emergence of the free market, and arguments presented

by scholars such as David R. Loy (“The Religion of the Market,” in Visions

of a New Earth: Religious Perspectives on Population, Consumption and

Ecology) and others emphasize the religious role that consumerism fills in

contemporary society.

The lack of a discussion on this perspective in Stearns’ work is somewhat

disappointing, particularly in light of growing recognition among scholars and

others that consumerism and environmental protection are fundamentally and

dangerously at odds. If, as Stearns states in his preface, we are to study

consumerism in large part to “better grasp a host of international issues,”

consumerism’s relationship to the deteriorating global environment should be

foremost among those. The absence of this issue is especially striking in

Chapter 6, which provides an otherwise illuminating discussion on “The dark

side of Western consumerism.” The strength in this chapter is that Stearns

effectively links critiques of consumerist values to broader movements such as

anti-Americanism. But the relationship between the environment and consumerism,

and the link between critics of consumerist values and spokesmen for the

environment, seems crucial to the subject of the chapter; for some reason,

however, it has been overlooked.

Similarly, the question of gender relations is addressed, but not fully

explored. Stearns provides an insightful account of changes in gender relations

as one aspect in the historical emergence of consumerism. But the relevance of

gender to consumerism extends beyond the early stages of the phenomenon; it

would be relevant to analyze whether contemporary relations between the genders

foster consumerist behavior today, i.e. whether women acquire material goods in

order to demonstrate economic parity with men, whether men pursue material

acquisition to a greater degree than before in an effort to out-compete women,

or alternatively, one another, in a society where women are increasingly

economically self-sufficient. Given Stearns’ expertise on gender in world

history, his full insights on this issue would have been especially welcome.

The discussion in the first part of the book serves largely as an insightful

introduction to different perspectives on consumerism, and provides an

excellent foundation for further research. But it is the second part of the

book that is perhaps the book’s most illuminating and original. Here, Stearns

offers a round-the-world view of consumerism, describing the phenomenon, its

character, manifestation and scope, in Russia, East Asia, Africa and the

Islamic Middle East. Readers who are familiar with studies on consumerism will

welcome this contribution. It is fair to say that so far, most scholars in the

field discuss these regions only to gauge the extent to which indicators of

“Western” civilization and modernization, including consumerism, have

effectively reached non-Western societies. In this work as well as previous

publications, Stearns, while well aware of the influence of the West in the

spread of consumerism, demonstrates a true knowledge and genuine appreciation

of the “world” in “world” history. Once again, however, the discussion would

have benefited from a deeper analysis of societal factors such as the role of

religion, which Stearns discusses as only one of numerous factors, and its

relationship to consumerist values.

The final part of the book, which contains only two brief chapters, deals

briefly with the accelerating pace of globalization and the spread of “Western”

style consumerism. While the first chapter of this section offers nothing

controversial, and serves as a sort of summary of globalization in terms well

understood by scholars, the media and social observers, the second chapter —

and book’s Conclusion — takes a surprising turn. Stearns spends the final

pages of his work investigating “Who wins — Consumerism or Consumers?” This is

surprising mainly because it seems to contradict the author’s introductory

declaration of this study as value-neutral, as an analysis that does not wish

to present consumerism as either ‘good’ or ‘bad.’

Particularly on pp.139-142, Stearns directly addresses the ‘good’ and ‘bad’ of

consumerism, asking, for instance, whether consumerism is making the world too

homogeneous, and directly asking whether consumerism “is a good thing, in terms

of human values.” The inclusion of this discussion does not follow from what

the reader is led to expect in the opening of the book, and is therefore a

structural weakness. In terms of the substance of Stearns’ response to the

questions, it is again notable that environmental issues are alluded to in only

the most general way, although they figure very prominently in today’s debate

on consumerism and globalization.

Stearns’ most recent book is nevertheless an excellent introduction to the

study of consumerism in world history, and a highly recommended read for anyone

interested in the subject. Graduate students or scholars interested in

developing a thesis relating to consumerism will come away from this book with

a good general grasp of the phenomenon, and will be happy to find abundant

secondary sources listed as “Suggested Readings” at the end of each chapter.

Jasmine Aimaq is a Visiting Professor at the Departments of History and

International Relations, University of Southern California. She is the author

of a book on French-American relations in Vietnam and several articles, and

currently conducts the USC History Department’s course on Modern World History.

Subject(s):Household, Family and Consumer History
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

The Transformation of American Law, 1780-1860

Author(s):Horwitz, Morton J.
Reviewer(s):Rothenberg, Winifred B.

Project 2001: Significant Works in Economic History

Morton J. Horwitz, The Transformation of American Law, 1780-1860. Cambridge, MA: Harvard University Press, 1977. xvii + 356 pp.

Review Essay by Winifred B. Rothenberg, Department of Economics, Tufts University.

When the Rules Changed: A Twenty-five Year Retrospective on The Transformation of American Law, 1780-1860

“In short, the transition periods can be described as periods of controlled social and economic revolution. They are revolutions because they involve rapid changes in long-standing economic, social, and often political institutions; they are controlled in that the integrity of the societies is maintained despite prolonged internal conflicts.”(Kuznets, 1968, p. 107)

In 1926, when J. Franklin Jameson published The American Revolution Considered as a Social Movement, the American Revolution was not generally considered to have been a social movement at all. So much less wrenching than its French or Russian prototype, ours seemed to be a colonial war, not a class war; a war about “Who shall rule?” — not a revolution; for — recalling Carl Becker’s famous phrase — with respect to “Who shall rule at home?” nothing much appeared to have changed. But in the seventy-five years since Jameson, historians have compiled abundant evidence that fundamental change took place after the Revolution in virtually every economic, political and social indicator, from market integration to marital fertility, from agricultural productivity to religious affiliation, from the nature of the polity to financial markets, from literacy rates to life expectancy, and most of all in that elusive thing the French call mentalit?. Those changes constituted a ‘transformation’ beyond mere ‘change.’

‘Change’ is continuous. It is the condition of being in a world where “Whirl is King.”1 But the transformation of American private law that Morton Horwitz describes here “lifted pencil off paper.”2. After the Revolution, the legal reasoning that governed judge-made law in America could cut itself free from that ‘undiscovered country’ from which the English common law traced its origins and drew its enormous authority; from its rigid pleadings; from its “blind veneration for ancient rules, maxims, and precedents” (p. 25); from its neglect of societal consequences. More to the point, it was a discontinuity that paralleled the sudden acceleration of capitalist development and the new “era of shared ideation” that legitimated it.3

Horwitz is not alone in remarking a critical period in the law in and around the 1780s. For Roscoe Pound, the early years of the Republic were “the formative era of American law,” although he seems thoroughly to have rejected the notion, so central to Horwitz, of an ideological discontinuity at that time. “Tenacity of a taught legal tradition,” he wrote, “is much more significant in our legal history than the economic conditions of time and place”(Pound, p. 82).4 But in William E. Nelson’s telling, “The War of Independence ushered in the beginning of a new legal and social order . . . the most important element [of which] was the emergence of new legal doctrines that recognized the materialism of the age” (Nelson, p. 5). And Lawrence Friedman, author of the first general history of American law, describes a “fundamental change in the concept of law” after the Revolution, one in which “the primary function of law was … to be a utilitarian tool [protecting] property in motion or at risk rather than property secure and at rest . . . [in order] to foster growth [and] to release and harness the energy latent in the commonwealth” (Friedman, p. 100).

The Transformation of American Law became an instant classic upon its publication in 1977. Readers not already familiar with it should understand that it is a flagship work of the Critical Legal Studies movement which was born and bred in American law schools in the aftermath of the civil rights struggle, the Vietnam War, and Watergate. From that anguished, profoundly anti-institutional perspective, the book mounts a brilliant attack on the transformation of the private law of property, negligence, contract, competition, and commerce that was wrought in the state courts — quite to the exclusion, incidentally, of state legislatures. Decision by decision, treatise by treatise, state court judges of the revolutionary generation began the process of making new law and new legal rules in the form and substance of which Horwitz discerns a coherence to which he gives the name ‘instrumentalism.’

Horwitz’s use of the word “instrumental” is an important clue to his thesis. The dictionary definition of ‘instrumental’ is simply “helpful; serving as a means,” in which sense the word could apply equally well — could it not? — to the eighteenth-century English common law which just because it was based on precedent, was biased in favor of the status quo, was indifferent to social consequences and was resistant to change, was ‘instrumental’ insofar as it preserved order in a society that valued order above all things. It is clear, then, that Horwitz uses the word ‘instrumental’ in a heightened sense to mean reshaping private law so that it may serve as “a creative instrument for directing men’s energy toward social change” (p. 1). To effect social change within a common law tradition inherently biased against change required a transformation not only of legal rules but of the role of judge-made law in the society. Courts shed their passivity, to the point of assuming a quasi-legislative role. Early nineteenth century judges understood — Coase to the contrary notwithstanding — that legal rules do matter, that “different sets of legal rules would have differential effects on economic growth, depending both on the distribution of wealth they produced and the level of investment they encouraged” (p. xvii, note).


Property Law

The property-rights emphasis in the New Institutional Economic History makes knowing what property rights _are_ a matter of importance, what they _were_ a matter of greater importance, and that they are not what they were, and why, of greater importance still. The substance of Horwitz’s argument begins with property law the transformation of which ran parallel to a transformation in the conception of property itself, from an estate to be tranquilly enjoyed (in the eighteenth century), to a resource to be productively employed (in the nineteenth). The rubric of property law included riparian and other water-power rights, tenant rights, and the law of ‘waste.’ Eminent domain, nuisance, negligence, and damages fall under this rubric as well, but rules changes in those areas figured so conspicuously as subsidies to growth sectors in the economy that Horwitz treats them as such in a separate category.

Land use in the eighteenth century was constrained within two legal maxims that seem at first glance to check each other, but in fact were mutually reinforcing. On one hand stood Blackstone’s definition of private property rights as absolute: “the sole and despotic dominion which one man claims and exercises over the external things of the world in total exclusion of the rights of any other individual in the universe.” On the other stood the ancient common law principle in which property rights appear to be conditional: sic utere tuo, ut alienum non laedas, ‘so use yours that others be not harmed’. But far from mitigating the despotism of A’s dominion, sic utere extended it, for it conferred on A the power to prevent any use by B of his own land that disturbed A’s quiet enjoyment.

Property law would have to change to accommodate the nineteenth century, and it was with respect to rights in the use of water that judges, “listening to the future,” began the transformation. Two iconic cases, Merritt v. Parker (New Jersey, 1795) and Palmer v. Mulligan (New York, 1805) defined the era. Both are riparian rights cases in which a new user constructed a mill upstream or downstream of a prior user, obstructing, diverting, diminishing the flow of water or back-flooding the land. In 1795 the plaintiff won on the common law principle of aqua currit et debet currere, ‘water runs and ought to run.’ In 1805 the defendant won on efficiency grounds: that “explicit consideration of the relative efficiencies of conflicting property uses should be the paramount test of what constitutes legally justifiable injury” (p. 38). On the cusp of the new century the rules of the game had changed.

Palmer v. Mulligan may have been the tipping point that Horwitz tells us it was, but in fact it was challenged, Horwitz tells us, by other judges and by Joseph Angell in his treatise on watercourses. As late as 1827, in Tyler v. Wilkinson, the much-esteemed Justice Story of Massachusetts attacked the Palmer decision as “unjust.” His rejection of the ‘efficiency’ and ‘balancing’ standards that had been determining in Palmer “spawned a line of decisions opposed to all diversion or obstruction of water regardless of any beneficial consequences, [and] marks the nineteenth-century high point in articulating the traditional conception of property that had already come under attack” (p. 39, emphasis mine). In another watercourse case, Cary v. Daniels (1844), Chief Justice Shaw “stated a legal doctrine strikingly different from Story’s earlier formulation [in Palmer]” (p. 41). Judge Morton came down on the other side of Story on the Charles River Bridge’s claim of prescriptive rights. The reader, then, is tempted to ask which — Palmer or Tyler? Story or Angell or Morton or Story? — correctly caught the spirit of the age? Could Horwitz be accused, here and indeed throughout, of selection bias in the judicial opinions upon which he chose to hang his argument? In the age of waterpower there must have been hundreds of riparian rights cases in state courts all over the country.5 How much and how wide was the difference of opinion among sitting state court judges on each of the pivotal issues that made new law? By what process did one opinion become regnant, diffuse, and become new law? Had Horwitz wanted to construct an operationally testable hypothesis, these are the questions, I should have thought, with which he would have dealt. It is early in this review to make this point, but it should, I think, be made.

If ‘for example’ is not proof, neither is it irrelevant to a proof. If the “professional historians and other nonlegally-trained scholars” for whom The Transformation of American Law was written (p. x) are persuaded by it, it will be in large part because of the sheer weight of the evidence, the enormous amount of corroborating testimony with which Horwitz has illuminated a critical juncture in the history of ideas in America.


Mill Acts

The reinterpretation of eighteenth-century Mill Acts provided another opportunity for nineteenth-century courts to shed the neutrality with which the common law had clothed them and overtly to take sides in the “sacrifice of ‘old’ property for the benefit of the ‘new'” (p. 63). “Under the Mill Acts, an owner of a mill situated on any non-navigable stream was permitted to raise a dam and permanently flood the land of all his neighbors, without seeking prior permission” (p. 48). Mill Acts had been enacted by provincial legislatures as early as 1713 to privilege colonial gristmills on the ground that they were private enterprises exercising a public function. This gave the floodings something of the character of a taking in eminent domain. A jury set the height of the dam, the time of the flooding, and the compensation. In return for the remedies provided in the Acts, the plaintiffs relinquished their common law right to sue for trespass, for punitive damages, for nuisance, or to seek an injunction. But in 1827, the Massachusetts court extended to textile, paper, and saw mills, unaffected with any public interest, the same privileges and immunities, allowing them “virtually unlimited discretion to destroy the value of lands far in excess of any benefit they might possibly receive,” while at the same time to “escape damages entirely by showing that the irrigation benefits the plaintiff received from having his lands over-flowed more than outweighed any injury he had incurred” (pp. 50-51). A sterner lesson could be drawn from this but for the fact that the Mill Acts, in response to public outrage, were repealed in 1830.


Eminent Domain

Immediately after the Revolution, the “release of energy” that Willard Hurst would teach us to associate with the buoyant business of settling Wisconsin, could already be felt in the ambitious infrastructure projects being undertaken in the East. At such a time, “the most potent legal weapon” in the quiver of an instrumental jurisprudence is the power of eminent domain. Late in his book, Horwitz says of its potential to take and redistribute wealth that it was “the one truly explosive legal ‘time bomb’ in all antebellum law” (p. 259). That a State should have such a power inheres in the principle of sovereignty itself. Under English law, all who hold land do so at the sufferance of the Sovereign. Under U.S. law, where sovereignty resides in the whole people represented by the states, those states possess “unlimited power”(p. 65) to take private property for public use — even, in the case of railroads, to take private property for private use. The argument has gone even further: even to take private property for private use without compensation, for (argued counsel for the railroads) any limitation of the power of eminent domain is a limitation of sovereignty (p. 65). And, indeed, until the ratification of the fourteenth amendment carried the Bill of Rights to the States, the clause of the Fifth Amendment that reads, “nor shall private property be taken for any public use without just compensation” bound only the Congress. Most state constitutions had no such provision even as late as 1820.

Aware, as they always were, that the ad hoc outcomes of eminent domain cases could set precedents that would impact significantly upon the cost of future development projects across the continent, the courts became involved in eminent domain takings only when disputes arose over compensation. How, for example, should the land be valued? By the current owner’s purchase price? By its current price? By its estimated future price given the trend rate of growth of population and land prices? Or by speculating as to its value after the projected construction has secured its market access? Any one of these, even the most generous, could have a perverse outcome: in one of the many cases involving abutters injured by the diversion of water during construction of the Erie Canal, compensation was denied entirely on the ground that the “general increase in land values and access to markets” that might arise as a consequence of the Canal was sufficient remedy (p. 69).

And how should the consequential destruction of property be compensated? In the Erie Canal cases, the court exempted consequential injuries from liability, and never did make clear the grounds on which it did so. Horwitz suggests five: ? the risk of consequential damage was already discounted in the price originally paid for the land; ? the threat of appropriation by the state was already discounted in the price originally paid for the land; ? the injury was damnum absque injuria, (defined in Black’s Law Dictionary as “a loss which does not give rise to an action for damages against the person causing it,” just something to be borne “as part of the price to be paid for the advantages of the social condition”); ? the injury resulted from a breach of contract that could not have been anticipated; ? the injury was entirely predictable, but it is not clear who should bear the cost. In the event, “Landowners whose property values were impaired without compensation in effect were compelled to underwrite a portion of economic development”(p. 70).



The question of who should bear the cost also lies at the center of the negligence doctrine. The issues in negligence law have attracted considerable attention, not only because it is “the largest item of business on the civil side of the nation’s trial courts,” but also because Richard Posner’s well-known analysis of appellate-level determinations in cases of railroad and street railway accidents launched the field of Law and Economics (Posner, p. 29). In that exhaustive study, Posner tested his hypothesis that sitting justices aimed to set damage awards in such a way as to ‘make the market work'; that is, “to bring about an efficient level of accidents and safety” (Posner, p. 34). “The only recognized basis for invoking the legal process to shift an accident loss from the victim to another party is the expectation of improving the efficiency of resource use.” If, as a result of an accident, the magnitude of the loss, L, weighted by the probability or forseeability of it happening, a, is less than the cost, C, of preventing it, then economic welfare requires that the injurer not assume the costs of prevention. The injurer — it was so often the railroad — would do better, both for itself and with respect to maximizing some social welfare function, to assume liability and pay full damages to the victim rather than incur the cost of installing guard-rails, fences, gates and bells at every cross-road, automatic coupling devices, fire extinguishers, etc. to prevent further accidents. The observed behavior of judges confirmed Posner’s proposition. But his data are for the period 1875-1905, leaving room for Horwitz’s discussion of the prior history of negligence to make an important contribution.

He traces the stages in the evolution of the negligence standard from the an eighteenth-century action for nuisance in which the defendant was held strictly liable; to nonfeasance or failure to perform a duty required by law or by contract; to carelessness, as in collisions between non-contracting strangers, where the joint-ness of the act makes causation (and therefore liability) difficult to determine; to contributory negligence where the assumption of the plaintiff’s complicity can defeat his claim against the defendant; to a standard, used in railroad and bridge collapse cases, where there is a defendant at fault but no liability on the rule that “injury brought about by risk-producing activity was itself no ground for imposing legal liability” (p. 97); and finally: to the use of the negligence standard as an instrument of social change. Judges, says Horwitz, were “encouraged to regard themselves as social engineers and legislators, whose decisions to impose liability were influenced by broader considerations of social policy” (p. 88). The rule governing the outcomes in Posner’s sample would, I should think, fit here.

In order to immunize new forms of enterprise against the huge costs of strict liability, the watering-down of negligence doctrine provided a significant subsidy to the dynamic edge of the American economy.6 As in the case of tariffs on British textiles, it is fair to ask, was this subsidy necessary? If it was, it should have been done, says Horwitz, through (progressive) taxation rather than through changing legal rules — a criticism he makes throughout. There are interests of substantive justice as well as of law at stake here, and, as should be clear by now, Horwitz has taken sides. “The increasingly ruthless application of the private law negligence principle . . . became a leading means by which the dynamic and growing forces in American society were able to challenge and eventually overwhelm the weak and relatively powerless segments of the American economy” (p. 99).



Contract law may be the area respecting which the nineteenth-century transformation of American law was at once most thoroughgoing and most relevant to the concerns of modern economic history. ‘Thoroughgoing’ in that, as Horwitz tells it (and he tells it with passion and eloquence), after the Revolution contract law was torn root and branch from its origins in equitable conceptions of substantive justice, inherent fairness and objective value, and given over, entire, “to articulate the ‘will theory’ with which American doctrinal writers expressed the ideology of a market economy in the early nineteenth century” (p. 185). ‘Relevant’ in that economic historians have in recent years appropriated from contract law the whole apparatus of modern contract theory — implicit contracts, incomplete contracts, principal-agent interactions, internal labor markets, and the implications of all these for the boundaries of the firm and the transacting that takes place within them. (See for example, Hart (1995), Holmstrom and Robert (1998), and Rosen (1985).)

Evidence of the shift from “the old learning” (that contractual obligation derives “from the inherent justice or fairness of an exchange”) to the new (that contractual obligation shall reside solely in “the convergence of the wills of the contracting parties”) (p. 160) was made manifest as early as 1790 in the first legal action to acknowledge expectation damages. With the emergence of financial markets, “the function of contracts correspondingly shifted from that of simply transferring title to a specific item to that of ensuring an expected return” (p. 161, emphasis mine). Price could no longer be thought of as a stable, objective, customary, absolute measure of value when it was in the very instability of prices that gains were to be made and losses from foregone gains sustained. Henceforth the courts would acknowledge that it is “the consent of the parties alone that fixes the just price of any thing, without reference to the nature of things themselves, or to their intrinsic value” (p. 160).

It is curious to see the extent to which, in this telling, eighteenth-century legal rules are made to rest upon the foundation of intrinsic or objective value. To borrow Calvin’s devastating comment on free will: “What end could it answer to decorate a thing so diminutive with a title so superb?” There could have been little, if any, experience of price stability in the lives of this generation of judges. They had lived through the extreme price volatility of 1720-40, the simultaneous circulation of several paper currencies denominating several sets of prices with only an arbitrary relation to one another, the steady depreciation of each colony’s silver currency on the British pound sterling, and the spectacle of the Continental vanishing daily. ‘Objective value’ must have been less a ‘foundation’ than an “instrumental conception” in the service of a static social order. In light of the dominant place Horwitz gives throughout his book to this shift from objective to subjective value, one might almost say that the emergence of a market economy had a more profound impact upon the law than it had upon the real economy.

The consequential link between subjective value and the will theory of contract is nowhere more clearly illustrated than in the emergence of caveat emptor and the triumph of express over implied contracts. Whereas the most important aspect of the eighteenth-century conception of exchange had been an equitable limitation of contractual obligation if the underlying exchange were unfair, under modern will theory contractual obligation was bounded entirely by the ‘meeting of minds’ as expressed in the contract. The existence of informational asymmetries, even if establishing the inherent inequality of the parties, would no longer invalidate a contract as unfair. No provision of the contract — having been “created by it alone” (p. 182) — could be other than that expressly agreed to, even if the terms of that agreement contravened rules of law. And thus, by 1825, “the chasm” (p. 186) between express and implied contracts had emerged. The bench’s treatment of nineteenth-century labor contracts would make that chasm a bitterly contested terrain.

Applying the will theory to labor contracts The whole corpus of contract theory today is based on the recognition that it is impossible to write a complete contract. “It is simply too difficult to anticipate all the many things that may happen … [I]t is clear that revisions and renegotiations will take place. In fact, the contract is best seen as providing a suitable backdrop or starting point for such renegotiations rather than specifying the final outcome … [Both parties] are looking for a contract that will ensure that, whatever happens, each side has some protection, both against opportunistic behaviour by the other party and against bad luck” (Hart, p. 2). To interpret and enforce a contract as ‘entire’ that even under the best of circumstances is incomplete, enlists something beyond legal rules; it enlists the sympathies of the judges. Horwitz’s thesis, of course, is that the sympathies of nineteenth-century judges were, by this time, allied to commerce and industry and quite orthogonal to labor’s interests. The judicial zeitgeist, having “destroyed most substantive grounds for evaluating the justice of exchange” (p. 201), reified in its stead “the momentary intention of the parties” (p. 196).

Based on the doctrine that “an express contract bars an action in quantum meruit,” laborers who quit on a long-term contract were barred from recovering wages for time served. “In no case,” said the court in Stark v. Parker (Massachusetts 1824), “has a contract in the terms of the one under consideration been construed by practical men to give a right to demand the agreed compensation before the performance of the labor, … it would be a flagrant violation of the first principles of justice to hold it otherwise” (Karsten, p. 170). This precedent stood, with only one “solitary challenge” — Britton v. Turner (New Hampshire 1834) — until the 1870s.7 Horwitz strikingly underscores his point by presenting a parallel case: while laborers were denied recovery, building contractors who quit on an express contract were allowed to recover, both in quantum meruit for labor services and in quantum valebant for materials used (Hayward v. Leonard (Massachusetts 1828). “While the judges who adhered to the distinction between labor and building contracts never acknowledged an economic or social policy behind the distinction, it seems to be,” says Horwitz, “an important example of class bias” (p. 188).

Horwitz has been sharply taken to task for his analysis of labor contracts, and the critics have come at him from all sides, disputing both the benign class relations he attributes to the eighteenth century and the exploitative class relations he attributes to the nineteenth century. Peter Karsten (1997) and Robert J. Steinfeld (1991) are among those who have re-examined these issues in recent years. Karsten disputes Horwitz’s allegation of discrimination in the contrast between Stark v. Parker and Hayward v. Leonard. “I identified some sixty-eight ‘contractor’ cases in American courts,” he writes, “and found very little difference between the ways that courts treated ‘contractors’ and other workers. Contractors fared no better, no worse, than laborers in suits to recover in quantum meruit (and quantum valebant)” (Karsten, p. 186).

And as to the implication that the eighteenth-century common law was more equitable, more just, less punitive, and less coercive than judge-made law in the nineteenth, Karsten responds, “One searches in vain for an idyllic past in the history of British labor law” (Karsten, p. 159). Karsten and Steinfeld both sketch the sorry chronicle of over 550 years of oppressive English labor legislation and jurisprudence, from the Ordinance of Labourers (1349) to the Master-Servant law (which lasted, amended, from 1747 to 1875), during which quitting on a contract not only forfeited wages, but was prosecuted as criminal theft of the master’s property in his servant’s labor. The servant was brought before a magistrate and punished with “wage abatement, imprisonment, and whipping” (Karsten, p. 159), “and a fine largely exceeding the amount of his wages” (Steinfeld, p. 151). “As late as 1875 about two thousand agricultural laborers were still being convicted and imprisoned each year for leaving or threatening to leave their employers” (Karsten, p. 160). In his most recent book, I understand that Steinfeld has found 10,000 such prosecutions each year.

In defense of nineteenth-century American labor law, by contrast, “no one even imagined that [laborers] might be compelled to serve out their time. … Direct coercion would not be permitted, but legally sanctioned economic compulsion would. And this,” says Steinfeld, “made perfect sense. It comported with the emerging model of labor that left to the laborer the formal decision whether to stay or to go” (Steinfeld, pp.150-51).

Our interest as economic historians in the judicial enforcement of these contracts is in their labor-market consequences, for it is upon mobile resources and minimal transaction costs that the efficiency of a labor market depends. In his article on negligence theory, Posner had remarked “the affinity between economic market and common law adjudication as methods of allocating resources” (Posner, p. 75). What efficiency argument justifies the employer’s capture of the worker’s wages? The productivity-enhancing consequences of coercive discipline? But in Clark’s (1994) model of factory discipline it was enough that the worker ‘hired’ the coercive boss; he did not have to forfeit all his earnings to pay him. Then, did the employer need to be compensated by the worker for the savings he must now forgo on search costs, implicit contracting, labor hoarding, and lock-in that had motivated the annual contract in the first place? If so, the loss to the worker should vary inversely, rather than directly, with time worked.

The most plausible explanation is, of course, the deterrent effect. But in my own research on contract labor on Massachusetts farms, 1750-1865, where the quit rate was about ten percent of hires, the account books of the employing farmers showed that in no case were earnings withheld (Rothenberg, p. 207). America’s most ‘peculiar institution’ may not have been plantation slavery — after all, almost every agrarian society designs institutions to constrain the mobility of its labor force — but the genuinely free labor on New England farms.

But with this elegiac insertion from my own work I have broken the mood of Horwitz’s book, which at this point is utterly bleak. With the transformation of contract, having “neutralized” substantive justice, objective values, the power of juries, earlier protective or regulatory doctrines, and moral duties, “judges and jurists could no longer ascribe any purpose to legal obligations that were superior to the expressed ‘will’ of the parties. As contract ideology thus emasculated all prior conceptions of substantive justice, [the patently false assumption of] equal bargaining power inevitably became established as the inarticulate major premise of all legal and economic analysis. The circle was complete; the law had come simply to ratify those forms of inequality that the market system produced” (p. 210). The “affinity” between law and economics that Posner had remarked in 1875, Horwitz has found at least a generation earlier.


The Development of Commercial Law: Negotiability, Marine Insurance, Usury

While the responsibility for the transformation of most areas of private law fell upon (or was appropriated by) the state courts, the development of a body of commercial law — having to do with negotiability, usury, and marine insurance — was the preserve of the federal judiciary. Of these areas, negotiability, which lay at the heart of all commercial relations, presented the most difficult contradictions with the common law for it intruded upon the privity of contract.

Ideally, full negotiability requires that endorsed notes “should circulate as freely as money,” which, if one thinks about what money is, means that a subsequent innocent holder of the note “might depend on payment, regardless of any unknown defects in the obligation arising out of the original transaction between distant parties” (p. 213). To illustrate, following Horwitz: A, debtor to B, can be sued by C to whom B had transferred A’s note, even if no understanding had passed between A and C. And if C had endorsed the note over to D not knowing that A had defaulted, D could sue B, a prior endorser. Most crucial — and this is what distinguishes fully negotiable instruments from assignments — suppose A has already paid the note to B; the courts will protect D, an innocent purchaser of the instrument, from the assumption of any risk arising from B’s attempts to defend himself against D’s suit. It was with respect to this last particular that the state courts, particularly in Massachusetts, balked, until the federal court overruled them in 1809, thereby taking the first step in creating a general commercial law. For Horwitz this step was doubly important: it established full negotiability, and it deposited commercial disputes in the jurisdiction of the federal courts, thereby taking them from the “uncongenial anti-commercial environment often found (sic!) in state courts” (p. 252).

Marine insurance in the eighteenth century had been operated out of taverns, inns, and coffee-houses, by merchants and shipowners for their mutual protection; “it had never been intended for profit” (p. 227). Each voyage was a unique event; each transaction was personal; only extraordinary perils at sea were covered; and the underwriters held themselves strictly liable in all cases, unless it could be proved that the ship was unseaworthy, or an agent was negligent (called ‘barratry’).

Sometime during the remarkably fruitful period 1790-1820 came “the gradual acceptance of what we might call an actuarial conception of social risk … a social consciousness that comes to conceive of a greater and greater portion of activity as appropriately within the realm of chance” (p. 228). With the chartering in the 1790s of incorporated insurance companies with large pools of capital, marine insurance law — like bankruptcy and negligence law — devolved upon an actuarial conception of insurable risks. Losses were no longer unique events, but were predictable according to a probability distribution calculated on the experience of hundreds of voyages. Unseaworthiness and barratry were no longer bars to recovery against the insurance companies; moral responsibility became attenuated, and while the risks of moral hazard increased, insurance companies protected themselves by requiring a variety of warranties and representations any breach of which would defeat recovery. For example, “any deviation from the stipulated route of a marine voyage would void a policy even without a showing that it had increased the risk of loss” (p. 231).

“The ultimate triumph of a market ideology” (p. 241) was the movement to abolish usury laws. It is noteworthy, however, that by the Civil War, seven states still voided usurious contracts, penalizing them with fines and/or forfeiture of principal, and every state except California maintained some regulation over the legal rate of interest (p. 243), but by 1860, “it was no longer possible to recapture an earlier and more coherent system of premarket morality” (p. 245) in the context of which this lingering survivor of the ‘just price’ any longer made sense.



As economic historians have been made increasingly aware of legal institutions, if not by Ronald Coase then by Douglass North, no one, I think, any longer doubts that they are intimately related to economic development. But can we understand that relationship without positing a direction of causation? For Horwitz, the transformation of American law after the Revolution appears to have been so thoroughgoing, so deliberate, so willed that it is possible to read him as suggesting that the causation might actually have run counter-intuitively: from legal change to economic change, from pro-entrepreneurial judges to instrumental legal rules; from instrumental legal rules to the institutions of corporate capitalism. And now, twenty-five years after The Transformation of American Law, the theoretical work currently being done by Andrei Shleifer, Robert Vishny, Edward Glaeser, Daron Acemoglu, and other New Political Economists can be read as suggesting that such a thing is not only possible, but a direction worth pursuing in the development field. (See for example, Glaeser and Shleifer, forthcoming.)

Horwitz is not a Luddite. His target is not the process of economic development per se. It is that the courts appropriated so much of the process, and by so doing effected the transformation by obiter dicta rather than by legislation; by changing legal rules rather than by accommodating conflicting interests; by debt- and equity-financing rather than by progressive taxation. It is that, as a consequence, “growth was subsidized by victims of the process” (p. xvi).

Much of Horwitz’s argument depends on his belief that something precious was lost in the passing of the eighteenth century. Objective value, just price, equitable standards, fair contracts, symmetrical information, implied contracts, substantive justice, compensated takings, strict liability: the furniture of “the heavenly city of the eighteenth century.” It can all be compressed into one of his sentences, the belief “that unequal bargaining power was an illegitimate form of duress” (p. 184).

As the book moves through the antebellum period and the lineaments of the transformation harden in place, Horwitz’s own deeply moral commitment to humane values becomes increasingly engaged. The rhetoric grows angrier, the sarcasm more difficult to conceal. It makes this wonderful book exciting to read, but more problematic. One hates – I hate — to disagree with him.


1. Becker (1932), p. 15, quoting Aristophanes. The full quote is “Whirl is king, having deposed Zeus.” 2. The phrase is from Gerschenkron (1968). 3. The phrase is from Nelson (1975). 4. Pound goes on to say, “Today national law schools, teaching law, not laws, and teaching law in the ‘spirit of the common legal heritage of English-speaking people’, are working effectively to preserve this uniformity, against many forces of disintegration” (p. 83). 5. Riparian rights are property rights to the banks of non-navigable waterways, i.e., of waterways not subject to the ebb and flow of the tides, and to the waters up to the mid-point of the stream. 6. Subsidy? Posner replies, “It is true that if you move from a regime where railroads are strictly liable for injuries inflicted in cross accidents to one where they are liable only if negligent, the costs to the railroads of crossing accidents will be lower, and the output of railroad service probably greater as a consequence. But it does not follow that any subsidy is involved — unless it is proper usage to say that an industry is being subsidized whenever a tax levied upon it is reduced or removed” (Posner, p. 30). 7. Karsten has an extended discussion of Britton v. Turner on pp. 157-82. Apparently it was not at all a “solitary” case; it was “hotly debated” in many state courts, and “before the Civil War had ended, five states had adopted the Britton v. Turner standard” (p. 175). Others had recognized it as more equitable but so radical as to require a legislative rather than judicial initiative.


Becker, Carl L., 1932. The Heavenly City of the Eighteenth Century Philosophers, New Haven: Yale University Press.

Clark, Gregory, 1994. “Factory Discipline.” Journal of Economic History 54 (1), pp. 128-163.

Friedman, Lawrence M., 1973. A History of American Law. New York: Simon & Schuster.

Gerschenkron, Alexander, 1968. Continuity in History and Other Essays. Cambridge, MA: Harvard University Press.

Glaeser, Edward and Andrei Shleifer, forthcoming. “Legal Origins,” Quarterly Journal of Economics .

Hart, Oliver, 1995. Firms, Contracts and Financial Structure. Oxford: Oxford University Press.

Holmstrom, Bengt and John Robert, 1998. “The Boundaries of the Firm Revisited.” Journal of Economic Perspectives 12 (4), pp. 73-94.

Jameson, J. Franklin Jameson, 1926. The American Revolution Considered as a Social Movement. Princeton: Princeton University Press.

Karsten, Peter, 1997. Heart versus Head: Judge-Made Law in Nineteenth-Century America. Chapel Hill: University of North Carolina Press.

Kuznets, Simon, 1968. “Reflections on Economic Growth,” in Toward a Theory of Economic Growth. New York: W.W. Norton.

Nelson, William E., 1975. The Americanization of the Common Law: The Impact of Legal Change on Massachusetts Society, 1760-1830. Cambridge, MA: Harvard University Press.

Posner, Richard A., 1972. “A Theory of Negligence.” Journal of Legal Studies 29, pp. 29-96.

Pound, Roscoe, 1938. The Formative Era of American Law. Gloucester: Peter Smith.

Rosen, Sherwin, 1985. “Implicit Contracts: A Survey.” Journal of Economic Literature 23 (3), pp. 1144-75.

Rothenberg, Winifred, 1992. From Market-Places to a Market Economy: The Transformation of Rural Massachusetts, 1750-1850. Chicago: University of Chicago Press.

Steinfeld, Robert J., 1991. The Invention of Free Labor: The Employment Relation in English and American Law and Culture, 1350-1870. Chapel Hill: University of North Carolina Press.

Winnie Rothenberg is Associate Professor of Economics at Tufts University. She is the author of From Market-Places to a Market Economy: The Transformation of Rural Massachusetts, 1750-1850 (Chicago: University of Chicago Press, 1992), and of a number of articles in Journal of Economic History, one of which, published in 1981, won the Arthur H. Cole Prize for best article. She has served as Vice President of the Economic History Association and as a member of its Board of Trustees.

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

The Second Great Emancipation: The Mechanical Cotton Picker, Black Migration, and How They Shaped the Modern South

Author(s):Holley, Donald
Reviewer(s):Heinicke, Craig

Published by EH.NET (March 2002)

Donald Holley, The Second Great Emancipation: The Mechanical Cotton Picker,

Black Migration, and How They Shaped the Modern South. Fayetteville, AR:

University of Arkansas Press, 2000. xvi + 284 pp. $36 (cloth), ISBN:


Reviewed for EH.NET by Craig Heinicke, Department of Economics, Baldwin-Wallace

College, Berea, Ohio.

At the end of World War II, the southern United States stood at a turning

point — would the region continue to catch up with the rest of the nation with

respect to wages, education levels and other economic indicators or return to

its separate path of labor-intensive agriculture, paternalism, racial strife,

underemployment, and lagging wages? Without the mechanical cotton picker there

is no doubt that the former would have been delayed; with it by the late 1960s

the South lost much of its regional character. How important can any one

implement or invention be in bringing about social and economic change?

Although Donald Holley (Professor of History at the University of Arkansas at

Monticello) does not show that the mechanical harvester was indispensable for

the South’s transformation (more on this below), he builds a good case that

this machine was more important than any other since the cotton gin in

transforming the region. By the author’s account, the cotton picker

“emancipated” both southern farmers and black workers from among the most

arduous forms of “stoop” labor, and with it from perpetual misery, inadequate

education, low standards of living and the tedium of unchanging expectations.

Donald Holley’s thoroughness in addressing the associated questions that arise

suggests that this book will be a lasting reference for those interested in

this subject.

After setting out the context in the early chapters, Holley documents how the

mechanical cotton picker came to be mass produced and marketed, beginning with

how its promoters struggled with cotton’s exasperating resistance to machine

techniques, the hallmark of American agricultural advance for much of the

twentieth century. Every aspect of the somewhat familiar story of the Rust

brothers’ inventive activity is examined (chapter three), along with the Rusts’

consciousness of the potential social upheaval that mechanization of the

harvest could unleash (chapter five). The fears of other contemporaries are

documented at length; one particularly striking comment was published amid the

Depression’s high unemployment, when the Rusts’ experiments seemed poised for a

final breakthrough: “The machine is said to be quite practical … That being

true, it should be driven right out of the cotton fields and sunk into the

Mississippi River” (p. 77, quoting The Jackson Daily News, August 31,

1936). The fears of the Rusts and others were for the unemployed themselves,

but the hesitancy of some was mixed with white paranoia: “Imagine, if you can,

500,000 Negroes in Mississippi just now lolling around on cabin galleries or

loafing on the streets” (p. 78). Ten years after that editorial, when the

mechanical harvester was on the verge of becoming a commercial reality, more

fears were expressed, but many also foresaw that the picker would solve the

problem of labor scarcity (chapter eight). Holley’s strength is documenting the

extremes as well as the middle ground, revealing that the harvester was neither

savior nor “Frankenstein’s monster.”

Part of the cotton picker story includes an account of how each major

manufacturer (not only International Harvester, but also John Deere,

Allis-Chalmers, and Ben Pearson) made a bid in the “cotton harvester

sweepstakes.” Among the most interesting passages are those that lay out

International Harvester’s marketing studies (chapter six), and two “case

studies” of cotton producers using the new machinery (chapter seven). While

past accounts have implied only the wealthy used the mechanical harvester in

its early stages, one of Holley’s cases involves a small landowner.

How did it come about that after years of tinkering, doubts, and anxiety about

the consequences, the International Harvester committed itself to regular

production of the “spindle” (so-called, due to the rotating “spindles” that

pulled lint from the cotton boll) picker? In late 1942 Fowler McCormick of

International Harvester announced that a viable picker was perfected —

although scheduled production awaited the year 1948. It is plausible that

war-time migration and the resulting labor scarcity would have increased the

anticipated value of the machine. Still, 1942 was relatively early in the

process; we know only in retrospect of the sustained rise in harvesting wages.

If the experience of World War I had been repeated, however, might not southern

landowners have expected a return to pre-war wages in the future? How much

different would the timing have been without the war?

The above questions are worth pondering, and are indeed to some extent

suggested by the text. The issue involves to what extent changes outside the

cotton and southern labor markets influenced the timing of the cotton picker’s

commercial production. What else was going on at the boardrooms and

decision-making units of the major farm implement makers? Knowing this, would

help us understand exactly how much of the move toward marketing this machine

was due to changes peculiar to the South, and how much of the move was

exogenously determined. Cotton was certainly a key commodity and machinery

makers would no doubt have been aware of the breadth of the potential market.

Still, other trends in the implement industry may well have influenced the

timing of the major manufacturers’ entries into this market. Despite leaving us

to ponder these questions, the book provides extensive documentation of

southern developments and makes a solid contribution to our understanding of

how a production “bottleneck,” a machine invented to fill that need, and the

social consequences that followed, shaped other major demographic and social


Related to the timing of the picker’s production is a well-documented debate

over whether the picker would “push” workers from the field or replace those

who had been “pulled” to better jobs in the cities (chapters eight and nine).

The book extensively surveys the range of contemporary and scholarly views. The

documentation is rich in its breadth of viewpoints; the author, however, also

forwards a statistical assessment of whether the “push” of workers from the

fields was greater than the “pull.” He finds that the latter dominated,

although not by much. The author’s labor supply and demand estimation is

perhaps too uncritical of the existing data series — for instance the “piece

rates” paid to hand pickers omit important expenses for hand labor — and his

county level regressions are somewhat unconvincing on the matter of causality,

while omitting important variables. The exercise, however, does provide another

angle from which to view the relevant questions. The documentary evidence,

thoroughly presented, will form a highly valued reference from which to assess

these important questions.

Government crop programs of the New Deal era are also important (chapter four)

in the overall process. The author takes the unconventional view that the

Agricultural Adjustment Act was less a cause of tenant “displacement” than

economic trends themselves, and argues that the AAA had positive effects in

helping to rid the South of rural overpopulation. It is not that Holley is

unsympathetic to the plight of the displaced. He recognizes, like those writing

a half century ago, that the poverty of South could not be abated with too many

people on the land. He also appreciates the limited alternatives that existed

in a place and time where the aftermath of slavery still held its loathsome


The book is convincing that the mechanical cotton picker was important beyond

its value to southern farmers, and thus that we can learn much from examining

the forces which brought it about and those which delayed its arrival. The

author goes one step further, arguing that the cotton picker was

“indispensable” for both the success of the Civil Rights Movement (p. 195), and

for the “transition from the pre-World War II South of overpopulation, poverty,

and sharecropping to the postwar, modern South” (p. 185). Reminiscent of the

“axiom of indispensability” in another context, this is an intriguing idea, but

not one that is tested directly. To show that momentous events (themselves

difficult to measure in any conventional sense) would not have taken

place absent a particular invention is indeed a demanding standard. A problem

with the cotton picker as “indispensable,” is that in part it was an

intermediary between other large demographic and economic shifts and their

results for southern markets and society. These include the effects of World

War II, the New Deal, and the internal evolution of southern society and

economy among others. These observations do not necessarily imply the cotton

picker was dispensable, but they certainly provide perspective on the idea. In

this case — as with railroads, economic growth and the question of

indispensability — the substitutes for the picker from the landowner’s

perspective may have been less attractive, but they were substitutes

nonetheless. Among those that could have relieved the southern plantation

sector’s thirst for a large docile labor force were abandonment of the cotton

“mono-culture” or capital movement to the cities and other industries. On the

labor supply side, there was also migration to the cities.

A slightly different point involves the degree to which the mechanical cotton

picker “emancipated” the southern farmer and African-American. For the latter,

the analogy is laced with meaning. We should note that if the harvester

“emancipated” blacks, then there was also a good deal of self “emancipation”

that preceded it. African-Americans chose to leave the South in large numbers

for three decades prior to 1948, before the first commercially marketed cotton

harvester entered the fields. In fact, that is part of the story the author

forwards, and why it was that many contemporaries thought the harvester mainly

“replaced” those who left the fields rather than kicking workers off the land.

By 1950 when the mechanical picker first became a viable alternative for hand

picking, the percentage of black workers in the South employed in agriculture

was 31 percent. Southern African-Americans were doing other things in addition

to picking cotton. The busses of Montgomery and lunch counters of Greensboro

were more than a step away from the fields.

Perhaps the term “emancipation” is used by the author to counter some of the

“bad press” that labor saving machines, including this one, have attracted over

the years; but we must be careful of overstatement on the other side. Still, we

can agree that on balance the cotton picker represented a positive step,

despite the fact that it brought with it ambiguities and pain for those workers

with few alternatives. It is certainly true that the changes in racial and

economic relationships associated with mechanical harvesting took place


It is difficult to get a handle on exactly how much one should attribute social

and economic change to any one any invention, and this case is no exception. A

great value of the book is that Donald Holley draws attention to the mechanical

cotton picker as among the most consequential inventions for the South in over

two centuries of history. It also was among the more important in

twentieth-century American agriculture, even if it was not indispensable for

the major social changes that followed it. In part, the cotton picker was

important because the demographic and social changes with which it was

entangled were so consequential; Holley is aware of this at every step, and in

the end provides the balance and completeness of documentation that should

assure the longevity of his work as a reference.

Craig Heinicke, Associate Professor of Economics at Baldwin-Wallace College,

has authored, “Driven from the Fields or Enticed to the City? The Cotton

Picking Machine and the Great Migration from the Cotton Belt, 1949-1964,” with

Wayne Grove (Syracuse University), Allied Social Sciences Association Annual

Meeting, Cliometric Society Sessions, 2002; and “African-American Migration and

Mechanized Cotton Harvesting, 1950-60,” Explorations in Economic History

1994, 31: 501-520.

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

Rip Van Winkle’s Neighbors: The Transformation of Rural Society in the Hudson River Valley, 1720-1850

Author(s):Wermuth, Thomas S.
Reviewer(s):Parkerson, Donald

Published by EH.NET (January 2002)

Thomas S. Wermuth, Rip Van Winkle’s Neighbors: The Transformation of Rural

Society in the Hudson River Valley, 1720-1850. Albany, NY: State University

of New York Press, 2001. vii + 184 pp. $17.95 (paper), ISBN 0-7914-5084-8.

Reviewed for EH.NET by Donald Parkerson, Department of History, East Carolina


Rip’s New World

When Rip Van Winkle stumbled out of the Catskill Mountains following an

afternoon of heavy drinking and an unexpected twenty-year nap, he discovered a

world that was very different from the one he had left behind. His little

village of Sleepy Hollow had been “a peaceful spot”(p. 1). But now things were

different, “the very character of the people seemed changed. There was a busy

bustling, disputatious tone about it, instead of the accustomed phlegm and

drowsy tranquility” (p. 1). While Thomas Wermuth notes that Rip’s vision of the

Hudson Valley in the eighteenth century was clearly a romanticized one, “he was

essentially correct” (p. 2) in his observations of profound change by the

beginning of the nineteenth century. It is this complex transformation that is

the centerpiece of Wermuth’s excellent new book.

Wermuth’s study is based on a variety of primary sources from the Hudson Valley

including town records, probated inventories, accounts and wills, assessment

rolls, more than a dozen account and day books, diaries, newspapers and

letters. His careful use of these and other documents as well as a variety of

secondary sources provides the reader with a rich and textured portrait of

social and economic change in this region during the early years of the market


In Rip Van Winkle’s Neighbors Wermuth devotes three chapters to the

social, political and “rural economic culture” of the region prior to the

American Revolution, one chapter to the changes endured by Winkle’s neighbors

during the Revolution (“We Are Daily Alarmed and Our Streets Filled with Mobs”)

and three chapters to the impact of the market economy on the people of the

mid-Hudson Valley to 1850.

Wermuth places his research in historiographical perspective by reviewing the

debate concerning the onset of rural capitalism. While debunking the myth of

the “happy yeoman” who was self sufficient, independent and lived free of

government authority, he also argues that Rip’s neighbors were not full-blown

capitalists. He notes that previous studies of the “economic behavior of farm

households” have relied on farm daybook records that are more representative of

“busy, successful men” (p. 93). In order to develop a more accurate portrait of

“the multitude of smaller farmers,” Wermuth examines a number of shopkeepers’

accounts such as those of Abraham Hasbrouck of Kingston Landing, New York. He

sampled Hasbrouck’s books from 1799, 1820 and 1839 and then linked these

records to census and tax returns in order to understand the social background

of his farming customers.

Wermuth concludes that in 1799 only about 12 percent of these farming people

were “market producers” (p. 103). By 1820, however, the forces of the market

economy had begun to impact the valley. By then, the more successful,

large-scale producers had entered the marketplace as commercial farmers but

ordinary farmers typically had not increased their agricultural output. Rather

they entered the market obliquely through the production of non-agricultural

products such as barrel staves that they bartered for textiles, hardware and

cheap consumer goods.

By 1839 canals and roads in the region provided new market opportunities for

valley farmers but they also brought stiff competition for those markets from

the west and north. As a result, van Winkle’s neighbors altered their

production as they searched for a market niche. Some farmers shifted their

production from wheat to livestock because of the competition of cheaper wheat

from the Ohio Valley and Midwest. Others virtually abandoned the production of

wool in favor of dairy products as a result of the increasing dominance of

woolgrowers and textile manufacturers from New England.

Although their production changed significantly over the years, Wermuth notes

that these changes allowed valley farmers to maintain a degree of independence

from the wage labor and rural outwork that had become a way of life for many

New England farmers. By specializing in market products that they could produce

themselves, their farms remained the center of their economic activity and

mediated some of the harsher consequences of the market economy.

Wermuth’s study of Hudson River Valley farmers during these years reveals a

great deal about the complex process of change in rural America during the

market revolution of the late eighteenth and nineteenth centuries. By examining

a wide variety of sources including merchant account books, he is able to focus

our attention on the vast majority of rural producers during this period rather

than just the handful of great landholding commercial farmers. On the other

hand, Wermuth’s valley farmers clearly were different from others, even within

New York State. As such their experiences were in some ways unique, especially

their ability to maintain the integrity of farm production in the face of

powerful market forces. Nevertheless, Rip Van Winkle’s Neighbors is a

finely crafted and well researched analysis of an important rural community in

the process of dramatic economic change.

Donald Parkerson is author of The Agricultural Transition in New York

State, Iowa State University Press, 1995 and with Jo Ann Parkerson,

Transitions in American Education: A Social History of Teaching,

RoutledgeFalmer, 2001.

Subject(s):Social and Cultural History, including Race, Ethnicity and Gender
Geographic Area(s):North America
Time Period(s):19th Century

The Great Breakthrough and its Cause

Author(s):Simon, Julian
Reviewer(s):Hohenberg, Paul M.

Published by EH.NET (May 2001)

Julian Simon, The Great Breakthrough and its Cause. Ann Arbor,

University of Michigan Press, 2000. x + 214 pp. $39.50 (cloth), ISBN:


Reviewed for EH.NET by Paul Hohenberg, Department of Economics, Rensselaer

Polytechnic Institute.

Julian Simon, who died in 1998 just before finishing the manuscript that

became the book under review, was a forceful and prolific exponent of the

anti-Malthusian thesis that population growth has positive economic effects.

It goes without saying that “Malthusian” is used here — and indeed by Simon

– in its more common sense, in the same way that “Keynesian” or “Marxist” do

not typically imply close attention to the actual writings. The argument is

applied to economic history, notably to what the author calls Sudden Modern

Progress, the widespread increase in material well-being that began to spread

in the late eighteenth century. As the title makes clear, the book advances

one true or underlying cause for this epochal transformation and that is the

increase in human population.

Nil nisi bonum aside, this reader finds the book frustrating, to the point

where my review may not give all it contains of interest its due. One example

among many: a cunning graph on page 20 looks at world population over the last

million years with log scales for numbers and years before 2500CE. Aside from

the fact that the text on the same page flatly contradicts the diagram, the

successive surges of population it shows are clearly labeled as “resulting

from” successive technological breakthroughs. Yet the entire argument is

precisely that population growth antedates and indeed brings about the growth

of knowledge. If one ignores the legend and looks only at the curves, then the

long lags between successive growth surges casts doubt on a positive feedback

mechanism that would proceed from growth of human numbers to the development

of knowledge to further growth in numbers.

There are further difficulties with the argument, which is not so much

developed as restated with variations. Sometimes the crucial quantity is the

population of the world, sometimes of the nation or region. Nor is it clear

whether what really matters is total numbers or population concentration, in

the form of density or urbanization. I fear that behind much of the ambiguity

is the awkward fact that the largest concentrations of people, whose forebears

had fashioned the great civilizations of India and China, took virtually no

part in the breakthrough on which Simon focuses. While an entire chapter is

devoted to this issue, I, at least, emerge from it no wiser. One school Simon

will not join: you will hear nothing here of imperialism, that is, of the idea

that Western growth resulted from exploitation of what came to be the


Such frustrations are a pity, since the book’s basic thesis is well worth

pondering, as the sympathetic foreword by Richard Easterlin points out. There

is no question that output and population numbers have grown together. Current

theories of economic growth stress human capital, knowledge, and institutions

rather than natural resources or the accumulation of physical capital, and

this shift is very much in the direction that Julian Simon worked hard to pull

us. Well-functioning markets do demand as well as foster a larger scale of

both production and consumption. Cities facilitate the exchange of knowledge

and foster specialization in its production. I am, however, not persuaded that

large numbers, overall or in a single political or cultural unit,

monotonically generate more and better ideas. That sort of “gold-bearingore”

model of human creativity seems to me ahistorical. A much more promising

approach would be to focus on the conditions that will allow creativity to

flourish. I will not endeavor to do that here, save to point out that

prosperity and freedom may not, helas, offer the best milieu. The best wines

are made from grapes grown in stony soil.

Julian Simon (who was Professor of Business Administration at the University

of Maryland, College Park) gained fame, perhaps notoriety, by casting scorn on

earlier prophecies of catastrophic shortages of raw materials. And indeed, it

is hard to imagine the world economy running down for want of tungsten. In

this book, natural resources get little play, and pollution, including global

warming, apparently none (there is no index to serve as a check on my memory).

A similar lack of shading marks the discussion of progress in longevity and

health, on which Simon lays considerable stress. The triumphs over mortality

and disease, and their links to medical knowledge and sanitary institutions,

are rightly highlighted, but there is no mention, for example, of

drug-resistant agents. Perhaps in the longer perspective he is right.

Certainly neither wars nor obscurantism nor plagues have derailed the

juggernaut of progress so far. Will nuclear weapons, the genome, AIDS, and

carbon dioxide also prove to be minor incidents on the road upward from

poverty? Yet even if they turn out to matter little on a global and

multisecular scale, if one thinks back to China in 1400 or Spain in 1600, to

say nothing of earlier (or later) climacterics, the consequences of taking the

wrong road can last many lifetimes. To be fair to Julian Simon, these and

other miscues did not originate in Malthusian diminishing returns.

Paul Hohenberg is Professor of Economics Emeritus and currently Acting Chair

of the Department of Economics at Rensselaer Polytechnic Institute. He has

served as editor of the Journal of Economic History and has written on

European economic and urban history.

Subject(s):Economic Development, Growth, and Aggregate Productivity
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

Comparative Public Policy: Patterns of Post-war Transformation

Author(s):Castles, Francis G.
Reviewer(s):Couch, Jim F.

Published by EH.NET (May 1, 2000)

Francis G. Castles, Comparative Public Policy: Patterns of Post-war

Transformation. Cheltenham, UK and Northampton, MA: Edward Elgar, 1998. xi

+ 352 pp. $30 (cloth), ISBN: 1-85898-816-0.

Reviewed for EH.NET by Jim F. Couch, Department of Economics, University of

North Alabama.

Professor Francis G. Castles of the Research School of Social Sciences,

Australian National University, has undertaken quite a task in his latest work

– that of explaining the growth of government. Castles investigates twenty-one

advanced countries that are all long-term members of the Organization for

Economic Cooperation and Development (OECD), which enables the author to obtain

standardized data. Data are from three periods — 1960, 1975, and the early


The pace of governmental growth among nations during this time was uneven.

Measuring “national trajectories of public expenditure growth in terms of their

changing share in GDP” between 1960 and 1995, “seven countries — Denmark,

Finland, Greece, Japan, Portugal, Sweden, and Switzerland-had experienced

growth of government in excess of 100 percent, whilst, at the other end of the

distribution, in the USA, outlays had grown by only 22 percent and, in the

United Kingdom, by only 35 percent” (p. 100).

Castles begins his analysis of the growth of government with World War II,

arguing that the war reshaped society. “Wartime experience had accustomed

governments to a more interventionist role, so that the task of running a

welfare state, which had seemed beyond most governments in the 1930s, now

seemed almost routine” (p. 28).

Next he investigates characteristics of the nations including their economies,

their societies, and their political systems and offers explanations for why

these characteristics may be related to public policy development. Castles

explores a wide variety of possible explanatory variables including voter

turnout, Catholicism, trade union membership, international trade, and the

seats held by left leaning and right leaning politicians. He provides a summary

of the independent variables (pages 106-108) and the justification for their

inclusion in the model.

Quantifying these variables, however, sometimes proves to be difficult. For

example, Castles calls World War II “the single most important precursor of

post-war outcomes” and defines a war impact variable ranging from 0 to 3 to

capture the severity of the wartime experience. While the extent of wartime

damage is certainly important, a scale with four values is unfortunately


Also included is the age of the population because “countries with a larger

proportion of old people are likely to have had higher levels of government

expenditures” (p. 107). Castles notes that researchers suggest that large

numbers of elderly people can form a powerful interest group that is able to

engage in successful rent-seeking. Thus, as the population grows older, seniors

can demand more services from government and the welfare state will grow.

Castles ignores Olson’s (1965) Logic of Collective Action which asserts

an optimal group size for cooperative action. Larger groups do not necessarily

have greater political clout. Richard McKenzie empirically tests this

proposition in his paper “The Retreat of the Elderly Welfare State” (Center for

the Study of American Business, Washington University in St. Louis, Publication

Number 102, December 1990). McKenzie finds that as the number of seniors in the

U.S. has grown expenditures have declined.

Castles rather abruptly changes directions in the later chapters of the book by

exploring the sources of cross-national variation in male and female labor

force participation, in unemployment rates, in home ownership, and in fertility

and divorce rates.

Returning to his original theme, he explains that readers hoping for a single

explanatory key to the growth of the welfare state will come away disappointed.

Instead, “the causes and consequences of the policy actions of the state differ

widely from one policy area to another and within particular areas over time”

(p. 300). However, he does identify some surprising relationships. For example,

economic development had a smaller than expected role in the growth of the

welfare state. Overall, Castles’ work is accessible and provides much data

regarding public policy after World War II.

Jim F. Couch is an Associate Professor of Economics at the University of North

Alabama. His book, The Political Economy of the New Deal (Edward Elgar,

1998) co-authored with William F. Shughart, describes the political forces that

shaped much of the New Deal.

Subject(s):Government, Law and Regulation, Public Finance
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: WWII and post-WWII

The Greatest Nation on Earth: Republican Economic Policies During the Civil War

Author(s):Richardson, Heather Cox
Reviewer(s):Wright, Gavin


Published by EH.NET (January 1998)

Heather Cox Richardson, The Greatest Nation on Earth: Republican Economic Policies During the Civil War. Cambridge, Massachusetts: Harvard University Press, 1997. viii + 342 pp. $35.00 (cloth), ISBN: 0-674-36213-6.

Reviewed for EH.NET by Gavin Wright, Department of Economics, Stanford University.

American economic historians do not pay enough attention to the history of economic policymaking, and when they do take up one of the usual policy suspects — tariffs, banks, transportation — these are often treated as specialty topics in isolation from each other and from the political context of the times. We generally leave to political historians questions about contending economic philosophies and ideologies, especially for the nineteenth century and especially for the federal government. Perhaps we are implicitly committed to a view that American policies were driven by interest group pressures and pure politics, so that the whole concept of implementing an economic program seems out of place.

There is at least one glaring exception to this image, the insurgency of the Republican Party during the 1850s and its abrupt ascension to political power in the 1860s. To be sure, wartime conditions were exceptional in ways that had little to do with ideology. But even in the midst of war — to some extent because of these extraordinary circumstances — Republicans were able to push through sweeping changes in national policy in any number of areas, with a minimum of political opposition. Many of these are standards in the economic history curriculum — tariffs, banking, the Homestead Act, railroad land grants — but rarely are these treated as a cohesive policy package enacted by a party in power. This quasi-neglected topic is the subject Heather Cox Richardson’s new book, growing out of a Ph.D. thesis from the Harvard history department.

According to Cox, the story has the structure of classical tragedy. In the “self-righteous optimism” of their celebration of individual labor and private property, the Republicans enacted policies that “unwittingly lay the groundwork for the turmoil of the late nineteenth century” (255). Believers in active government support for economic development, party members thought they were opening opportunities for family farmers and ordinary workers. But because they underestimated greed, corruption, racism, and the exercise of economic power, what they gave the country instead was the Gilded Age: “their vision contained the seeds of its own destruction” (vii). This interpretation is not entirely novel — this version is more-or-less what I remember learning in my undergraduate American history class — but to map this transformation in historically specific detail would be no small achievement.

Unfortunately, the book’s individual chapters are not up to the task of carrying such an ambitious historical structure. In her focus on legislative histories, Cox rarely gets close enough to the substance of the issues to be able to compare intentions and reality in any depth. Her command is stretched to the breaking point in the second and third chapters, which deal with war bonds and monetary legislation. These subjects are certainly important, and wartime financial policies had lasting consequences; but they hardly fit the framework of a fresh political opportunity to implement a pre-existing economic philosophy. What Lincoln said about his entire administration– “I claim not to have controlled events, but confess plainly that events have controlled me” — applies as well to Chase’s desperate struggle to pay the wartime bills, and to William Pitt Fessenden’s reluctant support for greenbacks. In general, Cox does not make enough room in her narrative for the possibility that in many areas, Republicans were pressured by events into policies they would otherwise not have dreamed of adopting.

Her best cases are in the next four chapters: taxes and tariffs, support for agriculture — not just the Homestead Act, but the founding of the Department of Agriculture, and the Morrill Act establishing land grant colleges — transcontinental railroads, and, of course, slavery. On many of these one can make the case that a naive enthusiasm for positive action gave birth to something quite different in practice. On the other hand, one can also argue that many of these measures had positive long-run benefits, whatever the calculations and intentions behind them. To pursue these sorts of evaluations rigorously would require a different kind of book, one with more of an empirical base and more follow-up study into the postwar implementation of legislation that originated during the war. To expect such material in a relatively conventional political history is doubtless unfair. What Cox might have provided within her own frame of reference, however, is a better-developed sense of the political context behind each of these measures — not just the Republican ideology, but the lineup of interest groups and the evolution of the debate over time. It would be extremely helpful to know whether the party really functioned as a legislative unit on economic issues, drawing up strategies, choosing leaders, imposing discipline. But organizational matters like these are almost entirely neglected by Cox, and one is led to infer by its absence that by and large the party did not operate in these ways.

With her interest in ideology, Cox is often too ready to take political rhetoric at face value, as in the arguments of Justin Smith Morrill (influenced by Francis Wayland and Henry Carey) that his tariff legislation was not traditional special-interest protectionism, but instead would benefit all members of society (105). Morrill may have been sincere in this belief, but how much of the political support for his tariff bill was attributable to his sincerity?

One particularly interesting shift in the Republican position is noted but not really explained. Although the party had some of its roots in the nativism of the 1850s, by the end of the war it was a champion of immigration (160-168). Cox attributes the change to wartime shortages of farm labor. But was it a permanent change, and did it correspond to a change in the party’s political constituency? To answer these questions one would have to trace political developments beyond the wartime period, which Cox is not generally inclined to do.

Whatever the book’s shortcomings, Cox has formulated or at least revived an extremely interesting set of issues that deserve further attention from economic historians and others. Reading her concluding chapter, however, reminded me that there are still some fairly strong differences between political and economic historians in working assumptions about American history. Cox takes it as axiomatic that the Gilded Age was a disaster. Republican policies, she says, “paved the way for the eventual demise of the small farm” (256). “The standard of living for city workers, especially immigrants, fell to appalling levels” (257). None of these statements are footnoted, and the author seems unaware that documenting them would be a real challenge. The deeper problem is that the entire construction of a disastrous Gilded Age is unexamined. This willingness to accept contemporary rhetorical formulations at face value seems oddly out of date nowadays — which is not to say that on closer examination these conceptions would be entirely wrong. This promising subject area seems ripe for re-examination.

Gavin Wright Department of Economics Stanford University

Gavin Wright is this year’s president of the Economic History Association. He is now revising for publication his 1997 Fleming Lectures on “Slavery and American Economic Development.”


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

The Development Dilemma: Security, Prosperity, and a Return to History

Author(s):Bates, Robert H.
Reviewer(s):McGuirk, Eoin

Published by EH.Net (July 2018)

Robert H. Bates, The Development Dilemma: Security, Prosperity, and a Return to History. Princeton: Princeton University Press, 2017. xii + 188 pp. $28 (hardcover), ISBN: 978-0-691-16735-0.

Reviewed for EH.Net by Eoin McGuirk, Department of Economics, Yale University.

In The Development Dilemma, Robert Bates (Harvard) addresses a fundamental question on the political economy of development: when is power used to foster economic growth? His approach is shaped by the idea that, in order to study the development process, it is unwise to limit one’s analysis to countries that are yet to develop. With this in mind, he turns to early modern Europe for illustrative case studies. From similar beginnings following the fall of Rome, England and France embarked on divergent paths that left the former on the cusp of the Great Transformation and the latter mired in violence. Bates attributes this divergence to the use of power: in England, regional interests were aligned with the center; in France, they were not. These competing interests created a trade-off between development and political stability in France that was not present to the same extent in England. Drawing lessons from this historical comparison, Bates revisits his fieldwork in Kenya and Zambia, where, he argues, colonial intrusions generated political environments more akin to medieval France than to medieval England.

The foundation of Bates’ argument lies in what he calls the “fundamental tension” between security and prosperity — a theory of development that puts power and coercion at the center of the development process. He begins with a Malthusian setting: agrarian societies are destined to be poor, owing to the diminishing marginal returns to land, and poor societies are destined to be agrarian, owing to Engel’s law. To escape this trap, families must either migrate in search of better land or specialize and trade. This produces the first dilemma: once families begin to accumulate wealth in this manner, they in turn attract the specter of violent appropriation from other families. As long as private families control both production and coercion, therefore, society’s choice is one between poverty and security on the one hand, or wealth and violence on the other.

This tension was evident as England and France recovered following the fall of Rome. In France, the emerging rural elite sought to concentrate their landholdings into estates that would pass only to the eldest surviving male. The growth of prosperity was thus accompanied by a new class of younger, unmarried warriors with little stake in social order. The violence, extortion and fear that they generated ultimately led families to recruit their own armed companies in response, giving rise to the “era of the chatelain,” characterized by growing prosperity and conflict in the countryside. Over time, this outbreak of violence was met by a demand for peace and the successful attempt to centralize the means of coercion by the church and the royal family. Power would be vested in their hands, and the private use of violence would be outlawed.

A similar process took hold in twelfth century England. Following his death in 1135, the battle to succeed Henry I exacerbated existing tensions over land in the countryside. This pattern of conflict resulted in “The Anarchy” — a period in which private armies were established and violence spread throughout the country. When the Angevins eventually captured the throne, the new monarch, Henry II, sought to secure his possessions by enacting statutes that prohibited private acts of violence. As in France, such acts were to be deemed crimes against the political community.

A second tension emerges at this point in Bates’ model. In theory, removing the means of coercion from rival families ought to lay the groundwork for private investment and the pursuit of prosperity. The problem, of course, is that any central authority that has the power to secure property also has the power to seize it. Here, the fates of England and France diverged. While the Norman conquest of England resulted in a relatively unified political class under William, by contrast the regions of France were both culturally and economically distinct under the House of Capet. Facing diverse and powerful families, the Capetians “assembled” rather than seized France. In this environment, political expediency meant placating diverse interests rather than pursuing common goals.

Bates argues that these contrasting terrains shaped political behavior in a manner that would have profound and lasting effects. This is best illustrated by the development of their respective public finance systems. In England, landowners and merchants were willing to provide tax revenues to finance wars in return for political influence. As a result, the entire political class had a shared interest in both military victory and policies that facilitated private enterprise. From these origins also emerged a tax infrastructure that would underpin state capacity into the future. In France, competing interests undermined any attempt to foster cohesion. Under Charles V, for example, vulnerable duchies from the west were willing for pay for military protection while those from Paris were not. In return for political quiescence, kings in France were therefore apt to exchange private privileges to regional families — such as exemptions from taxes — rather than orchestrate collective agreements in the name of the national interest. In many instances, the authority to collect taxes on behalf of the center was devolved to the regions themselves, who, Bates notes, tended to underreport their collections and inflate their costs.

Bates provides further enriching examples of how these contrasting political landscapes determined the use of power in both countries. By the end of the eighteenth century, England strode toward the Great Transformation while the French monarchy descended into predation, violence and state failure.

The central tenet of Bates’ analysis is that lessons for contemporary development can be drawn from these historical case studies. To this end, he introduces his considerable expertise on the political economy of development in twentieth century Africa. European colonization, he argues, created fractured, decentralized states throughout the continent that resembled medieval France. First, the crude imposition of arbitrary borders threw together large numbers of ethnically, culturally and regionally diverse groups into the same polity; second, European colonial powers found it more profitable to govern by “indirect rule,” whereby the national interest was relegated in favor of placating regional leaders to ensure political stability; and third, the investments made by European settlers served to exacerbate regional inequalities rather than promote broad-based development.

To illustrate the effect of this political environment on the subsequent use of power, Bates focuses on post-independence Kenya and Zambia, and their first presidents, Jomo Kenyatta and Kenneth Kaunda. Both had to consolidate the support of their core constituencies: the Central Province for Kenyatta and the United National Independence Party for Kaunda; both had to garner the support of competing interests beyond their core: the Rift Valley for Kenyatta and the Copperbelt for Kaunda; and both altered the rules of the game upon their failure to ensure political stability through legitimate means. The result in both countries was an era of authoritarianism, corruption and violence.

This is a beautifully written book that will add much to the scholarly discourse on the origins of comparative development. By looking to medieval Europe for insights on contemporary development, it presents a rare and valuable analysis that has important lessons for all readers. While the core argument is provocative — that there exists a trade-off between economic growth and political stability in polities with incongruent regional interests — it is refreshing to note that there is much in the state-of-the-art empirical literature that aligns well with its implications (e.g., see Michalopoulos and Papaioannou, 2016; Alesina, Michalopoulos and Papaioannou, 2016; and Burgess, Jedwab, Miguel, Morjaria and Padro i Miquel, 2015).

Ultimately, like all grand theories in development, this book raises several interesting questions for future scholarship: How can the low-income countries of today escape the trade-off between growth and stability? Is it better to sacrifice scale economies in the name of secession, or it is better to invest in nation building? And if national unity is indeed a first order condition for development, then why is Kenya richer than neighboring Tanzania, where a common identity has been carefully fostered since independence? The Development Dilemma will inspire political economists to tackle questions such as these for years to come. It is an essential addition to a paramount research agenda.


Alberto Alesina, Stelios Michalopoulos and Elias Papaioannou, 2016. “Ethnic Inequality.” Journal of Political Economy, 124 (2): 428-88.

Robin Burgess, Remi Jedwab, Edward Miguel, Ameet Morjaria, and Gerard Padró i Miquel. 2015. “The Value of Democracy: Evidence from Road Building in Kenya.” American Economic Review, 105 (6): 1817-51.

Stelios Michalopoulos and Elias Papaioannou, 2016. “The Long-Run Effects of the Scramble for Africa.” American Economic Review, 106 (7): 1802-48.

Eoin McGuirk is a Postdoctoral Associate the Department of Economics and the Economic Growth Center at Yale University. He will join the Department of Economics at Tufts University as an Assistant Professor in 2019.

Copyright (c) 2018 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 (July 2018). All EH.Net reviews are archived at

Subject(s):Economic Development, Growth, and Aggregate Productivity
Economywide Country Studies and Comparative History
Government, Law and Regulation, Public Finance
Markets and Institutions
Geographic Area(s):General, International, or Comparative
Time Period(s):Medieval
16th Century
17th Century
18th Century
19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII

Karl Polanyi: A Life on the Left

Author(s):Dale, Gareth
Reviewer(s):Knoedler, Janet T.

Published by EH.Net (September 2016)

Gareth Dale, Karl Polanyi: A Life on the Left.  New York: Columbia University Press, 2016.  ix + 381 pp. $40 (hardcover), ISBN 978-0-231-17608-8.

Reviewed for EH.Net by Janet T. Knoedler, Department of Economics, Bucknell University.

Gareth Dale’s intellectual biography, Karl Polanyi: A Life on the Left, excavates the numerous intellectual influences on Karl Polanyi’s life and work during the tumultuous first half of the twentieth century.  Dale frames this biography using Polanyi’s own description of his life as “a ‘world’ life” (p. 10).  Indeed!  During the first three decades of his professional life, Polanyi witnessed two world wars and a worldwide depression; and as he explored the causes and consequences of these major episodes of twentieth century history, he collaborated with leading thinkers in progressive political and intellectual circles in Europe and the United States.  And in the end Polanyi produced a body of work that remains relevant today.  Using extensive primary and secondary sources, Dale examines the individuals and the ideas that led Polanyi to produce his masterpiece, The Great Transformation (hereafter, GT), and Polanyi’s many other contributions to scholarly and political discourse along the way.

During the eventful five decades of his professional life, Polanyi combined political engagement with the great issues of his day and scholarly pursuit of knowledge in a wide range of disciplines.  Before World War I, as a newly minted Ph.D. in jurisprudence, Polanyi, along with other leftists, formed the Galileo Circle, which promoted such progressive issues as universal suffrage, land reform, and racial tolerance, and he joined Hungary’s Radical Bourgeois political party.  As Dale explains, Polanyi was sympathetic to the Marxist critique of capitalism, but was drawn more to the ideas of Ernst Mach, Leo Tolstoy, G. K. Chesterton, Edouard Bernstein, Henry George, and Henry Charles Carey.  Polanyi came to perceive that the exploitation he and his colleagues were striving to overturn was rooted in ‘conquest and enserfment’” (p. 50), ideas that would become more fully developed in GT.  When the war broke out, Polanyi served as an officer in the Austro-Hungarian army, where his experience led him to ponder the “human capacity to construct sociotechnical systems geared to the wreaking of carnage” (p. 59).  A bout with typhus forced him to bed, during which he read the Bible and converted to Christianity, but a version of Christianity underpinned by an activist ethos in support of radical social change.  During his recuperation, he relocated to Vienna, where he lived for a time with Eugenie Schwarzwald, a noted social reformer, and learned from her frequent guests, including Hans Kelsen and Karl Popper.  There he also met his future wife, Ilona Duczynska, a scholar/activist committed to the communist revolution, and her pragmatism and activism remained an enormous influence on Polanyi throughout the rest of his life.

At this time, Vienna was the only large European city to be run by a labor party, which allowed Polanyi to observe social democracy at close quarters.  While in Vienna, Polanyi began to write about world affairs for the prominent Osterreichische Volkswirt, where he again came into contact with Kelsen, as well as Peter Drucker, Gottfried Haberler, Friedrich Hayek, and Joseph Schumpeter.  To supplement his meager salary, he taught part time at the People’s College in Vienna, where he began to delve more deeply into the history of economic ideas.  After reading H. G. Wells, Polanyi concluded that, not just war, but market-based society as well, was bringing catastrophic social disintegration to the world.  Polanyi increasingly viewed the international scene through the analytical framework that he would use in the GT: “with the enfranchisement of the working class, democratic government in the modern era had entered into an irreconcilable tension with the rule of capital” (p. 104).

However, by the 1930s, Austria’s social democratic movement was displaced by Nazism.  The Polanyis relocated to London, where they moved within a new circle of socialist friends and liberal idealists, including G. D. H. Cole, Richard Tawney, Harold Laski, Thomas Green, Arnold Toynbee, A. D. Lindsey, and John Macmurray.  Dale singles out Toynbee’s “Challenge and Response” framework as inspiring Polanyi’s concept of the double movement.  Polanyi began to read the classical economists, but rejected their analysis of market capitalism for “reducing human beings and nature to commodity status” (p. 156).  As Dale puts it, through his synthesis of the classical economists and the Christian socialists, “Polanyi had arrived at the thesis for which he was to make his name: that the introduction of laissez-faire liberalism provokes a protectionist reaction . . . that he famously termed the ‘double movement’” (p. 156).

However, due to the economic distress in Britain during this time, Polanyi was only able to find part-time work.  Through his influential contacts, he made a lecture tour in the United States, which led to a visiting position at Bennington College.  There he expanded his network of influences to include E. H. Carr, Erich Fromm, Aurel Kolnai, Karl Mannheim, Franz Borkenau, and Lionel Robbins.  There he also drafted the GT.  As Dale recounts, the book was, for Polanyi, not simply an analysis of the economics of industrial capitalism, but also a philosophy of history, a fusion of Christian socialism and modern British welfare policy, and an “analytical survey of contemporary history” (p. 169).  Though his famous brother, Michael Polanyi, predicted that the GT would make Karl famous, Dale reports that the initial reviews of the GT were lukewarm at best, some overtly hostile.

After the war, with the support of Carter Goodrich and Walter Stewart, Polanyi secured a permanent position in the Columbia economics department.  There Polanyi came into contact with prominent American economists and sociologists: along with Goodrich, John Maurice Clark, Talcott Parsons, Robert Merton, Seymour Lipset, C. Wright Mills, Arthur Burns, Moses Finley, and Paul Lazarsfeld.  Ironically, as Dale remarks, even in that diverse crowd of intellects, the sociologists at Columbia saw Polanyi as an economist while the economists saw him as a sociologist.  At Columbia, Polanyi began work on Trade and Market in the Early Empires, a study of ancient non-market economies.  During these years, Polanyi flourished as a scholar, thanks to a regular income, good research support, and collaboration with his colleagues and graduate students.  Moreover, working with anthropologists on the topic of non-market economies, Polanyi was “thrilled” to see that the evidence supported “the lack of a primary orientation to material gain . . . by ‘primitive’ people” (p. 226).  Polanyi’s study of non-market societies led him to develop his substantivist approach to economics, i.e., an institutional economic analysis that relied on the broader concept of provisioning rather than on the narrower concept of decision-making under scarcity being cemented in mainstream economics at the time.  Despite this scholarly success, Polanyi reentered the political realm with the Co-Existence project in the early 1960s, to engage in the debate over Hungary’s future.  His death in 1964 prevented him from seeing this project through.

Dale concludes his book with the observation that Polanyi has again become relevant for twenty-first century capitalism.  Workers are “bought and sold like cucumbers” (p. 282); welfare critics offer simplistic solutions to poverty and unemployment; global capitalism is increasingly ‘financialized;’ and trade is producing a race to the bottom.  As Dale puts it, “It is Polanyi’s diagnosis of the corrupting consequences of the marketization of labor power and nature that gives his work a contemporary feel and explains its continued appeal” (p. 282).  However, while Polanyi’s grounding in social democracy instilled in him a faith in the power of government to mitigate the excesses of industrial capitalism, as Dale notes, Polanyi did not live to see how modern governments would themselves be captured by the “interests and imperatives of capital accumulation” (p. 284).

Gareth Dale has done an outstanding job of recounting Polanyi’s very full life in both the political and academic realms.  A truly important contribution is how he has woven, throughout his narrative of Polanyi’s different periods and activities, the origin of the ideas that underpinned the GT.  Moreover, Dale has used extensive work in five different archival repositories as well as Polanyi’s own writings, and the writings of many of those who influenced Polanyi during the key turning points of his life, to place Polanyi in his historical context.  Dale has also placed Polanyi’s work in the modern context by highlighting the increased relevance of Polanyi’s critique of market capitalism.  If at times Dale’s description of the pantheon of important thinkers who influenced Polanyi becomes dizzying to the reader, it should be seen as testament to the rich tapestry of intellectual ideas upon which Polanyi daily seemed to gaze, and not the fault of Gareth Dale, who has done a masterful job in situating and summarizing these myriad important influences.  For those interested in the work, not only of Karl Polanyi, but of many leading liberal thinkers of the first six decades of the twentieth century, this book will be invaluable.

Janet Knoedler is co-editor and co-author of three books, The Institutionalist Tradition in Labor Economics (with Dell P. Champlin), Thorstein Veblen and the Revival of Free-Market Capitalism (with Dell P. Champlin and Robert Prasch), and Introduction to Political Economy (with Charles Sackrey and Geoffrey Schneider), as well as numerous articles on institutional economics.

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Subject(s):History of Economic Thought; Methodology
Geographic Area(s):Europe
North America
Time Period(s):19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII