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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

American Exceptionalism, American Anxiety: Wages, Competition, and Degraded Labor in the Antebellum United States

Author(s):Glickstein, Jonathan A.
Reviewer(s):Margo, Robert A.

Published by EH.NET (December 2002)


Jonathan A. Glickstein, American Exceptionalism, American Anxiety: Wages, Competition, and Degraded Labor in the Antebellum United States. Charlottesville, VA: University of Virginia Press, 2002. viii + 361 pp. $39.50 (hardcover), ISBN: 0-8139-2115-5.

Reviewed for EH.NET by Robert A. Margo, Department of Economics, Vanderbilt University.

It is said that the longest running debate in British economic history is the standard of living debate. No debate in American history can be as long running as any debate in British history. Nevertheless, Americans have our own version of the British debate. The issue, simply put is: did American workers “benefit” from early industrialization? For the American case, this comes down to the period from 1820 to 1860.

Until recently the prevailing wisdom on this issue among economic historians — if not labor historians — could be described as strongly Whiggish. Estimates of per capita incomes suggest that these grew in real terms. The distribution of economic rewards may have become more unequal, but not enough to reverse the gains. The quantitative evidence, however, did not seem to square all that well with qualitative accounts, which emphasized the inconstancy of work, the grinding poverty experienced by some groups, the difficulty of moving up, growing pauperism in certain cities, and widespread misery experienced during any of the several antebellum financial “panics.”

This was also a period during which wage labor grew substantially in relative importance. Few people worked for wages early in the nineteenth century, but far more did in 1860, particularly in eastern cities. Labor became a commodity, bought and sold like flour or rum.

Recent cliometric work has challenged the Whiggish point of view. Data on heights and mortality suggest that health conditions were worsening during early industrialization. Robert Fogel has called attention to the so-called “hidden depression” that afflicted eastern urban labor during the late 1840s and early 1850s. Fogel emphasizes several aspects of the transformation of workplaces during this period — the intensification of the pace of work, “de-skilling,” and so on — that are hard to measure and, therefore, have not been incorporated into various quantitative measures of the standard of living.

New estimates of real wages prepared by your reviewer also challenge the Whiggish perspective. If you believe me, real wages grew overall at about 1 percent per year between 1820 and 1860. This number is greater than zero but rather less than previous estimates. Artisans fared worse than common laborers, who fared worse than white-collar workers. Perhaps most importantly, growth was in fits and starts, and there were several periods of poor performance, notably the 1850s. This decade experienced what was perhaps the first “welfare explosion” in American history, partly because real wage performance was so poor.

Jonathan A. Glickstein’s new book is also about wage labor during early American industrialization, but it is not a quantitative work. Rather, its “data” consist of the written record of commentators of the time, primarily elites, commenting about the transformation of work occurring around them. It is about questions like: what did these people think were the good and bad points about a “free” labor market? Were workers motivated by the positive incentive of upward mobility, or the threat of starvation? If one might starve, would it have been better to be a slave? Why did some commentators extol the “intrinsic” benefits of common labor, particularly if it were work that they themselves would never do (being elites)? Broadly speaking, the book about the differences between “perception” and “reality” — if elites thought America was really such a promised land for free labor, why were the promises unfulfilled for so many — particularly, for those other than white males? Were the elites simply misinformed, or did they simply not care, perhaps because they were more interested in constructing an ideology that rationalized their own privileged status. (Jonathan A. Glickstein is Associate Professor of History at the University of California, Santa Barbara, and the author of an earlier work on ante-bellum labor, Concepts of Free Labor in Antebellum America.)

Let it be said at the outset that, for someone like me, this book is not an easy read. It is full of words like “poststructuralism” and phrases like “linguistic turn.” There are no tables and no regressions and, therefore, no escaping the text. The text is densely written, the footnotes more so. However, the footnotes are also filled with references to the economic history literature and, allowing for publication lags, these are up-to-date. Your reviewer’s work is featured prominently in the Introduction, and in the footnotes, along with most of the other relevant economic historians. Glickstein doesn’t always agree with us, and sometimes he gets the story wrong. (For example, on p. 7, he claims that I find that eastern artisans “fared worst of all.” Assuming he means “northeastern,” these experienced higher real wage growth than artisans in the Midwest, or the South; see my Wages and Labor Markets, p. 51.) But he is never dismissive of economic history without reading, and I appreciate that (would that we economic historians were so charitable in reverse).

American Exceptionalism is divided into an Introduction, seven substantive chapters, and a Conclusion. The Introduction, as implied above, sets the stage, noting how recent work in economic history has challenged the Whiggish point of view. Glickstein’s interests, however, are not in the particulars of the debate in economic history, but rather in how individuals — as noted above, mostly elite — conceived of wage labor. Chapter One, “The World’s Dirty Work,” considers views expressed at the time about whether common labor carried “intrinsic” rewards (such as building character) or had only “extrinsic” value (that is, in facilitating consumption, as assumed in the standard labor-leisure model). It also considers the development of beliefs that America was exceptional in the opportunities it provided ambitious free labor — and, therefore, why those who failed did so through their own fault.

Chapter Two, “Pressures from the Bottom,” focuses on how evidence contrary to exceptionalism was to be reconciled. What is one to make of the benefits of a “free” labor system when paupers were swarming on city streets? Perhaps, some commentators suggested, they swarmed because the availability of poor relief “distorted natural market forces” (p. 69). It also considers some of the rhetoric of anti-slavery discourse, in particular, whether slavery “freed” the slave from the risk (and attendant anxiety of facing) starvation, and how this could be weighed against the loss of “hope” — that is, freedom and upward mobility.

Chapter Three, “Buy Cheap, Sell Dear,” takes as its point of departure some of Horace Greeley’s observations on strikes, “especially those of the Iron Puddlers of Pittsburgh.” Greeley admonishes the workers for complaining that their wages “ought” to be higher because the employer can “afford” it. Who among the strikers, Greeley asks, gave the same consideration to the poor widowed seamstress who made the men’s shirts? Glickstein points out, however, that one’s own pursuit of self-interest, given the rules of the economic game, does not mean that one would not prefer different rules. While acknowledging that self-interested behavior proceeded the “market revolution” of the early nineteenth century, Glickstein still insists that that “industrial and urban capitalist components” of the revolution led to a new social norm, one in which a “competitive free-market ethos … did come to govern a plethora of social and economic relationships” (p. 113). Chapter Four, “Further Social Consequences of the Market Mechanism,” examines some of the difficulties that early labor activists faced in reconciling nascent versions of the labor theory of value with the emerging capitalist ideology.

Chapters Five through Seven are inter-related in their use of Gresham’s Law as an organizing device. As originally conceived, Gresham’s Law applied to bad money but in its more general guise, it can apply to bad anything — in Glickstein’s case, “bad” labor arrangements driving out the “good.” Chapter Five examines an address by George M. Weston, a prominent anti-slavery writer of the era. Ostensibly “about” how slavery reduced the wages of free labor, Glickstein also uses the address to segue into two other forms of “cheap” labor. Attitudes towards the first of these, convict labor, are examined in Chapter Six. Convict labor refers to the practice on the part of state government officials of making prisoners available to private contractors. Never widespread, the practice was nevertheless widely condemned at the time by ante-bellum labor organizations. Chapter Seven draws attention to the fact that restrictions placed on the use of convict labor adopted by the New York State Legislature in the early 1840s exempted domestic employers who competed directly with imported manufactured goods. These exemptions recognized, or so the claim went, that such imports were produced by cheap (“pauper”) labor. As a consequence, American manufacturers needed the exemptions to be competitive.

American Exceptionalism is a demanding work. Glickstein makes few concessions to readers who are not fluent in contemporary “humanistic” approaches to historical writing. If I have one criticism, it is that Glickstein might have drawn more parallels with our own time. (Chapter Seven, which notes the resonance of the debate over “pauper” labor with contemporary debates over “globalization,” is a partial exception.) However, the questions that motivate this study are fascinating and well worth the attention of cliometricians, even if they are not the questions that we are used to asking.

Robert A. Margo is Professor of Economics and History, Vanderbilt University, and Research Associate of the National Bureau of Economic Research. He is the author of Wages and Labor Markets in the United States, 1820-1860 (Chicago, 2000) and (with Joel Perlmann) Women’s Work? American Schoolteachers, 1650-1920 (Chicago, 2001).

Subject(s):Living Standards, Anthropometric History, Economic Anthropology
Geographic Area(s):North America
Time Period(s):19th Century

The Peasants of Languedoc

Author(s):Ladurie, Emmanuel Le Roy
Reviewer(s):McCants, Anne E.C.

Project 2001: Significant Works in Economic History

Emmanuel Le Roy Ladurie, The Peasants of Languedoc.

Review Essay by Anne E.C. McCants, Department of History, Massachusetts Institute of Technology.

There and Back Again: The Great Agrarian Cycle Revisited

It has been thirty-six years since the original publication of Le Roy Ladurie’s now classic Les Paysans de Languedoc, whose English translation appeared only eight years later. This work of “total” regional history (p. 8), grounded in the climate and topography of its fixed place, narrated around a loving reconstruction of time series data drawn from land tax registers, grain (and other commodity) prices, population registers and communicant lists, and ultimately nuanced by an anthropologist’s sensitivity to the social impact of even small changes in literacy and spiritual affiliation, is in many respects the crowning achievement of the Annales school for the post-Braudelian generation.1 It takes for its subject a place close to the heart of Braudel himself, the Mediterranean French province of Languedoc, and the people who tilled its fields and nurtured its vines, mostly in the small family holdings which so captured the historical imagination of French scholars of the inter- and post-war periods. It also takes as its time period those in-between centuries so favored by Braudel, following the dramatic collapse of the fourteenth century, but well before the acceleration of change brought on by industrialization in the late eighteenth century and thereafter. Despite the poverty and hardship, not to mention the periodic bouts of starvation and insanity, which cross the pages of this book, it retains nonetheless a bucolic vision of the French countryside, only superficially touched by the affairs of men, at least in anything but the very long run. Finally, it attends most fully to the natural and human processes characterized best by an ebb and flow of cyclical change: climate, the productivity of the soil, and population. In all of these respects the intellectual debts to Marc Bloch, Fran?ois Simiand, and of course Fernand Braudel are immediately obvious.

Yet in important ways Le Roy Ladurie also deviates from what had by the time of this publication become the normative format for a major work of Annales history. Instead of dividing his subject into the classic, and fundamentally non-sequential, tri-part formula of structure, conjuncture, et ?v?nement, Le Roy Ladurie instead follows the older norm of telling his story in time. He begins with the tailings of the fourteenth century crisis, what he calls “the low-water mark of a society.” He then traces the effects of the so-called “wage and price scissors” of the long sixteenth century, culminating once again with population collapse and economic depression in the seventeenth century. The self-proclaimed “protagonist” of this book is “a great agrarian cycle, lasting from the end of the fifteenth century to the beginning of the eighteenth, studied in its entirety” (p. 289). While as heroes go this is still a far cry from the kings and generals of old-fashioned history, it is clearly less fixed in time and space than Braudel’s mountains and seas with their capacity for geologic movement only. The Peasants of Languedoc is thus a narrative, and like all good narratives it is susceptible to accidental interventions in the plot and to their concomitant unanticipated outcomes. And so Le Roy Ladurie’s ‘great agrarian cycle’ turns out to have embedded in it a hint of something more linear, a harbinger of the demise of his otherwise so carefully crafted longue dur?e, and what he himself calls “the seeds of true growth” (p. 302). Yet his own lingering ambivalence about what others have been tempted to call progress is underscored by his choice of metaphor to describe it. In the same breath in which he invokes “incandescent particles in the darkest hours” he also speaks of the “contagion of true growth” (p. 303). Is economic growth (that is the “increase of individual wealth” (p. 303) in his definition) good or bad, or both simultaneously? This question, which seems so easily answered by anyone trained in neo-classical economics, lingers unresolved by La Roy Ladurie. Indeed, it perhaps remains to the present unanswered by those who have followed him in the French historical school, particularly as it has turned increasingly back towards the study of culture and in the process adopted many of the methodologies and proclivities of the anthropologist.2

What then are these (insidious?) interventions that push the great agrarian (read Malthusian) cycle off course? Perhaps somewhat surprisingly they are phenomena which Max Weber would have recognized even if their shading is not exactly that of a Protestant ethic. They include the spread of viticulture and sericulture to the detriment of the subsistence grain; the gradual appearance of an “industrial mentality,” admittedly never well defined but seemingly linked with the increase in production of exportable commodities; the spread of remedial education and its powerful accompaniment literacy; and finally, the most nebulous of all, “a certain psychological transfiguration and a general improvement in behavior,” that is best characterized by the “virtue of self-control” (p. 307). Le Roy Ladurie cites the decline of dueling, spontaneous knife fights, and religious fanaticism as just the most obvious evidence of the shift towards a more “intellectual” and “composed” life (p. 309). The link from this reform of manners to real (that is sustainable) economic growth is only inferred, but presumably those who can refrain from emotional outbursts of violence will also be better able to defer consumption gratification in order to invest for the future. Without these (overwhelmingly cultural) interventions the peasant smallholder might have been doomed to an endless Malthusian repetition of the great agrarian cycle of expansion — characterized by population growth, downward pressure on family farm size, the cultivation of marginal lands, the impoverishment of heirs, and rising subsistence prices — and retreat, in which all of the above signs would reverse. As long as subsistence agriculture remained the dominant activity of the agrarian economy population won the race over bread every time (p. 73). Malthus would have been right, if he had not been born too late. Certainly for La Roy Ladurie Malthus was the true prophet of the age that just preceded his own (p. 311)

Yet not many scholars remain unabashed Malthusians or even slightly watered-down neo-Malthusians these days. We have learned well from Ester Boserup that population pressure could and did drive human societies to greater intensity of work effort and the concomitant technological modifications suited to natural resource scarcity and labor abundance. We have learned from Adam Smith and his many followers the productivity advantages of specialization, encouraged as it was by the rise of urban places and the increasingly dense networks of trade among them. We have learned as well from the Marxists of Robert Brenner=s tribe that power relationships between and among individuals and social groups (dare I call them classes?) could powerfully impact the nature of economic response to demographic catastrophe, both on the individual level and for societies as a whole. And of course, we also know from the body of theory built up over the last century in mainstream economics departments that markets are capable of clearing an amazing range of commodities, and that they often did so even in the somewhat murky pre-industrial past. Finally, the “New” Institutional Economics has taught us that social and political institutions had a lot to do with how well markets were actually able to perform their pure function. What then is there for the Anglo-speaking economic historian (most likely trained in the neo-classical tradition) to take from this book and its larger research agenda nearly four decades out?

Fortunately lots. To begin with there is the terrific data series reconstructed over a substantially long period of time to allow for serious study of the macro-dynamics of a pre-industrial economy. For even if Le Roy Ladurie “confuses rent with profits” as Douglas North pointed out long ago, we do not have to follow in that confusion.3 We can read the rent series for what it really is, using it in tandem with price and wage series as a base for understanding the changing profitability of subsistence agriculture, particularly as it varied by the scale of the farm operation. For as La Roy Ladurie rightly emphasizes throughout his exposition, it is far too simplistic to speak only of booms and depressions in the agrarian economy overall. If you had a surplus to sell, falling grain prices induced hardship; but the story was very different for those forced onto the market to ensure sufficient quantities of bread for survival. For them agrarian depressions could be a time of relative plenty. Thus the macro-dynamics that inhere in his great agrarian cycle could produce both winners and losers simultaneously, depending on the distribution of property, and the larger social structure in which farming took place. It is always good for us to be reminded of this complication.

The Peasants of Languedoc also provides a model for the integration of cultural history into economic history which is still relevant today. Despite La Roy Ladurie’s now outdated reliance on Malthus for the structure within which his narrative operates, he nonetheless discerns the cultural forces which were at work in eighteenth-century Languedoc (and in nascent form even earlier) to disrupt the Malthusian paradigm. To the claim on this side of the Atlantic that ‘institutions matter’ a fresh reading of Le Roy Ladurie offers the reminder that mentalit? matters too. Adequate labor and capital resources may have been necessary conditions for economic growth of the modern variety, but they were hardly sufficient. Their application in new ways required whole new modes of thought and behavior. Thus, as any Frenchman would surely understand in the widest possible sense that we are what we eat, La Roy Ladurie would also have us understand that we produce what we think.

Finally this book remains the most accessible to the American student (of all ages) of all the major works to come out of the Annales school. It is neither geologic in its movement, nor overwhelming in its scope. Yet it achieves its stated goal to be “total” in its comprehension of its own subject. The barren mountain reaches, rolling fields of grain and vine, and scrub filled blessedly with chestnut trees; the long cycles of climate change, and the violent bursts of climatic extremes; the struggling peasant with too many children, the upstart coqs de village, and the emerging bourgeois of Montpellier; “Huguenot carders and Papist peasants” (p. 158); all of these characters come alive on the pages of this book. Their multiple, often conflicting, stories are woven together seamlessly by La Roy Ladurie into a complicated whole that looks remarkably like real human experience. If the master economic narrative sometimes goes astray or suffers from lapses of logical explanation, this seems a forgivable fault to this enthusiastic reader. There is much indeed for us to learn, not only about the agrarian economy of a Mediterranean province before industrialization, but about historical storytelling as well.


1. All quotes from the text are taken from the English translation by John Day, published in paperback by the University of Illinois Press in 1976.

2. See Peter Burke, The French Historical Revolution: The Annales School 1929-89, Stanford, 1990, especially pp. 79-93.

3. Douglass North, AComment@ in Journal of Economic History, Vol. 31, no. 1, 1978, p. 80.

Anne McCants is the author of Civic Charity in a Golden Age: Orphan Care in Early Modern Amsterdam, University of Illinois Press, 1997, and numerous articles on living standards, migration, and marriage patterns in northern Europe. She teaches in history, economics and women’s studies at MIT.

Subject(s):Historical Demography, including Migration
Geographic Area(s):Europe
Time Period(s):Medieval

Surabaya, City of Work: A Socioeconomic History, 1900-2000

Author(s):Dick, Howard W.
Reviewer(s):Sutherland, Heather

Published by EH.NET (October 2002)

Howard W. Dick, Surabaya, City of Work: A Socioeconomic History,

1900-2000. Athens, OH: Ohio University Center for International Studies,

2002. xxvii + 541 pp. $30 (paperback), ISBN: 0-89680-221-3.

Reviewed for EH.NET by Heather Sutherland, Free University of Amsterdam.

This study of Surabaya, by Howard Dick, is a unique contribution to the

history of Indonesia, and should be read with pleasure and profit by anyone

with a serious interest in a variety of fields: economics, history, urban

studies, sociology or politics. Integrated history, uniting several approaches,

is notoriously difficult to write. The dramatic tension and clarity of the

chronological narrative is continually undermined by the necessary exposition,

as specific topics are explained and contextualized. However, if a thematic

rather than diachronic approach is chosen, historical events have to be

recapitulated to explain the setting of individual subjects. All too often, the

result of either approach is unwieldy, without a confident sense of direction.

In this case, the author has found an elegant solution, through a well-judged

combination of five major thematic chapters, within which a broad chronological

structure prevails.

Howard Dick, who is associate professor at the Australian Centre of

International Business at the University of Melbourne, is primarily an economic

historian. However, his knowledge extends beyond the narrowly economic,

encompassing a wide and well-informed interest in social and political history.

In this book he wears his expertise lightly. The combination of a confident

mastery of his material, tables, maps and illustrations, together with an

accessible style, ensure that his book is easy to read, and will impress both

students and specialists alike. The first two chapters are essentially

introductory. In Chapter One, “Aspects,” the reader accompanies Dick into

Surabaya, first by sea and then by land. During the journey the author provides

a painless introduction to geography, history, the urban landscape and the

rhythms of daily and annual life, giving a concrete (in every sense) and human

face to the city. “Episodes,” the second chapter, is an eighty-page survey of

Surabaya’s twentieth-century history, focusing on the institutional and

political developments that shaped economy and society. This chapter epitomizes

the careful selection and judicious use of material from English, Indonesian

and Dutch sources, which is typical of the book as a whole.

The next five chapters, some 340 pages, form the core of the book, as each

examines one aspect of Surabaya’s development. Chapter Three, “Profile,” is a

detailed analysis of Surabaya’s people: their numbers, ethnicity, occupational

profile, education and living conditions. Comparisons with Jakarta add depth to

Dick’s conclusions. “Government” is the theme of the next chapter, almost a

hundred pages in length. Here topics from the preceding chapter are

reconsidered, but with an emphasis on policy, so housing, markets, education,

and public health (including prostitution and venereal disease) are discussed.

In each section the situations under the colonial and various post-war

Indonesian regimes are compared. In Chapter Five, “Industry,” the focus is more

narrowly economic, analyzing policy, manufacturing and the informal sector

during the main phases in the growth of this most industrial of Indonesia’s

cities. The historical scope broadens again in Chapter Six, “Land,” as the

extent and morphology of Surabaya is traced, with sketch maps going back to the

seventeenth century, before the author discusses in more detail transport, land

rights, squatting and urban planning in Dutch and post-colonial eras. “Trade”

is the subject of the last chapter, which places Surabaya in the context of its

plantation hinterland as well as depicting its role in inter-island and

international commerce.

In the book’s relatively brief conclusion of eighteen pages, Dick selects

several points for specific discussion. Here also a long-term perspective is

central, as he concentrates on the nature of Indonesia’s New Order regime

(1965-1998), comparing it to the late colonial period. He makes this comparison

his point of departure for a consideration of patterns apparent in the

interaction between Surabaya’s local economy and the global economy. These

were, most notably, industrial retardation and a cycle of boom, bubble and bust

in the real estate market. Dick also describes the conflicts between state and

city-dwellers in the Dutch and post-colonial periods. On page 471 he comments,

with regard to the long-term patterns which run through twentieth century

Indonesia’s economic and political history: “Relations with the global economy

are sufficient to generate parallelism; the internal dynamics of Indonesian

society have given rise to a repeated cycle of reaction and revolution.”

Nonetheless, Dick concludes his book on a guardedly optimistic note, in the

hope that the new autonomy law in Indonesia will give Surabaya an opportunity

to shape a future less subject to Jakarta-generated shocks.

Urban history is not well developed for Indonesia; indeed, if we consider the

importance of Asia’s cities as a whole we can only conclude that they remain

critically understudied. Moreover, analyses of urban society are often problem

and policy oriented, with a specific issue being examined in isolation, and

usually without a historical perspective. Howard Dick’s study of Surabaya is an

example of what can be done. With its explicit emphasis on long-term trends and

the socio-political context, it is a readable book for the general student of

Indonesia or urban history. At the same time the richness of the data

presented, and the sophistication of his judgment, make it a rewarding source

for the specialist.

Heather Sutherland is Professor of Non-Western History at the Vrije

Universiteit Amsterdam. Her current research examines how incorporation into

long-distance trade and changing state structures shaped the Indonesian port

city of Makassar, East Indonesia, over a period of three hundred years. In 2003

she will publish, together with Gerrit Knaap, the book Monsoon Traders:

Trade, Commodities and Captains in Eighteenth-Century Makassar.

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

International Trade and Political Institutions: Instituting Trade in the Long Nineteenth Century

Author(s):McGillivray, Fiona
McLean, Iain
Pahre, Robert
Schonhardt-Bailey, Cheryl
Reviewer(s):Nye, John V.C.

Published by EH.NET (July 2002)

Fiona McGillivray, Iain McLean, Robert Pahre and Cheryl Schonhardt-Bailey,

International Trade and Political Institutions: Instituting Trade in the

Long Nineteenth Century. Cheltenham, UK and Northampton, MA: Edward Elgar,

2002. x + 242 pp. $80 (hardback), ISBN: 1-84064-690-X.

Reviewed for EH.NET by John V.C. Nye, Department of Economics, Washington

University in St. Louis.

This stimulating and well-written volume is based on the papers originally

presented at a mini-conference held at Washington University in St. Louis.

(Which, it should be noted, I now regret having missed.) The four lengthy

essays plus a substantial introductory essay and conclusion share the common

theme of analyzing the link between political institutions and the history of

European — especially British — trade policy in the century between the

Napoleonic wars and the coming of the First World War. This unity of theme

makes for something more than a hastily assembled collection of conference

essays. Furthermore, some of the methodological issues that are addressed

should prove of additional interest for economic historians trying to balance

the demands of social scientific reasoning and historical detail.

The nineteenth century is, of course, of central importance for historians of

international commerce as the latter half of the century provided the first and

arguably the only true period of relatively free trade among the major European

powers. Furthermore, the special role of Britain as apologist for and most

prominent nation in the drive towards freer trade commands the attention of

theorists in international relations as well as the political economy of trade


The opening essay — in its own way perhaps the most impressive piece in the

book — points to the tensions that arise between those who focus on the

narrowly political details of a particular historical event or political

transition and the desire to construct more generalizable theories of political

economy and trade relations. Furthermore, even among the theorizers, there is a

real clash — almost a culture clash — between those who favor international

level, states-as-single-actors explanations of policy common to the work in

“Realism” and the theory of “Hegemonic Stability” and the more economically

oriented explanations (overlapping with work in public choice theory) that

focus on the role of domestic interests in competition with one another.

The former approach seems to be the more traditional “political” approach

focusing on policy strategy and power relations, while the latter — often

called Endogenous Tariff Theory (ETT) — is more economistic, drawing on the

metaphor of politics as interest group competition derived from ideas of

economists such as Olson, Buchanan and Tullock, or North. Indeed, the latter

approach is especially congenial to economic historians who have played no

small role in advancing the state of knowledge in this area.

The latter approach, while often faulted for its tendency to oversimplify or

ignore important historical detail, can count as its achievement the production

of a body of theory and empirical evidence that is unmatched in the literature.

As is noted in the introduction, “It is unlikely that any other approach could

boast a comparable number of logically interrelated testable propositions” (p.

9) with strong empirical support. In contrast, proponents of the work in the

various areas of Realism “disagree even about the main assumptions and central

claims of the theory” (p. 9) which to this reviewer seems to be an incredibly

damning indictment of that body of research.

But a greater problem occurs from the desire to reconcile work that focuses on

material interests — common to ETT and to other “economic” approaches —

versus studies that concentrate on the role of ideas or on political ideology.

This contradiction is not resolved and if anything is deepened by the examples

given in this book.

Pahre’s long essay on tariff treaty regimes in the nineteenth century is the

most general work in the book and is itself a fine demonstration of the

benefits to be derived from even a simplified special interest model. Focusing

on competition between importers and exporters in a reduced form political

model in which the ruler or state throws his support to one faction or the

other, Pahre gives us an analysis of the movement towards trade liberalization

in the nineteenth century which does not suffer from the tendency of many

writers to over-emphasize the role of Britain. As this reviewer has argued in

other work, France and Germany should be viewed as the major figures in the

spread and eventual retreat of liberal trade policies in the century. British

tariff reform early in the century was neither as dramatic as has been

presented to us nor did it engender a response in the major trading partners.

Only the 1860 Anglo-French Treaty of Commerce and other events having little to

do with unilateral moves on the part of the British spurred the spread of freer

trade through bilateral treaties with third parties contrary to the arguments

of purist free traders.

Any such model will be bound to have multiple caveats ranging from the reduced

form concerns to the non-incorporation of economic conditions to the relatively

simplistic political model employed. Even at the level of his analysis Pahre

has some difficulties with the empirical tests finding, for example, that

openness measures work better than average tariff levels for his hypotheses.

But nothing in his model really gets at openness per se, and openness, unlike

tariff levels, is as much a function of the underlying economic fundamentals of

the countries as of any political decisions that could have been made by the

tariff setting authorities. Nonetheless, the effort is still impressive, and

there is much in the overview for political scientists and economists to chew


McGillivray’s work focuses on the issue of U.S. tariff policy in the first few

decades after the Revolution. She uses recent work in economic history to

reject the claims of some political theorists that “under the Articles of

Confederation, states adopted beggar-thy-neighbour tactics towards each other”

(pp. 96-97). She points to the decentralized nature of the state system and the

prevalence of agricultural interests to explain why interstate trade flourished

among the states while the Republic found itself unable to create a unified

tariff regime which could be used to retaliate against the British. Though

employing neither formal theory nor detailed statistics, this essay shows how

suggestive arguments can still be developed with some rigor if they rely on

careful argument from theory and pay attention to the theoretically-relevant

findings of the historical literature.

A bigger problem arises when comparing Pahre’s work to the two essays by McLean

and Schonhardt-Bailey. McLean provides a nuanced, albeit fairly traditional,

account of the ideological aspects of the debates over repeal of the Corn Laws.

However, given that repeal of the Corn Laws did not decisively produce free

trade in Britain, and given the observations by Pahre and others regarding the

irrelevance of British tariff liberalization on the eventual spread of free

trade on the Continent, one is left to doubt the central role assigned to the

political debates by McLean. The struggle over the Corn Laws is no doubt

interesting in and of itself, but if Britain was neither the magnanimous free

trader of lore nor the successful free-trade hegemon of international relations

theorists, then this singular political event loses its central importance in

the historiography of nineteenth- century commercial policy.

Though broader and more analytic, Schonhardt-Bailey’s study of how ideas can be

strategically employed to nationalize what might have been seen as merely local

or narrowly ideological interests shares the same problem of overemphasis of

the role of the Corn Laws repeal. There is no attempt to distinguish between

political debates that were salient as politics versus the objective weight of

a given policy in the overall structure of British trade or tariffs. However,

the broader theoretical discussion of how ideas are generalized and the attempt

to use Continental examples in addition to the British back story make this

work rather more complementary to the Pahre essay than the work of McLean which

tends to stick out from the rest.

Indeed, the conclusion by Schonhardt-Bailey tries to reconcile all these papers

by arguing that they are complementary and co-exist by virtue of their

differing levels of analysis. While no one can argue with this sage and fairly

general claim, the case would have been better made if the four essays at least

took care to coordinate the background narrative or stylized facts that overlap

among them. If any claim is going to be made for the virtues of promoting these

differing levels of analysis we would benefit from seeing how they can all

combine to produce a whole greater than the sum of the parts. Sadly they lost a

great opportunity and the numerous contradictions among the component parts

leave the promise of the concluding chapter unfulfilled.

Nonetheless, none of these criticisms should detract from the value to be

derived from reading this remarkable volume. I do not exaggerate in saying that

this should be standard reading for international relations theorists as well

as economists and economic historians interested in the political economy of

trade reform.

John V. C. Nye specializes in French economic history and industrial

organization. His publications include “The Myth of Free Trade in Britain and

Fortress France: Tariffs and Trade in the Nineteenth Century” Journal of

Economic History (1991).

Subject(s):International and Domestic Trade and Relations
Geographic Area(s):North America
Time Period(s):19th Century

Bonds of Enterprise: John Murray Forbes and Western Development in America’s Railway Age

Author(s):Larson, John Lauritz
Reviewer(s):Churella, Albert J.

Published by EH.Net and H-Business (June 2002)


John Lauritz Larson, Bonds of Enterprise: John Murray Forbes and Western Development in America’s Railway Age. Iowa City: University of Iowa Press, 2001. xxiii + 257 pp. $17.95 (paper), ISBN: 0-87745-764-6.

Reviewed for H-BUSINESS and EH.NET by Albert J. Churella, Social and International Studies Program, Southern Polytechnic State University.

Perhaps no other economic change has so consumed Americans than the emergence of big business in the 19th century. As the invisible hand of the marketplace gave way to the visible hand of management, output rose, prices fell, and the United States became an economic powerhouse. This process also fundamentally changed the nature of the relationship between business, businessmen, individual citizens, and their democratic system of governance. Big business concentrated wealth and power, and manipulated the streams of commerce in ways that seemed antithetical to the political rhetoric of Jacksonian Democracy. Technical discussions associated with the management of large, vertically integrated enterprises were thus matched with a passionate debate regarding the equitable relationship between capitalism and democracy. Railroads, the nation’s first big business, were at the center of these debates since they embodied massive concentrations of capital and constituted the lifeblood of many communities. While many scholars have studied parts of the railroad revolution, few have attempted to integrate all of the multifaceted effects of this process.

John Lauritz Larson, an associate professor of history at Purdue University, provides just such an integrated account in Bonds of Enterprise. Larson examines the career of John Murray Forbes (1813-1898), whose life spanned the very different worlds of personal, market capitalism and “visible-hand” big-business management. Like a spider at the center of a web (although Larson would probably eschew such a malevolent analogy) Forbes touched all of the varied aspects of the “railroad question.” As Larson points out, this book is not so much a biography as it is a selective depiction of Forbes’ role in developing the “bonds of enterprise” that linked both cities and competing interest groups to each other. Thomas McCraw used a similar approach in Prophets of Regulation, linking four notable individuals to the regulatory mechanisms that they hoped to create. While Bonds of Enterprise may not garner the same degree of notoriety, it is still a fascinating and important work. While still a young man, John Murray Forbes earned his fortune in the China trade. He relied heavily on the standard pillars of long-distance capitalism in the early 1800s; family connections and trust backed by an impeccable reputation. By the 1840s, Forbes settled into what he believed would be a respectable semi-retirement and he invested heavily in railroad securities.

Perhaps the pivotal moment in Forbes’ career occurred in 1846 when he acquired control of the moribund Michigan Central Railroad, a state-owned project that typified the internal improvement mania that had arisen before the Panic of 1837. Like most such rail and canal projects, the state initially envisioned the Michigan Central to be solely a trunk line designed to encourage general commercial development. Private entrepreneurs would then construct feeders to the mainline, allowing, in a very Jacksonian fashion, all of the common men equal access to the economic potential of the railway.

Forbes increasingly saw the economic function of the railroad in quite a different light. He realized that only a combined branch-and-trunkline railroad could earn a satisfactory profit, and he felt that railroad development should proceed gradually and sequentially, allowing each region of the frontier to develop before proceeding to the next. In the process, the railroad must inevitably change transportation patterns in the region that it served causing some regions-and some individuals-to prosper, and others to fail. Like many 19th century entrepreneurs, Forbes had only the haziest idea of the competitive forces that America’s first big business had unleashed. He was, however, deeply troubled by his role in this process. He had grown up in, and attained wealth by, a system of personal capitalism. He professed a life-long belief in the limitless potential of a virtuous citizen in a democratic society. Yet, like Henry Ford nearly a century later, he helped to bring about massive economic and social transformations that, within his lifetime, helped to shatter the moral principles that he held dear.

Forbes and his associates plunged into the “system-building” phase of railroading during the 1850s. No longer advocating a sequential approach to railroad expansion, Forbes increasingly saw railroads as essential to the economic development of the West. As he pieced together the Chicago, Burlington, and Quincy system, Forbes preferred to maintain the fiction of local control as long as possible, relying heavily on home-grown investors and managers. While this method allowed local entrepreneurs to assume many of the risks and enabling the Boston capitalists to expropriate all of the rewards, Larson does not see this as a stain on Forbes’ exemplary business ethics. Nor does he blame Forbes for any of the relatively mild financial machinations associated with the Burlington; these he lays at the feet of James F. Joy and other unscrupulous financiers who abused Forbes’ trust.

As farm prices fell after the Civil War, farmers in Iowa protested rate differentials and other types of “unfair” competition. They believed that a lack of competition had caused these problems, while Forbes and other system-builders increasingly understood that overbuilding and excess competition were to blame. Forbes believed that he was advancing the cause of progress by opening up the West and by increasing the general welfare through his business enterprises. He seemed genuinely astonished that the seemingly ungrateful beneficiaries of his efforts depicted him as a profit-hungry robber baron. Perhaps because Forbes’ “style of business was paternalistic, and his patient efforts to develop the Iowa country had been met with hostility,” (p. 142) he responded with a stubbornness that seemed to veer between puzzlement and outrage. For example, the Burlington deliberately inflamed the passions of westerners by raising long-haul rates to conform to Iowa rate-equalization-legislation. Forbes thought that grandstanding populist politicians like Iowa governor William Larrabee were ignorant of the fundamentals of railroad economics; Larrabee was determined to fight “a war against the arrogance of ‘experts’ who scorned the authority of popular government.” (p. 187) Forbes believed that, in the end, only railroad officials could adequately understand the complexities of rate-making, and could thus capture, or at least reduce, the deleterious effects of state and federal regulation.

Ultimately, Larson’s biographical approach strikes very near his target, but it is not quite a bullseye. The reader is left with a thorough knowledge of Forbes’ career, of the railroads that Forbes controlled, and of the regulatory problems that affected those railroads. Clearly, Forbes brought together many of the disparate threads that connected all of the institutions and all of the historical actors associated with the transformative effects of railroads on American life. But there were also many currents that swirled and eddied far from the gaze of that Boston-based Midwestern railroader. There is no doubt that Forbes was a pioneer; whether or not he was typical is another matter.

Portions of Larson’s analysis seem rather quaint and outdated. Bonds of Enterprise originally appeared in 1984, and has now been reprinted with a short additional introduction and amended bibliography. Still, this book employs scholarship that is nearly two decades old. Scholars such as Gabriel Kolko figure prominently in the original bibliography, even though their findings have been superseded by more balanced research efforts. Larson seems needlessly stereotypical in his descriptions of “the squalid poverty of the Chinese” (p. 11) and “that exquisite pride of Oriental leisure.” (p. 17-18) Nor can we be positive that “Forbes seemed to thrive on tension.” (p. 23) And, it may be giving Forbes too much credit to suggest that, “He generated a model for developing the vast interior of the United States, and he adapted or invented many of those instruments of corporate enterprise with which industrialists and financiers revolutionized American life.” (p. 169)

Larson’s obvious enthusiasm for his subject does not detract from the value of this book, however. On the contrary, Bonds of Enterprise is a beautifully written and superbly organized account of a pivotal time, and a pivotal person, in the history of American business. Historians of the 19th-century railroad industry, of business-government relations, and of entrepreneurship will not discover any startling revelations here. Certainly the work of scholars such as Naomi Lamoreaux and Colleen Dunlavy has done more to advance our knowledge of these issues. What the reader will find is an excellent overview of these issues in a form that is readily accessible to people lacking expertise in these areas, as well as to students in graduate-level, or even advanced undergraduate classes. At a time when the history profession seems inevitably destined for fragmentation, compartmentalization, and the study of minutiae, Larson is to be commended for this synthetic work.

Albert J. Churella is an assistant professor in the Social and International Studies Program at Southern Polytechnic State University in Marietta, Georgia. He is the author of From Steam to Diesel: Managerial Customs and Organizational Capabilities in the Twentieth-Century American Locomotive Industry (Princeton: The Princeton University Press, 1998).

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

An Economic History of Twentieth-Century Latin America

Author(s):Cárdenas, Enrique
Ocampo, José Antonio
Thorp, Rosemary
Reviewer(s):Beatty, Edward

Published by EH.NET (February 2002)


Enrique C?rdenas, Jos? Antonio Ocampo and Rosemary Thorp, editors, An Economic History of Twentieth-Century Latin America, three volumes. New York: Palgrave, 2000. Volume 1: The Export Age: The Latin American Economies in the Late Nineteenth and Early Twentieth Centuries , 344 pp. $75 or ?52.50 (hardback), ISBN:0-333-91304-3; Volume 2: Latin America in the 1930s. The Role of the Periphery in World Crisis, 320 pp. $69.96 or ?50.00, ISBN: 0-333-63341-5; Volume 3: Industrialization and the State in Latin America: The Postwar Years, 360 pp. $75 or ?52.50, ISBN: 0-333-63342-3.

Reviewed for EH.NET by Edward (Ted) Beatty, Department of History, University of Notre Dame.

The three densely packed volumes that constitute An Economic History of Latin America in the Twentieth Century mark the culmination of a long-term project to present the region’s economic history from the 1870s through the late twentieth century. Their publication is a landmark event, and these volumes should provide an essential reference on the economic history of the region for some time to come. Each volume stakes out one of three principal subperiods: volume one examines the “Export Age,” ca. 1870 to the 1920s; volume two probes the region during the 1930s; while volume three focuses on the era of “accelerated industrialization,” ca. 1940-1980. Each volume begins with one or more introductory and thematically oriented chapters that set out the central economic and historiographic issues for the period, followed by chapter-length studies of particular countries. Argentina, Brazil, Chile, Columbia, Mexico, and Central America get chapters in each volume, while Peru is covered twice and Bolivia, Cuba, and Venezuela each once. The authors of the country studies in each volume all occupy central positions in their fields, and most are Latin Americans themselves. One of the many attributes of this collection is to disseminate their work widely in Britain and North America. Each chapter builds on the authors’ previous scholarship and most synthesize the central historiographic debates and contributions of the extant literature. This review will concentrate primarily on volumes one and three. The second volume is a reprint of Latin America in the 1930s, edited by Rosemary Thorp and first published in 1984. This ambitious project also yielded an overview volume, Progress, Poverty and Exclusion: an Economic History of Latin America in the Twentieth Century, written by Rosemary Thorp and published in 1998 by the Inter-American Development Bank and Johns Hopkins Press. It has been reviewed for EH.NET by Alan Taylor.

Volume one, The Export Age, traces how the expansion of world trade and investment largely drove Latin America’s export growth and was itself a product of nineteenth century revolutions in technology, transportation, and institutions. The result was an extraordinary demand for raw materials and the opportunistic response of most Latin American nations. While geography, natural resource endowments, and domestic social and political features shaped the particular way in which each nation engaged the world economy and was in turn shaped by that engagement, the underlying factors convincingly justify the unity of a regional periodization. While our understanding of the overall contours of this story and its periodization have in many ways remained unchanged over the past half century, important aspects have changed remarkably, even over the past decade. Several merit particular mention.

First, recent monographs have increasingly examined the significance of early industrialization in countries like Brazil and Mexico over the period 1880-1914. In these cases and others, investment in domestic manufacturing came precisely when producers in the North Atlantic countries could place ever cheaper and better quality goods in Latin American markets. While export growth and export linkages help us understand the changing domestic markets that made large scale domestic manufacturing possible, they were nowhere sufficient. New investments to import foreign technologies and erect large factories made sense only with programs of government protection, both at state and national levels. While these efforts are not detailed in any of the chapters here, there is widespread recognition of the role of the state in shaping investment patterns in the export sector as well as in other activities. Several chapters incorporate this revisionist story, although it is notably ignored in the title and to a great extent in the introductory chapter of volume one. We are left with the implicit conclusion that it is debatably anachronistic — misleading at most and overly narrow at least — to continue labeling the 1870-1914 era simply as Latin America’s “export age.”

Second, several of the contributions here suggest that if Latin America fell further behind the industrialized North Atlantic in the late nineteenth century (or, seen another way, did not take full advantage of opportunities for growth), it is not because the region exported too much, but that it exported too little. Beginning in the 1940s one common view of the region’s economic history (most visibly expressed by ECLA economists) held that the opening of Latin American economies in the nineteenth century and the export booms that accompanied this opening led to growth but also to underdevelopment, due in large part to a secular decline in terms of trade (see E.V.K. Fitzgerald’s account of this in chapter 3 of volume 3). The pessimism, which colored much of the scholarship on the export age before the 1980s, has given way to a more complex and mixed account. The revisionist argument that late nineteenth century export growth provided a significant foundation for twentieth century development (including physical infrastructure, manufacturing capacity, state capacity, and human capital) is present in a number of the accounts here. The chapters on Colombia and Bolivia state this most clearly (see, for instance, p. 62), but the theme runs throughout the volume. What is missing, however, is a broader assessment of the way in which linkages, spillovers, and externalities of export sector growth were not narrowly economic in scope but shaped fundamental social and political transitions during the 1880-1920 period. The chapters of Alan Knight on Mexico and Roberto Cort?s Conde on Argentina provide partial exceptions to this tendency. In contrast to the generally pessimistic tone of many earlier accounts of nineteenth century development — its dependent nature, limited technology transfer, rising inequality — this volume offers a more positive account of substantial growth, of a new foundation for future development, and of the creation of a modern state.

Volume two, Latin America in the 1930s, compiles papers first written in 1981 and 1982 and subsequently published in 1984. The current volume is an exact reprint. I touch on it only briefly here as it was extensively reviewed fifteen years ago. Despite its age, these contributions still stand as authoritative assessments of the region during and immediately following the Great Depression, and this holds true both for the summary chapters by Carlos D?az Alejandro and Charles Kindleberger as well as for the individual country studies. Two issues strike me as I read the volume now, nearly two decades after it was first written. First, the moderately revisionist view of these contributions still holds up: the Great Depression may constitute a turning point in economic thought and certainly helped shape the region’s move towards state-led industrialization, but in many important ways the 1930s witnessed a continuation of tendencies already apparent in the 1920s. In particular, nearly every one of these country studies note that import substituting industrialization (ISI) was already underway, and most decisively so in the larger nations. If in the early 1980s these authors attributed the beginnings of ISI to the 1920s, more recent research has placed its origins exactly in the so-called “export-era” of the late nineteenth century, as I noted above. Second, this volume represents the last chance for an examination of Latin America’s twentieth century history as yet uncolored by the economic debacle of the 1980s and the subsequent movement towards neoliberal openings. Although in its particulars the story presented here of the region’s response to 1930s trade and finance shocks differs in relatively minor ways from what might be written today, its tone throughout lacks the pervasive pessimism and critique of state-led industrialization which has largely characterized writing in the post-debt crisis era. This is not to say, however, that the accounts presented here can be ignored because they are dated — quite the contrary. They continue to provide our most authoritative assessment of the macro-economic crisis and response during that crucial era, and it might be argued that their pre-crisis perspective provides us with an important corrective to the consistently critical assessments of recent years. Needless to say, the more recent work of Enrique C?rdenas, Alan Taylor, and others provides essential new perspectives.

Volume three, Industrialization and the State in Latin America, makes the issue of state intervention explicit. Over the past decade or so there has been if not a revolution, then a significant shift in conventional views of Latin America’s post-war economic history. Although state-led industrialization, import substituting industrialization (ISI), or desarrollo hacia afuera has had its critics since the 1950s, it has been roundly vilified over the past decade or so as responsible for many if not most of the current ills of the region. The lead chapter in this volume provides a revisionist view — the first synthesis of the region and era written over a decade after its final collapse in the early 1980s. On one hand, the authors generally do not question the now-common acceptance of the inefficiencies generated by the long duration of highly protective policies, although most prefer not to dwell there long. Their macroeconomic focus tends to see costs in terms of the region’s lost opportunity to exploit the benefits of expanding world trade between 1950 and 1970, instead of in microeconomic inefficiencies. On the other hand, the authors balance this pessimistic view with an appreciation for the development that occurred in most countries through the period. This included most importantly the linkages of industrial growth to technological capacity, the emergence of effective national states, and the development of social infrastructure, including human capital. This is most explicit in the overview chapters and the account of Argentina, but runs through each chapter in some form. Most of the contributions in this volume also prefer to view the policy foundations of ISI as a result not of domestic policy errors or a rent-seeking political economy, but of rational short-term responses to international and macroeconomic circumstances in a world where few alternatives appeared feasible. By the 1960s, recurring macroeconomic crises and growing social conflict made the aggressive pursuit of alternative paths even more difficult. Although many countries began a retreat from the more aggressive version of ISI in the 1960s and 1970s (or began to include some export incentives, as in Brazil), its final demise was driven only by the severe external shocks and domestic crises of the early 1980s. How the substantial if problematic industrial growth that occurred from 1940 to 1980 was accompanied by a significant improvement in human development (though also by the persistence of high inequality) is alluded to but not explored in detail.

The editors’ decision to include chapters on technology (by Jorge Katz and Bernardo Kosacoff) and on the role of international institutions like the World Bank and IADB (by Richard Webb) in volume three should be commended. Both provide uncommon and extremely useful perspectives on central actors and outcomes of the ISI era. These two chapters provide novel views of the era of accelerated industrialization, but the chapter by Katz and Kosacoff is weakened by a vagueness that runs through many of the country studies as well. Despite the central role attributed to “institutions” in this chapter and in many of the country chapters, we get relatively little discussion of the nature of institutions: of the relationship between formal structure and administrative practice, of the way in which they structured incentives to invest in productive or rent-seeking activities, and of their mutability in the face of economic and political crises. Author after author asserts the importance of institution building in the post-war era, but institutions remain rather opaque black boxes throughout. The extensive contributions of recent work on property rights institutions and positive political economy finds little reflection here.

Most of the country chapters in volume three emphasize the tremendous change in social welfare experienced by most countries. In the companion volume, Progress, Poverty and Exclusion, Rosemary Thorp summarizes the change between 1900 and 1995: average per capita income (in constant US dollars) rose from $185 to $990, life expectancy increased from 29 to 68 years, while illiteracy fell from 71 percent to 10 percent. Most chapters here also point out how economic growth and average welfare did not mean better income distribution — often quite the opposite. What is not generally explored, however, is the relationship between social welfare and each country’s economic history. Although the implicit suggestion is that social welfare and economic growth are somehow linked, largely ignored is the more direct and causal relationship between politics — a combination of populist politics and the maturation of the basic elements of modern welfare states — and social welfare. The chapters on Venezuela and Brazil present the best accounts of the social consequences of particular growth experiences, although these two present more discouraging accounts of social welfare development than most other countries in the region. The problem throughout is not so much the uneven inclusion of social welfare issues, but rather the lack of an explanation for the relationship among social welfare, inequality, and economic growth.

All three volumes approach Latin American economic history largely from a macroeconomic perspective and with a particular emphasis on the international context. The influence of a distinctly British-style development economics is clear throughout. While the role of the state is a central component of nearly all national stories told in these volumes, and while institutional approaches are touched on here and there, accounting for domestic political economy is absent from most, as is the broader social context. Furthermore, issues such as labor, technology, and consumers receive relatively little coverage, with a few notable exceptions. These contributions, in other words, represent an approach rather removed from recent tendencies by economic historians in the United States to privilege microeconomic topics and institutions, especially those related to property rights and policies which shaped firms’ behavior.

Despite the superb quality of all of these country studies, I will offer two complaints. The first may not be entirely fair. The country studies in all three volumes provide — as advertised — economic histories of national export sectors and their linkages. Most admit up front that the export economy embraced neither most of the national labor force nor (in most cases) most of the nations’ GDP. While the accounts here are impressive, this historian still awaits a more broadly conceived economic history of Latin America since the mid-nineteenth century, an account that would incorporate a broader synthesis of economic and social history within the narrative story. One exception in this first volume is the fine synthesis of export, agricultural, and manufacturing issues in Mexico by Alan Knight, notably further outside the field of economic history than most of the contributors. Secondly (and more frustratingly), there are distressingly few citations and references in these volumes to scholarship after 1990 or so. Antonio Santamar?a Garc?a’s chapter on Cuba is a notable exception, and in general this problem is greatest in volume two (remember, a reprint of the 1984 volume) and in volume one, and somewhat less so in volume three. Given the wealth of new insights that economic historians of the region have offered over the past ten years, this suggests a volume that teeters on the verge of outdatedness at publication. Certainly the tremendous time and logistics that went into the production of these volumes necessitate substantial lag between composition and publication, but the gap here is occasionally striking. Together, however, these contributions succeed in reflecting the sea change in our understanding of the economic history of the long twentieth century in Latin America.

In conclusion, these volumes provide a sorely needed single source on the economic history of modern Latin America. With the exception of Victor Bulmer-Thomas’s broad and indispensable overview of the region, nowhere else is this available. These volumes will prove an enduring and much used reference for present and future economic historians. No other source matches the comprehensive, concise, and sophisticated accounts presented here. As important as this contribution is, however, it speaks only to the converted. Do these volumes speak to non-economic historians? Do they help convince historians of other persuasions that the economic history of their nations-of-study is not only interesting but necessary in order to understand social and cultural history? Do these volumes make this argument — at least implicitly — in a way that is accessible and compelling to those skeptical of the accessibility and relevance of economic history? I think the answer is a tentative yes, although I wish that I could say so with less hesitation. Recently the chasm between economic history, on one hand, and social and cultural history, on the other has widened considerably. This has been nowhere more true than within Latin American history in the United States. I recently attended a seminar of Latin American historians (at an institution not too far from my own) where I was shocked not so much by the presence of antipathy and scorn for social science approaches, as by its vehemence. What the broader community of Latin American scholars need from economic historians are works that seek to bridge or reach across that gap. With the exception of several chapter contributions here (for instance, those by Alan Knight and Roberto Cort?s Conde in volume one), these volumes do not accomplish this — although the introductory chapters by the volumes’ editors stand out in their clear, relatively non-technical, and authoritative presentation of a complex history. (I should note that the summary volume Progress, Poverty and Exclusion by Rosemary Thorp does a better job of presenting a compelling economic history to non-economists, although it too falls short of this ideal.) Most of the country chapters present sophisticated treatments of the nations’ macroeconomic experience over the past century. In doing so they offer a landmark resource for those already interested in the region’s economic history, but will not likely be read closely by others, and that is a shame.

This review cannot do justice to the rich variety of the thirty-three separate chapters collected in these volumes. Suffice it to say that nowhere else will the economist or historian find such a useful collection of concise and authoritative accounts. The concerns I have expressed in this review touch more on what I would have liked to see than on the quality of what is presented, which is excellent throughout. The introductory and overview chapters of the three volumes are alone worth the price of purchase. These should be required reading for every graduate student in the field — and for the rest of us as well. Together these volumes will provide an indispensable reference for future efforts to evaluate and re-evaluate what will continue to be a much-debated era in Latin American economic history.

Edward (Ted) Beatty is Assistant Professor of History at the University of Notre Dame and Fellow at the Kellogg Institute of International Studies. He has recently published a book on industrial policy in Mexico, Institutions and Investment: The Political Basis of Industrialization in Mexico before 1911 (Stanford University Press, 2001), and is currently working on the history of technological change in Mexico during the same period.

Subject(s):Economywide Country Studies and Comparative History
Geographic Area(s):Latin America, incl. Mexico and the Caribbean
Time Period(s):20th Century: WWII and post-WWII

Rising Life Expectancy: A Global History

Author(s):Riley, James C.
Reviewer(s):Easterlin, Richard A.

Published by EH.NET (February 2002)

James C. Riley, Rising Life Expectancy: A Global History. New York:

Cambridge University Press, 2001. xii + 243 pp. $50 (hardback), ISBN:

0-521-80245-8; $17 (paperback), ISBN: 0-521-00281-8

Reviewed for EH.NET by Richard A. Easterlin, Department of Economics,

University of Southern California.

Economic historians, who have been backing into life expectancy by way of

stature, will find this book of interest. It is a qualitative survey of the

nature and causes of increasing life expectancy since 1800. Today, global life

expectancy at birth is about 67 years; two centuries ago it was 30 years or

less. The first fifth of this book describes briefly the temporal and spatial

features of this “health transition.” The remainder is devoted to individual

chapters on six possible causes: (1) public health, (2) medicine, (3) wealth,

income, and economic development, (4) famine, malnutrition, and diet, (5)

households and individuals, and (6) literacy and education. In the author’s


Two main arguments are developed . . . . The first . . . is that individual

countries . . . devise their own strategies for reducing mortality. People have

always selected from the same six tactical areas [listed above]. . . . But

different countries have used those means in different ways . . . .

The second . . . deals with the implications of having extended survival in

this way . . . . [On the plus side] [t]he multiplicity of tactics . . . are

accommodations to the different characteristics and preferences of people . . .

. [On the negative side] old schemes are often maintained even as new schemes

are being adopted [and] . . . strategies that limit risks to survival and

foster the good health of a population may be remarkably inefficient (pp.


A great strength of this book is its global approach. Riley, professor of

history at Indiana University, is not constrained by the geographic paradigm

that dominates economic history (Britain, France, Germany, U.S., Russia, Japan,

and perhaps a few others). He sees the spread of rising life expectancy as a

continuous worldwide process, and in chapter after chapter strives assiduously

to include developing along with developed countries. The text, footnotes, and

end-of-chapter references provide valuable entr?e, not only to a vast

historical literature, but also to much contemporary work in demography and

public health, as well as that by specialists at the World Health Organization

and World Bank.

Riley sees parallels between the health transition and modern economic growth,

and laments the casual concern with the causes of life expectancy compared to

those of economic growth. For economic historians who still believe that

economic development is the prime mover behind life expectancy, this is a

non-issue. But Riley seemingly believes that development is not a very

important cause of increased life expectancy (chapter 4). I think he is right,

though, surprisingly, reference to the adverse impact on mortality of

development-induced urbanization is in chapters other than that on economic

development (pp. 148, 175). Indeed, if economic historians came to see both

modern economic growth and life expectancy as analogous phenomena, each driven

by advances in different areas of knowledge and technology, they might benefit

from comparative study of the two. Riley’s book would be a help in such study.

Although a useful survey, this is, at the same time, a frustrating book. While

accepting the concept of an industrial revolution, Riley rejects this

term for the breakthrough in life expectancy. “[T]he health transition has no

well-defined beginning point. It . . . was underway by 1800, but the discovery

of a period or country where it began is a quite difficult matter” (p. 6). Here

I think Riley is wrong. It is relatively easy to date the onset of a

revolutionary rise in life expectancy in country after country. (See Richard A.

Easterlin, “How Beneficent is the Market? A Look at the Modern History of

Mortality,” European Review of Economic History, 3 (1999), pp. 262-264.)

By contrast, views on the timing of the onset of economic growth differ

greatly; as an example, Rostow dates Britain at 1783-1830 and Sweden at

1868-1890, whereas Maddison puts them both at 1820.

The book is frustrating too because of its emphasis on the variability among

countries in routes to rising life expectancy. Riley’s statement that “[p]eople

have always selected from the same six tactical areas . . . [b]ut different

countries have used those means in different ways” gives the impression that

all six sources of life expectancy increase have been equally important, and

countries could virtually choose at random the mix they wished to use. In fact,

the opposite is the case. The critical breakthroughs that have made possible

the worldwide revolution in life expectancy are public health and medicine,

Riley’s categories (1) and (2). Absent the transformation in health production

functions arising from these sources, categories (3) through (6) would not have

transformed health and life expectancy. All countries that have experienced a

marked increase in life expectancy have done so by implementing a new

technology of disease control via new institutions, centering on, but not

confined to, a public health system. The role of public initiative has been

central in this transformation in all countries — “households and individuals”

and “literacy and education” in themselves would have been of little importance

had it not been for public action to disseminate new knowledge of disease

control and promote new household and business practices to implement this

knowledge. Nowhere is this clearer than in the biggest single accomplishment

improving health and mortality, the eradication of smallpox, which required

concerted action by national and international authorities (cf. p. 71). To the

extent there have been “different paths” followed by countries, it is largely

because of differences in the state of knowledge at the time of onset of the

“health transition.” Britain is charged by Riley with a costly emphasis on

sanitation that today’s developing countries could and should avoid. But

Britain’s path reflects the state of biomedical knowledge at the time (along

with Britain’s relatively high level of urbanization). It’s as though one would

chide Britain for its costly nineteenth century emphasis on a technology of

steam-powered railroads and factories, rather than using motor vehicles and

electric motors.

I suspect Riley would agree with this view of the causal primacy of public

health and medicine, because one can find support for much of it in the

chapters on the “six tactical areas.” But by emphasizing variability rather

than commonalities among countries, Riley downplays the central role in raising

life expectancy of new knowledge, and public action to implement this

knowledge, in country after country.

In sum, this book is a useful starting point for understanding the modern

revolution in mortality. But economic historians will want to go farther to

identify and quantify the uniformities among countries in the rise of life

expectancy and in the requirements of labor, capital, and new institutions

underlying this rise, and to test models of causation.

Richard A. Easterlin is University Professor and Professor of Economics at the

University of Southern California. He is the author of Growth Triumphant:

The Twenty-First Century in Historical Perspective (Ann Arbor: University

of Michigan Press, 1996).

Subject(s):Historical Demography, including Migration
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: WWII and post-WWII

Capitalists in Spite of Themselves: Elite Conflict and Economic Transitions in Early Modern Europe

Author(s):Lachmann, Richard
Reviewer(s):Jones, Eric

Published by EH.NET (January 2002)

Richard Lachmann, Capitalists in Spite of Themselves: Elite Conflict and

Economic Transitions in Early Modern Europe. New York: Oxford University

Press, 2000. xii + 314 pp. $49.95 (hardcover), ISBN: 0-19-507568-4.

Reviewed for EH.NET by Eric Jones, Melbourne Business School and Graduate

School of International Business, University of Reading.

The entry price for writing “big picture” history is high. However novel his

or her own framework may be, the scholar is usually obliged to cite supporting

material reorganized from hundreds of books. Richard Lachmann’s contribution is

no exception, dealing as it does with the period of transition between 1500 and

1800, across England, France, Spain, the Netherlands and Florence. Throughout

much of the volume his objective is to explain changes in the distribution of

income among social groups but ultimately he brings his thesis to bear on the

issue of economic growth, chiefly by contrasting alterations in English

agrarian relations with those in France.

Most of the time he is engaged in a sustained debate about competition among

elites with other sociological historians, Marxists and Weberians, though a

little surprisingly not with Mosca or Pareto. Although Lachmann steers away

from the Marxist fixation with expropriation by “the” elite towards his own

theme of conflict among elites, Capitalists in Spite of Themselves seems

to be a phoenix arisen from the ashes of Marxism. The argument seems couched in

the type of code that Marxists, or sociologists, or both, delight in affecting.

Economists will find it harder to follow, though it is vigorously expressed,

impressive in its consistency and grounded in detailed cases. Perhaps a little

too much is claimed for the guiding idea; everything fits neatly but accepting

the results depends on going along with some very encompassing social

categorizations. Almost everyone else is held responsible for sins of omission,

for failing to account for paradoxes said to be resolved here. As Marxist-style

writings often do, the rhetoric put me in mind of the quip about Winston

Churchill, “I wish I were as certain of anything as he is of everything.”

The heart of the analysis is “elite conflict theory.” “Elite conflict is the

bright thread of agency that propelled structural changes in all situations”

(p. 231). We are told to ignore the attributes of individuals in favor of

taking their behavior to be determined by their “structural positions in

networks.” Structural analysis accordingly seems to make individuals into

automata. Individuals are assumed to be rational maximizers, responding to

opportunities, and everything thus depends on what opportunities are actually

presented to them. This is not so much a finding, which is implied here, as an

assumption, and a strong one at that. It is a unifying behavioral postulate, a

little like Realism in International Relations. Elites, like nation-states, are

destined to fall on any weakling should it stumble, and refrain from doing so

only as long as they are dissuaded by coalitions of competing forces.

Patrician disunity is common enough in history; various groups are constantly

falling out. But where did the golden opportunities come from that turned the

past into something other than battles between kites and crows, in time to

transform the early modern world? Major candidates include population change,

technological change, and the Discoveries. They are all exogenous to the model.

They are what offer the new opportunities; elites, meaning individual

maximizers cemented together, must compete to secure them, in doing so

destabilizing societies and leading to new equilibria. The very boldness of

Lachmann’s exposition brings the mechanistic character of this to the surface.

An even deeper unease arises from the way elites are reified: They have

interests, not friends (Realism again), and culture and ideology exist solely

to commit individuals to the interests of the group, because — credibly, but

ironically given the rather deterministic framework — they cannot always spot

their own interests in the maze of social life. Aside from the postulated

mechanics of the processes, it is a little disconcerting to find that the

typologies of elites are asserted more than demonstrated. None of this fits

naturally into the thinking of economists and economic historians.

When we come to the divergence between England and France, we are told that the

clue lies in the relative power of the Crown to eliminate rivals and form local

ties. Lachmann’s account, which is based on work by Robert Allen (though his

conclusion differs), shows England navigating its way between two dangers. On

the one hand it escaped from a bucolic peasantry able to hold onto its plots

and consume the produce and on the other hand avoided a parasitic state elite.

The English gentry did not need to invest in politics in order to keep their

estates. They secured the proceeds of productivity growth engineered by the

yeomen, without suppressing productivity levels. According to Allen their

capital was not usefully invested, though Lachmann has found a source that

prompts him to emphasize the share going into the funding of state debt,

military campaigns to obtain foreign markets, and passive investment in


The issue would be usefully approached regionally, which Lachmann shies away

from doing. Indeed he chides Goldstone and Thirsk, of all people, for

over-simplifying English agricultural regions and by implication with bothering

with regionalization. It is scarcely justified to carry on the debate merely at

national and occasionally county levels. Both those units are semi-arbitrary,

like all divisions. Treating England as a single unit will not do for important

purposes. Only regionalization can hope to explain the paradox of so much

“gentry” capital and so much inventiveness coexisting with

deindustrialization across southern England, at the same time as

industrialization occurred in the north. Lachmann is also extremely categorical

in stating that capital from the gentry’s hijacking of the yeomen’s revolution

was the ultimate source of English economic development. The case against the

“gentry,” or the magnates, will probably turn out to be much stronger than it

seems already. Their capital was not so much created and wasted on the land as

immolated there by the purchasers of estates who continually brought it in from

London trade, finance, the law, and public office. Nevertheless, we do not

really know what the proportions were, how much passive investing outside the

countryside the landowners undertook, or where most industrial capital came


Once upon a time there was something called the Time magazine effect.

Whether it holds true now I cannot say, but the idea was that every

professional found the reports most enlightening — except with reference to

his or her own field. Despite my hesitations about method and tone mentioned

above, I had the opposite sensation with this book. With the exception of an

intriguing chapter on religious change, I admired the parts I knew most about

(English agricultural and economic history) more than those with which I was

less familiar. The approach reminded me of an older sociological history, not

listed in the Bibliography, Barrington Moore’s Social Origins of

Dictatorship and Democracy (1966), which caused considerable excitement in

its day. Lachmann, too, shines an unfamiliar light on the fundamental questions

of why historical processes take place when and where they do.

Eric Jones is Professorial Fellow at Melbourne Business School and Professor

(part-time) at the Graduate School of International Business, University of

Reading. He is author of The European Miracle (Cambridge: third edition,

with a substantial afterword, forthcoming 2002) and The Record of Global

Economic Development (Edward Elgar, forthcoming 2002).

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

Western Capitalism in China: A History of the Shanghai Stock Exchange

Author(s):Thomas, W. A.
Reviewer(s):McElderry, Andrea

Published by EH.NET (December 2001)

W. A. Thomas, Western Capitalism in China: A History of the Shanghai Stock

Exchange. Aldershot: Ashgate, 2001. xii + 328 pp. $74.95 (hardback), ISBN:


Reviewed for EH.NET by Andrea McElderry, Department of History, University of


W. Arthur Thomas of the University of Liverpool has written a very

straightforward descriptive history of the securities market in Shanghai from

the late nineteenth century to the present. The study centers on securities

trading in Shanghai’s International Settlement where the listed securities

were almost exclusively those of foreign companies and organizations. Along

the way Thomas provides glimpses of life in the International Concession and

sketches of its foreign residents. In the final two chapters on Chinese stock

markets, Thomas gives a useful summary of the Chinese government bond market

until 1940, which was the main activity on the Chinese stock exchanges, and

of the ins and outs of today’s emerging markets in Shanghai and Shenzhen.

Thomas begins with a brief account of the development of foreign trade in

China and of the foreign community in Shanghai. Crucial to both was the

formation of the International Settlement in Shanghai as a result of the

Treaty of Nanking, 1842 (which ended the Opium War) and subsequent agreements

between Chinese and foreign governments. In the International Settlement,

foreign residents lived under the jurisdiction of their own courts and at

least some of them elected their own Municipal Council since “there were

strict property qualifications attached to the franchise” (p. 20). Western

banks and trading houses located in the Settlement and it quickly became a

“flourishing emporium.”

The bulk of the book is an account of securities trading centered in the

International Settlement. Thomas’s main source of information is the weekly

share list and related material published in the Settlement’s English-language

newspaper, the North China Herald. In spite of “an extensive search of

libraries and other depositories,” Thomas did not find any records of the

Shanghai Stock Exchange founded in 1904 or the earlier Shanghai Sharebrokers’

Association, formed in 1898. The first share list appeared in 1866 and by then

Shanghai’s International Settlement had developed the conditions conducive to

the emergence of a share market: several banks, a legal framework for

joint-stock companies, and an interest in diversification among the

established trading houses (although the trading houses themselves remained


The supply of securities came primarily from local companies. In the early

days, banks dominated private shares but, by 1880, only the Hong Kong and

Shanghai (the local bank, so to speak) remained. Shipping, insurance, and

docks persisted to 1940 but were overshadowed by industrial shares after the

Treaty of Shiminoseki, 1895, which permitted Japan, and by extension other

nations who had treaties with China, to establish factories in Shanghai and

other treaty ports. Rubber plantations became the staple of stock trading

beginning in the second decade of the twentieth century. Fixed securities

balanced the “risky” shares of local companies, both in terms of dividends and

capital value. Those of the Shanghai Municipal Council and local utilities,

such as the Shanghai Waterworks, enjoyed the most consistent favor.

Shanghai had no shortage of people who were willing to risk investing in local

companies. Thomas has gleaned information about the foreign investors from

reports of company meetings in the North China Herald. Individuals,

most connected in one way or another with Shanghai’s foreign trading

companies, provided the main “supply” of investors in the early days. From the

mid-1890s, with the expansion of commercial activity and the introduction of

manufacturing, “the securities of local companies became attractive trade

investments for the corporate sector” (p. 83). Information on Chinese

investors comes largely from Yen-p’ing Hao’s work on compradors and Chinese

business development in the late nineteenth century. (See, Yen-p’ing Hao,

Commercial Revolution in Nineteenth Century China: The Rise of Sino-Western

Mercantile Capitalism, University of California Press, 1986, and The

Comprador in Nineteenth Century China: Bridge between East and West,

Harvard University Press, 1970.)

What stands out in chapters 7 through 9 detailing the fluctuations of the

market is the importance of rubber. In 1909-10 investment and speculation in

rubber plantations in Southeast Asia “produced a transformation in the share

list” (p. 145). By autumn 1910, 47 rubber companies were listed on the

Shanghai exchange. Not surprisingly, the boom did not last. Thomas details the

rise and subsequent crash of rubber shares, the general outlines of which are

known to those familiar with Shanghai financial history. What is not so well

known is that rubber recovered and remained a staple of the market until the

Japanese occupation of International Settlement in December 1941 brought an

end to the Shanghai Stock Exchange. For example, “a sharp and unexpected rise

in the price of rubber produced a big increase in share business” (p. 199) in

1925 after a major strike among Chinese workers in Shanghai. Rubber prices

collapsed in early 1928 on the heels of a crisis connected to Chiang Kai-shek

consolidating control over the Chinese part of Shanghai. Perhaps, Thomas

suggests, the fall in rubber prices was responsible for the ensuing enthusiasm

for greyhound shares. Greyhound racing had arrived in Shanghai in 1928 and

the shares in companies who ran the sport were briefly “the focus of all

activity” (p. 203). However, when “the flirtation with ‘the dogs’ had ended

the market returned to its main dealing medium, rubber shares” (p. 203).

Thomas’s study is the first account of foreign stock trading in Shanghai and,

as such, will be useful to those who examine various aspects of finance and

business in Shanghai and China. The book is also an addition to literature on

the history of stock trading. It would benefit from an analytical framework

grounded either in Chinese economic history or in comparative stock market

history. The latter is more realistic since the author is clearly not a China

specialist but is quite conversant with stock markets.

The book has a sense of having been written and published in a hurry.

Footnoting is inconsistent. At times, even quotations have no citations.

Material from the Cambridge History of China, one of the main secondary

sources on China, is sometimes cited by author but mostly cited only by volume

and page. Also the book, or at least the copy I have, needs some serious

copy-editing, especially for romanized Chinese words. Understandably spell

check doesn’t recognize the Chinese words, but even Hong Kong comes out

variously as Kong Kong and Honk Kong. More serious, Chinese names of authors

cited are sometimes, but not always, misspelled. For example, the frequently

cited works of Yen-p’ing Hao are often footnoted as Hoa. Less serious is the

lack of a standardized romanization system such as on page 138 where spellings

of Kang Youwei and the Kuang-hsu emperor come from two different systems.

Admittedly, the romanization of Chinese is a slippery slope and thus its

inconsistency can be put down as a quibble from a Chinese specialist who will,

no doubt, use the book as a reference.

Andrea McElderry’s publications on Chinese business history include a study

of Chinese stock exchanges, “Shanghai Securities Exchanges: Past and Present”

(Occasional Paper Series in Asian Business History #4), Brisbane: Asian

Business History Centre, University of Queensland, 2001.

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):Asia
Time Period(s):20th Century: Pre WWII