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The Economy of Early America: Historical Perspectives and New Directions

Author(s):Matson, Cathy
Reviewer(s):Ryden, David B.

Published by EH.NET (January 2007)

Cathy Matson, editor, The Economy of Early America: Historical Perspectives and New Directions. University Park, PA: Pennsylvania State University Press, 2005. viii + 380 pp. $55 (hardcover), ISBN: 0-271-02711-8.

Reviewed for EH.NET by David B. Ryden, Department of History, University of Houston-Downtown.

In her lengthy overview of the intersection between economics and the field of history, Cathy Matson leads us to the conclusion that the New Economic history is all but fizzled out in Early American studies. Seventeenth and eighteenth century data are simply too thin to solve long-running regional income debates; to evaluate theories on economic growth (i.e. the staples model); or to conclude whether the colonials and early nationals were capitalists, proto-capitalists, or anti-capitalists. Furthermore, the cliometric approach has been unable to keep up with the non-quantifiable questions pursued by linguistic and cultural theorists. The point of this book, then, is to showcase new approaches that attempt to reframe social and cultural history into the field of economic history. While some economists might be initially suspicious of this agenda, it appears that the book is written for historians, with the hopes of persuading them to be more receptive to adopt economic themes in their research.

Eleven out of the twelve contributions to this volume were delivered at the inaugural Program in Early American Economy and Society (PEAES) Conference, in April 2001. As the subtitle suggests, this collection of essays is all about taking stock of the field and divining “new directions.” Much of the book is therefore historiographic and Matson has chosen John McCusker and Russell Menard’s The Economy of British America (1985) as a reference point (for full disclosure, Rus Menard was my graduate school advisor). Both Matson’s general survey and David Hancock’s “Rethinking The Economy of British America” mark the publication of the McCusker and Menard synthesis as a breaking point for the economic approach to colonial history. The problem with McCusker and Menard’s volume, according to Hancock, was that it “seem[ed]” (1) “to close more doors than it opens,” (2) “to be too ‘economic’ in its orientation” and (3) “to be insufficiently connected to historian’s emerging interest in cultural studies.” Thus, fashion and the apparent certitude of the conclusion mapped by McCusker and Menard cemented in many minds (particularly that of younger historians) that there are no longer exciting colonial-era avenues for statistical research. Echoing Matson’s call to fit more scholarship under the economic-history umbrella, Hancock laments the fact that cultural histories are absolutely bereft of economic history, calling this development to be just plain “weird.” While he doesn’t hold out high hopes for a resurgence of the statistical studies championed by McCusker and Menard, he sees the “boundaries of political-economic history … waiting to be pushed.”

The interloping contributors to this volume are Lorena Walsh and Russell Menard himself. In her review essay on recent trends in the demographic history of British America, Walsh sees continuity between the quantitative history of the 1970s through today. She points to the relatively recent migration studies by David Eltis and P.M.G. Harris. Added to these macro-studies are the quantitative regional work by Billy Smith, Daniel Vickers, and R.C. Nash. But Walsh emphasizes that there is still more statistical work to be done. She sees the greatest need in the areas of slave demography, material culture, and consumption patterns. Even the conclusions of The Economy of British America are suggested to be worth revisiting, for the “often tentative synthesis of the state of the art in 1985″ became “far more concrete and enduring … than the authors [McCusker and Menard] ever intended.” In the final sentence of her paper, Walsh’s uncompromising position is loud and clear: she proclaims the urgent need for senior researchers, such as those listed above, to “persuade younger scholars to roll up their sleeves and get on with the important tasks remaining” in the field of economic and quantitative history.

Walsh briefly complies with the volume’s theme when she notes that material-culture topics offer the best opportunity for a dialogue between economists and those operating within the cultural approach. Menard’s chapter, on the other hand, ignores the book’s agenda altogether. Rather, his paper follows through with the same neoclassical themes he laid out with his coauthor in 1985. This time, however, Menard uses the opportunity to survey recent findings on colonial agricultural production in order to hammer away at Peter Mancall and Thomas Weiss’s contention that there was no colonial economic growth (1999). Menard coins the phrase “Mestizo agriculture” to catalogue a long list of on-the-spot farm innovations that integrated skills and methods from Europe, America, and Africa. For Menard, the widespread advances in productivity provide sufficient evidence that there were at least modest gains in real income.

With the exception of Christopher Tomlin’s summary of colonial servant migration and Brooke Hunter’s impressive research on the economic impact of the Hessian-fly infestation, the remaining chapters are indeed significantly different from the approach laid out by McCusker and Menard. These pieces are working within an entirely different historiographical framework, dealing with more political and social issues of the late colonial, early national, and Jacksonian periods. A repeated theme in these chapters is the debate over how Americans felt about the “Market Revolution” during the early nineteenth century. As mentioned in the book’s preface, there is not a consensus on many points, including this one. Seth Rockman, for example, emphasizes the exploitation that was at the heart of the “Unfree Origins of American Capitalism,” while Donna Rilling’s study of Philadelphia entrepreneurs focuses on a group that directly benefited from market integration during the early national period. Because this debate over attitudes toward the market is so prominent in these essays, it is no surprise that political economy reverberates throughout the second half of this volume.

Every essay included in this book is insightful and offers solid documentation on the current state of the field. Its fundamental limitation, however, is in its narrow geographic scope. Each author fits his or her work within the literature of United States history, but there is a marked concentration on Pennsylvania subjects. This is no surprise, given that the PEAES is located at the Library Company in Philadelphia. Nonetheless, with the rise in “Atlantic history” since the publication of The Economy of British America, one might expect that trade and mercantile connections would figure more prominently. Attitudes towards consumption of foreign goods and imperial restrictions on British West Indian commerce are mentioned several times, but never explored deeply by any of the contributors. This complaint, however, should not distract from the book’s contributions. Matson’s seventy page “Thoughts on the Field of Economic History” is a powerful introduction to the intersection of the two disciplines, while each individual essay offers an impressive survey of the literature. Economists and historians interested in early America will find this provocative collection to be a worthwhile read that might motivate them to challenge or endorse the PEAES-school approach.

Table of Contents:

Preface
1 A House of Many Mansions: Some Thoughts on the Field of Economic History by Cathy Matson
2 Rethinking the Economy of British America by David Hancock
3 Colonial America’s Mestizo Agriculture by Russell R. Menard
4 Peopling, Producing, and Consuming in Early British America by Lorena S. Walsh
5 Indentured Servitude in Perspective: European Migration into North America and the Composition of the Early American Labor Force, 1600/1775 by Christopher Tomlins
6 Capitalism, Slavery, and Benjamin Franklin’s American Revolution by David Waldstreicher
7 Moneyless in Pennsylvania: Privatization and the Depression of the 1780s by Terry Bouton
8 Creative Destruction: The Forgotten Legacy of the Hessian Fly by Brooke Hunter
9 The Panic of 1819 and the Political Economy of Sectionalism by Daniel S. Dupre
10 Toward a Social History of the Corporation: Shareholding in Pennsylvania, 1800/1840 by John Majewski
11 Small-Producer Capitalism in Early National Philadelphia by Donna J. Rilling
12 The Unfree Origins of America Capitalism by Seth Rockman

David B. Ryden is an assistant professor of history at the University of Houston-Downtown. His research focuses on the economy of British America. Most recently, he coauthored (with Russell R. Menard) “South Carolina’s Colonial Land Market: An Analysis of Rural Property Sales, 1720-1775,” Social Science History (2005). He is presently completing a book manuscript on the West India lobby and the abolition of the British slave trade.

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

An Age of Transition? Economy and Society in the Later Middle Ages

Author(s):Dyer, Christopher
Reviewer(s):Huffman, Joseph P.

Published by EH.NET (December 2006)

Christopher Dyer, An Age of Transition? Economy and Society in the Later Middle Ages. Oxford and New York: Oxford University Press, 2005. vi + 293 pp. $65 (hardback), ISBN: 0-19-822166-5.

Reviewed for EH.NET by Joseph P. Huffman, Department of History, Messiah College.

Medievalists for some time now have been about the business of questioning the traditional boundaries between the medieval and early modern periods. It all started with taking down the Renaissance a few pegs in Charles Homer Haskins’ The Renaissance of the Twelfth Century (1927) and has been followed by such works as Lynn White’s Medieval Technology and Social Change (1962), Joseph R. Strayer’s On the Medieval Origins of the Modern State (1970), Pierre Chaplais’ English Diplomatic Practice (1982), Colin Morris’ The Discovery of the Individual, 1050-1200 (1987), and Giles Constable’s The Reformation of the Twelfth Century (1996), all of which argue persuasively that characteristics and trends we have deemed “modern” appeared much earlier than the post-1500 western world.

What these scholars have wrought in the areas of cultural, political, technological, and religious history, the eminent historian Christopher Dyer (University of Leicester) has accomplished in the area of English socio-economic history. Originally delivered as the Ford Lectures (University of Oxford, Hilary Term 2001), this book’s fundamental thesis is “that many of the tendencies of the end of the Middle Ages had their roots in a much earlier period … [and that] the advance of commercialization, as towns grew and markets multiplied in the thirteenth century, has led to doubts about whether the changes of the long fifteenth century were of much significance” (p. 3). He continues on to assert that “Just as the commercial growth of the thirteenth century prepared the way for the structural changes of the fifteenth, so developments before 1500 can be connected with the trends of the early modern period” (p. 3). Prosperous rural yeomen, wage laborers, innovative farming techniques, occupational specialization, and the rise of a consumer economy were not the turning points of the early modern period but rather quite typical of England before 1500.

Dyer is not fashioning a wholly new thesis here about English economic history, but rather offering a wonderfully detailed yet thoroughly readable account of the scholarship produced by a generation of Anglo-American socio-economic historians (himself perhaps foremost among them) in the past fifteen years or so: Richard H. Britnell, Bruce M.S. Campbell, Stephan R. Epstein, John Hatcher, Edward Miller, David Palliser, Derek Keene, Mavis Mate, Jim Masschaele, Mary Ann Kowaleski, Wendy Childs, and Jenny Kermode, for example. These scholars have produced ground-breaking evidence of a rapidly commercializing economy in thirteenth-century England — a trend overlooked in the past because it was hidden in the local and regional economies of towns rather than documented in multiple metropolitan areas as one finds on the continent. Based on this relatively recent scholarship, the picture of England’s socio-economic development looks much more matured before 1500 than previously believed and the crisis of the fourteenth century proved to be a period of economic innovation and advancement by the lower ranks of society even though the aristocracy experienced decline.

Chapter one, entitled, “A New Middle Ages,” articulates the thesis in more detail. Dyer emphasizes the active agency of the lower ranks of society in overcoming the challenges faced in the later Middle Ages, as they used the market to their advantage. The twelfth and thirteenth centuries no longer appear as a “false start” of a modern economy, but rather as the foundation that weathered the storms of the fourteenth century; continuities in urbanization, commercialization, and transportation infrastructure remained the norm well past 1500. Although the aristocracy lost economic ground and social control in the later Middle Ages, the more entrepreneurial among the social ranks beneath them proved resilient and even prospered as a result of the crisis period. Dyer concludes, “the ‘new middle ages’ contradicts the strongly held belief that decisions were made by the powerful elite, and that change was directed from above … many features of the period, from family structures to farming methods, bear a strong resemblance to those prevailing in the sixteenth and seventeenth centuries” (p. 40). It should also be obvious that traditional views of the “transition from feudalism to capitalism” are no longer viable, since the peasantry appears every bit as entrepreneurial and commercial-minded as the gentry and urban middle classes of the late fifteenth century.

The remainder of the book contains topical chapters of real interest to economic historians. Chapter two considers the shifting boundaries between private property and communal welfare. Dyer’s case studies reveal that conflicts driven by individual self-interest were not early modern phenomena; indeed, peasants (not just lords) pressed for ‘privatization’ of common fields, and their retirement, inheritance, and landholding practices reveal a desire for privacy and independence between generations. Yet while a high rate of migration and the transformation of the land market in the later Middle Ages recalibrated communal village life, evidence shows that parish life was vibrant with church ales, entertainment, fraternities, and a great deal of church building and repair. Thus while family bonds were weakened, civic bonds of sociability were actually strengthened in this period.

Chapter three considers the relationship between authority and freedom as magnates abandoned direct demesne farming and village management in the later Middle Ages in response to a declining capacity to extract wealth from a shrinking rural population. Economic dynamism and market-based entrepreneurialism existed among the gentry and peasantry, however, which collectively responded to the new economic conditions of the fourteenth and fifteenth centuries. Before royal government filled the political space vacated by the magnates, the peasantry in particular enjoyed a period of unparalleled freedom of migration and economic innovation. High wages, low prices, low rents, and population decline as a result of the plagues enabled untold peasants to migrate, to be freed from serfdom and compulsory labor services, and to benefit from opportunities in land and agricultural markets. Because of such political and economic changes, Dyer argues that the peasantry developed “puritan” social attitudes and a sense of belonging to the political community as early as 1450.

Chapter four explores the results of recent research in the areas of late medieval consumption and investment. Much of this evidence has come from archaeological investigation of structures and artifacts, and it entirely refutes the traditional view that consumerism did not exist until the “consumer revolution” of the eighteenth century. As Dyer asserts, “There is no value in announcing yet another revolution, but we can recognize consumerism in the Middle Ages, and identify episodes and characteristics in the material culture of our period which have some similarity with those of the eighteenth century” (p. 128). Of course the contracted economy of the later Middle Ages (ca. 1375-1500) does not compare in size with that of the eighteenth century, but when viewed from the point of view of consumption rather than production, remarkably similar patterns emerge. After the Black Death, likely because of lowered prices and the concomitant increase in spending power, the pattern of consumption changed markedly. Per capita expenditure for foodstuffs and manufactured goods increased significantly: wheat bread replaced rye and barley, more meat was consumed (indeed, more fresh meat and fish), and more ale brewed (now from barley malt instead of oats). New building, metal products, and ceramic pottery (replacing wooden cups and bowls) are signs of changing manufacturing patterns. Even fashion became a significant aspect of consumption, with shops beginning to advertise in order to create demand: one need only think of the notorious poulaine shoe with its four-inch long toes and the close-fitting short garments of the era. Increased expenditures on consumer goods, however, did not in fact inhibit investment. Again, although lords invested less in the later Middle Ages, new groups (farmers, entrepreneurs, artisans) spent much more on infrastructure, textile mills, ironworks, and even facilities to brew hopped beer on a large scale.

Dyer extends the economics of consumption and investment further in chapter five, which considers the relationship between subsistence living and markets in this period traditionally understood as one of economic contraction. He concedes that the volume of economic activity obviously shrank during this period. Yet he persuasively argues that the “ingrained habits of marketing and the employment of credit and money continued” (p. 173). Though it was an era of economic contraction for some, it was also an age of opportunity and prosperity for many (like entrepreneurial farmers, artisans, and even wage-earners), who in time subverted the social hierarchy by dressing and eating above their traditional status. We are reminded of the Statute of Laborers, the sumptuary laws, and the Canterbury Tales in this context.

What attitudes toward work and leisure developed among the lower ranks of society during this period? In chapter six Dyer considers this question, and though he rejects the view that a “proletariat” class of wage earners emerged in the later Middle Ages he does assert that definite attitudes toward the value of work and leisure appeared, which had profound implications for the traditional ethic of charity. “Voluntary idleness” became unacceptable given a strong work ethic; therefore charity was increasingly reserved for the “deserving poor” with vagrancy and begging frowned upon as mere laziness. In a rather modern-looking development, familial care at retirement diminished given the smaller number of children and their mobility during this period and so the community was turned to for support. The net affect was one of pragmatism rather than charity, akin to our modern attitudes toward welfare. For their part, employers conceived of a “work ethic” because of the labor shortage (i.e. they needed to maximize their labor resources). But we also find this ethic among wage-earners who were seeking to better themselves through hard work. Dyer concludes, “‘Modern attitudes towards leisure and social security, which are so often thought to have developed under Protestant influence, were emerging in association with the work ethic” (p. 241).

Dyer does a masterful job of using new types of sources that shed light on the dynamic and vital aspects of late medieval economic history. Reliance on traditional sources of estate records from the aristocracy and church obviously renders a picture of slow economic decline and decay of social control. Yet inclusion of wills and archaeological sites of buildings provides additional dimensions that reveal continuity and even entrepreneurial adaptation to changing economic times among those below the aristocracy and upper clergy. Thereby Dyer has effectively defended the thesis that “the supposed turning point around 1500 has been given excessive importance, as many features of the early modern period can be observed well before 1500 and even before 1300″ (p. 244).

The socio-economic patterns Dyer articulates so well in this monograph are by now well known to medievalists. The historiographical aspects have been anticipated by John Hatcher and Mark Bailey’s Modeling the Middle Ages: The History and Theory of England’s Economic Development (Oxford University Press, 2001). Indeed, one will find this understanding of late medieval economic trends throughout histories that include continental Europe; for example, Fran?ois Crouzet’s A History of the European Economy, 1000-2000 (University of Virginia Press, 2001) has already asserted, “The European economy of the late Middle Ages and the early modern period … was not fundamentally different from the one that had emerged in the thirteenth century.” Peter Spufford’s Power and Profit: The Merchant in Medieval Europe (Thames & Hudson, 2002) has also declared, “The whole period from this commercial revolution [i.e. of the thirteenth century] to the industrial revolution of the eighteenth and nineteenth centuries possessed an economic unity …” Though the bibliography of this volume is extremely thorough when it comes to English historiography, Dyer could have taken his volume beyond the Hatcher/Bailey historiography by connecting late medieval England’s economic history with that of the larger economic history of Europe (and of contemporary continental historiographies). The signal benefit of this book, though, is that we see English economic patterns in line with those on the continent, even though England only had one major metropolitan region.

But this is asking more than was intended for this fine book. Dyer was hoping to build bridges with Anglophone socio-economic historians of the early modern era rather than with medievalists, and we can only hope that they will take up this book and engage with him anew the subject of the “age of transition” toward a modern economy. If this book becomes mandatory reading for all scholars of English economic history, as it should well be, we can be sure that there will emerge a clearer and more unified view of English economic history from the thirteenth through the eighteenth centuries.

Joseph P. Huffman is academic dean of the School of the Humanities at Messiah College and Professor of European History. He has authored Family, Commerce and Religion in London and Cologne: Anglo-German Emigrants, c. 1000-1300 (Cambridge University Press, 1998) and The Social Politics of Medieval Diplomacy: Anglo-German Relations (1066-1307) (University of Michigan Press, 2000).

Subject(s):Markets and Institutions
Geographic Area(s):Europe
Time Period(s):Medieval

Industrializing American Shipbuilding: The Transformation of Ship Design and Construction, 1820-1920

Author(s):Thiesen, William H.
Reviewer(s):Sicotte, Richard

Published by EH.NET (November 2006)

William H. Thiesen, Industrializing American Shipbuilding: The Transformation of Ship Design and Construction, 1820-1920. Gainesville, FL: University of Florida Press, 2006. x + 302 pp. $55 (cloth), ISBN: 0-8130-2940-6.

Review for EH.NET by Richard Sicotte, Department of Economics, University of Vermont.

William H. Thiesen’s Industrializing American Shipbuilding is a carefully researched, insightful book that focuses on the evolution of U.S. shipbuilding from a craft to a modern heavy industry. Thiesen is the curator of the Wisconsin Maritime Museum in Manitowoc, Wisconsin. With impressive command of the details, he chronicles the enormous changes in the design and construction of ships from 1820 to 1920. Thus, the book is primarily of history of technology, but Thiesen’s very effective presentation also contains substantial information about particular business enterprises, shipyards, entrepreneurs, scientists and naval officers.

The book is organized as follows. The first chapter discusses the origins of U.S. craft shipbuilding methods. The ascendance of scientific design and construction in Great Britain in the nineteenth century is the topic of chapter two. Chapters three and four describe the growth and heyday of American wooden shipbuilding. The fifth is one of the most creative and interesting chapters, in which Thiesen describes the transition from wood to iron. In the sixth and seventh chapters, the author discusses ship design, and the belated adoption of scientific methods in U.S. shipbuilding. Thiesen then describes the revolution in U.S. ship construction, through the invention and adoption of labor-saving machinery and greatly improved production organization. The final chapter is a thoughtful summary and conclusion.

Thiesen has provided an important, perhaps indispensable contribution for answering some of the questions about U.S. shipbuilding that would probably be of most interest to economic historians. For example, when and why did the U.S. apparently lose its comparative advantage in shipbuilding? American-built steamships played a minor role in international shipping in the late nineteenth and early twentieth century, carrying only a fraction of U.S. oceanborne commerce. Previous scholarship has focused, without much quantitative evidence on costs of production, on the changes from wood to iron and sail to steam, as explaining the decline of U.S. shipping. Although Thiesen provides little in the way of quantitative analysis, his detailed account of American shipbuilding methods will provide researchers interested in the comparative advantage question with a number of promising leads of where to look for evidence, and how to develop alternative hypotheses. In chapter five, he convincingly demonstrates the “cross-fertilization” of techniques between the wood and iron branches of the U.S. shipbuilding industry, and argues that the construction of iron ships in mid-nineteenth century United States was largely a craft. Thiesen describes the step-by-step process of the construction of the iron steamship Saratoga in the 1870s. The extent of custom-fitting is striking. Still, I was left wondering whether it was possible to provide a reasonable quantitative estimate of how much additional cost these methods implied relative to practices employed in other countries. Just how important were demand-side factors, relative labor costs, and access to resources in determining the comparatively poor performance of U.S. iron shipbuilding?

Thiesen’s description in chapter eight of the application of electric power and cutting-edge technology at the New York Shipbuilding Company is highly provocative. He cites European visitors to the yard as being awestruck by the high-tech operation, and describes how the U.S. began to be a source of shipbuilding technology transfer rather than only a destination. He does not show, however, what the effects of these innovations were on the competitive position of American shipbuilding relative to its foreign rivals. Because foreign firms adopted many U.S. innovations, it seems likely that the effects were mitigated.

A second major research question about U.S. shipbuilding concerns the effects of U.S. public policy toward the industry. Thiesen is decidedly critical of the tariff on iron, arguing that it was a serious impediment to the industry’s development. He argues that without the federal regulation reserving coastal traffic for American ships, the industry would have been much smaller. (The Great Lakes became the major center of U.S. shipbuilding in the late nineteenth century.) The most innovative and well documented contribution he makes insofar as public policy, however, is the vital role that the U.S. Navy played in bringing scientific design and modern naval architecture to the industry. The Navy sent officers and engineers to Europe in the 1870s and 1880s to learn modern techniques. Later, naval engineers were assigned to teach courses at American universities, eventually leading to the establishment at several universities of degree programs in naval architecture. Thiesen states that the “development of a naval-industrial complex paved the way for more systematic ship design and construction methods” (p. 159).

William Thiesen has produced an excellent book. It is a must-read for maritime historians, and of major interest for historians of technology. It also will stimulate research on some of the most interesting questions surrounding the comparative advantage of U.S. shipbuilding industry and of U.S. heavy industry more generally.

Richard Sicotte is Assistant Professor of Economics at the University of Vermont. His research has focused on the shipping industry, its market structure and effects on international trade and migration.

Subject(s):Transport and Distribution, Energy, and Other Services
Geographic Area(s):North America
Time Period(s):20th Century: Pre WWII

Cultures Merging: A Historical and Economic Critique of Culture

Author(s):Jones, Eric L.
Reviewer(s):Greif, Avner

Published by EH.NET (July 2006)

Eric L. Jones, Cultures Merging: A Historical and Economic Critique of Culture. Princeton, NJ: Princeton University Press, 2006. xvii + 297 pp. $30 (cloth), ISBN: 0-691-11737-3.

Reviewed for EH.NET by Avner Greif, Department of Economics, Stanford University.

For some scholars, a society’s culture determines its economic destiny. For others, culture is malleable reflecting deeper political and economic variables and hence is epiphenomenal to economic outcomes. In this interesting book, Eric Jones (author of The European Miracle among other publications, a Professorial Fellow at Melbourne Business School, University of Melbourne and an Emeritus Professor at La Trobe) provides a useful survey of this debate and argues for a middle ground.

Jones views culture — patterns of beliefs, habits, values, ideals, and preferences shared by groups of people — as both sticky and fluid. Because culture reflects habituation which one acquires at young age, it is slow to change. Yet, culture is also fluid; it is often of relatively recent vintage, changes rapidly, and is promoted, or even created by those who stand to gain from it. Culture changes in response to economic, political, and social forces. Cultural change reflects better knowledge of alternative cultures and such knowledge leads to cultural merger, new syntheses in languages, religion, and other domains. Culture therefore exhibits transient fixity.

Culture and the economy interrelate. A given culture influences transaction costs and thereby economic outcomes for a while. Yet, the economy shapes culture because it alters constraints and opportunities and provides knowledge regarding alternative cultures. Indeed, the rate of cultural change has accelerated in modern times because of the decline in information cost and the global reach of goods — such as movies, contraceptives, and cars — which embody alternative cultures. Cultural change also accelerated recently because the modern economy provides individuals with choices and opportunities that were not available in the past. Since culture is malleable, its impact on economic outcomes is less than often asserted. The global economy, however, will not lead to a globally uniform culture as it also enables new cultures to develop and prosper. This is the case because communication and information costs are so low in this new economy.

Culture and institutions also interrelate. The distinction between institutions and culture, according to Jones, is that the latter is informal, socially transmitted, and taken for granted while institutions tend to be conscious, even political constructs. Culture is relatively intangible while institutions have a more rule-bound existence. Institutions can shape culture although informal culture is difficult to alter. Jones asserts, without much elaboration, that a growth enhancing culture must be protected by law and not man. It seems that he means to contrast the European traditional rule of law with some unspecified alternatives.

Following this general discussion, Jones devotes a lengthy discussion to the important controversy in economic history regarding economic growth in China and Europe. While the “California School” of Chinese history claims that Europe was first to industrialize because it had better endowments, Jones argued that institutional distinctions mattered, particularly those influencing the use of resources, motivating technological advances, and enabling complex contracting. Rule of law was the most important principle. More generally, the fragmentation of power led to diversity of institutional development and institutionalized equalities brought peace and prosperity. “The institutions of the West were impersonal and decentralized; its institutional network held out the promise of extension to fresh social groups and new societies; and … it evinced great power of self-correction” (p. 132).

As the discussion of institutions illustrates, Jones does not hold all cultures to be born equal. He emphasizes that cultures are neither chosen rationally nor selected by evolutionary forces according to their functionality. Mediocre — welfare reducing practices — can and do prevail. Yet, competition can eradicate mediocre cultures. When alternative cultures are competing, a materially and emotionally beneficial culture is likely to be adopted, particularly by young adults.

The first five chapters of the book elaborate on the above point and the following three illustrate particular points by providing “cultural commentary.” In this commentary, Jones presents evidence the culture of immigration is uniform — second and third generations tend to exhibit cultural mobility and adopt the local culture while potentially changing it in the process. He then takes issue with the claims that “Asian culture” is underpinning the remarkable growth in Asia, that the resentment to the Western cultural role model is more than a reflection of deeper economic and political problems, and that local cultural protection reflects the will of the local people rather than interest group politics.

Regarding the debate over culture being immutable or epiphenomenal, Jones advances an appealing and intuitively correct assertion: culture is neither immutable nor epiphenomenal. Jones has done a wonderful job of reviewing both sides of the debate while exposing and articulating on the deficiency of the opposing views. Furthermore, Jones exposes various political and economic reasons that motivate the opposing sides to adopt the positions they do. Among these reasons are nationalistic sentiments, the fear of political and social elites that new culture will erode their positions, and the desire of local cultural producers to gain from subsidies. A novel aspect of the analysis is the emphasis on the role of knowledge regarding cultural diversity on cultural change. This enables Jones to link technological changes that reduce information costs and globalization of markets with the rate and direction of cultural change.

The book does not employ quantitative evidence. Yet, Jones draws on an amazing array of anecdotal evidence, both historical and contemporary, to make his point. Indeed, it is relatively easy to knock out the two extreme positions — that culture is either everything or nothing — by providing counter examples. Lacking, however, is good evidence regarding the stronger claims made — explicitly or implicitly — in this work. Among these claims are that all cultures are similarly malleable, that distinct cultures do not differ in their endogenous dynamics, that the interrelationships between culture and institutions cannot undermine the process of cultural change that Jones is describing, that Western institutions were more accommodating to cultural diversity than those of other societies, that the cultural assimilation of immigrants is universal, that mediocre cultures can perpetuate even in the presence of cultural competition, etc.. (For an analysis of how culture and institutions can mutually reinforce each other, see Greif 2006.)

Similarly unsatisfying is the multiplicity, and sometimes contradictorily implicit models that Jones invokes in his analysis. Only the conclusion verbally presents a model of culture and cultural change. This is an evolutionary model of cultural development in which information about alternatives and exogenous economic shocks causes cultural change. Some individuals respond to new information and exogenous shocks by altering their behavior and hence the resulting culture. Because culture reflects historical habituation, such change is often gradual and usually the old are more resistant to change.

No doubt, this individualistic model captures what may indeed be a mechanism for cultural change. Yet, central to it is that individuals can freely choose their culture and a rejection of the importance of culture as social phenomenon. This assertion is in contrast to the recent empirical finding (e.g., Guiso, Sapienza, and Zingales 2006) indicating that culture is a social phenomena. Moreover, it opposes many chapters in the book that consider the social dimensions of culture. These chapters argue, for example, that institutions influence culture, that the powerful attempt to shape culture, and that interest groups manipulate policies regarding culture. The book does not resolve the tension between the individualistic and the social-based models of culture. It does not, for example, elaborate on the factors determining which model is more applicable in a particular time and place.

These reservations notwithstanding, Jones provides an accessible, illuminating, and inspiring book on a complex issue, while providing thought-provoking ideas regarding where more research is warranted.

References:

Avner Greif, 2006. Institutions and the Path to the Modern Economy: Lessons from Medieval Trade. Cambridge University Press, 2006.

Luigi Guiso, Paola Sapienza, and Luigi Zingales, 2006. “Does Culture Effect Economic Outcomes?” Journal of Economic Perspectives 20: 23-48.

Avner Greif teaches economic history and institutional analysis at Stanford University. Among his recent publications are Institutions and the Path to the Modern Economy: Lessons from Medieval Trade (Cambridge University Press, 2006); “The Origin of Impersonal Exchange: The Community Responsibility System and Impartial Justice” (Journal of Economic Perspective, 2006); “Commitment, Coercion, and Markets: The Nature and Dynamics of Institutions Supporting Exchange” (in the Handbook for New Institutional Economics, edited by Claude Menard and Mary M. Shirley, 2005); and “A Theory of Endogenous Institutional Change” (American Political Science Review, 2004.)

Subject(s):Social and Cultural History, including Race, Ethnicity and Gender
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

European Business, Dictatorship, and Political Risk, 1920-1945

Author(s):Kobrak, Christopher
Hansen, Per H.
Nicosia, Francis R.
Huener, Jonathan
Reviewer(s):Ferguson, Thomas

Published by EH.NET (April 2006)

?

Christopher Kobrak and Per H. Hansen, editors, European Business, Dictatorship, and Political Risk, 1920-1945. New York: Berghahn Books, 2004. xiv + 261 pp. $60 (hardback), ISBN: 1-57181-629-1

and

Francis R. Nicosia and Jonathan Huener, editors, Business and Industry in Nazi Germany. New York: Berghahn Books, 2004. viii + 211 pp. $25 (paperback), ISBN: 1-57181-654-2.

Reviewed for EH.NET by Thomas Ferguson, Department of Political Science, University of Massachusetts, Boston.

There is a mix of both good news and bad news to report about these two works, which are natural complements and can hardly fail to interest many readers.

First the good news. Business and Industry in Nazi Germany contains six essays by some of the best known historians working in the area. Gerald Feldman’s opening essay, “Financial Institutions in Nazi Germany: Reluctant or Willing Collaborators?” draws on his earlier studies of German banks and insurance companies. As before, he is highly critical of analysts whom he believes over-emphasize alignments between the Nazis and big business. This time, however, near the end of his essay, he strikes an oddly discordant note: “When one digs deeply enough, one discovers that financial institutions were part of the network of governmental and private institutions engaged in Germany’s imperial and racial goals” (p.33). This is eerily similar to Fritz Fischer’s basic point.

Harold James departs from roughly the same premises as Feldman. But he does not perceive much “higher unity” between the Nazis and bankers. Instead, his elegantly written study portrays the Third Reich’s money men as glumly anticipating an eventual triumph of the Nazi Party’s “populist wing”: “In conscious or unconscious calculations of how adaptation to the ‘New Germany’ would affect the financial and social standing of bankers, most financiers could only come to the conclusion that whatever happened, they were bound to lose as representatives of a world and a style of business that the new regime had declared to be obsolete and discredited” (p. 61).

Peter Hayes’s brief but fluently written essay makes similar points. He compares I.G. Farben and Degussa, on which he has written separate full length studies. While he is clear that neither scrupled at profiting from the Holocaust and acknowledges personal “inadequacies” of the two concerns’ leaders, he asserts that “well before … 1937″ Nazi dominance left businesses “almost incapable of asserting their own interests against those of the state” (p. 70).

Michael Thad Allen contributes a striking essay on the SS’s organization of concentration camps. In contrast to analysts who have seen theses ventures as driven by a search for profit, he disparages purely “business” motivations in favor of more ideological considerations. But he is explicit that the explosive growth in the use of slave laborers by German corporations came at the instigation of the companies, not the SS, as employers felt increasingly squeezed by war time full employment pressures. His conclusion is provocative indeed and merits a longer look by comparative historians of slavery and serfdom, who have for decades debated the economic efficiency of violence and brutality. Mass murder, he argues, was essential to the emerging system of wartime German labor control: “Slavery was directly tied to the Holocaust and could not have functioned without the constant influx and ‘liquidation’ of prisoners” (p. 99).

The final case study is by Simon Reich. He considers the relation between the Nazi regime and foreign-owned corporations, in particular, the Ford Motor Co. He relates his experiences as an advisor to the American auto concern, when in response to several lawsuits filed in the 1990s, it sought to pin down its responsibility for actions of its German subsidiary after the Nazis came to power and, especially, during World War II. In the spirit of work he published before he went to work for Ford, Reich argues that the concern was no more than a secondary player in the German auto industry and was not perceived by the Nazis as a “German” company. As a consequence, before the war the regime actively discriminated against the company. Once the U.S. entered the war, he claims, Ford’s German executives ran the company in the interests of Germany, without direction from Detroit, so that Ford USA could not reasonably be held responsible for the sometimes appalling practices of its subsidiary.

The viewpoint of European Business, Dictatorship, and Political Risk is more panoramic. Consciously borrowing from the rhetoric of contemporary finance, it aims to explore how firms in the inter-war period dealt with “political risk.” The introduction, by the editors and Christopher Kopper, explains that the essays take as “their starting point the perceptions of business people about their political circumstances and the scope of business reaction to its changing and often hostile political environment” (p. x).

The extent to which the various essays actually do this varies widely. Myra Wilkins’s survey of the problems that faced firms in the interwar period says little about actual perceptions, but is of great interest and illustrated with a wealth of factual detail. Feldman contributes a well documented essay on collaboration between German and Italian insurers, while Hayes discusses Degussa’s successful attempt to develop homegrown, echt Deutsch carbon black, a priority for the Reich. Jana Wustenhagen outlines the travails and strategems of Schering in Argentina, while Martin Dean examines how various “multinational” Jewish firms succeeded and failed at transferring capital abroad in the face of German exchange controls.

Wifried Feldenkirchen’s essay on Siemens in Eastern Europe touches hardly at all on what that concern’s management thought it was doing or tried to do; instead it concentrates on the external details of the German giant’s business involvements in that tumultuous region. Lars Heide’s discussion of IBM is more ambitious. While it sniffs at previous studies of IBM, including Edwin Black’s IBM and the Holocaust, in fact it offers few specific criticisms of any of them. Once again, however, Heide is more impressed by what he claims was the predominant position of the Reich vis-a-vis the American giant. IBM, he argues, “was obliged to leave its business well managed by Germans and its machines that proved crucial in the management of German warfare under the sovereign control of the German government” (p. 173).

Kurt Jacobsen’s essay on how the Great Northern Telegraph Company negotiated with the Soviet Union and Japan and, more broadly, strove to stay ahead of governments intent on controlling strategic communications throws much light on an unheralded but important corner of international business history. Because of its close connection to the much discussed topic of “appeasement,” Neil Forbes’s analysis of why most British businesses sought to work with the Nazi government is one of the book’s most interesting essays. It benefits extensively from its author’s previous work in the area. Edward Kubu, Jiri Novotny, and Jiri Sousa collaborate on a chilling, well documented account of how German businesses and the Reich worked together to swallow most major multinational businesses in Czechoslovakia after 1938, while Luciano Segreto outlines the regulation of business under Fascism in Italy.

Now for the bad news. Business and Industry in Nazi Germany, contains a final essay by Volker Berghahn on “Writing the History of Business in the Third Reich: Past Achievements and Future Directions.” His well crafted piece revisits the much debated question of “the political responsibility of German businessmen under Nazism” (p. 129). His picture of the Nazis’ relation to big business differs radically from those in the other essays in these books: He suggests that a substantial number of big business leaders, in fact, enthusiastically backed the Nazis. While he continues to credit Henry Turner’s claims to have disproved what might termed the old “Nuremburg” theory of the Nazi seizure of power (p. 136), Berghahn bluntly declares that Hitler “obtained the support of both the officer corps and business soon after his seizure of power” (p. 142). More intriguingly, he goes on to propose that by “1935-1936″ not only were the Jewish business leaders gone, but that “an older generation of non-Jewish entrepreneurs and senior managers,” who might have been hostile to the regime, were headed into “retirement” or “inner immigration.” Their replacements were, in many cases, he suggests, men who “envisioned the future of the world in terms of blocs or empires” and whose “dynamism and energy, as Lutz Schwerin von Krosigk has put it, ‘degenerated into brutality and who would not be impressed by anything'” (p. 143). While he does wonder whether some wartime remarks by G?ring might have raised the blood pressure of this new generation of big business leaders, his discussion points to a major qualification of conventional wisdom.

A book review can hardly pursue the far-reaching implications of Berghahn’s proposals. About all one can say is that reopening the question of the “mentalities” (the debt to Annales is acknowledged) of German big business is sure to lead in interesting directions. Given the plain evidence of support from the whole German right, including big business circles, for the German government’s disastrous scheme for a customs union with Austria in 1931, it cannot be very long before someone notices that musings about “blocs and empires” long antedated the crisis Berghahn perceives in 1935-36.[1] It may be that Friedrich Meinecke’s old suggestion (revived by Dirk Stegmann) that “Pan-Germanism” constituted a critical historical link between pre-World War I and post-World War I German expansionism was right all along.[2] At the dawn of the twenty-first century, however, it important to note that studies of perceptions of “political risk” or how the Nazis related to big business can now incorporate less elusive forms of evidence. It is now widely recognized that stock prices incorporate a great deal of information about economics and politics. While the thin, restricted German stock markets of the later thirties may throw up barriers, it may be possible to check some of the claims advanced in these books with the methodology of event analysis. I am skeptical, for example, that most German bankers really felt themselves to be trudging through the Valley of the Shadow of Death under the Nazis. The Night of the Long Knives, after all, eliminated or cowed the noisiest parts of the Party’s “populist” wing. In addition, the regime duly reprivatized the banks that in 1931 had fallen like rotten apples into state hands, while prospects of profits from “Aryanization” (documented not least by James himself) were beguiling financiers. But James might be right — and if he is, it should probably show in the stock prices of banks relative to other sectors of big business, since his argument implies a large effect unique to finance, not business as a whole. Until the work is done, we will not know for sure, but readers of Berghahn’s essay will not, perhaps, be surprised to learn that the behavior of the German stock market during the Nazis seizure of power does not appear to be consistent with the Turner thesis that underpins key claims advanced by many essays in these two books.[3] Notes: 1. On the pressure for expansion in the 1931 crisis, see especially Thomas Ferguson and Peter Temin, “Made in Germany: The German Currency Crisis of July 1931,” in Research in Economic History 21 (2003): 1-53.

2. See the discussion in Dirk Stegmann, “Zum Verhaeltnis Von Grossindustrie und Nationalsozialismus, 1930-1933,” Archiv fuer Sozialgeschichte 13 (1973): 402-03.

3. Thomas Ferguson and Joachim Voth, “Betting on Hitler: The Value of Political Connections in Nazi Germany,” London: Center for Economic Policy Research, 2005, Discussion Paper 5021. A revised version is nearing completion.

Thomas Ferguson is Professor of Political Science at the University of Massachusetts, Boston. His publications include Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Political Systems (University of Chicago Press, 1995).

Subject(s):Economic Planning and Policy
Geographic Area(s):Europe
Time Period(s):20th Century: Pre WWII

Business and Industry in Nazi Germany

Author(s):Kobrak, Christopher
Hansen, Per H.
Nicosia, Francis R.
Huener, Jonathan
Reviewer(s):Ferguson, Thomas

Published by EH.NET (April 2006)

?

Christopher Kobrak and Per H. Hansen, editors, European Business, Dictatorship, and Political Risk, 1920-1945. New York: Berghahn Books, 2004. xiv + 261 pp. $60 (hardback), ISBN: 1-57181-629-1

and

Francis R. Nicosia and Jonathan Huener, editors, Business and Industry in Nazi Germany. New York: Berghahn Books, 2004. viii + 211 pp. $25 (paperback), ISBN: 1-57181-654-2.

Reviewed for EH.NET by Thomas Ferguson, Department of Political Science, University of Massachusetts, Boston.

There is a mix of both good news and bad news to report about these two works, which are natural complements and can hardly fail to interest many readers.

First the good news. Business and Industry in Nazi Germany contains six essays by some of the best known historians working in the area. Gerald Feldman’s opening essay, “Financial Institutions in Nazi Germany: Reluctant or Willing Collaborators?” draws on his earlier studies of German banks and insurance companies. As before, he is highly critical of analysts whom he believes over-emphasize alignments between the Nazis and big business. This time, however, near the end of his essay, he strikes an oddly discordant note: “When one digs deeply enough, one discovers that financial institutions were part of the network of governmental and private institutions engaged in Germany’s imperial and racial goals” (p.33). This is eerily similar to Fritz Fischer’s basic point.

Harold James departs from roughly the same premises as Feldman. But he does not perceive much “higher unity” between the Nazis and bankers. Instead, his elegantly written study portrays the Third Reich’s money men as glumly anticipating an eventual triumph of the Nazi Party’s “populist wing”: “In conscious or unconscious calculations of how adaptation to the ‘New Germany’ would affect the financial and social standing of bankers, most financiers could only come to the conclusion that whatever happened, they were bound to lose as representatives of a world and a style of business that the new regime had declared to be obsolete and discredited” (p. 61).

Peter Hayes’s brief but fluently written essay makes similar points. He compares I.G. Farben and Degussa, on which he has written separate full length studies. While he is clear that neither scrupled at profiting from the Holocaust and acknowledges personal “inadequacies” of the two concerns’ leaders, he asserts that “well before … 1937″ Nazi dominance left businesses “almost incapable of asserting their own interests against those of the state” (p. 70).

Michael Thad Allen contributes a striking essay on the SS’s organization of concentration camps. In contrast to analysts who have seen theses ventures as driven by a search for profit, he disparages purely “business” motivations in favor of more ideological considerations. But he is explicit that the explosive growth in the use of slave laborers by German corporations came at the instigation of the companies, not the SS, as employers felt increasingly squeezed by war time full employment pressures. His conclusion is provocative indeed and merits a longer look by comparative historians of slavery and serfdom, who have for decades debated the economic efficiency of violence and brutality. Mass murder, he argues, was essential to the emerging system of wartime German labor control: “Slavery was directly tied to the Holocaust and could not have functioned without the constant influx and ‘liquidation’ of prisoners” (p. 99).

The final case study is by Simon Reich. He considers the relation between the Nazi regime and foreign-owned corporations, in particular, the Ford Motor Co. He relates his experiences as an advisor to the American auto concern, when in response to several lawsuits filed in the 1990s, it sought to pin down its responsibility for actions of its German subsidiary after the Nazis came to power and, especially, during World War II. In the spirit of work he published before he went to work for Ford, Reich argues that the concern was no more than a secondary player in the German auto industry and was not perceived by the Nazis as a “German” company. As a consequence, before the war the regime actively discriminated against the company. Once the U.S. entered the war, he claims, Ford’s German executives ran the company in the interests of Germany, without direction from Detroit, so that Ford USA could not reasonably be held responsible for the sometimes appalling practices of its subsidiary.

The viewpoint of European Business, Dictatorship, and Political Risk is more panoramic. Consciously borrowing from the rhetoric of contemporary finance, it aims to explore how firms in the inter-war period dealt with “political risk.” The introduction, by the editors and Christopher Kopper, explains that the essays take as “their starting point the perceptions of business people about their political circumstances and the scope of business reaction to its changing and often hostile political environment” (p. x).

The extent to which the various essays actually do this varies widely. Myra Wilkins’s survey of the problems that faced firms in the interwar period says little about actual perceptions, but is of great interest and illustrated with a wealth of factual detail. Feldman contributes a well documented essay on collaboration between German and Italian insurers, while Hayes discusses Degussa’s successful attempt to develop homegrown, echt Deutsch carbon black, a priority for the Reich. Jana Wustenhagen outlines the travails and strategems of Schering in Argentina, while Martin Dean examines how various “multinational” Jewish firms succeeded and failed at transferring capital abroad in the face of German exchange controls.

Wifried Feldenkirchen’s essay on Siemens in Eastern Europe touches hardly at all on what that concern’s management thought it was doing or tried to do; instead it concentrates on the external details of the German giant’s business involvements in that tumultuous region. Lars Heide’s discussion of IBM is more ambitious. While it sniffs at previous studies of IBM, including Edwin Black’s IBM and the Holocaust, in fact it offers few specific criticisms of any of them. Once again, however, Heide is more impressed by what he claims was the predominant position of the Reich vis-a-vis the American giant. IBM, he argues, “was obliged to leave its business well managed by Germans and its machines that proved crucial in the management of German warfare under the sovereign control of the German government” (p. 173).

Kurt Jacobsen’s essay on how the Great Northern Telegraph Company negotiated with the Soviet Union and Japan and, more broadly, strove to stay ahead of governments intent on controlling strategic communications throws much light on an unheralded but important corner of international business history. Because of its close connection to the much discussed topic of “appeasement,” Neil Forbes’s analysis of why most British businesses sought to work with the Nazi government is one of the book’s most interesting essays. It benefits extensively from its author’s previous work in the area. Edward Kubu, Jiri Novotny, and Jiri Sousa collaborate on a chilling, well documented account of how German businesses and the Reich worked together to swallow most major multinational businesses in Czechoslovakia after 1938, while Luciano Segreto outlines the regulation of business under Fascism in Italy.

Now for the bad news. Business and Industry in Nazi Germany, contains a final essay by Volker Berghahn on “Writing the History of Business in the Third Reich: Past Achievements and Future Directions.” His well crafted piece revisits the much debated question of “the political responsibility of German businessmen under Nazism” (p. 129). His picture of the Nazis’ relation to big business differs radically from those in the other essays in these books: He suggests that a substantial number of big business leaders, in fact, enthusiastically backed the Nazis. While he continues to credit Henry Turner’s claims to have disproved what might termed the old “Nuremburg” theory of the Nazi seizure of power (p. 136), Berghahn bluntly declares that Hitler “obtained the support of both the officer corps and business soon after his seizure of power” (p. 142). More intriguingly, he goes on to propose that by “1935-1936″ not only were the Jewish business leaders gone, but that “an older generation of non-Jewish entrepreneurs and senior managers,” who might have been hostile to the regime, were headed into “retirement” or “inner immigration.” Their replacements were, in many cases, he suggests, men who “envisioned the future of the world in terms of blocs or empires” and whose “dynamism and energy, as Lutz Schwerin von Krosigk has put it, ‘degenerated into brutality and who would not be impressed by anything'” (p. 143). While he does wonder whether some wartime remarks by G?ring might have raised the blood pressure of this new generation of big business leaders, his discussion points to a major qualification of conventional wisdom.

A book review can hardly pursue the far-reaching implications of Berghahn’s proposals. About all one can say is that reopening the question of the “mentalities” (the debt to Annales is acknowledged) of German big business is sure to lead in interesting directions. Given the plain evidence of support from the whole German right, including big business circles, for the German government’s disastrous scheme for a customs union with Austria in 1931, it cannot be very long before someone notices that musings about “blocs and empires” long antedated the crisis Berghahn perceives in 1935-36.[1] It may be that Friedrich Meinecke’s old suggestion (revived by Dirk Stegmann) that “Pan-Germanism” constituted a critical historical link between pre-World War I and post-World War I German expansionism was right all along.[2] At the dawn of the twenty-first century, however, it important to note that studies of perceptions of “political risk” or how the Nazis related to big business can now incorporate less elusive forms of evidence. It is now widely recognized that stock prices incorporate a great deal of information about economics and politics. While the thin, restricted German stock markets of the later thirties may throw up barriers, it may be possible to check some of the claims advanced in these books with the methodology of event analysis. I am skeptical, for example, that most German bankers really felt themselves to be trudging through the Valley of the Shadow of Death under the Nazis. The Night of the Long Knives, after all, eliminated or cowed the noisiest parts of the Party’s “populist” wing. In addition, the regime duly reprivatized the banks that in 1931 had fallen like rotten apples into state hands, while prospects of profits from “Aryanization” (documented not least by James himself) were beguiling financiers. But James might be right — and if he is, it should probably show in the stock prices of banks relative to other sectors of big business, since his argument implies a large effect unique to finance, not business as a whole. Until the work is done, we will not know for sure, but readers of Berghahn’s essay will not, perhaps, be surprised to learn that the behavior of the German stock market during the Nazis seizure of power does not appear to be consistent with the Turner thesis that underpins key claims advanced by many essays in these two books.[3] Notes: 1. On the pressure for expansion in the 1931 crisis, see especially Thomas Ferguson and Peter Temin, “Made in Germany: The German Currency Crisis of July 1931,” in Research in Economic History 21 (2003): 1-53.

2. See the discussion in Dirk Stegmann, “Zum Verhaeltnis Von Grossindustrie und Nationalsozialismus, 1930-1933,” Archiv fuer Sozialgeschichte 13 (1973): 402-03.

3. Thomas Ferguson and Joachim Voth, “Betting on Hitler: The Value of Political Connections in Nazi Germany,” London: Center for Economic Policy Research, 2005, Discussion Paper 5021. A revised version is nearing completion.

Thomas Ferguson is Professor of Political Science at the University of Massachusetts, Boston. His publications include Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Political Systems (University of Chicago Press, 1995).

Subject(s):Economic Planning and Policy
Geographic Area(s):Europe
Time Period(s):20th Century: Pre WWII

Manpower in Economic Growth: The American Record since 1800

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

Classic Reviews in Economic History

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

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

Manpower after Forty Years

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

References:

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

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

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

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

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

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

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

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

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

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

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

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

The Great Meadow: Farmers and the Land in Colonial Concord

Author(s):Donahue, Brian
Reviewer(s):Rothenberg, Winifred Barr

Published by EH.NET (December 2005)

Brian Donahue, The Great Meadow: Farmers and the Land in Colonial Concord. New Haven: Yale University Press, 2004. xx + 311 pp. $35 (cloth), ISBN: 0-300-09751-4.

Reviewed for EH.NET by Winifred Barr Rothenberg, Department of Economics, Tufts University.

One bleak day in early spring I saw my neighbor, desperately ill at the time, standing barefoot in his small vegetable garden — not a garden yet, but the soil had been turned over and he was pressing his bare feet deep into the cold, damp clods. “I draw strength from the earth,” he said. One cannot read Brian Donahue’s splendid book without believing that he too — a forester, a shepherd, and a farmer for many years before becoming an academic — draws upon a deeply personal (dare I say spiritual?) bond with the earth and all that grows therein.

Donahue, Associate Professor of Environmental History at Brandeis University, begins his book by inviting us to walk with him around this lovely town, across the fields, over its uplands, through the woods, and down to its two sluggish rivers. As we walk he peels off the layers of time. The first to be removed is Concord Present, then Thoreau’s Concord, then Colonial Concord, then Musketaquid — the Indians’ Concord — until he is down at last to the paleo-geological past that he reads in the floodplains, glacial outwash, glacial till, meltwater ponds, and spongy meadows left behind by the retreating ice. By the end of his book one has learned to accept his ecological determinism: the explanation of much of Concord’s — perhaps of New England’s — history is vouchsafed to the few who, like Donahue, can read this palimpsest.

As we make our way up out of the Ice Age and into the historical past, The Great Meadow becomes a paean to a vanished State of Nature. There is lyric poetry in the prose — “the forest soaked into the look, the feel, and even the flavor of this world — into its shoe leather, cider barrels, huckleberry puddings, and the plain color of its everyday clothes” — but it is not sentimental. The evidentiary base is rock-solid, built upon a meticulous reading of soil analyses, probates, tax valuations, town histories, account books, architectural drawings, biographies, genealogies, GIS three-dimensional mappings, and, above all, land deeds which have been exploited here to the fullest. The careful use of deeds has allowed him to follow the inheriting, buying, selling, partitioning, bequeathing, leasing, improving, and abandoning of the lands of seven of the founding families over a period of close to two hundred years. It is a work of high scholarship. It is not, however, as will be discussed below, a history of colonial Concord. Nor does it claim to be.

The colonists who settled upon this iconic place have fascinated generations of historians. In many respects, colonial Concord and communities like it have been the prism through which early American history has been understood. Puritan discipline, enthusiastic revivals, town government, material culture, paper money, provincial taxation, local exchange, long-distance trade, living standards, credit, debt, Revolution, Shays’ Rebellion, early manufacturing in general and clock-making in particular — these things had all been played out on Concord’s stage, but in Donahue’s book they have only a walk-on role, if any role at all. In terms of the useful categories of Annales historiography, this is histoire structurelle, what Braudel called ‘the stagnant layer of history.’ Events — save for the First and Second Divisions of the common – are barely perceptible here.

And that is as it should be: The Great Meadow tells its story through changes in the land, giving a new meaning to ‘history from the bottom up,’ in which the ‘bottom’ is not the crowd of working poor but the forests, grasses, and plants which Donahue knows by name (and Latin name); the marshes, ponds, streams, and rivers of which he knows the rhythms of ebb and flow; the rocks and ungenerous soil of pulverized granite which broke as many hearts as plowshares. Above all, Concord’s agriculture was ‘bottom’d’ on its meadows until well into the nineteenth century.

Between 1786 and 1801, county tax rates on meadow rose 32 percent to become the most highly taxed land use, while the tax rate on tillage acres fell 14 percent. When I first stumbled upon these numbers in my own research I interpreted the relative downgrading of tillage in tax valuations as evidence of the retreat of grain agriculture in Massachusetts. But Donahue tells us that the switch from grains to hay, from tillage to meadow did not signal a retreat. Meadow was the bedrock of soil fertility in Concord. Because crop rotation was not practiced in Concord, nor were nitrogen-fixing clover and turnips used to restore the fertility of the fragile soil, it depended upon manure which in turn depended upon the quality of meadow hay that maintained it. Additional nutrients leaking from higher up in the system were carried by the waterways that ran through and alongside spongy lowland meadows, including effluent from barnyards and runoff drained from the ditches that had been laid out to run downhill between strips in the common-fields. In this profoundly circular process, cattle, horses, and sheep, as producers of manure, were stabled early against the winters, requiring two to three times more hay than English livestock. The entire ecology of Concord’s agriculture was oriented, to a much greater extent than in England, around the preservation of meadows.

The early winter cold forced another adaptation that seriously undermined the commons idea. ‘Common of shack’ — the practice of letting the cattle and sheep onto harvested fields to forage on the rowen and the gleanings and at the same time to manure the soil — had been central to the regulation and control of open fields in England, for it imposed the requirement that all cottagers with strips in the arable must plant and harvest the same crop at the same time so that all cattle could enter upon the planting fields on the same day. But in New England the early arrival of cold weather forced the cattle indoors and put an end to the practice.

Winter was only one in a series of challenges that precipitated the Second Division of the undivided common in 1653, only seventeen years after first settlement. The cut-off of Puritan immigration in 1642 had interrupted the inflow of labor, capital, and specie, and threatened the Bay Colony’s West Indian trade; the winter of 1641/2 was the bitterest in New England’s history; the appearance of wheat rust — a mold or fungus — put an end to wheat cultivation in eastern Massachusetts; and population doubling every fifty years pressed upon the Malthusian frontier.

Concord dealt with these exigencies by choosing decisively to “turn away” from the common system. Donahue puts it this way:

“As the second generation came of age, the proprietors of Concord (like those of many other New England towns at about the same time) … decided to distribute nearly all of their common land to themselves and their heirs in private lots…. By dividing their commons among themselves the proprietors assured that this valuable resource would not be diluted as newcomers arrived in town and placed in their own hands the means to arrange inheritances for their progeny” (p. 101).

In so doing, says Donahue, the proprietors were “driven by a desire for equity in the way land was distributed” (p. 107).

By judging ‘equitable’ the manner in which the commons was divided among proprietors to the exclusion of newcomers, Donahue joins other colonial historians who stand accused by John Frederic Martin, of having “neglected the contentious, competitive, and unfair qualities of town life,” among which was the emergence of a social hierarchy each rung of which — inhabitant, sojourner, resident, commoner, voter, church member, freeholder, householder, townsman, shareholder, taxpayer, tenant — carried a different mix of rights and responsibilities. The sharpest distinctions were to be found in the commonage rights of proprietors and everyone else. “The group being maintained was shareholders, not town-dwellers; the purpose was to control rights, not residency.”[1]

In all fairness to Donahue, Concord was not one of the 63 entrepreneurial/commercial towns in Martin’s study sample. But if Concord was very different Martin would say of it what Stephen Innes said of Dedham: “When viewed in the larger historical setting, it was not Springfield’s commercialism but rather Dedham’s [read Concord’s] corporatism that appears anomalous.”[2]

By the mid-eighteenth century, the consequences of the choices made by Concord’s proprietors were becoming clear. Whereas the yeomanry in England had brought about revolutionary increases in agricultural productivity growth by the late seventeenth/early eighteenth century,[3] the yeomanry in Concord bumped up against what Donahue calls “interlocking ecological limits” (p. 218). “There was little slack left from which to … sustain economic growth of any kind” (p. 196).

What were those limits? Not crop land, surely, for by 1771, one-third of Concord’s land lay still in forest. But — and here Donahue’s intimate knowledge and unique perspective is revelatory — there was no point cutting forests to expand plowlands if there wasn’t enough dung to build soil or enough labor to spread it. It required “about two tons of hay for every acre tilled in order to support enough livestock to manure the corn properly” (p. 210), and twenty acres of meadow for every grazing animal, while the size of meadows and the quality of meadow grass was constrained by the regulated flow of water, which in turn required labor to ditch, drain, dike, and dam the streams. Where would the labor come from? Of the seven founding families his study has followed, only one son remained in Concord by the fifth generation.

In his Epilogue, Donahue ventures into the nineteenth century when Concord confronted the environmental depredations of what he calls ‘agricultural capitalism.’ Tax valuations had begun in 1801 to count a new category of land use called ‘unimproved.’ What is this? asks Donahue. Surely, one assumes, it is virgin land not yet broken to the plow, is it not? No, says Donahue, it is land too much broken, dis-improved, indeed exhausted by specialization and intensive farming for the market. Economic growth has been bought at the expense of ecological disarray. Here he mourns, and we, too moved to argue, mourn with him.

Notes:

1. John Frederick Martin, Profits in the Wilderness: Entrepreneurship and the Founding of New England Towns in the Seventeenth Century (Chapel Hill: University of North Caroline Press, 1991) p. 228.

2. Stephen Innes, Labor in a New Land: Economy and Society in Seventeenth Century Springfield (Princeton: Princeton University Press, 1983), p. 182.

3. Robert C. Allen, Enclosure and the Yeoman: The Agricultural Development of the South Midlands (Oxford: Oxford University Press, 1992).

Winifred Barr Rothenberg is Associate Professor in the Department of Economics of Tufts University, Medford, MA. She is the author of From Market-Places to a Market Economy: The Transformation of Rural Massachusetts, 1750-1850 (Chicago: University of Chicago Press, 1992).

Subject(s):Historical Geography
Geographic Area(s):North America
Time Period(s):18th Century

Japan, China, and the Growth of the Asian International Economy, 1850-1949

Author(s):Sugihara, Kaoru
Reviewer(s):Lee, Ming-Hsuan

Published by EH.NET (December 2005)

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Kaoru Sugihara, editor, Japan, China, and the Growth of the Asian International Economy, 1850-1949. New York: Oxford University Press, 2005. xv + 295 pp. $140 (cloth), ISBN: 0-19-829271-6.

Reviewed for EH.NET by Ming-Hsuan Lee, Department of Economics, Boston University.

Modern Asian economic history traditionally has been written in terms of the West’s impact on Asia and Asia’s response to it. By contrast the history of international contacts among Asian countries has not been considered as fundamental to the understanding of the region’s economic modernization. While the institutional frameworks introduced or enforced by Western powers in Asia did provide the basis for economic modernization, the process of realizing this goal depended extensively on interactions across Asian countries. Japan, China, and the Growth of the Asian International Economy makes a useful contribution by examining the history of intraregional trade, capital mobility, and migration within East Asia as factors that determined the course of the region’s economic development.

This book consists of an introduction by the editor and ten essays that are divided into four parts. In the introduction, the editor, Sugihara, recognizes that the impact of the West was a major influence on East Asia’s integration into the world economy, but he argues further that it is essential to recognize the central importance of intra-Asian regional dynamics in accounting for the economic history of this region. Part I looks at the history of interactions between the Chinese and Japanese cotton textile industries and the effects of these interactions. In chapter 2, Furuta traces the ways in which British cotton textiles were distributed across East Asian countries by Chinese merchants through their East Asia trading network centered in Shanghai, and concludes that Kobe, a major Japanese port, had become part of the Shanghai network. In chapter 3, Kagotani examines further the relationship between the Chinese merchants’ networks and the growth and decline of the Japanese cotton industry from 1890 to 1941. These two chapters establish the importance of networks as a key institution for modern Asian economic development. In chapter 4, Abe traces out how, in response to Chinese competition, the Japanese cotton industry between 1914 and 1930 sought to upgrade its production by pursuing cost-cutting technologies and diversifying its products.

Part II examines institutional change in China resulting from deeper involvement in international trade. In chapter 5, Kuroda argues that the adoption of the Gold Standard in India and Japan from the end of the nineteenth century to the early twentieth century made it more difficult for China to engage in international trade while preserving its old monetary regime and thus became an important force pushing China’s monetary reform. In chapter 6, Goto-Shibata reinterprets the boycott movements against Japanese and British products in China as a tool for developing China’s national industries. In chapter 7, Kubo relates the development of China’s tariff policy to the international environment China faced and argues that tariff policy was a factor that helped China to industrialize.

Part III discusses patterns of China’s internal integration and relationships with the international economy. In chapter 8, Lin gives an overview of the extent to which the Chinese economy was dualistic and how this dualism was affected by China’s fluctuating international relations as seen in foreign trade. In chapter 9, Kose uses statistics of foreign trade and internal trade from 1914 to 1930 to study the progress of economic developments in eight different regions of China.

Part IV looks at China’s economic relations with Taiwan and Southeast Asia, especially the diffusion of institutions and network resources. In chapter 10, Lin examines the trade between Taiwan and China between 1895 and 1937 and argues that the trade provided Taiwanese merchants with important opportunities to accumulate foreign trade experience. In chapter 11, Sugihara studies the patterns of Chinese migration to Southeast Asia from 1866 to 1939 and highlights the importance of networks in facilitating migration.

Each of the ten essays is well written and provides a concrete example on how interactions between Asian countries affected various aspects of economic development of this region. Generally, the authors are able to cross the border of “nationality” and recognize both strengths and weaknesses of the paths toward economic development taken by various countries. On the other hand, none of the authors employ economic theory or econometric tests in a formal sense and consequently the relevant incentives or determinants underlying development are largely unexamined, and the explanatory power of particular factors (including the West’s impacts and the intra-Asia interactions) is not measured.

Criticisms aside, Japan, China and the Growth of the Asian International Economy is an important corrective to traditional accounts in its clear picture of how and why interactions between East Asian economies shaped the region’s economic development.

Ming-Hsuan Lee is a graduate student in economics at Boston University. She is currently writing a dissertation on the impact of economic development on gender differences in schooling in China in the late twentieth century.

Subject(s):International and Domestic Trade and Relations
Geographic Area(s):Asia
Time Period(s):20th Century: Pre WWII

City of Clerks: Office and Sales Workers in Philadelphia, 1870-1920

Author(s):Bjelopera, Jerome P.
Reviewer(s):Mandell, Nikki

Published by EH.NET (December 2005)

Jerome P. Bjelopera, City of Clerks: Office and Sales Workers in Philadelphia, 1870-1920. Urbana: University of Illinois Press, 2005. ix + 208 pp. $22 (paperback), ISBN: 0-252-07227-8.

Reviewed for EH.NET by Nikki Mandell, Department of History, University of Wisconsin-Whitewater.

City of Clerks examines a class of workers that is inherently difficult to study, the exploding office and sales workforce of the second industrial revolution. Jerome Bjelopera clearly understands this. His opening chapter grapples with what he calls the “clerical revolution.” This revolution encompassed the entry of women into the clerical workforce, the incomplete feminization of clerical occupations, proletarianization of clerical work in the form of increased routinization and mechanization, and diminishing opportunities for upward mobility. None of this is entirely new terrain for historians. Instead, City of Clerks seeks to move the historical conversation beyond the workplace to a consideration of clerical workers “anchor[ed] … firmly within the context of the industrial metropolis” (p. 3). Bjelopera reminds readers that the long-standing fascination with the manufacturing sector misrepresents the industrializing era: the white collar workforce grew more rapidly during the late nineteenth and early twentieth centuries than did the blue collar workforce. Thus, “understanding the work lives, residential patterns, and leisure experiences of the clerical workers between 1870 and 1920 helps us to more clearly conceptualize the maturation of the industrial order and provides insight into the initial stage of post-industrial society” (p. 7).

After the opening chapter’s national overview, City of Clerks turns to a case study of the clerical sector in Philadelphia. The author relies almost exclusively on the records of two firms, the Pierce Business School, which claimed to be the nation’s largest business school in the early decades of the twentieth century, and Strawbridge and Clothiers, one of Philadelphia’s leading department stores. Chapter 2 explores the process of finding a white collar job, opportunities for upward mobility and gendered commonalities among clerical work across the office and sales sectors. Chapter 3 pursues this theme more intently, finding that the curriculum at Pierce School “helped forge a new white-collar identity” that encompassed a gendered construction of the clerical world (p. 77).

The second half of the book turns to the clerical world outside the workplace. Chapter 4 chronicles a shift in clerical leisure activities from pre-1890s single-sex fraternal and benefit associations to post-1890s mixed-sex sports and night life, including baseball, bicycling, vaudeville, amusement parks and travel vacations. This mixed-sex leisure drew clerks into a world of middle class consumption. Chapter 5 argues that these leisure activities contributed to a gendered and racially prescribed clerical identity. In an interesting analysis of clerks’ proclivity for minstrelsy, Bjelopera concludes that clerks transferred occupational values (of loyalty, industriousness, thrift, temperance) into a personal ethic that described who they were as white middle class men and women. The final chapter follows the rise of a clerical identity into clerks’ homes and neighborhoods. Using city directories to plot residential patterns, Bjelopera finds that clerks joined an outward migration to increasingly homogeneous furnished-room districts. By 1920 experiences outside the workplace were as important in shaping clerical identity as were experiences in the office and on the sales floor.

This is a commendable effort that shines a spotlight on a feature of industrial modernization that has been neglected for too long. Readers unfamiliar with the growing literature on white collar workers will find a broadly inclusive and engaging portrait of the clerical world. Trade and services, not manufacturing, replaced agriculture as the dominant economic activity in the modern economy. This portrait of clerking life in Philadelphia is rich in detail. Accounts of typewriters’ poems, bicycle club outings and minstrel shows are particularly noteworthy, as is the author’s attention to race as an element of a white collar ethic. City of Clerks reminds us of the complex white collar world and that clerks in this new middle class were among the first to incorporate consumption into their occupational identity.

Despite this potential, City of Clerks does not live up to its promise. Although the book opens with accounts of the many fracture lines within the clerking occupations and describes clerking as an occupation in transition, succeeding chapters treat the clerical workforce as an unchanging and largely homogeneous group. The reader learns virtually nothing about differences between office and sales clerks, between in-store and traveling salesmen, between office clerks working in small offices and large pools. After noting that the “most significant growth” in white-collar occupations during the first decade of the twentieth century occurred in the professions, and that this was due to the “swelling of managerial jobs,” the book fails to address the relationship between managers and workers in the white collar world (p. 27).

This inattention to managerial-clerical relations is particularly troubling since the book relies almost exclusively on sources created by or presumably with the approval of management. City of Clerks finds that clerks “created a rich group life away from the workplace,” without questioning who shaped that group life. Stating that “[b]oth salespeople and managers were active in the same clubs formed by the Strawbridge and Clothier workforce” misses an essential point (p. 113). The evidence suggests that these club activities occurred within company (or school) welfare work programs. Recent studies demonstrate that management purposefully shaped welfare work to promote the gendered middle class work ethic that City of Clerks finds expressed in clerks’ “rich group life.” Did clerks actually imbibe this ethic? What proportion actually participated in these welfare work activities?

This is not the only area that begs for deeper inquiry and greater skepticism about the sources. The author asserts that “[i]nstead of … a clear division between male management and female workforce [there was] some degree of role blurring and gender intermingling in the office and on selling floors.” Yet, beyond men’s numerical majority, the evidence presented does more to prove gender segmentation than to support the contention that there was “role blurring and gender intermingling.” In fact, one of the strengths of City of Clerks lies in its attention to the ways in which gender segmentation shaped all facets of the clerical world.

Finally, this reader wishes that City of Clerks had explored its central thesis more thoroughly. Returning to the opening assertion that understanding the clerical world is central to understanding the “maturation of the industrial order,” this book ends with the curious statement that clerks “approximated the lives of twenty-first century Americans more closely than did their industrial-era working-class counterparts: at work they managed information; at home they were consumers. In these regards, they were postmodern in the modern age” (p. 161). This places City of Clerks among a new literature exploring the ways that consumer culture permeated all aspects of public and private life in the twentieth century. Bjelopera challenges his readers to revision the typical worker of the industrial era as an information handler with an identity grounded in consumption, not a production worker with an identity grounded in class or ethnicity. If clerking was an integral part of the emerging modern industrial order as the author asserts, then clerks were, by definition, modern not postmodern.

Nikki Mandell is the author of The Corporation as Family: The Gendering of Corporate Welfare, 1890-1930 (University of North Carolina Press, 2002). She is currently engaged in research for a case study of business women in Milwaukee, 1880-1930.

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