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Depression, War, and Cold War: Studies in Political Economy

Author(s):Higgs, Robert
Reviewer(s):Rockoff, Hugh

Published by EH.NET (July 2007)

Robert Higgs, Depression, War, and Cold War: Studies in Political Economy. New York: Oxford University Press, 2006. xv + 221 pp. $35 (cloth), ISBN: 0-19-518292-9.

Reviewed for EH.NET by Hugh Rockoff, Department of Economics, Rutgers University.

It was a great idea for Robert Higgs and Oxford University Press to publish this collection of Higgs’ papers. The volume brings together ten papers that Higgs has published over the past two decades, which reinterpret some of the key events of the twentieth century. Several of these papers appeared originally in the Journal of Economic History and Explorations in Economic History and will be familiar to economic historians. Others, however, appeared in policy journals, and economic historians may have missed them. The papers reinforce each other, offering a coherent and stimulating view of three crucial events in the twentieth century: the Great Depression, World War II, and the Cold War.

The papers are arranged in chronological order. Chapter 1, “Regime Uncertainty: Why the Great Depression Lasted So Long and Why Prosperity Resumed after the War,” argues that part of the explanation for the persistence of the Great Depression was the “regime uncertainty” created by the New Deal. Investment was depressed not by the decline in income (the old multiplier-accelerator model), high real interest rates, or other conventional economic determinants of investment, but rather because of “a pervasive uncertainty among investors about the security of their property rights in their capital and its prospective returns” (p. 5). Potential investors were afraid to commit their funds because they did not know what Roosevelt and the New Dealers would do next. Low levels of investment in turn depressed the economy as a whole. This is not a new argument. Joseph Schumpeter (1962, 64-5), as Higgs notes, and other prominent economists had made the same point. Higgs, however, argues the point in detail, and brings in forms of evidence, such as opinion polls, that economic historians often ignore. He makes a strong case.

I find that papers by Higgs always lead to more questions. This is not a criticism, but rather an indication they address important issues. Terms like “regime uncertainty” and “security of private property” cover a lot of ground. Were investors afraid mainly of higher corporate taxes? Increased union power? Minimum wage laws? Social Security? Abandonment of the gold standard? Outright nationalization? Higgs quotes Elliot Brownlee (1996) to the effect that it was tax policy that most concerned business. Higgs, however, seems to be neutral on what if any policies contributed the most to the low level of investment. Indeed, his argument seems to be that it was all of these things together that contributed to the new regime, and that trying to parse out the effect of particular New Deal policies would be counterproductive. Before giving up on the Depression era as a source of information about how policies affect the economy, however, it makes sense to me to probe further. We want to know which, if any, policies are likely to have substantial unintended consequences for investment. Must we simply put the Depression era aside?

One of the pieces of evidence that Higgs uses to make this point is a graph of relative yields. He shows that the yields on long-term bonds spiked relative to yields on short-term bonds (for a given rating) when Roosevelt’s anti-business rhetoric was reaching a peak. This graph does add support to his argument, but I am skeptical that it is as decisive as Higgs suggests. The following simple table shows the yields on BAA corporates, AAA corporates, and long-term government bonds. The data are from The yields on the private sector bonds fell during the New Deal. And the spreads between private and public yields, which could be interpreted as the premiums for holding privately issued securities, also fell. Apparently, economic contractions were the really scary things for investors in the bond market. To be sure, there are many possible interpretations of this data. The anti-business rhetoric and actions of the Roosevelt administration may have depressed the stock market and accelerated the flight to safety that landed investors in the private bond market. Large-scale government intervention could even have been construed as a good thing for debt issued by large firms if investors thought that these firms had now become too big to fail. My point is simply that threats to property rights are difficult to tease out of the financial data. I doubt that the debate that Higgs has started on this issue is over.

Table 1. Interest Rates, 1929-1939


BAA yield


AAA yield


Bond yield


Long-term bond


Long-term bond


In chapter 3, “Wartime Prosperity? A Reassessment of the U.S. Economy in the 1940s,” Higgs challenges the notion that in World War II a combination of high government spending and extensive government intervention in the form of price controls, rationing, and so on rescued the country from the Depression and allowed Americans to enjoy guns and butter at the same time. Higgs has a good point. Conventional economic time series point to the war economy as a kind of economic heaven on earth. In 1944 the standard measure of unemployment was 1.2 percent of the labor force, inflation was a reasonable 2.21 percent (the GDP deflator), and real GDP per capita was at an all time high, a level that would not be reached again until 1953 (Millennial Edition of Historical Statistics). Clearly, the numbers suggest that the policy of massive government spending and government controls, including price controls, had worked wonders. Higgs rightly and convincingly attacks this view. The statistical case for economic heaven on earth is created by comparing apples with oranges. Unemployment rates were low, Higgs insists, in part because young men were drafted into the armed forces, price indexes are misleading because of hidden price increases and other distortions produced by controls, and real GDP per capita is misleading because, among other things, it treats an intermediate good, munitions, as final product. Every undergraduate and graduate student of economics (and not a few of their professors) would benefit from reading Higgs’ essay (and the related essays in Chapters 4 and 5). They would learn that economists need to think about the meaning of economic statistics. They might even learn that knowing some economic history can help them understand the time series they use.

Higgs’ argument still leaves open the question of why so many contemporaries, and so many historians, including historians who lived through the period, consider it a prosperous period. One issue that deserves more attention, I believe, is the role of savings. Americans built up large holdings of liquid assets during the war. These were a source of utility for their holders, even if expectations of postwar deflation led people to overestimate their ultimate value. Workers may have viewed jobs in defense plants, moreover, as a way of acquiring skills that would be valuable after the war, as an investment in human capital. (But see Casey Mulligan (1998) for the argument that conventional economic forces cannot explain high wartime work effort.) Even enduring the hardships of moving to a war production center ? and Higgs rightly emphasizes the costs of moving to and living in war production centers ? may have been viewed as an investment that would pay dividends after the war.

Another question raised in this essay concerns Higgs’ claim that we should exclude military production from GDP on the grounds that it is an intermediate good that contributes nothing directly to utility. This is true for some people; I suspect it true for Higgs. It is at least possible, however, for people to draw utility from public expenditures: the Space Program comes to mind. One can imagine people taking satisfaction in World War II from knowing that they were forging the tools of victory over Germany and Japan. Surely learning about the Liberation of Paris, and feeling that they had contributed if only by working in a war plant, meant something to Americans of that generation. Perhaps this is why Simon Kuznets (1945), who generally favored excluding defense spending from GDP on the grounds that it was an intermediate good, argued that in a period such as World War II when winning the war was one of the primary “end purposes” of economic life, munitions production should be included in GDP.

The theme of measurement error, and the consequences of misinterpreting economic data, is continued in Chapter 4, “Wartime Socialization of Investment: A Reassessment of U.S. Capital Formation in the 1940s.” Here Higgs takes issue with the estimates of government owned privately operated capital made famous by Robert J. Gordon (1969). Gordon argued that adding government financed but privately operated capital created during the war to standard estimates of total capital helped explain what appeared to be an otherwise unexplainable increase in total factor productivity. Higgs’ point is that wartime capital was subject to very high rates of depreciation, rates that exceeded accounting allowances. Chapter 5, “From Central Planning to the Market: The American Transition, 1945-47,” once again takes up the issue of what GDP measures. Official figures show real GDP per capita falling precipitously from 1945 to 1946. But Americans didn’t see 1946 as a return to the Great Depression. Economic historians can try to adjust the GDP figures. Alternatively, they can simply say that people saw 1946 for what it was, a year of rapid transition to postwar economic prosperity.

Altogether, Higgs mounts a powerful challenge to conventional economic wisdom regarding the accomplishments of the Roosevelt administration during both the New Deal and World War II.

Another major theme is the enormous cost of the Cold War and the enormous waste in military spending programs associated with it. Economic historians, Higgs claims, have not paid sufficient attention to the Cold War. Higgs has made a good start on filling the gap. In Chapter 2, “Private Profit, Public Risk: Institutional Antecedents of the Modern Military Procurement System in the Rearmament Program of 1940-41,” Higgs shows how the military went from competitive bidding to negotiated contracts in which the government assumed most of the risk in the summer of 1940, and never looked back. Chapter 6, “The Cold War Economy: Opportunity Costs, Ideology, and the Politics of Crisis,” describes the cost of military spending during the Cold War, and shows that military spending came mainly at the expense of private sector spending not civilian government spending. Chapter 7, “Hard Coals Make Bad Law: Congressional Parochialism versus National Defense” tells the story of how the legendary Congressman Daniel Flood and other politicians forced the Department of Defense to buy anthracite coal. Some of it was shipped to Germany, a clear case of coals to Newcastle, and some ended up simply stored in the U.S. in a great heap. Chapter 8, “Airplanes the Pentagon Didn’t Want, but Congress Did,” tells a similar story about aircraft production that was kept going long after it was clear that there were more effective ways of spending defense dollars. Higgs writes well and does a good job of pointing out the underlying forces that distort defense spending. And it is not as if the lessons have been learned. The same forces are at work producing the same distortions in spending.

Chapter 9, “Profits of U.S. Defense Contractors,” shows that investing in defense contractors was very profitable over the years 1970-1989. Indeed, combining Higgs’ data with the earlier work by George Stigler and Claire Friedland (1971) leads to the conclusion that investing and holding stocks of defense contractors was a good strategy throughout the Cold War. Chapter 10 “Public Opinion: A Powerful Predictor of Defense Spending,” shows that an index derived from public opinion polls does a good job of predicting national defense spending. Higgs is justifiably cautious about this finding, and is quick to point out that public opinion was only the proximate determinant of defense spending. Ultimately, public opinion was shaped by the arguments made by politicians, experts, and the press. And, of course, public opinion may be misled by experts who claim to have special information not known to the general public, a prescient observation.

This is an important book. Economic historians, no matter their area of specialty, and no matter their ideological preconceptions, should be familiar with Higgs’ arguments. You will not learn any new econometric techniques with which to wow your friends from reading this book. You will not find any data that you can use to quickly turn out a note for a journal. You will find, however, an original and thoughtful exploration of what the great events of the twentieth century tell us about the appropriate role of the government in the economy.


Robert J. Gordon, 1969. “$45 Billion of U.S. Private Investment Has Been Mislaid” American Economic Review, Vol. 59, No. 3 (Jun.): 221-238.

Simon Kuznets, 1945. National Product in Wartime. New York, National Bureau of Economic Research.

Casey B. Mulligan, 1998. “Pecuniary Incentives to Work in the United States during World War II,” Journal of Political Economy, Vol. 106, No. 5 (Oct.): 1033-77

Joseph Schumpeter, 1962. Capitalism, Socialism and Democracy. New York: Harper Torch Books.

George Stigler and Claire Friedland, 1971. “Profits of Defense Contractors,” American Economic Review 61 (4): 692-4.

Hugh Rockoff is a professor of economics at Rutgers University and a research associate of the National Bureau of Economic Research. His paper written with Leonard Caruana, “An Elephant in the Garden: The Allies, Spain, and Oil in World War II,” is forthcoming in the European Review of Economic History.

Subject(s):Military and War
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

Europe’s Third World: The European Periphery in the Interwar Years

Author(s):Aldcroft, Derek H.
Reviewer(s):Wolf, Nikolaus

Published by EH.NET (June 2007)

Derek H. Aldcroft, Europe’s Third World: The European Periphery in the Interwar Years. Aldershot: Ashgate, 2006. xi + 217 pp. $100 (cloth), ISBN: 0-7546-0599-X.

Reviewed for EH.NET by Nikolaus Wolf, Centre for the Study of Globalisation and Regionalisation, University of Warwick.

Aldrcoft’s book is a compact and very useful survey on what we know about the economic development of the European Periphery during the interwar years. In large parts it reads like an extension of Berend and Ranki (1982) into the 1930s and like Berend and Ranki, Aldcroft refuses to present an overarching scheme or some unified model for the European Periphery. The main virtue of the book is to synthesize in a highly readable way a vast literature on the puzzling persistence of economic backwardness outside the north-western European core. Moreover, the book underlines the urgent need for further comparative research into the economic history of the Europe’s periphery.

The book is organised in nine chapters, covering thirteen European countries, namely Poland and Hungary in Central Europe, the three Baltic States, the Balkan countries of Albania, Bulgaria, Romania and Yugoslavia, and the Mediterranean countries of Turkey, Greece, Spain, and Portugal. There are many informative comparative tables on these countries, a list of references that is quite impressive (though of course incomplete: I missed for example the excellent 1997 book of Feinstein, Toniolo and Temin) given the shortness of the text, and a very good index. But the reader will not find any maps, except the one on the front cover, which is rather misleading about the geographical scope of the book. This absence of maps is understandable from a publisher’s perspective, especially because the cartography of Europe after 1914 is rather challenging, but it is hard to justify from an academic point of view. Good maps on the ethno-linguistic patchwork, on the extreme differences in natural geography, or on the presence or absence of infrastructure across the European Periphery would have been very telling about the economics of this region.

The first chapter argues for an “economic rather than a geographic” (page 3) definition of the European Periphery, encompassing those countries as peripheral which at the turn of the last century still had at least 50 percent of their population dependent on agriculture and with per capita incomes of less than 50 percent of the advanced European nations. On these grounds the exclusion of Czechoslovakia from the book is straightforward, but less so the exclusion of Italy. Here and elsewhere in the book, Aldcroft should have touched upon the massive regional differences within countries that prevailed during the interwar years. Then of course the exclusion of southern Italy but also that of Slovakia from the European Periphery would have become even more debatable, as well as the inclusion of Upper Silesia or some parts of Spain into the periphery: geography matters and I will come back to this. The chapter continues with a description of several common characteristics of these peripheral countries, which implicitly also indicates Aldcroft’s conceptual framework for economic backwardness as such. All countries showed a low land and labor productivity in agriculture, coupled with a not much higher productivity in industry, which is reflected in the dominance of primary commodities in their foreign trade. Urbanization rates were much below Western Europe and the development of infrastructure and capital in a broad sense lagged behind. A growing population was fragmented into a diversity of ethno-linguistic groups, which contributed to political instability and helped to bring about authoritarian regimes. Chapter two elaborates on this to describe the situation of Europe’s periphery prior to 1914: agriculture hampered rather than helped economic progress, human capital formation was slow and institutions poor. It also touches upon the “core-periphery” concept of development limited by economic dependency, but Aldcroft is skeptical about its general applicability (pp. 19-23).

Chapter three on “Peripheral Europe in the Interwar Setting” is the key narrative of the book as it surveys in about thirty pages the interwar experience of the thirteen countries in question. Here Aldcroft shows his outstanding command of a vast literature to tell a tale of many small and often young states fighting against a series of disasters. After a brief description of the difficult post-war reconstruction he rightly points to the fragility of the economic upturn in the late 1920s. Manufacturing production in the periphery grew, but all too often nurtured by subsidies and tariff protection, while still too slow to induce any structural change. When the Great Depression hit, it made a bad situation worse, by limiting access to markets while (often) increasing the debt burden. Aldcroft argues that the policy turn towards strategies of economic nationalism in most parts of the European Periphery during the mid-1930s was essentially without alternative (page 59). He mentions the raising share of defense spending in public expenditure due to a climate of military threat and concludes that “the international background … was scarcely the most auspicious of environments for latecomers to modern development” (page 67). It might have been rewarding to explore that international background a bit closer ? I missed some reference to the work of Eichengreen on international cooperation or more specifically to Ritschl on the international reparations problem. Instead, the following chapters (four to eight) look into some details of the country-specific experiences, before chapter nine concludes with a question mark on “development stalled?”

The country chapters give a concise and suitable introduction into the economic development of the periphery during these years. While Aldcroft acknowledges that the available data on the overall performance of the peripheral economies “should be treated with some caution” (page 172), the data show an intriguing variety in experience. The Baltic countries fared better than most of the Periphery, especially Estonia and Latvia, as did Greece or Bulgaria compared to the rest of the Balkans. Albania did ? for the little we know about it ? develop least, while Poland struggled for most of the period to catch-up to her pre-war level. This cross-country variation within the European Periphery, but also the changes over time that Aldcroft’s survey depicts in a very compact manner, suggest to this reviewer a reconsideration of the “core-periphery” debate in a way that places geography where it belongs: at the very heart of economic development.

As stated earlier, Aldcroft used an “economic rather than a geographic” (page 3) definition of the European Periphery, but he is reluctant to provide the reader with a conceptual framework to make economic sense of it. Paradoxically, geography might deliver such an economic framework. Rosenstein-Rodan’s landmark work of 1943 on economic development dealt with Eastern and South-Eastern Europe, and was elaborated in the work of Krugman and others on the “new” Economic Geography. In Krugman (1991), and in the vast literature that has developed in the wake of Krugman, a core-periphery pattern emerges from the notion that different access to markets can be self-replicating, without any recurrence to economic dependency or exploitation. Aldcroft’s whole book can be read as a history of failed development due to bad access to markets for peripheral countries, made worse by the limits that international politics imposed, especially for the new stats of Eastern Europe. A suitable example is provided by Poland between the wars. The reunification of Poland inevitably reduced the size of her accessible markets in the early 1920s as the Polish domestic market was far too small to make good for the loss of access to Russia. The implied dependency on German markets threatened the state, and Poland tried to channel her trade over the Baltic Sea ? often competing with Britain ? and improve access to “friendly” capital. When Scandinavia entered the Sterling Bloc and capital inflows dried up, Poland was left with a possibly hopeless strategy of autarchic industrialization that started in 1936. Other countries seem to fit into such a picture. Countries that fared best in the 1930s were those with (politically enabled) access to significant markets: Bulgaria and Greece that opened up to Nazi Germany; Estonia and Latvia that became de facto part of the Sterling bloc. The data on many of these states are still very poor, but there are signs for some improvement. While we still lack reliable GDP estimates for Poland, Latvia, Lithuania, or Albania, recent work on Estonia (by Jaak Velge) or Bulgaria (by Ivanov and Tooze) has started to fill some of those gaps and may help to rewrite the history of the European Periphery some day.

For the time being, Aldcroft’s book provides a highly readable and compact survey on what we currently know about the economic development of Europe’s periphery during the interwar years, linking up with the work of Berend and Ranki (1982) for the period up to 1914. It is a good starting point for further research into one of the most promising areas in European economic history.


Ivan T. Berend and Gyoergy Ranki (1982), The European Periphery and Industrialization, 1780-1914, New York: Cambridge University Press.

Charles Feinstein, Gianni Toniolo, and Peter Temin (1997), The European Economy between the Wars, Oxford: Oxford University Press.

Paul Rosenstein-Rodan (1943), “Problems of Industrialization of Eastern and South-Eastern Europe,” Economic Journal 53: 202-11.

Paul Krugman (1991), “Increasing Returns and Economic Geography,” Journal of Political Economy 99: 183-99.

Nikolaus Wolf is a Senior Research fellow at the Centre for the Study of Globalisation and Regionalisation (CSGR), University of Warwick and a Research Affiliate (International Trade) at the CEPR. He works on European economic geography in the long run. Recent publications include “Estimating Financial Integration in the Middle Ages: What Can We Learn from a TAR-model?” Journal of Economic History (2006), with Oliver Volckart and “Endowments vs. Market Potential: What Explains the Relocation of Industry after the Polish Unification in 1918?” Explorations in Economic History (2007).

Subject(s):Historical Geography
Geographic Area(s):Europe
Time Period(s):20th Century: Pre WWII

Global Migration and the World Economy: Two Centuries of Policy and Performance

Author(s):Hatton, Timothy J.
Williamson, Jeffrey G.
Reviewer(s):Keeling, Drew

Published by EH.NET (June 2007)

Timothy J. Hatton and Jeffrey G. Williamson, Global Migration and the World Economy: Two Centuries of Policy and Performance. Cambridge, MA: MIT Press, 2006. xi + 471 pp. $50 (cloth), ISBN: 0-262-08342-6.

Reviewed for EH.NET by Drew Keeling, Department of History, University of Zurich.

For decades, scholars of modern cross-border migration and its history have noted the desirability of broad comparative perspectives, as frameworks for more numerous studies of particular locales and ethnicities. In recent years, economists have led development of a “big picture” approach to the history of international migration, and Jeffrey Williamson and Timothy Hatton have been at the forefront of those economists.

Global Migration and the World Economy, the latest and most exhaustive joint study of this duo, builds on their prior work together and independently, but also breaks important new ground. For instance, most of this new book is not duplicated either in their Age of Mass Migration (1998) or in Williamson and Kevin O’Rourke’s collaboration, Globalization and History (1999).

The book is divided into four sections by time period: the nineteenth century rise of global migration, the early twentieth century fall, the late twentieth century “rise again,” and a final section examining contemporary migration trends and future alternatives. Ten of eighteen chapters concern the period since 1914, and among the book’s strengths are its many insightful comparisons between the post World War II period and the “first global century” that ended with World War I.

Using an impressive combination of original theory, statistics, and logic, and incorporating a broad array of findings from other scholars, the authors dissect the economic fundamentals underlying international mass migration. They deploy their multi-pronged analysis across the vicissitudes of the modern migratory age: through shifts in origin countries, the transformation from industry to services in destination country economies, the growing importance of asylum-seeking and illegal migration, and the emergence of policy regimes that have become more restrictive, more sophisticated, and more difficult to effectively administer. A solid historical perspective informs a thorough examination of contemporary issues: from the importance and limitations of immigration regulations in shaping the magnitudes and character of migration, to democratic disconnections between public opinion and public policies on migration, to the complex offsets and feedbacks between education and mobility, skilled and unskilled labor, and the “brain drain” and remittances. Global Migration and the World Economy is chock full of precise and salient questions, and takes at least a stab at most of them, although it is often a challenge for the reader to keep track of which among a shifting multitude of open issues is being addressed, or where it has already been addressed.

A tour de force summation of economic history literature on migration will make this an excellent reference source for future researchers. The coverage is particularly thorough on recent publications, through about 2004, which lends this volume an impressive “cutting edge” character, but also makes its conclusions tentative in a number of places. This suggests the possibility of an eventual second edition, which would also provide an opportunity to correct ambiguities in a few of the otherwise generally helpful “supply and demand” graphs or “box diagrams” and to redress overstatements such as “the labor market effect of immigration has always been the key focus in debate over immigration policy.” That remark, on page 289, is difficult to reconcile with the finding, on page 359, that “prejudice against those of a different race and culture is the most important influence on attitudes towards immigrants.”

The topical coverage is very wide, although less so than the title might suggest. Migration’s overlaps with international trade are treated more extensively, for instance, than its impacts on economic growth or its interactions with demographic and environmental factors. A more functionally descriptive title might be “the economic causes and consequences of global migration since 1815,” and in that important category this significant book has few peers, if any.

While an impressive work overall, some parts of Global Migration are problematic. The authors appropriately stress the importance of labor markets, which have been underappreciated in most of the migration historiography, but apply an incomplete corrective. They say little about labor demand, stressing labor supply instead, and attributing even more significance to factors exogenous to labor markets (such as travel costs, famines, wars, and government policies). At the core of their historical explanation for “what drove migration” is a model in which potential migrants in poorer countries are stuck in a “poverty trap” until they can find a way to “escape” it, with the help of higher wages, government subsidies, foreign remittances or lower ticket prices. Undoubtedly, relocation costs have always been a consideration in long-distance cross-border migration decisions, and were, in general, a more serious constraint the further back in time one looks, but the Hatton and Williamson model imputes to them a centrality beyond that established by their data. Rising wages across the nineteenth-century Atlantic basin lowered the real costs of travel, new travel technologies reduced travel times, the sources of Europe’s overseas emigrants shifted southward and eastward to regions more remote from New World destinations, and there was a long term secular shift towards lower average labor market “skills” amongst transatlantic migrants. All of this is consistent with a declining cost barrier to migration. But how big a role did that barrier play to begin with, at the outset of the “first global century,” e. g. circa 1830? The truth is, no one seems to really know for sure yet, including Hatton and Williamson. There is no model here explicitly assessing the relative importance of factors, including travel affordability, which distinguished stayers from leavers, there is no clear distinction between wanting to migrate and being able to migrate, and the cost data presented are quite incomplete.

The authors’ claim that “during the great transition from trickle to flood, it was the decline in steerage rates and in the time in passage that mattered most,” but there are at least two problems with this theory as they present it. Firstly, most nineteenth century overseas migrants left from Europe, most of those European emigrants moved to the United States, and the all-time peak in U.S. immigration relative to population was in the early 1850s, a time when very few migrants yet reached America on the steamships which cut oceanic travel times by two thirds or more. Steamships did not take more steerage passengers to the U.S. than sailing ships until 1865. Secondly, the supporting passage cost data presented in Global Migration do not include most available sources of such figures, such as the fares compiled by Kristian Hvidt (1971) or Arnold Kludas (1986) showing an increase in North Atlantic transit fares after 1900 that coincides with an even sharper rise to the second highest all-time peak in the U.S. immigration rate.

Hatton and Williamson deal authoritatively with the expected net benefits of migration, but have little to say about how the variance and uncertainties of such net benefits also have been important to voluntary international migrants. Uncertainties and fears ? of mass amnesty, or of millions forced to live outside the law ? have played a role in recent U.S. immigration policy debates. Long-distance transnational migration itself has long and rightly been regarded as a great gamble. Smuggled migrants crossing Arizona’s deserts or the waters between Africa and Europe clearly confront substantial risks. Risk considerations have been convincingly suggested as contributing factors to past mass migration trends, such as the record high rate of Irish emigration in the early 1850s, for example, or the strong and persistent drop in German emigration after 1890. The causal role of pitfalls and anxieties, about leaving or staying or both, receive little attention in this book, however.

The discussion on pre-World War I economic “convergence” between immigrant-sending and immigrant-receiving countries is not entirely clear-cut. Williamson’s path-breaking international real wage comparison data set, gathered in the early 1990s and focused on 1870-1913, apparently still lacks coverage of two immigrant source countries which were major contributors to the massive migration “peak” of 1900-1913, Russia and Austria-Hungary. Many of the convergence examples actually cited, moreover, are comparisons within Europe rather than between Europe and the New World. This important distinction is often blurred.

The authors nonetheless do make a persuasive case (for the nineteenth century and today) that chain migration, demographic transitions, travel costs relative to source incomes, and government policies are more significant than wage gaps in “driving” migration, but that international labor market migration, if sufficiently massive, has generally reduced global economic inequality between poor and rich countries. This migration-induced convergence has tended to come at the cost of rising inequality within richer destination countries, however. Subject to some notable distinctions and qualifications, the authors also reach similar conclusions regarding “south-to-south” migration, e.g. movement between less-developed countries.

The chapter on the early twentieth century “backlash” against immigration suffers from a conflation of attitudes and intentions (on the one hand) with effective policies (on the other). Based on a model quantifying “policy stance” rather than “policy impact,” Global Migration plausibly indicates that “labor market fundamentals,” e.g. the negative effect of immigration on wages of the native-born were, after all, more important than xenophobia or racism in producing a gradual shift in favor of restricting European migration to the New World by the early twentieth century. Contrary to the assertions in this chapter, however, (although not the immediately following chapter on the impacts of the” backlash”) the decade 1915-24 saw dramatic changes in the policies actually adopted in the U.S., the destination of most transatlantic migrants in the century before World War I.

On the eve of that war, gradually increasing exclusion of limited categories of arriving Europeans had raised the debarment rate at U.S. entry ports to a still near negligible 2%. During the war, in contrast, U.S. immigration dropped by over 75%. The 1920s quota laws which soon followed were explicitly and successfully designed to eliminate most of the influx from Southern and Eastern Europe which had accounted for a large majority of the 15 million American immigrants of 1894-1914. As the authors rightly observe, American immigration quotas were largely redundant during the Great Depression and World War II, but nonetheless did have major restrictive effects in the 1920s and 1950s. The shifting constellations of political party strategies and interest groups which enabled significant fulfillment of growing popular sentiment against immigration to the U.S. by the 1920s, but not before, was chronicled in John Higham’s Strangers in the Land half a century ago. It remains a useful study still today, but is not mentioned in Global Migration. The counterfactual question of whether ? absent the world wars, the 1930s depression, and the U.S. quotas ? immigration from Europe might have dwindled anyway after 1920, is one of many examples of provocative and interesting issues raised by the book, but not resolved, due to unavoidable space limitations.

Hatton and Williamson do not, however, duck complicated and controversial concerns about labor migration negatively affecting native employment and wage levels. In several different historical contexts, they unravel the often indirect ways this occurs (such as inflows of foreigners helping to stimulate regional relocations of natives). Nonetheless, the authors also make a convincing case that the net overall effect of cross-border migration has tended to be economically beneficial: not just for migrants but also for the countries they move out of and into.

The potential receptivity of contemporary policymakers and opinion-shapers to these judicious conclusions is another matter. The authors’ stated desire to reach that set of audiences might have been more effectively served had there been a bit more attention devoted to how labor migrants import language, culture, ideas, and so forth, along with their job skills. Migrants come for work, but then often also become neighbors, taxpayers, users of public services, parents of school children, citizens and voters, and these developments, in turn, have economic impacts well beyond the fiscal impacts (which are treated authoritatively here). The cogent final section, on contemporary policy issues, has much to recommend it, but it is questionable how much of the preceding 340 pages policy formulators might read en route to it. Complex historical insights and practical politics do not mix easily in any case, however.

A more avoidable shortcoming is the relative absence of questions addressed by migration historians. This book is loaded with material casting doubt upon non-economic historians’ often implicit assumptions that narrow slices of the migration picture suffice to illuminate the whole. But, the argument for the big picture rather than the narrow case study is never quite engaged.

Scholarship from outside of economic history but addressing migration history broadly is also given little weight. One cannot expect a book of this scope to cover all bases, but not mentioning Markus Hansen, Philip Taylor or Daniel Tichenor, for example, somewhere in four hundred pages suggests a lost opportunity. Dirk Hoerder’s nine hundred page Cultures in Contact, published in 2002, has several references to Wallerstein, but none to Williamson, or Hatton. Global Migration and the World Economy talks at some length about Heckscher, but makes no mention of Hoerder. This divergence of History and Economics is undoubtedly yielding gains from specialization, but also implies unrealized potential gains from trade. A better appreciation of the inherently interdisciplinary and historical nature of this deeply personal and interpersonal, psychological, cultural, and even biological phenomenon would enrich models and analyses built around economic aggregates. A firmer and more nuanced understanding of migration’s economic fundamentals, and a greater awareness of their central role, would enhance historians’ investigations of international human relocation.

Historians should read Global Migration and the World Economy, because sooner or later, they are likely to be called upon to more directly confront some of the crucial issues it raises. An interconnected world of demographic challenges, resource limitations and increasing climate disruptions, for example, is going to be a world where cross-border mass migration will be about much more than ethnic identities, culturally diffusing diasporas, or even elegantly contingent narratives. Even if ? as Hatton and Williamson realistically conclude ? the historical record offers no “easy solutions to the world migration problems” of the near future, it seems a reasonably safe bet that coming global migration challenges, whatever else they do, will also stoke desires for geographically broad historical insights.

Notwithstanding its unevenness, and sometimes overstated conclusions, the sweep and incisive power of this book make it likely to remain a point of reference for years to come. It will probably receive more attention within the fields of economics and economic history than outside of them, but the long run prospects for interdisciplinary “convergence” on the causes and effects of global migration are improved by this ambitious and far-reaching scholarly contribution.

Drew Keeling received his Ph.D. in History from the University of California, Berkeley in 2005, and is now an instructor in the History Department at the University of Zurich. His dissertation, “The Business of Transatlantic Migration between Europe and the USA, 1900-1914″ was awarded the 2005 Gerschenkron Prize of the Economic History Association. Two related publications are forthcoming later this year: “Costs, Risks, and Migration Networks between Europe and the United States, 1900-1914,” in Research in Maritime History, and “Transport Capacity Management and Transatlantic Migration, 1900-1914,” in Research in Economic History.

Subject(s):Living Standards, Anthropometric History, Economic Anthropology
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: WWII and post-WWII

An Economic History of Twentieth-century Europe: Economic Regimes from Laissez-faire to Globalization

Author(s):Berend, Ivan
Reviewer(s):Toniolo, Gianni

Published by EH.NET (April 2007)

Ivan Berend, An Economic History of Twentieth-century Europe: Economic Regimes from Laissez-faire to Globalization. New York: Cambridge University Press, 2006. xv + 356 pp. $35 (paperback), ISBN: 0-521-67268-6.

Reviewed for EH.NET by Gianni Toniolo, Department of Economics, Duke University and Universit? di Roma.

Before taking up his current position of Professor of History at UCLA, Ivan Berend spent most of his scholarly life in Hungary where he was, among other things, Rector of the Budapest University of Economics and President of the Hungarian Academy of Sciences. At the edge of Eastern and Western Europe, endowed with a highly educated and cosmopolitan upper middle class, Hungary provides an excellent observation point for European history. It comes as no surprise, therefore, that after writing extensively on central and eastern Europe, Berend felt the time had come for him to offer his overall view of the eventful economic history of twentieth-century Europe. To do so, he chose the textbook format (or rhetoric). The result is a relatively short book, presumably aimed at upper undergraduates but sure to be appreciated by the general public as well.

The six chapters are structured around the prevailing ideologies of the times rather than according to the traditional political or economic partitions of twentieth-century history. Thus, the first chapter deals with the pre-World War I “laissez-faire system,” the second with the decline of laissez-faire and the rise of “regulated market systems,” the third and the fourth with the fascist and socialist regimes, the fifth with the so-called mixed economy and the welfare state. The title of the final chapter is “Globalization: Return to Laissez-faire?” A strong emphasis on ideology, including the final question mark, will have an intellectual appeal to Europeans over forty while it is likely to puzzle not only most American students but also many of their Old Continent counterparts, particularly economics majors. But, indeed, meminisse juvabit (it is useful to remember) and Berend’s book will help to inoculate readers against the current loss of memory of how heavily European history has been burdened by ideology, as well as against the assumption that we are now living in a post-ideological world.

The first pages in the book deal with “the gradual transformation [of Europe] from protectionism cum bimetallism to free-trade cum gold standard” (p.11). As most scholars do, the Cobden-Chevalier Treaty of 1860 and the general adoption of gold convertibility in the 1870s are taken as the watershed between a world still imbued with mercantilist ideology and one identified with “laissez-faire.” Berend then proceeds to touch upon the rise of modern sectors (sometimes called the “second industrial revolution”), the changing position of Europe in the world and of individual countries within Europe. A mix of aggregate statistics and sectoral case studies (some of them aptly encapsulated in useful boxes) describe the rise of German economic power, the beginning of the Scandinavian catching up and the lagging behind of the eastern and southern peripheries. Among the latter, the fairly good performance of Italy is duly depicted. All this factual material is well organized and written: students will find it useful as an introduction to some of the main topics in pre-1913 European economic history. There are, however, two curiosities students are likely to have but remain unanswered. The first is the reasons why Europe’s “western offshoots” grew so much faster than Western Europe (which Berend characterizes as the core of the world economy as late as 1913). If, by the 1880s, the United States already led Western Europe (if not Britain) in aggregate productivity and per capita GDP, why was Europe unable to close the gap? The second question is: how widespread were laissez-faire practices and what impact did they have on growth? Berend acknowledges that the “laissez-faire ideology … became the Zeitgeist in the advanced countries although it remained a shallow practice” (p.13), but the second part of this statement receives little attention in the following pages. One has to wait for the chapters on the interwar period for a brief mention of the “globalization backlash” highlighted by the tariff movement of the 1880s. Little is also said about domestic economic legislation which, in several countries, retained more than just the flavor of mercantilism: regulation and red tape remained quite pervasive. And students may wonder if there is a link between the questions. The United States enjoyed more than their fair share of protectionism but domestic free trade allowed the exploitation of regional comparative advantages within a large country. It is likely that tariffs and other restrictions on international trade made the exploitation of comparative advantages more difficult in the Old Continent and students would possibly be interested in exploring how far Europe’s fragmentation goes in explaining the diverging rates in productivity growth between the two sides of the Atlantic.

A large portion of the book (three chapters) is devoted to the “regulated market system,” fascist economic dirigisme and centrally planned economies. This will possibly turn out to be the most useful and interesting part as far as students and educated laypersons are concerned, if nothing else because I know of no other comparable compact account of how policymaking everywhere, if with very different connotations, became state-centered and inward looking between 1914 and 1950. Chapter 2, dealing with the democratic countries, collapses in less than fifty pages a good standard review of 1914-1950. The “novelty” here is perhaps the emphasis on the Zeitgeist, even though one wonders whether the economy was driven by ideology, as sometimes the author seems inclined to believe, or it was the economy’s failure to shape new economic and political ideas. The chapter on the varieties of European fascisms covers also the Iberian Peninsula into the 1970s, to the fall of Franco and Salazar. The differences between the Fascist and Nazi regimes are excellently outlined. Had the author dealt more in detail with macroeconomic policies, the similarities between the running of the economy by Fascism and most democratic governments would have become more apparent. Chapter 4, on centrally planned economies, also crosses the World War II threshold to cover the period up to the fall of the Berlin wall. This way of arranging the material compacts the narrative on Eastern Europe, if at the expense of a comparison between and interaction with the market economies west of the river Elbe. Berend takes a balanced approach highlighting not only the shortcomings but also the successes of the centrally planned economies in generating rapid growth, in enhancing education and research as well as in creating a comprehensive welfare state. The reasons that eventually produced increasing inefficiency are highlighted together with the too-little-too-late reform attempts.

The last two chapters are devoted to postwar growth in Western Europe and to the apparent recent globalization challenge to Europe’s economic success. In an interesting departure from most of the recent English-language literature in the field [1], Berend strongly emphasizes the positive role played by the state in the phase of rapid catch-up growth. This is not Eichengreen’s argument about the immediate postwar advantages of coordination, drawing on the long-standing debate on the “varieties of capitalism,” but rather the sheer appreciation of the role played by state-owned companies in technology transfer, infrastructure building, and trend setting in industrial relations. Rehabilitation of the state-run enterprise in most contexts during the 1950s and 1960s is worth pursuing by economic historians provided, however, that the explanation of its early success is matched by a consistent account of its most recent failure. The last chapter, covering the 1970s to the 1990s, does not take up the challenge. This chapter is the one I find least convincing. In particular, I have three main disagreements with the treatment of the period. (i) One finds it difficult to agree with Berend that [in 1973] “the seemingly ‘endless’ prosperity [of Europe] came to an abrupt halt” (p. 280). This may possibly be true for the centrally planned economies, but Western Europe continued to catch up with the United States in GDP per capita and in output per hour worked, which around 1990 was about equal on the two sides of the Atlantic. Within-Europe convergence also continued. (ii) World-wide divergence in across-county income distribution became less rather than more polarized from the 1980s onward. (iii) The final section on Europe as a rising superpower neglects the huge debate on the reasons for the post-1995 new divergence between European and American GDP growth. On the other hand, one would definitely agree with Berend on his harsh judgment about international management of the “transition process”. The “third postwar settlement” of the twentieth century that took place after the end of the Cold War resembled more the ill-fated “first postwar settlement” than the virtuous “second” one.

When compacting into a single book such a long and eventful history as that of twentieth-century Europe, an author knows beforehand that he will not satisfy in detail any of his colleagues working in the field. I am sure that Ivan Berend nurtured no illusion in that respect. Yet, for all the things that I would have liked to have seen covered differently, this is a fascinating book commending high admiration for the breadth of the material covered (in several languages), for the clarity of presentation (a flowing prose is coupled with simple graphs, interesting boxes, a good bibliography and index) and, most of all, for the novelty of the approach which, as I said at the beginning, draws from the author’s personal perspective at the edge of Western and Eastern Europe. Nowhere else has history been as rich and contradictory as in the Old Continent during the twentieth century. Wars, depression, rapid growth, ideologies of all kinds, changing social and political regimes, the abyss of human depravation and the creation of the most humane and socially inclusive society ever seen in the history of mankind: all this and more was compacted in twentieth-century Europe. Berend succeeds in offering an engaging perspective into this enormous variety of situations, abrupt changes and reverses. This is precisely the mark of the great historian.


1. Two freshly-published excellent books are: Barry Eichengreen, The European Economy since 1945 (Princeton University Press, 2007) and Larry Neal, The Economics of Europe and the European Union (Cambridge University Press, 2007).

Gianni Toniolo’s most recent books are The Global Economy in the 1990s: A Long-run Perspective (Cambridge University Press, 2006), which he edited with Paul Rhode; and Central Bank Cooperation at the Bank for International Settlements (Cambridge University Press, 2005).

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

The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger

Author(s):Levinson, Marc
Reviewer(s):Sjostrom, William

Published by EH.NET (March 2007)

Marc Levinson, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger. Princeton: Princeton University Press, 2006. xi + 376 pp. $25 (cloth), ISBN: 0-691-12324-1.

Reviewed for EH.NET by William Sjostrom, Centre for Policy Studies, National University of Ireland, Cork.

Marc Levinson, a New York based economist and former economic journalist, has written a lively and entertaining history of the shipping container. Although it lacks a clear timeline of when containers replaced conventional break-bulk shipping, it has some solid stories about important events in the history of containerization, based not only on secondary sources, but on company archives and interviews. It also has a lot of entertaining anecdotes that economists can learn from.

At the core of Levinson’s history is Malcom McLean, a colorful entrepreneur whom he conventionally and I think fairly credits with driving containerization, not just as a big storage box on a ship, but as the centerpiece of a system making world transport substantially cheaper by rapidly transferring cargo from one transport mode to another. McLean did not merely use containers; he conceived the idea of specialized ships designed for rapid loading and unloading. Containers had been used before McLean, back to the nineteenth century, but they were simply boxes stowed on conventional break-bulk ships, which had to be positioned in the holds along with all the other cargo. Levinson brings McLean to life, describing his business maneuvers, his business failures, and his unusually driven personality.

There are other well told histories of particular events. Chapter six describes the personalities and the issues in the long fight to change work rules to accommodate the high speed, heavily mechanized container transfers, compared to old break-bulk days, when crews of 21 or 22 longshoremen would pack individual bales and boxes into the hold of a ship. Because the longshoremen crew could be much smaller, the longshoremen were bought out, largely with generous early retirement benefits. Levinson cites one official of the International Longshoremen’s Association as saying about their 1959 contract: “What the shippers did was give us a piece of the pie. Their savings with containers will be tremendous and they just passed on some of the cash to us.” If industrial organization economists had paid attention, they would have spared themselves years wasted on simplistic profit-concentration studies that assumed all excess returns went to capital.

Chapter ten discusses how militant unionism in Britain eliminated London and Liverpool as Europe’s major ports. It also led to the rise of previously obscure Felixstowe as Britain’s leading container port, and to the rise of Rotterdam as Europe’s largest container port.

I was fascinated by the chapter on the role of containers in supplying U.S. forces in Vietnam. I had never before heard of the DeLong pier, basically a 300-foot barge through which pilings could be driven to the harbor floor, and then jacked up to create a pier. One was towed from South Carolina through the Panama Canal and across the Pacific to form the first pier at Cam Ranh Bay. I was startled to learn that Gen. Frank Besson, head of supply for the army, estimated in 1970 that the U.S. military could have saved $882 million (over $5 billion today) by switching to containerization in 1965 rather than in 1968.

Economists should pay particular attention to chapter seven, a fine history of the politics of standardizing container sizes. Shipping lines had differing views on the ideal container size, and the Federal Maritime Board would not approve federal mortgage insurance for ships with non-standard containers, so a lot of different proposals were fought over. Pan-Atlantic (later renamed to the more familiar Sea-Land) wanted 35-foot containers, because that was the maximum length allowed on roads in New Jersey, their base. Matson wanted 24-foot containers because their big product was Hawaiian pineapples, and bigger containers would prove too heavy. Grace Line, which planned service to Venezuela, wanted 17-foot containers for South America’s mountain roads. Chapter eight extends the discussion of standardization to the energetic efforts of the railroads to get involved in containerization, and the equally energetic efforts of the ICC to get in the way with rules about limiting competition and covering overhead costs.

Levinson’s use of economic models, however, leaves much to be desired. Right up front, he says he will not use economic models to demonstrate the container’s effect. Except that he does, regularly, and his use of them is frequently ad hoc, casual, and incomplete. Three examples. Chapter five tells the fascinating story of the decline of Manhattan and Brooklyn as ports, as traffic switched to New Jersey. Levinson tells this story as part of his thesis that containers radically changed the location of industry by substantially lowering the costs of supply lines. But right away he mentions that Manhattan and Brooklyn were able to survive as ports, when the train terminals were across the river and goods had to be carried to the ports by lighters, only because they were protected by ICC tariff regulations. Levinson tells a great story about the shift in traffic from New York to New Jersey, abounding with political coalitions. But fascinating though this story is, it has little to do with containers and much to do with land prices and access to the docks.

Second, Levinson devotes chapter two to the life of longshoremen before containers, emphasizing the practice of the shape-up, or what the British more colorfully called “the scramble.” Familiar to anyone who has seen On the Waterfront, it is the practice whereby longshoremen show up at the docks looking for work, and depend on getting picked by the foreman. The chapter is a good description of the corruption engendered by the system. For example, in Liverpool docks, gombeen men were dock foremen who lent at 25% for short periods, a loan a longshoreman would take because it would ensure his being picked by the foreman. Although the willingness of longshoremen to stay in the trade in the face of these conditions suggests a substantial wage premium, Levinson is frustratingly silent on why wages stayed high, and what role unions played in those wages. Instead, using an implied but unanalyzed model of immobile labor and monopsony, Levinson piles on sermonizing about how tough the shape-up was on longshoremen.

Third, Levinson notes in chapter four that in Pan-Atlantic’s early days, management got bonuses in the form of stock as some form of incentive system. Unfortunately, although Levinson discusses Pan-Atlantic’s debt in detail, there is no other mention of the firm’s equity. If the stock was tradable, then it was simply the equivalent of cash, unless there was restriction on its sale. But Levinson offers no details.

But too much can be made of these criticisms. Much of the fun of the book is in the anecdotes. For example, when McLean was running a trucking line before he went into running liner shipping, he had novice drivers paired with more experienced drivers to learn about safe driving. If the novice got through his first year without an accident, the trainer got a month’s pay as a bonus. Talk about high-powered incentives.

There are a lot of fascinating anecdotes about government regulation and its destructive effects on the development of containers. The North Shore Line, running between Milwaukee and Chicago, tried to use containers, charging by weight rather than by specific goods, but after hearings in 1931, the ICC ruled that containers must be charged based on the most expensive item in the container, effectively killing containers on rails for decades.

Some of the anecdotes are simply bizarre. Keith Tantlinger, chief engineer at Brown Industries in Spokane, designed McLean’s first containers, which were to be carried on old tankers being modified at the Bethlehem Steel shipyard in Baltimore. When he arrived for a breakfast meeting with McLean at the Lord Baltimore Hotel, he learned that McLean and his executives were already at the shipyard. He went there to find McLean and his executives jumping up and down on the roof of the containers to see if they were as sturdy as Tantlinger claimed (they were).

Levinson asserts at the beginning of The Box that the container “has all the romance of a tin can.” Stuff and nonsense. The Box does a fine job of demonstrating how exciting the container industry is, and how much economists stand to lose by ignoring it.

William Sjostrom is Senior Lecturer in Economics at the Centre for Policy Studies, National University of Ireland, Cork. He is the author of “Ocean Shipping Cartels: A Survey,” Review of Network Economics, 3 (June 2004), 107-134.

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

European Aristocracies and Colonial Elites: Patrimonial Management Strategies and Economic Development, 15th-18th Centuries

Author(s):Janssens, Paul
Yun-Casalilla, Bartolomé
Reviewer(s):Álvarez-Nogal, Carlos

Published by EH.NET (March 2007)

Paul Janssens and Bartolom? Yun-Casalilla, editors, European Aristocracies and Colonial Elites: Patrimonial Management Strategies and Economic Development, 15th-18th Centuries. London: Ashgate Publishing, 2005. x + 282 pp. $100 (hardcover), ISBN: 0-7546-5459-1.

Reviewed for EH.NET by Carlos ?lvarez-Nogal, Department of Economic History, Universidad Carlos III de Madrid.

The aristocracy does not normally appear in analyses of economic growth for the pre-industrial period. More attention has usually been paid to the peasantry, a much larger and more homogeneous group. Before the Industrial Revolution, agriculture was the dominant activity employing most of the population. Historians interested in social or political areas had studied the nobility but little attention had been paid to its economic dimension. This may have been because the aristocracy was seen as a parasitic class or a rent-seeking group whose mere existence stood in the way of economic growth.

Paul Janssens, Professor at the Katholieke Universiteit, Brussels, and Bartolom? Yun-Casalilla, Professor at the European University Institute, Florence, remind us, in this magnificent collection of essays written by experts in the field, that the economic importance of the aristocracy under the ancien r?gime was due to their influential position in the institutional framework of society rather than simply to the number of aristocrats. Aside from the way in which wealth was distributed in that period, the aristocracy controlled most of the factors of production and, in addition, enjoyed a dominant position in the political institutions of the young European states. This meant that they were able to play a vital role in the development or lack of development of these societies.

This book brings this important social class into the debate surrounding economic growth and the prerequisites of the Industrial Revolution. It focuses on various European aristocracies and colonial elites and evaluates the strategies behind the decisions taken. The point of view adopted is that of supply, seeing aristocrats as investors in agriculture and other sectors or as innovators in the field of management of patrimonies, rather than taking the angle of demand and considering the aristocracy as wealthy consumers. Their contribution to economic growth is studied as if they were entrepreneurs taking or missing opportunities. Their influence in the establishment of property rights and behind advances in the workings of the market is also analyzed.

The book addresses three large questions. Were these large fortunes managed with maximization of profits or with socio-political criteria in mind? Did this situation change over the period under study? How and to what extent did change or lack of change affect economic performance in these societies?

One of the most interesting aspects of this book, despite the enormous difficulties involved, is the attempt to address these questions from a comparative point of view including as many countries and regions as possible. This approach leads to the conclusion that no single aristocratic model in the pre-industrial period existed and neither is it possible to offer a general model to explain its behavior.

Institutions are central to all the studies in this volume. There is no doubt about the influence of the aristocracy on the workings and development of the states during the ancien r?gime but, at the same time, the huge effect which the norms and traditions present in each society had on their behavior cannot be denied. For example, aristocracies became more important where crown estates and ecclesiastical properties were sold or redistributed as happened in England, France, Holland, Poland and Venice compared to regions like Portugal, Austria, Spain, Naples and Prussia where royal and ecclesiastical properties survived. On the other hand, the accumulation of national stocks of capital in the hands of commercial and industrial elites instead of in aristocratic hands would diminish the macro-economic significance of the aristocracy and lead the privileged group to make strategic changes.

Patrick O’Brien highlights three main areas present in many of the studies included in this book: the share of capital stock under noble control, the strategies and policies pursued by rich families for managing their patrimonies and the openness of aristocracies to talent and enterprise from outside their traditional networks.

The differences between the different European aristocracies in each of these areas are vital in an understanding of the influences of these groups on the economy. For example, the high proportion of real estate in the hands of the English aristocracy during the Industrial Revolution, noted by Robert Allen, allowed access to cheaper finance than that enjoyed by the rest of society. This explains the active investment of the landed classes in the non-agricultural sector, paving the way for a rapid industrialization of the island.

The book invites the reader to draw his or her own conclusions, in the light of the studies included, regarding the question of whether the differences between European aristocracies and ruling elites can explain the paths towards success or failure followed by each country before and during the Industrial Revolution.

The studies included in the book are organized geographically: Northern, Southern, Central and Eastern Europe and Colonial America (British North American, Peruvian and Brazilian colonial elites). The collection contains an introduction and fifteen chapters, each of which would deserve a review in its own right. The first is a general approach by Yun-Casalilla and the book closes with some considerations by O’Brien. While acknowledging the significant role played by the European aristocracy, the book avoids the error of “overcoming the prejudices by making the ancient r?gime nobles into standard-bearers of progress, modernization and economic growth.”

This collection of essays is an excellent first step but it also reveals that further research, measurement and analysis is needed before economic historians can begin to evaluate possible positive or negative contributions of the aristocracy to variations in national growth rates across Europe.

Carlos ?lvarez-Nogal is Assistant Professor of Economic History at the Universidad Carlos III de Madrid. His research spans the areas of early modern economic history, monetary and financial topics. His books include El cr?dito de la Monarqu?a Hisp?nica durante el reinado de Felipe IV (Junta de Castilla-Le?n, 1997) and Los banqueros de Felipe IV y los metales preciosos americanos, (1621-1665) (Banco de Espa?a, 1997). He is currently working on international networks of bankers in the seventeenth century.

Subject(s):Economywide Country Studies and Comparative History
Geographic Area(s):North America
Time Period(s):Medieval

From Silver to Cocaine: Latin American Commodity Chains and the Building of the World Economy, 1500-2000

Author(s):Topik, Steven
Carlos Marichal
Frank, Zephyr
Reviewer(s):Baskes, Jeremy

Published by EH.NET (January 2007)

Steven Topik, Carlos Marichal and Zephyr Frank, editors, From Silver to Cocaine: Latin American Commodity Chains and the Building of the World Economy, 1500-2000. Durham, NC: Duke University Press, 2006. v + 378 pp. $24 (paperback), ISBN: 0-8223-3766-5.

Reviewed for EH.NET by Jeremy Baskes, Department of History, Ohio Wesleyan University.

The field of Latin American history has been slow and reluctant to abandon the dependency paradigm (and its world systems sister). Conceived largely by Latin American scholars who used the region as the prime example to illustrate the alleged underdevelopment of the periphery caused by international trade, dependency theory came to be the nearly universal model influencing textbooks as well as monographs on regional trade.

For some time, scholars of Latin America have grown dubious of the claims of dependency theory. The model seemed too rigid, too dogmatic and too flimsily based on statistical data, which when actually compiled did not necessarily corroborate the paradigm’s dismal predictions. Despite the discrediting of dependency theory, Latin American scholars did not find a suitable alternative, rejecting the triumphant claims of neoliberalism as equally unrealistic.

The essays in this excellent collection seek to illustrate the value of examining Latin America’s international trade through the lens of “commodity chains,” the trajectory through which commodities passed from producers to consumers. While this method cannot possibly “answer” as many questions as dependency theory purported to address, the authors leave little doubt that a commodity chain approach can prove rewarding.

As the authors demonstrate, the examination of commodity chains serves to rupture historians’ tendency to focus exclusively on the national level. Too often, Latin American historians have focused on the supply side of the region’s exports, and have consequently been ignorant of the broader forces affecting the industries. The essays in this book demonstrate clearly the value of examining the entire commodity chain.

From Silver to Cocaine contains twelve essays penned by fifteen authors, each of them highly respected scholars. Each essay focuses on a single (or complementary) commodity and attempts to follow its path from producer to consumer. Four of the pieces examine colonial products. Carlos Marichal writes on both silver and Mexican cochineal; David McCreery compares Salvadoran and Bengali indigo and Laura Nater explores Caribbean tobacco. The remaining essays discuss Latin American commodities that, for the most part, took off in the second half of the nineteenth century. Steven Topik and Mario Samper contrast the Brazilian and Costa Rican coffee industries; Horacio Crespo examines the world market for sugar; Mary Ann Mahony investigates Bahian cacao; Marcelo Bucheli and Ian Read focus on Central American bananas and especially the United Fruit Company; Rory Miller and Robert Greenhill compare and contrast Peruvian guano and Chilean nitrates, both used as fertilizers; Zephyr Frank and Aldo Musacchio consider the Brazilian rubber boom; Allen Wells looks at the demise of the Yucatecan henequen industry; and, finally, Paul Gootenberg explores coca and cocaine.

It would be impossible to summarize adequately these rich and detailed chapters. One issue emphasized by a number of the authors is the social transformations undergone by commodities as they move from producer to consumer. Coffee became the preferred beverage of French revolutionaries who thought little about the enslaved workers who produced it. Cochineal was employed to dye the clothing of kings and popes, yet was produced by poor indigenous peasants in southern Mexico. Tobacco and coca were considered spiritual products by their Caribbean and Andean producers but consumed by Americans and Europeans for their medicinal or intoxicant value.

A central issue examined by most of the essays was the “agency” of producing countries. Dependency theory suggests that decisions of significance are made in the “metropolis” and that the “peripheral” producing countries have little control over their destiny. These essays clearly extinguish this notion demonstrating that “Latin American producers were much more than simple marionettes set to dance by overseas commands and demands. They were not simply passive victims” (p. 3). While wealthy capitalists and multinational companies undoubtedly wielded significant influence, producers and governments in Latin America exercised considerable market and other power. The massive expansion of Bahian cacao naturally responded to growing international demand, but was also influenced by government policies and the gradual conclusion among planters that it was their most advantageous commodity. The coffee industry of Costa Rica and Brazil followed very different paths due to distinct domestic conditions. Costa Rica opted to produce high quality coffee while Brazil took advantage of ample territory and an interventionist state to become by far the world’s largest producer.

More generally, the essays convincingly show the greater understanding that arises through an examination of the entire commodity chain. The boom and bust of the rubber trade in Brazil is much more comprehensible and much less tragic when one takes into consideration the evolution of the automobile industry. Considerable light is shed on the Salvadoran indigo industry by examining its major competitor, Bengal, India. While substitute products might have contributed to henequen’s decline, corruption and mismanagement in Mexico sealed its demise.

An additional matter addressed in the essays is the distribution of profits between core and periphery. Dependency theory predicted that profits from international trade invariably accrued in the more developed countries. While none of the essays goes so far as to suggest that the opposite was the case, for the most part they reject dependency’s predatory claim, arguing that reasonable profits accumulated and development occurred in Latin America. The arrangements of production and the networks of distribution were rational solutions given the different endowments of the various actors. According to Miller and Greenhill, for example, the nitrate and guano industries came to be organized in the most efficient manner conceivable, benefiting from the technological, financial, and informational advantages enjoyed by the multinational companies engaged in the trade. Despite multinational control over marketing, the authors conclude that each government extracted reasonable rents and that no alternative organization of the trade “would have provided significantly better rewards for Peru and Chile” (p. 261).

The death of dependency theory in Latin America is long overdue. It answered lots of questions, but the answers were most often facile. The essays in this excellent collection illustrate the potential rewards of reexamining old topics and offer a compelling way to help shape this new research. Unlike so many edited collections that lack cohesion or seem poorly conceived, the essays in From Silver to Cocaine are remarkably well integrated and address similar questions and themes. As such, the reader is well rewarded from comparison of the differing commodity chains.

Jeremy Baskes is Professor of Latin American History at Ohio Wesleyan University. He is the author of Indians Merchants and Markets: A Reinterpretation of the Repartimiento and Spanish-Indian Economic Relations in Colonial Oaxaca, 1750-1821 (Stanford University Press). His current research examines the ways that merchants in the Spanish empire organized their transatlantic commerce to mitigate risk.


Subject(s):Markets and Institutions
Geographic Area(s):Latin America, incl. Mexico and the Caribbean
Time Period(s):20th Century: WWII and post-WWII

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:

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

The Rise of the Amsterdam Market and Information Exchange: Merchants, Commercial Expansion and Change in the Spatial Economy of the Low Countries, c. 1550-1630

Author(s):Lesger, Clé L
Reviewer(s):Neal, Larry

Published by EH.NET (January 2007)

Cl? Lesger, The Rise of the Amsterdam Market and Information Exchange: Merchants, Commercial Expansion and Change in the Spatial Economy of the Low Countries, c. 1550-1630. Burlington, VT: Ashgate, 2006. xii + 326 pp. $100 (cloth), ISBN: 0-7546-5220-3.

Reviewed for EH.NET by Larry Neal, Department of Economics, London School of Economics.

Cl? Lesger, Senior Lecturer in Economic and Social History at the University of Amsterdam, provides quantitative evidence guided by economic theory to show that what really mattered at the end of the sixteenth century for Amsterdam’s rise to economic preeminence in Europe in the seventeenth and eighteenth centuries was its institutions, not its geography. The impetus for its rise was not inherent in its institutions, however, but came from the external shock of the failure of the revolt against Spanish rule in the southern Netherlands combined with the failure of the Spanish to reestablish control over the northern Low Countries. Geography played a role in determining those military outcomes, but not, Lesger argues, in determining the resulting changes in the patterns of trade.

This argument, familiar to readers of Jonathan Israel’s voluminous writings on the Dutch Republic, nevertheless runs counter to a tendency among historians to see very long-lived movements in historical developments that persist despite occasional shocks. Lesger notes that this has led historians, led by Fernand Braudel and others including some contemporary Dutch historians, to trace Amsterdam’s rise to preeminence to its geography and especially the attempts of its citizens to alter and control that geography. Not so, argues Lesger. The older historical literature was correct when it attributed Amsterdam’s rise to closing Antwerp’s access to the Scheldt. This destroyed Antwerp’s role as the major gateway for transportation networks throughout the Low Countries and forced its merchant community to disperse.

Amsterdam’s elite welcomed the new merchants because they saw no conflict between the trades of the Antwerp merchants who dealt in luxury goods, sugar, spices, and naval stores from distant lands and the trades of the Amsterdam merchants who dealt more with transshipping these goods on to its regional hinterland, northern Germany and the Baltic. Very quickly during the 1590s, the new merchants and their information networks combined with the older merchants and their continued trade networks to make Amsterdam the next global entrep?t, replacing Antwerp through the eighteenth century.

The entire region of the Low Countries comprising modern Belgium, the Netherlands, and Luxembourg was a well-integrated economic unit by the middle of the sixteenth century. Using the concept of a network of transportation gateways, Lesger shows that each city had a geographically determined hinterland and its niche for trade in specific commodities with the outer world. Prior to the revolt of the Netherlands against Philip II, Antwerp was the primary gateway through which the other cities in the Low Countries participated in the long-distance trades, the so-called “rich trades” in textiles, spices, porcelain, and luxury goods in general. Amsterdam was a major regional gateway, but focused on South Holland as its hinterland while re-exporting a wide variety of products to the Baltic and northern Germany, with emphasis on low value, bulky commodities. Overall, it accounted for only 6% of total exports, compared to Antwerp’s 75%.

After the Revolt disrupted trade patterns, especially for Antwerp, Lesger argues that there was little change in the gateway role of Amsterdam. Figures on both exports and imports for 1580 and 1584 show that Amsterdam was still oriented in its trade toward northern and eastern Europe. Starting in the 1590s, however, Amsterdam’s trade began a vertiginous rise that continued up to 1630. Lesger argues that rise had to be the consequences of the Revolt. To explain this sudden and dramatic break with geographically determined trade patterns, Lesger examines the role of the wealthy merchants displaced from Antwerp who increasingly fled to Amsterdam. Examining the records of the Wisselbank by various groups of depositors, he shows that the new merchants led the explosion of trade activity from Amsterdam, especially to Russia through the port of Archangel. Both the new merchants and various groups of North Hollanders led the way to the Indies, both East and West.

Part II turns to explore the institutional determinants in Amsterdam that enabled the influx of foreign merchants to occur so quickly with such dramatic results, and then to be sustained for the next century and a half. The answer, he argues, came from the ability of the incumbent Amsterdam elite to extract rents from the increased trading activity by maintaining political control while levying low indirect taxes on a rapidly increasing base of trade that did not conflict with Amsterdam’s traditional trade flows as a regional hub, and indeed helped to expand those trade flows as well.

The rising importance of Amsterdam’s traditional transit trade with the lower Rhine leads Lesger to see most of it increased trade with the wider world as really transit trade as well. In fact, he argues, Amsterdam displayed in the early seventeenth century all the features that modern trade analysts associate with transit trade. For a trade center to maintain its role in transit trade it must provide cost advantages to suppliers and customers in the services it provides in the form of finance, information, and price discovery, as well as in the physical facilities it maintains for transshipment. Ultimately then, the secret of Amsterdam’s success as the preeminent entrep?t for Europe’s long-distance trade lay not in its port and warehousing facilities for transshipments, but rather in its information processing facilities.

Overall, Lesger’s valuable quantitative study amplifies the importance of the service sector, which played a very modern role in establishing and then maintaining Amsterdam’s preeminence. Finally, this reviewer was very pleased to see the emphasis on external and irreversible shocks for explaining Amsterdam’s rise. A similar story, of course, helps explain its eventual demise in the nineteenth century and its replacement by London.

Larry Neal is Professor Emeritus at the University of Illinois, a Research Associate with the NBER and Visiting Professor at the London School of Economics.

Subject(s):Transport and Distribution, Energy, and Other Services
Geographic Area(s):Europe
Time Period(s):17th Century

Mills in the Medieval Economy: England, 1300-1540

Author(s):Langdon, John
Reviewer(s):Beek, Karine van der

Published by EH.NET (January 2007)

John Langdon, Mills in the Medieval Economy: England, 1300-1540. New York: Oxford University Press, 2004. xx + 369 pp. $150 (cloth), ISBN: 0-19-926558-5.

Reviewed for EH.NET by Karine van der Beek, Department of Economics and Business, Universitat Pompeu Fabra.

Mills represent one of the largest and most significant investments in physical capital in the pre-industrial European economy. Nevertheless, economic aspects of milling have received little scholarly attention so far and most studies in this field are dedicated to technological aspects of milling and to their pattern of diffusion.

Mills in the Medieval Economy by John Langdon, professor at the University of Alberta and a leading figure in the field of medieval economy and technology, is a well-written study, based to a great extent on original data, that not only provides an exceptional survey, but also explores key economic aspects of medieval milling and offers the reader an overall understanding of the industry.

This book focuses on England from 1300 to 1540 and examines various aspects of milling in a period that saw a dramatic peak in mill numbers and in population. Through skilled and convincing use of numerous documents and other sources, Langdon shows that the development of the industry displayed continuity over the period, both in terms of technology and investment, rather than a radical breakdown, as has often been emphasized in Marxist analyses of the Middle Ages.

Langdon’s book is obviously of great value to technology historians and social historians in general. Nevertheless, I find it to be of prime interest to economic historians. It presents an interesting case of entrepreneurial organization of a capital-intensive key industry that was characterized by low profitability and that was highly sensitive to periods of instability.

In successive chapters that examine most aspects of milling, it is shown for the first time that mills, which were traditionally seen as the symbol of peasant exploitation and as an important source of feudal income, were in fact hard to uphold. Their construction and maintenance required vast resources, and their revenues were highly volatile. The milling industry was widely exposed to demographic disasters caused by bad weather, wars, and plagues, which were commonplace from the mid-fourteenth to the end of the sixteenth centuries. These features of milling, which are noticed by Langdon but which should have been more emphasized throughout the book, are what makes the observation of continuity in this industry interesting, to my opinion.

The total number of mills in 1300 was about 10,000. This number remained relatively unchanged in the half century leading up to the Black Death. Yet, although the number of mills was clearly affected by the catastrophic demographic outcomes of the Black Death, the overall impact was not as critical as one might expect and it declined by only 10 percent in the first decades following the plague.

Langdon sees this moderate fall and quick adjustment of the industry as a testimony to what he refers to as “the determined entrepreneurial spirit” (p. 236). He explains it by an adjustment of the use of mills, which he observes in the documents. Mills, which had been most commonly used for grain grinding, were widely converted into industrial activities, such as textile fulling, after the Black Death. Such use was more profitable than grain grinding in periods of demographic crisis due to the relative rise in real wages.

Nevertheless, mill operation involved regular and costly maintenance, which was difficult to maintain during long periods of instability and low profitability. This is why, from the late fourteenth century to the early sixteenth, following a long period of instability that delayed the recovery of the milling sector, many mills were abandoned and mill numbers shrank by another 10 percent.

The different managerial strategies of dealing with the volatile profitability of mills are described in depth by Langdon in chapter five. This chapter demonstrates to the reader once again that medieval entrepreneurs were no different than modern ones. It shows that owners tended to lease the mills for a fixed rent. The relative bargaining power of mill owners, usually feudal lords, and lessees was reflected in the contract, in the degree of risk imposed on each part, revealed in the repair agreements. Langdon provides extensive data concerning the level of risk sharing and how it has changed over the period. The data show, for example, that as the situation in the milling industry worsened and revenues declined in the beginning of the fifteenth century, owners began to take a larger share of the maintenance costs.

Langdon also examines the extent to which the legal framework affected peasant demand and challenges the thesis posited by Marc Bloch. He argues that customers generally came to mills because they wanted to, not because they were coerced by lords to do so. There is much evidence that supports this claim, particularly in areas where feudal lords were holding small scattered estates and could not prevent peasants from going to nearby rival mills, such as in the South of England.

To conclude, Mills in the Medieval Economy is an in-depth study of late medieval milling which deals with the wider nature of industrial change. It is an admirable study that provides economic historians with a comprehensive description and thoughtful analysis of the medieval milling industry and of pre-modern entrepreneurship in general.

Karine van der Beek is currently a Post-Doctoral Fellow at Universitat Pompeu Fabra, Barcelona, as part of the CEPR Economic History RTN: “Unifying the European Experience.” Her research focuses on early European growth and on the effects of political structures on institutional formation, market organization, and productivity. Her recent papers include: “Political Fragmentation and Technology Adoption: Watermill Construction in Feudal France,” and “Political Fragmentation and Investment Decisions: The Milling Industry in Feudal France (1150-1250).”

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