Jewish Immigrant Entrepreneurship in New York and London, 1880-1914: Enterprise and Culture

Published by EH.NET (June 2002)

Andrew Godley, Jewish Immigrant Entrepreneurship in New York and London,

1880-1914: Enterprise and Culture. New York: Palgrave, 2001. xiii + 187 pp.

$60 (hardback), ISBN:0-333-96045-9.

Reviewed for EH.NET by Carmel U. Chiswick, Department of Economics, University

of Illinois at Chicago.

This volume by Andrew Godley, Lecturer at the University of Reading, is a

model of the cliometric art. Complete with creative hypothesizing, imaginative

data construction, and economic theory skillfully applied to a case study

(itself intrinsically fascinating), it yields conclusions in the form of a

promising new hypothesis. It is also well written and clearly presented. What

more can we ask?

The material for this study comes from turn-of-the-century Jewish immigrants to

London and New York who came from the Pale of Settlement in Czarist Russia. The

main hypothesis to be investigated, however, involves the stagnation of

entrepreneurship in England relative to that in the United States, to which the

twentieth-century decline in British economic power is sometimes attributed.

Jewish immigrants are viewed as a natural control group since they arrived in

both cities at the same time, from the same place, and with approximately the

same skills and proclivities toward entrepreneurship. The Jewish rate of

entrepreneurship (self-employment) was unusually high relative to that of other

immigrant groups, and during the period of this study it rose substantially in

New York but not in London. Godley seeks insights into differences between

British and American entrepreneurship by investigating the determinants of this

difference between the Jews of London and New York.

The main theme of the study, the relationship between enterprise and culture in

Britain, is presented in the introductory and concluding chapters, but the meat

of the analysis is the six intermediate chapters that constitute the case

study. Of these, the first two provide the evidence that the Jewish immigrants

in London and New York had a relatively high rate of entrepreneurship and were

a more-or-less random sort from the same base population. Several data sources

are available for the economic characteristics of New York’s Jews, although

Godley makes some adjustments for the purpose at hand. Until now, however, no

occupational data were available for the Jews of London. With an admirable

combination of imagination, common sense and perseverance, Godley constructs a

rich new data set from the marriage records of London synagogues, carefully

adjusting for age and other demographic factors to minimize any potential bias

in his comparison with New York Jews. The methods and procedures of this

exercise are well presented, and students of London’s Jewry will benefit

enormously from the publication of this new data set.

The next chapter focuses on the rates of entrepreneurship (self-employment) of

Jews in the two cities, also with sources and methods thoroughly and clearly

described. In the 1880s, the early years of this population’s mass migration in

which most Jews were newly-arrived, about 14 percent of London’s Jews and 18

percent of New York’s were self-employed, both rates considerably higher than

that of other immigrant populations. As immigration continued and more of the

Jewish population adjusted to their new environments, the London rate rose

somewhat, to 17 percent by 1914, but the New York rate increased to a whopping

35 percent during the same period.

Godley devotes an entire chapter to establishing that the difference could not

have arisen because of selection bias, access to capital, or skill levels in

the two populations. Observing that Jewish men in both cities worked mainly in

the garment industry, he devotes another full chapter on the characteristics of

this industry in New York and London. Technological improvements were an

important source of rising profits in both cities during this period, and

Jewish firms led in the development of a market niche in middle-priced

ready-to-wear clothes. The entry of new entrepreneurs reduced this increase,

but only in New York would this effect be large enough to offset the gains from

innovation and produce a marked decline in self-employment income.

The thrust of these three chapters is to establish that Jewish immigrant men

deciding whether to move from wage work to entrepreneurship faced virtually the

same economic conditions (demand) in the two cities and in the early years

after migration exhibited similar tendencies toward self-employment (supply).

As the two populations adjusted to their respective host economies, however,

their characteristics diverged so as to shift the American but not the British

supply curve rightward. Godley considers a series of alternative hypotheses,

rejecting each in turn as inconsistent with the empirical evidence.

Through his thorough and patient cliometric analysis, Godley convinces us that

whatever was causing the English to be less entrepreneurial than the Americans

was having a similar effect on their Jewish populations. Moreover since Jews in

the two cities were so similar in their cultural background, their industrial

setting and their factor endowments, these can be eliminated as explanations

for Britain’s relative decline in entrepreneurship. The final empirical chapter

focuses on a telling difference in the garment industry’s occupational

structure: the highly-skilled, well-paid “journeymen” workers in London’s

Jewish garment industry had no counterpart classification in the New York

occupational data even though the substance of workplace activity was the same

in both cities. The culture of English labor markets thus provided workers with

an opportunity for upward socio-economic mobility not available in America. The

switch from wage work to self-employment thus had a much higher opportunity

cost in London than in New York because there was more socio-economic

inequality within the wage worker category. Together with England’s long

tradition of mutual disdain between labor and capital, this undermined the

economic incentive of London’s most skilled Jewish workers to strike out on

their own in new businesses.

High wages for Jewish journeymen enabled them to move quickly into the English

middle class, facilitating assimilation of the London Jewish community within a

remarkably short period of time. New York’s equivalently high-skilled workers

would realize such gains only if they turned to self-employment, which they did

in great numbers. New York’s Jewish garment industry was thus characterized by

more firms that were smaller and more competitive than their London

counterparts, displaying the kind of innovation in which the American market

excelled.

Godley may not be the first to view Jewish immigrants as providing a natural

experiment for comparative economic history, but he may be the first to develop

serious data to explore this hypothesis. The use of Jews as a case study may

also prove insightful for understanding the comparative economic history of

Britain and the United States. If a generally ignored difference in workplace

culture was indeed the fundamental determinant of divergent Jewish experiences,

as this work suggests, the social environment of American labor may have been

far more significant as an economic stimulus than most cliometricians have been

willing to allow. Like most good research, this suggests many possibilities for

future analysis.

Carmel U. Chiswick is Professor of Economics, University of Illinois at

Chicago, and is Secretary of the Association for the Social Scientific Study of

Jewry. Her recent research is on the economics of religion, especially as it

applies to Jewish observance and to American Jewish communal institutions. Her

past work includes studies of economic mobility, self-employment, and immigrant

impacts.