The Genesis of Industrial America, 1870-1920

Published by EH.NET (December 2008)

Maury Klein, The Genesis of Industrial America, 1870-1920. New York: Cambridge University Press, 2007. xii + 224 pp. $23 (paperback), ISBN: 978-0-521-67709-7.

Reviewed for EH.NET by Tomas Nonnenmacher, Department of Economics, Allegheny College.

In The Genesis of Industrial America, Maury Klein (University of Rhode Island) offers an engaging narrative overview of the growth of American business during the 50 years following the Civil War. Relying largely on a series of brief case studies and biographies, Klein uses the metaphor of a hothouse to describe the source of the tremendous economic growth experienced in the United States. In this hothouse, entrepreneurs grew big business, which ultimately reshaped not only the economy, but culture and society as well. Mass consumption and distribution required an organizational revolution, which spread beyond the confines of business into all aspects of American life. Klein?s major critique of the growth of big business is that it was done in a short-sighted manner. Path dependence generated consequences that were unintended, far reaching, and welfare reducing.

Beginning in Chapter 2, Klein focuses on three sectors of the economy and provides short biographies of several entrepreneurs who played key roles in reshaping their industries. Chapter 2 covers the business of farming. Technological change forced a restructuring of agricultural production, but did not allow farmers to grow rich like urban captains of industry. Only corporations and speculators were able to become fabulously wealthy off of the land. Chapter 3 provides a broad overview of the transportation and telecommunication revolutions. It focuses on Cornelius Vanderbilt and Theodore Vail as examples of business leaders who transformed the shape of their industries by pushing forward technological and organizational change. Chapter 4 focuses on innovations in power. Considerable time is spent examining the AC vs. DC debate by telling the stories of George Westinghouse, Thomas Edison, and Samuel Insull.

In the next two chapters, Klein switches from an industry focus to a broader perspective on the organizational revolution. In Chapter 5, he covers how business reorganized itself in order to direct mass production. In the next chapter he argues that the organizational revolution not only transformed the way business was done, but transformed other activities as well. Government, unions, professional associations, and social organizations all either arose for the first time or became bigger and more centrally controlled, partially in response to the growth of business. Klein argues that the era of the individual was over, and the era of the organization had begun.

The final two chapters concern the social and cultural implications of the growth of big business. Chapter 7 deals broadly with the topic of urbanization, and in specific with the growth of political machines. Klein argues that machine politics were part of the organizational trend that swept all aspects of society. To achieve political outcomes, hierarchies were required to organize and incentivize voters. Chapter 8 concerns the marketing and advertising of mass produced output. Producers began to appeal directly to consumers rather than wholesalers or retailers, and brand names became more important. Mass consumption and distribution largely destroy the ?small town? traditions of consumption.

Klein believes that Americans have been too sanguine about the trend that ?the more things change, the more they become big business? (p. 196). Americans? lack of foresight is not limited to the shortcomings of big business though. The theme of path dependence is touched upon frequently throughout the book. According to Klein, the natural abundance of the country led to short-sighted decision-making. This argument may be pushed too far when he argues that the ?Louisiana Purchase revealed yet again the willingness of Americans to embrace economic opportunity in the short term regardless of what long-term consequences might ensue? (p. 9). The long-term consequences to which he refers in this case are the continued spread of slavery and the devastation of the Civil War. Other examples of the short-sightedness of Americans include the depletion of natural resources (p. 10), the misallocation of land in both rural and urban settings (p. 40), the unchecked growth of corporations (p. 108), and the elevation of work and material gain above traditional social and cultural activities (p. 161). While many of the cases of path dependence led to costly outcomes, Klein could have done more to systematize his thoughts on the topic. It is not clear whether American short-sightedness was unique or whether it was a characteristic shared by entrepreneurs around the world. Path dependence is a recurring theme of this book, and yet no analytical framework for studying it is provided.

The intended audience for this book seems to be the general public rather than economic and business historians focused on this era. The book has no footnotes or citations, relying instead on a list of ?sources and suggested readings? for each chapter. Authors and books are frequently referenced in the text but missing in the sources and the data concerning economic growth are not referenced. Klein has not included much of the recent scholarship on this era, relying heavily instead on classics in the field, including his own important work. The book?s shortcomings for an academic audience are made up for by clear writing, lively prose, a consistent narrative, engaging biographies, and a nuanced critique of the growth of big business.

Tomas Nonnenmacher is Associate Professor of Economics, Allegheny College, Meadville, PA. His most recent article, ?Culture, Coercion, and Contracting: Labor and Debt on Henequen Haciendas in Yucat?n, Mexico, 1870?1915? is coauthored with Lee Alston and Shannan Mattiace and will appear in the Journal of Economic History in March 2009.