The Roots of American Industrialization

Published by EH.NET (November 2003)

David R. Meyer, The Roots of American Industrialization. Baltimore: Johns Hopkins University Press, 2003. xiii + 333 pp. $45 (cloth), ISBN: 0-8018-7141-7.

Reviewed for EH.NET by B. Zorina Khan, Department of Economics, Bowdoin College.

For many, agriculture and manufacturing comprise a defining part of the American national identity. Yet, in 2003 a mere two percent of the civilian labor force works in agriculture, and manufacturing employs less than ten percent. The reason for the prominent role still attributed to these two sectors in contemporary culture clearly lies in historical experience. Numerous journal articles have analyzed the sources of industrialization and economic growth, but few comprehensive book-length monographs have integrated the extensive body of literature in this area. David R. Meyer, a professor of sociology and urban studies at Brown University, therefore makes a useful contribution by reviewing how industrialization started in the agrarian United States.

The first chapter outlines what Meyer views as “the puzzle of the antebellum east.” By now every economic historian (especially those who are fortunate enough to know Dick Sylla) realizes that one must choose between Jefferson and Hamilton; however, Meyer further insists on a duel between Hamilton and Franklin. Franklin in 1760 thought that manufacturing developed in response to a scarcity of agricultural land. Hamilton, who better understood the concepts of specialization according to comparative advantage and subsequent gains from sectoral trade, predicted reciprocal benefits to investments in agriculture and manufacturing. According to Meyer, this is a duel in which Franklin has so far prevailed, since “most discussions of the roots of the antebellum East’s industrialization accept Franklin’s view” (p. 1) rather than Hamilton’s. It is Meyer’s objective to show that Hamilton was right after all.

The book includes ten figures and fifty tables, although the author restrained his instincts as a trained geographer and includes a mere five maps. The exposition is organized in two chronological parts, the first of which deals with the period between 1790 and 1820. The story by now is well-known. The first years of the Republic were challenging, but the new society was well-positioned to take advantage of its bountiful natural resources and human capital endowments. The “conventional view” and “standard interpretations” that Meyer seeks to disprove are that eastern agriculture was unproductive because of diminishing returns to poor soils, and lost market share because of competition with farms in the Middle Atlantic and Midwest. Farming households tried to resist the transition to capitalism, but ultimately were integrated into outsourcing enterprises and factories. These claims are inconsistent with the evidence, so the “roots of eastern industrialization remain obscure” (p. 4).

The author offers an alternative explanation: that agriculture in the East was productive. Timothy Dwight, President of Yale in 1796, noted that Connecticut farming presented “a scene uncommonly cheerful,” and for good reason. Farmers were not passive victims of diminishing returns to land. They responded to price incentives, adopted new techniques, shifted to higher-valued output, and made investments in more effective inputs, all of which led to productivity growth. When efficiency in agriculture increased, it released surplus labor to the industrial sector. Rising wages and incomes in agriculture also expanded the market for finished manufactured goods. Agriculture and industry benefited each other through backward and forward linkages that created multiplier effects. Meyer considers the experience of shoemakers in Massachusetts, Connecticut workshops, and textile mills across the Northeast. Industrialization was encouraged by the availability of financial capital through banks and “insider lending.” Productivity benefited from technological progress as gauged by patenting activity. However, researchers who argue that patenting per capita expanded in response to changes in market access when water transportation improved have overestimated the influence of alternatives to wagons. Meyer contends that “Until about 1850 wagons offered fierce competition to waterways, canals, and railroads for transporting farm products and most manufactures,” (p. 33); moreover, “most firms did not require waterway transport because wagons provided low-cost shipment for manufactures,” (p. 67). In short, most transportation benefits were derived from “lowly wagons and road improvements.”

The rest of the book deals with the period between 1820 and 1860 and basically expands on the same points. By the 1860s the Northeast accounted for a little over a third of national population, while its rate of urbanization had increased to 35 percent. Despite the relative decline of the rural population, in absolute numbers its level was double what it had been in 1810. Eastern farms were able to cope with increased competition from the Midwest by switching from grains to higher-valued dairy products, fruit, and vegetables, for urban consumption. They benefited from the diffusion and adoption of agricultural inventions. By 1860 the East produced 74 percent of the value added in manufacturing. After the 1840s metropolitan centers and (to a lesser extent) their satellites became more diversified and industrially specialized. Manufacturing productivity increased from 2.1 percent annually to 3.2 percent. Although capital-intensive establishments experienced higher efficiency, improvements in productivity were distributed widely across industries and firms. Case studies again focus on footwear, cotton textiles and the brass industry. The author repeats his claims that, in the light of the relative efficiency of wagons, the net economic benefits of the Erie and other canals have been overestimated. As for railroads, “stagecoaches and wagons offered formidable competition for passengers and freight” (p. 156) and eastern railroads “generated minimal direct economic benefits” (p. 157).

By now every economic historian (especially those who are fortunate enough to know Dick Sylla) already realizes that Hamilton was right. This work for the most part comprises a synthesis of well-known original research on agriculture and industrialization by Jeremy Atack, Robert Fogel, Robert Gallman, Robert Margo, Kenneth Sokoloff, and Thomas Weiss, to name only a few who have already addressed the “puzzle of the antebellum east.” The author’s own interpretations and contributions are at times a little more puzzling. However, for those who are unfamiliar with (and not averse to) economic history, this book will likely provide a convenient introduction to the issues.

Zorina Khan is Associate Professor of Economics at Bowdoin College. She is the author of “The Fuel of Interest”: Patents and Copyrights in Early Economic Development (forthcoming, Cambridge University Press).