Published by EH.NET (November 2000)

Sara E. Wermiel, The Fireproof Building: Technology and Public Safety in

the Nineteenth-Century American City. Baltimore: Johns Hopkins University

Press, 2000. 301 pp. $45.00 (cloth), ISBN: 0-8018-6311-2.

Reviewed for EH.NET by James B. McSwain, Department of History, Tuskegee

University.

Sara E. Wermiel, historian of technology and city planner, has produced a

well-researched, clearly written study of the development of

fireproof/fire-resistant buildings in the United States from the late

eighteenth century to the threshold of World War I. Extensive documentation, a

useful glossary, and an excellent bibliographic essay, undergird her analysis.

Her work contains helpful reproductions of contemporary engineering,

architectural, and promotional drawings and sketches.

The drive to build fireproof buildings arose in part out of fear of

conflagration, or a city-wide fire. Many municipalities established “fire

limits,” a zone requiring strict exterior construction standards. This,

however, did not address the flammability of interior materials. Finding a

suitable non-flammable substitute for wood meant designing buildings with

noncombustible floors and roofs. The initial solution was the masonry vault,

or a barrel-shaped, load-bearing span that supported the floor above, and

rested on massive, and expensive, walls and piers. Held back by high costs and

“technical difficulties,” only a dozen masonry vaulted buildings, mainly for

the Federal Government, were put up in the U.S. before 1850. Vaulted buildings

performed well in fires, but had several drawbacks. They had a thorough-going,

anti-human atmosphere owing to the enormous walls, center pieces, columns, and

the “thrust” of the vault arches, that blocked light and used up most of the

interior space of the building.

Wermiel devotes the bulk of her book to the various solutions to the problem

of putting up fireproof/fire-resistant floors and roofs, without resorting to

vault construction. By 1850 U.S. builders relied upon a system of iron beams

and girders (horizontal spanning elements), in between which were brick

arches, quite like the masonry vaults, but not nearly as space-consuming.

Subsequently, wrought iron, having superior tensile strength, replaced cast

iron in framing buildings. Its malleability allowed rolling into “I” shaped

beams thinner and stronger than cast iron.

During the post-1865 construction boom, builders tried a number of

alternatives to brick arches and floors, including iron sheets and concrete,

stone slabs, and various sorts of solid and hollow clay (terra cotta or tile)

blocks. They generally performed well, though often structural iron failed

under intense heat. This suggested that noncombustible materials did not

guarantee the survival of a building. So, the notion of fireproof expanded to

include noncombustible materials that did not conduct heat, which could

distort flanges or other crucial components. In the 1890s building owners

found in New England “mill construction” an attractive model of affordable

fire-resistant construction that featured space separation accompanied by

fire-fighting equipment. Drawing upon this paradigm, the Associated Factory

Mutual Fire Insurance Companies (AFM) made features such as sprinklers,

stairways isolated from floor areas, and exterior access ladders, required

items. The AFM regarded this “slow-burning” construction a superior method

toachieve fire prevention at a comparatively low cost.

In the 1880s elevators allowed buildings to go beyond the six-story limit. To

make the proposed “skyscrapers” fire safe, architects and builders switched

from load bearing walls to a metal framework (skeleton), made of iron or

steel, that carried the weight of the building. However, a major problem to

resolve was egress. The contents of a fireproof/fire-resistant building could

burn and produce deadly smoke, toxic fumes, and blistering heat that killed

trapped occupants, forcing architects and engineers to focus upon how to leave

buildings. In the 1860s fire escapes became the norm for New York city

tenements. Yet, city codes for other public buildings remained dangerously

ambiguous. Boston led the way up to 1900 in imposing strict standards of

egress for many new buildings and all tenements and boarding houses. After

1900 New York city authorities tied egress to occupancy, so that the more

rooms a building had, the more exits were required.

Two fires revealed gaps between code and practice. In 1903 the Iroquois

Theatre in Chicago, outfitted with fireproof floors, roofs, and partitions,

burned, killing 581 people. However, it had steps in front of doors, fire

escapes exposed to flames, inadequate balcony stairways, and no exit signs.

Subsequent Chicago ordinances dealt with all of these shortcomings. In March

1911 the New York building containing the Triangle Shirtwaist Company burned.

The iron, steel and tile structure survived nicely. Although there were

stairways and escapes, several had doors that opened inward, and one may have

been locked. This led to building codes that redefined adequate egress from

buildings.

Wermiel concludes that the pivotal event of modern fire-resistive construction

was adoption of skeleton frame construction. It brought together existing

fireproofing materials and experience to build fire-resistant tall buildings.

She also argues that since fireproof buildings were so much more expensive

than regular buildings, government contract requirements and code regulations

provided incentives for architects, engineers, and industrial people to come

up with new materials and construction techniques for fireproof projects.

Several observations are in order. Having investigated controversies over

petroleum storage (1901-03), I was aware of insurance concerns over

conflagration in the late nineteenth century. Several names familiar to me

surfaced in Wermiel’s book. Engineers F.J.T. Stewart and William H. Merrill

served as advisors to the National Board of Fire Underwriters, the National

Fire Prevention Association and various consulting committees. I would,

therefore, have enjoyed more information about the role these groups played in

the development of and campaign for fire-resistant materials and construction

techniques. But I cannot fault Wermiel for sticking to her topic. Her work has

whetted my appetite for more explanation, an outcome I attribute only to good

books.

Further, there are important parallels between Wermiel’s book and Thomas J.

Misa’s A Nation of Steel: The Making of Modern America, 1865-1925

(1995). Wermiel points to the crucial role of government in stimulating demand

for fireproof building design and materials. Similarly, Misa explores the

relationship between central governments and an international cartel of steel

manufacturers who monopolized the fabrication of pre-WWI battleship armor.

However, in fireproofing there was much more unrestrained competition among

architects, suppliers, and contractors, than among the armor moguls. Price

considerations played a constant role in fireproof construction versus

traditional wood framing, and in iron and steel production. Here is where Misa

and Wermiel converge, because both address the market for iron and steel rails

and beams. Wermeil is clear about the role price, engineering preferences, and

the shift from wrought iron columns to steel columns, played in making

skeleton construction important to the evolution of fireproof buildings.

Misa’s account of the skyscraper is a bitmore complex and provides crucial

details of how designers and builders came to favor open-hearth steel over

steel produced by Bessemer rail shops. It is also set in the broad context of

urbanization and the push this provided to make better use of space by

building up rather than out.

Wermiel’s book is carefully crafted and informative. Though readers may

benefit from collateral reading in works such as Misa to fill out the context

of certain crucial events in the saga of fireproof construction, Wermiel has

assembled and synthesized a great deal of difficult, technical details to

support her narrative and to sustain her insightful conclusions.

James B. McSwain has recently completed “Energy and Municipal Regulation: The

Struggle to Control the Storage and Supply of Fuel Oil in Mobile, Alabama,

1894-1910,” the first of three related essays on this issue in the Gulf South

(Mobile, New Orleans, Galveston).

Published by EH.NET (November 2000)

Susannah Handley. Nylon: The Story of a Fashion Revolution. Baltimore:

The Johns Hopkins University Press, 1999. 192 pp. Notes and index. $29.95

(cloth), ISBN 0-8018-6325-2.

Reviewed for H-Business and EH.Net by John K. Smith, Jr., Lehigh University.

Nylon Reviewed

Handley takes on the task of incorporating synthetic fibers into fashion

history. The major contribution of the book is that it attempts to connect

the entire chain of textile processing and marketing from fibers to fashions.

The author is most comfortable when discussing the world of fashion designers;

at times, the narrative reads like a journalist’s report on a fashion show.

Following the fashion magazine format, the book includes over two hundred

mostly color photographs, making it suitable for any coffee table. The first

two chapters retell the pre-World War II histories of rayon and nylon, the

first man-made textile fibers. Her treatment of rayon is rather superficial,

while the chapter on nylon is quite thorough.

She really hits her stride in the third chapter where synthetic fibers, nylon,

acrylic, and polyester, in the 1950s are discussed. After the war synthetic

fibers benefited from a convenience craze. Synthetics offered to liberate

women from the drudgery of ironing. In the 1960s young designers in England

discovered synthetics as a medium for making outrageous clothing intended to

shock the stodgy establishment. The development of the boutique, especially

in London, allowed fashion entrepreneurs like Mary Quant to sell directly to

their clientele, eliminating the necessity of finding a buyer for their

designs. By the late 1960s, however, American youth had come to see synthetics

as boring at best, as evidenced in the famous remark in the film The Graduate,

and toxic and polluting at worst. Yet, the author attributes the souring of

the public on polyester, which had become the dominant synthetic fiber, on a

new emphasis on comfort and the mass production attitudes of fiber producers.

After 1975, as American turned against disco, it also discarded its

double-knit polyester leisure suits. The decade-long cultural exile of

synthetics began to end in the mid-1980s. Madonna’s provocative attire

signaled another rebellion against staid conventions. The fad for fitness took

spandex garments out of the gym and into the street. The first spandex

leggings were marketed in London in 1986. Finally, Japanese designers now saw

synthetics as avante garde, in the same way that young British designers had

done in the 1960s. Japanese fiber makers also discovered how to make

microfibers that finally allowed synthetics to be as comfortable to wear as

natural fibers.

But what is it that determines what we wear? Is it comfort or is it fashion?

The author uses both explanations to account for trends in clothing without

offering much in the way of supporting evidence. It also would have been nice

to have had some tables on fiber use. Data from the Statistical Abstract of

the United States indicates that polyester took away market share from cotton

until 1975. For the next decade market shares were relatively stable. Then,

after 1985 cotton began to make significant gains in market share. In the past

few years stability has returned with about equal consumption of cotton and

polyester.

Overall, the books succeeds as a history of the fashion industry and its

complex chain of production from chemical companies making fibers to fabric

designers to fashion designers to brand named mass produced fashions.

John Smith is working on technological innovation in the chemical industry.

His latest publication is “Turning silk purses into sows’ ears: environmental

history and the chemical industry,” Enterprise & Society (forthcoming).

Published by EH.NET (November 2000)

Denys Lombard and Jean Aubin, editors, Asian Merchants and Businessmen in the Indian Ocean and the China Sea. New Delhi: Oxford University Press, 2000. iii + 375 pp. $35.00 (cloth), ISBN: 0195641094.

Reviewed for EH.NET by Arturo Giraldez, Modern Languages and Literatures Department, University of the Pacific.

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This collection of essays was edited in 1988 by two professors of the L’Ecole des Hautes Etudes en Sciences Sociales in Paris and was published originally in French by the institution’s publishing house. The volume was produced after a conference on the same topic organized by these two eminent historians some years before. As Sanjay Subrahmanyam points out in the “Foreword,” it was a response to the perspective taken by Dutch historians of the Early Modern Period who considered the trading world of Asia in terms of the European Companies and the reaction of ‘non-Western’ societies. The economic dynamism was perceived as coming from Europe and acting upon backward economies. Denys Lombard and Jean Aubin tried to promote a contrary view of an Asian history “that was largely controlled by its internal rhythms, even if related in complex ways after 1500 to various forms of European commercial and political presence” (Subrahmanyam, p. i). This historical debate is not new; it follows controversies involving specialists in Indian, Chinese and African histories. Despite the twelve-year lapse between the French version and the current translation, these essays come at a time when the debate between Eurocentric paradigms and new historiographic perspectives is taking on a new life. The work of Andre Gunder Frank, Ken Pomeranz and R. Bin Wong, among others, place China and the ‘rise of the West’ in a different light, showing the importance of China in world history before the beginnings in Britain of the so called ‘Industrial Revolution.’ (See Andre Gunder Frank (1998) ReORIENT: Global Economy in the Asian Age, Berkeley: University of California Press; Kenneth Pomeranz (2000) The Great Divergence: China, Europe, and the Making of the Modern World Economy, Princeton: Princeton University Press; and R. Bin Wong (1997) China Transformed. Historical Change and the Limits of European Experience, Ithaca and London: Cornell University Press. A recent exposition of the ‘Eurocentric’ paradigm is David Landes (1998) The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor, New York: Norton. For a criticism of these ideas, see James M. Blaut (2000) Eight Eurocentric Historians, New York and London: Guilford Press.)

Despite inherent theoretical problems related to the meaning of the term ‘Europe,’ with even greater confusion in the case of the term ‘West,’ those intellectual constructs form the basis of historical interpretations of wide acceptance. This set of ideas considers past developments in the “European West” as essentially endogenous processes that produced economic and social institutions whose rationality and efficiency renders them the paradigm of economic modernization. Eurocentric views have the common trait of creating an intellectual template to be applied to the transformations of other societies and ranking them accordingly to the similarities and differences from an ideal historical development. To counteract this view, Denys Lombard and Jean Aubin have collected a vast array of articles dealing with the dense network of exchanges from the Persian Gulf, the Red Sea and the African East Coast to the shores of China and Japan. The Europeans — Portuguese, Spaniards, English and Dutch — took advantage of pre-existing dense economic networks but their disruptions did not essentially upset their control by Asian powers until the nineteenth century.

Four main themes structure the authors’ historiographical perspective: 1) “Harbor Towns” as centers of economic stimulation; 2) The role of Islam in developing merchant networks since the ninth century; 3) The study of merchant ‘diasporas’; and 4) The ‘Continuity’ of business in Asia.

Chronologically, the collection begins with Chen Dasheng and D. Lombard’s “Foreign Merchants in Maritime Trade in ‘Quanzhou’ (‘Zaitun’): Thirteenth and Fourteenth Centuries” and ends with “The Major Japanese Groups of Enterprises (Kigyoshudan), Heirs to the Zaibatsus” by Bertrand Cheng. This time span was chosen to avoid an Asian economic history “in which all exchanges are seen through the prism of a periodization, whose pulse is to be found in Lisbon, London or Amsterdam” (Lombard, p.3).

Cities were crucial to trade in Asian waters. Denys Lombard distinguishes between the ‘hydraulic’ city connected to an agricultural space and merchant cities, which depended, in fact, on the maritime nexus and its links with foreign land (p.114). An early case was Quanzhou in China: “a precursor of the merchant cities that we shall later see at different points of the Indian Ocean.” (Dasheng and Lombard, p.20). Luis Filipi F.R. Thomaz studies Melaka in the sixteenth century. Genevieve Bouchon places Calicut in relationship with the Arab world, Ceylon, the Moluccas and the trade with China. Studying the city-port of Surat, Ashin Das Gupta discovers how the arrival of the Dutch and English and the Portuguese departure opened a window of opportunity for Indian merchants to became ship-owners (pp.105-112). This is a good example of how Asian entrepreneurs were able to take advantage of changes produced by the European presence.

Islam played a great role in merchant networks after the ninth century. We find Muslim communities in Quanzhou in the eleventh century; by the sixteenth century they were present in Hurmuz, Malacca, Mindanao and Manila. “As late as the 19th and 20th centuries, Islam continued to animate a whole series of intermediate networks from one end to the Indian Ocean to the other” (Lombard, pp. 5-6). Several authors study these Muslim merchants: Hadramis, Gujaratis, Ismailis, Bohras, Kashmiris, Panthay, and so on.

One of the most intriguing aspects illustrated by these essays is the “continuity” of merchant family networks and how they took advantage of the opportunities provided by different social contexts. When “Saudi Arabia developed into a petro-economy state, it attracted a flood of Hadrami emigrants; two Hadrami multi-millionaires were known everywhere, Bin Mahfuz and Bin Laden” (R.B. Serjeant, p.149). Hadrami origins come from Yemen. Claude Markovits studies other industrial groups in India like the Kasturbhais family of Gujarati merchants whose ancestor, Shantidas Zaveri, was ‘jeweler’ to the Mughal Imperial Court. The family owned textile factories but during the 1960s the group expanded into the chemical industry in collaboration with European companies, ICI and CIBA. They passed from traditional merchants to modern industrialists: “This adaptation has been achieved without any basic modification in the working methods or in the forms of organization” (Markovits, p.318). Similar cases can be found among the Chinese Hakka studied by Claudine Salmon. In 1862 Aw Chi Ching, a Hakka doctor from Fujien settled in Rangoon where he practiced traditional medicine and sold medicinal herbs. His descendents marketed a remedy called “Tiger Balm” of great mass appeal. They began advertising in Chinese newspapers in Hong-Kong, Macao and Northern China. To fight competitors in the balm business they bought newspapers in Guandong, Amoy, Singapore, Hong-Kong and Penang. Despite losing their properties in China after the Revolution, the family overcame the post World War crisis. A successor, Sally Aw, bought newspapers in Hong-Kong and Australia and also invested in a variety of businesses. The Hakka network was a great contributor to family success. After World War II one family member founded the first Hakka Bank in Singapore, the Chong Qiao Yinhang.

The vicissitudes of business development in Japan are well exemplified by one prominent conglomerate of the country: “The Iwasaki family had created the Mitsubishi company, which was the result of a commercial enterprise installed in Nagasaki and financed by the Tosa fief. It had closely collaborated with the earlier Meiji administrations” (Akamatsu, p.365). Before World War II Mitsubishi was one of the ‘Big Four’ Zaibatsus — the others being Mitsui, Sumitomo, and Yasuda. “However, as early as the 1950s, a new type of structure called kigyoshudan emerged to regroup the erstwhile zaibatsus” (Chung, p.367). Mitsubishi is one of them. The previous cases go beyond mere anecdote, implying large theoretical issues. In the words of Lombard (p. 7): “The question still remains whether the recent development of Asian capitalism is a reproduction of Western capitalist systems or an outgrowth of an independent stand taken with regard to them.”

Asian merchants were not always able to develop into industrialists. Another completely different role was the symbiotic relationships between Chettiars and Kalangs with European powers. The Chettiar studied by Hans-Dieter Evers were a Tamil caste of South India. Initially they were moneylenders whose activities expanded to South Africa, Mauritius, Ceylon, Burma, Malaya, South Vietnam and Indochina at the end of the late nineteenth century. The Chettiar expansion coincided with development in South-East Asia of the corporate plantation system and the mining and logging industries. “The Chettiar money-lenders played a major role in the transformation of the remaining peasant subsistence economy and connecting it with the export crop-producing sectors” (Evers, p. 206). They also provided capital to Chinese, Burmese, Pathan and Sinhalese moneylenders, but at the same time were connected with European banking institutions. “Chettiar agents had turned peasants into ‘capillaries of a network of financial arteries leading to the banks of London and Paris'” (Evers, p. 208). The Kalangs are a group of Javanese merchants studied by Claude Guillot. Fatimah, a Kalang woman, involved herself in money lending, like her mother, and in buying and selling gold. The gold was melted down and made “into pure gold ingots that Fatimah personally took to sell to the Javasche Bank in Batavia.” After World War I, this bank “introduced Fatimah to diamond merchants from Antwerp.” The family became the most prominent diamond merchants of the Dutch East Indies (Envers, pp. 272-73).

One might criticize the editors’ decision to “set aside all that we know of the European networks” (Lombard, p.4). Ignoring the presence of the Europeans in Asian waters implies ignoring the substantial links developed between Asian economies, America and other colonial powers. For instance, the Chinese tributary system used Japanese and American silver as one of its main monetary substances; and in the nineteenth century the Atlantic economy, Australian gold, Chinese tea and Indian opium formed a network of exchanges with the British playing a pivotal role. This observation does not detract from the quality of the collection. The essays are full of information and their findings should be carefully incorporated into current historical narratives.

Denys Lombard and Jean Aubin were much aware of the difficulties of studying Asian economies. Whereas European companies and countries contain rich sources amenable to statistical treatment, that is not the case for many economies in the Indian Ocean and China Sea. That explains why many of the essays’ authors use biographical sources and anthropological research to fortify their cases. However, to dismiss their findings because of lack of statistical information would be a serious mistake. In so-called western societies many economic activities are not reported in a reliable numerical form, such as the drug trade that forms part of the, non-reported, “submerged economy.”

Sanjay Subrahmanym’s “Foreword” finishes with the following thoughts that express very well the book’s theoretical relevance. “It is a timely reminder, at the end of the twentieth century, that the family firm, the merchant community, and the networks of capital-raising and investment based on kinship, affinity, and sociability, are still a reality that one needs to contend with, in Asia, but also perhaps in Europe and even in America” (p.ix).

Overall, this is an excellent collection that is tremendously useful for the historian and social scientist willing to get acquainted with aspects of economic and social history usually known only to specialists. It is a deep loss that both Jean Aubin and Denys Lombard are no longer with us. Both were great examples of an excellent French tradition in social sciences. Also two other contributors to the volume, Ashin Das Gupta and R.B.Serjeant died in the last decade of the twentieth century. The book is a great occasion to get acquainted with their work.

Arturo Giraldez has published several articles (in collaboration with D. O. Flynn) on precious metals in the modern era and has edited Metals and Monies in a Global Economy (Aldershot: Varioum, 1997). Also he is a general co-editor of the Variorum collection The Pacific World: Lands, Peoples and History of the Pacific, 1500-1900.

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Published by EH.NET (October 2000)

Lee A. Craig and Douglas Fisher, The European Macroeconomy: Growth,

Integration and Cycles 1500-1913. Cheltenham, UK and Northampton, MA, USA:

Edward Elgar, 2000. xii + 389 pp. $120.00 (cloth), ISBN: 1-85278-643-4.

Reviewed for EH.NET by Stephen Broadberry, Department of Economics, University

of Warwick.

European economic history currently lacks a good textbook that might appeal

to undergraduate students with a background in economics. Floud and McCloskey

(The Economic History of Britain since 1700, Cambridge University

Press, second edition, 1994) exists, but there is nothing comparable for any

other European country or for the early modern period. This book by Lee Craig

and Douglas Fisher, both from North Carolina State University, is thus to be

welcomed as filling an important gap in the textbook market. It is to be

doubly welcomed, however, for doing an excellent job. In many ways, this book

builds on two earlier volumes, the first by Fisher (1992), The Industrial

Revolution: A Macroeconomic Interpretation, and the second by Craig and

Fisher (1997), The Integration of the European Economy, 1850-1913.

Parts III and IV of this book are essentially compressed and simplified

versions of the earlier two volumes, while parts I and II provide a

theoretical overview and a new section on the early modern period.

Part I sets out the theoretical framework, emphasizing four basic ideas that

recur throughout the book: (1) Institutions have an important role to play in

determining economic performance. In particular, increasing political and

economic integration plays an important role in helping to bring about

convergence of per capita incomes within and between countries. (2) Within a

given institutional setting, the long run rate of economic growth is driven by

population growth and technological progress, with investment affecting the

level of per capita income, but not the long run growth rate, as in the basic

neoclassical growth model. (3) Money and financial services play an important

role in real economic activity, but excessive monetary growth causes inflation

along simple quantity theory lines. (4) Business cycles are driven largely by

shocks to real activity, as in real business cycle models. Armed with this

theoretical toolkit, Craig and Fisher cut a swathe through European economic

history between about 1500 and 1914. The starting date reflects the belief

that integration within nation states had largely occurred by 1500, while

subsequent developments are seen as reflecting integration between those

states.

Part II deals with the growth of the European market economy 1500-1750 in four

chapters, covering population and agriculture (chapter 3), inflation, money

and banking (chapter 4), trade, industry and mercantilism (chapter 5) and

trends and cycles (chapter 6). There are some excellent sections here,

including the analysis of the price revolution in the sixteenth century and

the Kipper- und Wipperzeit inflation in terms of the quantity theory of money,

and the use of real wage data in England, Austria, Alsace, Germany and Spain

to make inferences about living standards. However, apart from population,

there is a serious shortage of macroeconomic data for many countries, so that

at times the authors seem constrained by their framework. Would it not be more

useful, for example, to get at the issue of European integration at this time

by using the abundant microeconomic data on variables such as grain prices,

rather than searching for a common European cycle in the fragments of

macroeconomic data?

Part III then turns to the First Industrial Revolution in Europe, 1750-1850,

with separate chapters on Britain (chapter 7), the “major” continental

economies of France, Germany and Belgium (chapter 8) and the “periphery”

(chapter 9). The discussion of Britain embraces the Crafts/Harley gradualist

view of growth during the Industrial Revolution, although I would have liked

more emphasis on the accompanying and more revolutionary structural change

that the British economy underwent at this time. Traditional microeconomic

themes such as the standard of living and other distributional issues receive

only the briefest mention, and although the “wave of gadgets” that spread

across the continent as well as Britain is discussed in chapter 8, the

treatment is brief by comparison with other texts. By contrast, a great deal

of space is devoted to an innovative attempt to identify a common

international cycle as a sign of the integration of the European economy.

Although the extent to which the peripheral countries can be seen as

integrated into the European economy and hence sharing in this common cycle is

limited, Craig and Fisher are keen to emphasize that right down to the “bottom

of the table,” all these countries were experiencing economic and population

growth rates that were uniquely rapid for any sustained period in their

history.

Part IV contains three chapters on the maturing of the Industrial Revolution

1850-1913 and a final chapter on growth and cycles 1500-1913. The chapters on

the 1850-1913 period cover population and overall economic growth (chapter

10), financial issues (chapter 11) and business cycles (chapter 12). With a

much more complete data set than for earlier periods, it is possible to show

clearly that most West European countries converged towards British levels of

per capita income between 1850 and 1913, but that South and East European

countries did not share in this process of convergence. It is also possible to

show how convergence was linked to a willingness to permit a shift of

resources out of agriculture and out of the industries of the First Industrial

Revolution into the industries of the Second Industrial Revolution. The fuller

data set for this period also permits a much more detailed analysis of the

role of money, drawing on the monetary approach to the balance of payments.

The close correlation of inflation rates across countries during the gold

standard era, combined with the very low correlation of monetary growth rates

across countries is explained by arbitrage in goods markets combined with a

commitment to fixed exchange rates, rather than by a specie-flow mechanism. As

in the previous sections, the chapter on business cycles identifies a common

European cycle.

There is much to commend in this approach. A broad sweep of history can be

covered without getting lost in excessive detail. And by sticking to some

basic ideas, Craig and Fisher have made the book accessible to students with

only a basic knowledge of economics. However, there are also drawbacks. One

concern is that by sticking to a macroeconomic approach, many of the issues

that economic historians have traditionally emphasized are simply not covered

or mentioned only briefly in passing. Maybe traditional texts do sometimes get

a bit bogged down in the details of how the spinning jenny worked, but the

macroeconomic emphasis of this book also has its drawbacks. For one thing, we

can probably be more confident about our knowledge of what happened in the

cotton industry than we can about the growth of national income during the

Industrial Revolution. This makes it instructive to work up to the aggregate

data from the micro evidence, not just to present micro data when macro

estimates are unavailable.

A second area of concern is that economics students studying economic history

should pick up a clear message that history matters. The authors do state at

the beginning that institutions are important, but much of the subsequent

material emphasizes smooth convergence on a global optimum apart from a few

exogenous shocks. One obvious way of emphasizing the importance of the

particular historical path taken would be to cover the twentieth century more

fully, since the period of European integration before 1914 was followed by a

long period of disintegration, some of the consequences of which are still

with us. The excluded twentieth century anyway looks eminently more suitable

for the quantitative macroeconomic treatment favored by the authors than the

included sixteenth and seventeenth centuries.

Overall, I found this a stimulating book. European economic history badly

needs a fresh approach and this is one way of doing it. It is to be hoped that

a paperback version will be issued, otherwise it may prove too expensive for

the mass undergraduate audience that it undoubtedly deserves.

Stephen Broadberry is Professor of Economic History in the Department of

Economics, University of Warwick, United Kingdom. He is currently an editor of

the European Review of Economic History, and his 1997 book, The

Productivity Race: British Manufacturing in International

Perspective,1850-1990, was published by Cambridge University Press.

Published by EH.Net (October 2000)

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W. David Lewis. Airline Executives and Federal Regulation: Case Studies in American Enterprise from the Airmail Era to the Dawn of the Jet Age. Historical Perspectives on Business Enterprise, Mansel G. Blackford and K. Austin Kerr, Editors. Columbus: Ohio State University Press, 2000. xi + 379 pp. Photos, notes, and index. $60.00 (cloth) ISBN 0-8142-0833-9.

Reviewed for H-List and EH.Net by Scott E. Tarry, , Aviation Institute and Department of Public Administration, University of Nebraska at Omaha.

W. David Lewis and his colleagues have produced a collection of studies that will be useful to both the historian interested in the evolution of America’s air transport system and the contemporary student of air transport who is looking for a better understanding of the industry’s contemporary challenges and opportunities. The studies, which focus on individual airline executives, are well written and informative. The biographical accounts in themselves would be interesting to students of aviation history, but the way in which Lewis and the other contributors weave the biographies together with an exploration of the regulatory and political processes that shaped the American air transport industry in its formative years makes this book attractive to a much broader audience. The book is worth reading because it shows how the individual characteristics and personal choices of these airline executives shaped in no small way their ability to work within the regulatory framework governed by the Civil Aeronautics Board (CAB).

In his introduction to the volume, Lewis gives a nice overview of the political, social, and economic environment that confronted America’s early airline executives. This information is especially important to the reader who understands today’s air transport industry, but may not fully appreciate the rather tenuous beginnings of air travel in this country. Lewis provides some indication of what might be found in each of the subsequent case analyses and also provides at least a general framework for thinking about relationship between government and firm.

The studies cover an impressive range of airlines and individuals. From Eddie Rickenbacker, who rose from a working class background to become an American hero and eventually the head of Eastern Airlines, to Robert Peach, who used his entrepreneurial spirit and legal training to build, against considerable odds, Mohawk Airlines into a serious regional carrier. In both cases, the authors, Lewis and William M. Leary, respectively, show how Eastern and Mohawk benefited from their leaders forceful leadership and willingness to take risks. Both authors also explain how the politics of the regulatory process and Rickenbacker’s unwillingness to play the political game and Peach’s predicament as the head of a small carrier eventually forced both men from the airline business.

The accounts of Continental’s Robert Six, Northwest’s Donald Nyrop, and American’s C.R. Smith are well written explorations of three success stories in the American airline industry. Despite different styles, political connections, and attitudes towards government, each of these men were able to make sense of the context within which their airlines operated. While not always successful in their bids for more routes and other concessions from the CAB, these men were more willing and able than many of their competitors to work within the confines of the regulatory system. Roger Bilstein provides a compelling overview of Smith’s rise to prominence, not only at American Airlines, but also in the industry itself. Donna Corbett’s study of Nyrop traces a successful personal journey from regulatory bureaucrat to airline manager and industry leader. She points to Nyrop’s political and regulatory experience in explaining his longevity and success at the head of Northwest Airlines. Michael Gorn’s analysis of the rise of Robert Six highlight’s the importance of making the most of one’s good fortune.

The cases are not exclusively personal and managerial success stories. In fact, three cases trace the tragic demise of airline executives who enjoyed considerable, but fleeting success. William Leary’s analysis of Robert Peach details the rise of Mohawk Airlines and its eventual demise and acquisition by Allegheny Airlines, which arguably precipitated Peach’s taking of his own life in 1971, shortly after the merger. William Trimble’s study of George R. Hann, the head of Pittsburgh Aviation Industries Corporation and Pennsylvania Airlines, and who was forced from the industry after participating in the so-called “spoils conference” in 1930, illustrates the fate of some of the industry’s early leaders. These leaders participated in the U.S. Postmaster General’s scheme to stabilize the industry by allowing if not promoting collusion among established carriers. While the airlines continued in the industry by simply changing their names and ending their affiliations with aircraft manufacturers, individual company leaders like Hann were excluded from participating in the growth and development of the industry they helped to found. Finally, Roger Launius’s study of Orvis M. Nelson provides an entertaining look at an entrepreneur who managed to succeed by working on the fringes of the regulatory system. Nelson’s development and operation of a successful “nonscheduled” airline operation challenged the authority of the CAB and the interests of entrenched carriers who operated with the blessing and support of the government. One is left to wonder whether Nelson’s Transocean Air Lines represented a healthy challenge to the industry’s entrenched interests or a dangerous, destabilizing force as his critics charged.

The book is a good collection of case studies and is highly recommended for those who study the industry’s history. It is also a worthwhile read for those dealing with air transport in its current evolutionary stage. Many of the same issues continue to confront the industry and policy makers who monitor the airline industry. Providing efficient and effective air transport services for small and rural communities continues to befuddle policy makers. Insuring that large established carriers do not have an unfair advantage over new entrants continues to raise questions about competition. Labor problems, customer service issues, establishing the right fleet mix, and maximizing profits while insuring safety have been constant themes throughout the industry’s history.

It is worth noting another theme and one that will be understood by those who have any connection to the airline industry beyond simply taking the occasional flight. That theme, and it is evident in each chapter of this book, is that aviation is, for better or worse, different from other industries. It is more than public transportation, it is more than an incubator for technological innovation, it is more than an economic development tool used to link communities to the global economy, it is more than a source of noise, and it is more than part of the nation’s national security. As Robert Six once said “I’ve never known an industry that can get into people’s blood the way aviation does” (p. 171). Aviation is as much about the people who work in it as it is about the airports and airplanes. Even today when airlines are characterized as being driven by faceless “beancounters” and executives with little or no personal love for flying, the airline industry continues to boast more than its fair share of characters who are seemingly larger than life. Herb Kelleher of Southwest Airlines, Gordon Bethune of Continental, and Richard Branson of Virgin Atlantic remind us of the impact individual airline executives can have on the success of their own firms and air transport more generally. Lewis and his fellow contributors provide an illuminating glimpse into some of the most intriguing characters in the historical development of America’s airline industry and remind us that individual leadership is still worth examining if we want to see where air transport is heading in the coming years.

Scott Tarry is Associate Professor of Aviation and Public Administration in the Aviation Institute at the University of Nebraska at Omaha. His research interests include air transport administration and policy. He has served as a faculty research fellow at NASA’s Langley Research Center. His current projects include an examination of rural air transport issues and the impact a small aircraft transportation system might have on small and isolated communities.

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Published by EH.NET (October 2000)

David Eltis, Stephen D. Behrendt, David Richardson, and Herbert S. Klein,

The Trans-Atlantic Slave Trade: A Database on CD-ROM. Cambridge and New

York: Cambridge University Press, 1999. (User guide, xi + 89 pp.) $195, ISBN:

0-521-62910-1.

Reviewed for EH.NET by Lorena S. Walsh, Department of Historical Research, The

Colonial Williamsburg Foundation.

The Trans-Atlantic Slave Trade Database is a monumental achievement

that brings together in a single multisource data set the results of over

thirty years of international research undertaken by many individual scholars

working in English, Portuguese, Danish, French, Spanish, and Dutch on the

largest transoceanic migration of any people prior to the outpouring of

Europeans to the New World in the nineteenth century. The authors entertain

“grand hopes” for this extraordinary resource, sponsored by the W.E.B. Du Bois

Institute at Harvard University with additional support from the National

Endowment for the Humanities, the Mellon Foundation, and the Ford Foundation,

and taking seven years to complete. It will, they contend, not only “enable

historians to develop new insights into the history of peoples of African

descent and the forces that determined their forced migration,” but will also

“greatly facilitate the study of cultural, demographic, and economic change in

the Atlantic world from the late sixteenth to the mid-nineteenth centuries”

(p. 2). Are the hopes of the authors, the sponsors, and of Cambridge

University Press justified? Or is the publication of this database more likely

simply to facilitate an expansion of the esoteric and sometimes contentious

numbers games that have frequently characterized slave trade studies? My sense

is that the project is indeed likely to stimulate new research not just on the

slave trade narrowly conceived, but also on a range of broader economic,

demographic, and cultural issues on both sides of the Atlantic.

The database includes records of 27,233 trans-Atlantic slave ship voyages made

between 1595 and 1866, accounting for between two-thirds and three-quarters of

all trans-Atlantic slave voyages sailing after 1600. (Independent estimates of

the volume of the trans-Atlantic slave trade after 1600 yield a “scholarly

consensus” figure of 11.4 million departures from Africa and 10 million

arrivals in the Americas. This suggests a total of between 34,482 and 35,561

slaving voyages in this period.) The authors standardized existing data sets

compiled by individual researchers, collated voyages that appeared in several

different data sets, and added new information from previously unexplored

sources. Extraordinary care was used in the initial compilation and in

subsequent editing of the database; the portion that I have used (and

rechecked against original primary sources) is exceptionally accurate.

Coverage of the British trade is fullest (the authors estimate that 90 percent

of all voyages are included) and the eighteenth-century French and Dutch

trades are also largely complete. Bigger gaps exist for the Portuguese,

seventeenth-century French, and nineteenth-century Spanish, Danish, and North

American trades. However the authors contend that the set “provides samples

large enough to present the major trends over time” (p. 5).

Each entry in the database consists of a single slaving voyage, for which up

to 226 pieces of information may be available. These include 162 data

variables incorporating information collected from the sources such as dates

at which the ship left from or arrived at various destinations during the

voyage; ports of origin, slave purchase, and delivery; number of slaves

embarked and disembarked, their demographic composition and mortality levels;

details of ship construction, registration, armament, and crew size; names of

captains and owners; the outcome of the voyage; and archival sources. An

additional 64 imputed variables are calculated or imputed from the data to

compensate for missing information and to facilitate analysis by consolidating

or regrouping variables that have unwieldy numbers of individual codes. These

include consolidation of geographic locations into regional and continental

categories, and grouping of voyages into different temporal categories (year

the voyage originated, year in which slaves were embarked, and year of

disembarkation, and for the last also into periods of 5, 25, and 100 years).

Outcomes of voyages (successful completion, wreck, capture, or insurrection

somewhere en route, etc.) are reclassified in three ways from the perspective

of slaves, captors, and owners. Other inferred variables group locations into

major trading regions, estimate the numbers embarked or disembarked where full

information is not available, and regroup data on age, sex, and mortality. How

the estimations were made is clearly documented (the SPSS program that

creates the imputed variables is included on the CD-ROM), so users can easily

substitute different groupings or estimations.

The usefulness of the database for refining conventional slave trade studies

is obvious, but it is the broader applications that go well beyond core issues

such as the volume and demographic structure of the trade, Middle Passage

mortality, and shipping productivity — indeed far beyond the slave trade

itself — that are the most exciting. On the African side, data on slave

exports from specific coastal outlets afford insights into the slave and

commodity trades of particular African subregions and even single ports, and

into African agency through resistance to the trade as evidenced in ship

insurrections, as well as broader economic and demographic results. The

authors contend that “the large role of Africans in the Atlantic world” is

“perhaps the single most important preliminary feature to emerge from these

new data” (p. 35). As the largest data base on any transoceanic trade of the

seventeenth and eighteenth centuries, it facilitates research into European

long-distance shipping activities, including investigations of changing

shipping technologies and, from records of ports of origin, ship owners, and

captains, connections between the slave and other colonial trades. For the

Americas, new information on the numbers and demographic composition of forced

migrants brought to particular destinations suggests a need to reassess

current understanding of at least some local population histories. Even more

importantly, the data set makes available more precise information on which

parts of Africa supplied the different parts of the slaveholding Americas.

Expanded evidence on the African origins of forced migrants will allow

scholars to explore the impact of African heritage on New World societies, and

to better assess patterns of cultural retention and adaptation. Most of the

papers and articles initially derived from the data set (listed on pp. 55-56)

deal with traditional slave trade topics. However David Eltis’s The Rise of

African Slavery in the Americas (Cambridge University Press, 2000) —

which builds on the database — provides a striking example of how such

quantitative measures can be utilized in combination with qualitative

materials to address broader comparative economic and cultural issues

including topics such as gender, ethnicity, and value systems.

Unlike many digitized data sets available through sources such as ICPSR that

require some level of technical expertise to manipulate, the data on

individual voyages can be readily accessed, queried, and rearranged, some

basic analyses obtained, and the results graphed, viewed on interactive maps,

and printed out simply by clicking on pull-down menus. Selected subsets can be

saved for subsequent reference or downloaded into SPSS data files for

modification and more refined analysis according to individual needs or

preferences. Thus the database has importance for several different audiences.

Scholars interested in quantitative aspects of the trans-Atlantic slave trade

are but the most obvious group. It is also a readily accessible reference work

that ought to be available to non-specialist as well as specialist users of

college and museum libraries. Finally, it is a marvelous teaching resource,

both for supplementing other course materials and from which students with

varying levels of technical expertise can develop a wide range of research

projects.

A closing caveat is perhaps in order since my enthusiastic endorsement of

The Trans-Atlantic Slave Trade Database is definitely not that of a

disinterested reader or casual user. Invited to present a paper exploring a

subset of the database pertaining to the Chesapeake region for a conference

held at Williamsburg in 1998, I at first imagined that this would entail

little more than a cursory review of some revised numbers. That supposedly

limited foray has since expanded into a multi-year research project

incorporating additional information on Chesapeake slaving voyages; tracing

connections between the slave, indentured servant, and tobacco trades;

exploring social, demographic, and cultural implications for the region; and

developing museum interpretations underscoring trans-Atlantic

interconnections. My experience is surely not unique. An example of a related

project is Gwendolyn Midlo Hall, ed., Databases for the Study of

Afro-Louisiana History and Genealogy, 1699-1860: Computerized Information from

Original Manuscript Sources (Louisiana State University Press, 2000).

Until recently compilations of slave trade statistics have seemed to reduce

one of the darkest episodes in world history into a set of abstract and

bloodless figures. This commendable collaborative effort now offers scholars

not only an authoritative source for developing better statistics, but also an

extraordinary resource from which to begin translating those esoteric numbers

back into a more humanized history.

(System requirements: The following configuration is recommended to run the

CD-ROM: Windows 95, 98, or NT operating system; 166 MHz Pentium processor; 32

MD RAM; 800 x 600 monitor resolution x 65,536 colors (16 bits); 6x speed

CD-ROM drive; 84 MD available hard disk space.)

Lorena S. Walsh is the author of From Calabar to Carter’s Grove: The

History of a Virginia Slave Community (University of Virginia Press,

1997), and of “The Chesapeake Slave Trade: Regional Patterns, African Origins,

and Some Implications,” William and Mary Quarterly, forthcoming,

January 2001.

Published by EH.NET (October 2000)

Martin F. J. Prachowny, The Kennedy-Johnson Tax Cut: A Revisionist

History. Cheltenham, UK and Northampton, MA: Edward Elgar Publishing,

2000. ix + 227 pp. $80 (cloth), ISBN 1-84064-417-6.

Reviewed by Richard K. Vedder, Department of Economics, Ohio University.

The conventional wisdom regarding modern American macroeconomic history is

that after the Keynesian Revolution of the 1930s, business cycles were largely

tamed, in part because of the intelligent use of fiscal policy. Scholars point

to the Kennedy-Johnson tax cut of 1964-65, which, we are told, turned a

sluggish economy into a vibrant and rapidly expanding one, setting off the

longest boom in American history to that time.

Martin Prachowny challenges that wisdom in his interesting and valuable

account of the Kennedy-Johnson tax cut, writing what he calls a “revisionist

history.” Yet the revisionism is a different form than I would have predicted

ex ante. I expected an account arguing that the Keynesian paradigm was faulty,

perhaps using a New Classical perspective that emphasizes the role that the

tax cut had in the genesis of the stagflation of the 1970s. Rather, Prachowny

finds not much inherently wrong in the Keynesian theoretical approach, but

much wrong in its implementation. The villains in this account are Walter

Heller, Gardner Ackley, and Arthur Okun, the chairmen of the Council of

Economic Advisers (CEA) of the era. The problem was not that they were

Keynesian, Prachowny argues, but that they were not Keynesian enough.

Prachowny suggests that the sins of this triad of economists were many. First

of all, he argues that they were not using the full array of Keynesian

theoretical tools to analyze the economy. They used a rather simple

multiplier-accelerator model, instead of the IS-LM approach that was

universally used in the intermediate macro theory books of the time. As a

consequence, they tended to ignore the interest rate and monetary dimensions

of their expansionist programs. Crowding out is not acknowledged as a

potential issue. The problem was sometimes even more basic: “the simple truth

is that Heller did not understand the operation of the accelerator” (p.68), a

hallmark of Keynesian cyclical analysis of that era. Moreover, while Okun

(approvingly in Prachowny’s view) championed the idea of measuring and

targeting the gap between actual and potential GNP, thus introducing some

supply side considerations into the analysis, the CEA inconsistently tried to

eliminate the output gap, and sometimes dishonestly or incompetently measured

it (Prachowny goes into some tedious econometric overkill to demonstrate that

point). Moreover, its sensitivity to supply side effects of stabilization

policy was wanting.

Moreover, the CEA was not always intellectually honest, sometimes suppressing

truth and hard analysis in order to accommodate some political problem.

Prachowny shows that at one point Ackley seemed to advocate lying (or at least

suppressing the perceived truth) about the forecasted GNP, even though this

would “not completely fool many outside experts” (p. 197). The notion that the

Council was a group of objective experts, who gave the president and public

the unvarnished truth as they saw it, is a fantasy. Speaking of Heller’s

perception of his job, Prachowny noted “there was no inconsistency between

being a partisan advocate of efficiency and a partisan Democrat” (pp.

180-181).

Even more sinful, the Council was intellectually inconsistent, fighting hard

in 1962 and 1963 for a tax cut to eliminate an output gap, but vacillating and

fudging forecasts so as to avoid vigorously prompting a tax increase when

aggregate demand overheated by 1966 or 1967. Bowing to political pressures

(e.g., opposition to a tax increase by Lyndon Johnson and Wilbur Mills), they

pushed wage-price guideposts and started bashing businessmen, implementing

fine-tuning and mindless intervention to an absurd degree. Thus, in February

1966, Gardner Ackley devoted considerable effort to rolling back an increase

in shoe prices, and argued that the U.S. “should . . . proceed to draw up an

export restriction order” (p. 122). In Prachowny’s view, inflation was

mounting because the government would not dampen aggregate demand, yet the

nation’s leading policy economist was advocating trade restrictions to deal

with the problem! Had Shakespeare been alive, he might sensibly have advocated

shooting the economists instead of the lawyers. The fiasco of failing to deal

at a macro level with excessive aggregate demand set the stage for inflation

and later stagflation.

Prachowny says that the CEA did not take advantage of modern advances in

Keynesian economics, such as the development of IS-LM analysis. One can argue

that they ignored non-Keynesian insights as well. Milton Friedman and Anna

Schwartz had written their Monetary History of the United States before

the tax cut was approved, and the early Keynesian notion that “money does not

matter” (which seemed, roughly, to be the Heller view) was under serious

attack. We were within a few years of reading new insights of Friedman,

Phelps, Lucas and others. Why did not some of the brainpower at the Council

anticipate the problems that demand stimulus would cause in the long run?

Among the Council’s members were future Nobel laureate James Tobin. Other

future Nobel winners, like Robert Solow, were informal advisors. Eccentric,

but probably correct, Ludwig von Mises almost perfectly anticipated the

Phillips Curve and its ultimate demise in the forward to his new edition of

the Theory of Money and Credit, published in 1953. If one wants to

indict the Council on its economics, one does not have to limit oneself to its

lack of sophistication regarding the Keynesian model.

When all is said in done, however, Prachowny’s book is a welcome addition to

the literature on American fiscal policy history. It adds importantly to the

work of individuals like the late Herbert Stein and the self-congratulatory

writings of participants in the policy-making arena. Prachowny despairs over

the politicization of policy recommendations of economists, but to students of

public choice his laments are totally predictable.

The Prachowny book is not the last word, however, on this subject. It is not a

comprehensive analysis of the Kennedy-Johnson tax cut, but rather an

economist’s attempt to analyze the actions of fellow economists who were

influential in making policy. The book virtually ignores the discussions

between Lyndon Johnson and his other advisers, the role played by the

Treasury, Commerce Department, Budget Bureau, Congress, special interest

groups and the like. Making economic policy is like making sausage — it is

not pretty. Prachowny expresses horror at this, particularly at it relates to

the CEA, but the problem did not start with Walter Heller or end with him.

Indeed, as a longtime consultant to a congressional committee myself, I think

the problem is far larger than he imagines. Indeed, the problems of timing

fiscal policy, of the probability of special interest manipulation of results,

etc., increase the case for a rules approach to macro policy, arguably on both

the fiscal and monetary sides.

Perhaps some of the alleged failings of the CEA during this period should fall

more on others largely ignored in Prachowny’s account. Even if the CEA had

behaved perfectly it might not have been able to alter policy that much: its

power was finite. While House Ways and Means chair Wilbur Mills gets some

mention in this book, there is very little on the political dynamics that went

into the tax cut and the laterdecision to engage an income tax surcharge.

There is no mention of Henry Fowler (LBJ’s Treasury Secretary) or Everett

Dirksen (prominent Republican senator) or dozens of other influential

political leaders who played a role in shaping fiscal policy during this era.

There is no mention of a fascinating phone conversation that Lyndon Johnson

had with Heller the day after Kennedy’s assassination inviting him, in effect,

to fudge revenue estimates (as recounted in Michael Beschloss’s editing of the

Johnson White House tapes). In short, much of the richness of the story about

policy changes of the era is lost in the Prachowny recounting, with its

emphasis on the arcane details of forecasting, model building, and econometric

estimations.

The Prachowny book, however, has stimulated me to offer a rather different

revisionist account, which some scholar might wish to develop or challenge. At

the time that the Kennedy-Johnson tax cut was approved in February 1964, the

unemployment rate was 5.4 percent, below the annual average for any of the

previous six years and 1.2 percentage points lower than when Kennedy took

office. If Robert Gordon is right, unemployment was pretty close to its

natural rate. The economy had been growing faster than its long run average

rate (of about 3.5 percent annual output growth). For example, real GDP rose

over 5 percent annually over the two years 1962 and 1963, significantly

reducing any potential output gap. In the five quarters including the

enactment of the tax increase and the year preceding, real GDP rose at annual

rate varying between 2.9 and 9.2 percent a quarter, with the median growth

rate being 5.3 percent. In short, there was no dire need to stimulate

aggregate demand: the self-correcting properties of the market were working

nicely to eliminate the last residue of the 1960 recession.

Yet 1964 was an election year, and LBJ was a masterful political animal.

Johnson wanted to revitalize the New Deal coalition, and a tax cut would help

give him the power to do it. The economy really did not really need a tax cut

from a cyclical perspective, but it needed it to meet LBJ’s political

objectives, and the economy (and Kennedy’s assassination) provided the cover.

Heller, Okun and Ackley were partisan Democrats wanting to help the cause.

Whether out of partisan enthusiasm for a liberal Democratic agenda or out of

economic ignorance or both, they went all the way with LBJ. To be sure, the

administration economists, with their obsession with aggregate demand,

probably underestimated the supply side effects of the tax cut, as total

income tax (individual and corporation) revenues rose over 20 percent from

fiscal year 1963 (the last pre-tax cut year) to fiscal year 1966 (the first

year with the cut fully implemented). The Laffer curve dimensions of the tax

cut were realized beyond their fondest dreams. Yet the extraordinary increase

on the demand side from the Vietnam War and Great Society programs led to

rising inflation, and ultimately to the higher inflationary expectations, wage

increases and soaring interest rates that ultimately led to the stagnation of

the 1970s. The budget deficit problem was not a result of a failure of tax

revenues to grow, but rather entirely the consequence of an extraordinary

growth in expenditures that went to fight what ultimately turned out to be two

highly unproductive wars, the War on Poverty and the Vietnam War.

Enough of my own speculation. The important point is that Prachowny has

provided a valuable addition to the literature, one well researched and

documented. Its faults are ones of omission rather than commission, and his

retelling of this era stimulates us to await a more comprehensive retelling of

the fiscal experiences of the Sixties.

Richard Vedder, Distinguished Professor of Economics at Ohio University, is

co-author with Lowell Gallaway of Out of Work: Unemployment and Government

in Twentieth-Century America (New York: New York University Press, 1997).

Published by EH.NET (October 2000)

Vito Tanzi and Ludger Schuknecht, Public Spending in the 20th Century: A

Global Perspective. Cambridge and New York: Cambridge University Press,

2000. xvi + 291. $64.95 (cloth), ISBN: 0-521-66291-5; $22.95 (paperback),

ISBN: 0-521-66410-1.

Reviewed for EH.NET by Roger Middleton, Reader in the History of Political

Economy, University of Bristol, UK.

This is an ambitious work which can be approached from two standpoints: of one

that revisits Colin Clark’s (1945) much-cited hypothesis that there is some

critical level of public expenditure beyond which diminishing returns prevail;

and of the other as a contribution to the current global debate on economic

policy which is now dominated by the question of which model of capitalism

works best. In one sense few economists are better qualified to undertake

this study than these authors. Tanzi is the Director of the IMF’s Fiscal

Affairs Department and Schuknecht the Principal Economist in the European

Central Bank’s Fiscal Policies Division. Both have made significant

contributions to the applied fiscal policy literature and to the political

economy of state reform. But this book has ambitions to be more than a study

of the current policy debate; it purports to be a historical survey of the

growth of government since c.1870. Both seem to be economists, however,

largely innocent of the ways of economic historians and of the economic

history literature – also that of comparative public policy – and this has

quite significant ramifications for the conduct of their study and the

interpretation of the evidence. The problems raised are various. They range

from extraordinary statements, such as a reference to Keynes (1926) as ‘a

little known book’ (p. 4), through gross stereotypes of episodes in the

history of economic thought and policy regimes, and onward to ignorance of so

much of the literature on both government growth and the interpretation of

long-run economic growth (of which more later). There is also a populist tone

to much of this book which will grate with some readers, and not just those on

the political left who will in any case be unconvinced by the ‘Washington

consensus’ message.

But, enough of this for the present and instead let us progress to the

structure and organisation of this study, and of its conclusions, for there is

much here that is very valuable. The basic thesis is established early: that

the growth of public expenditure since c.1870 was not caused by inevitable

forces that made it imperative; that in terms of the standard socio-economic

indicators (taken as proxies for government policy objectives) smaller, better

focused government is better able to deliver than is big government; and,

therefore, there exists significant scope currently for the big spending OECD

states to contract their public sectors. Moreover, they argue, such fiscal

consolidation can be attained without incurring major economic or political

penalties. This thesis is pursued through four parts to the book: I, ‘The

growth of government: a historical perspective’ (chapters 1-3); II, ‘Gains

from the growth of public expenditure’ (chapters 4-6); III, ‘The role of the

state and government reform’ (chapters 7-9); and IV, ‘Recent experiences of

countries in reforming the government’ (chapters 10-12). The first two parts

rely heavily on two long-term cross-country datasets for the OECD states: one

on comparative public finance (where, despite the book’s title, revenuedata

is also included and analysed) and the other on socio-economic indicators.

These are provided for benchmark years (c.1870, 1913, 1937, 1960, 1980 and

1990s) and sub-periods (for growth rates) for as many of the OECD states, and

for as wide a range of social and economic indicators, as can be amassed as

far back towards c.1870 as is possible. The underlying data is a useful

resource in its own right, but it is unfortunate that the authors know so

little about the public finance history of the individual states (including

the existence of data sources often more suited than those general

statistical collections they have used) and are unaware of important

comparative work by authors such as Gemmell (1993), Steinmo (1993) or Castles

(1998) which covers much of the ground they do but tells much richer stories

about the growth of big government.

Tanzi and Schuknecht’s account of the rise of big government posits a

watershed around 1960. Until that point, and for the majority of countries,

the rise in public spending was matched by improved economic and social

welfare, whereas thereafter diminishing returns became established. They find

the rapid growth between 1960-80 remarkable, given that it occurred when most

countries were not engaged in war effort, there was no depression and the

demographic developments were generally fiscally friendly. Their explanation

is in terms of changed attitudes towards the role of the state – ‘the heyday

of Keynesianism and the time when governments were perceived by many to be

efficient in allocating and redistributing resources and in stabilizing the

economy’ (p. 16). My problem with such arguments is that they attempt to

provide overarching explanations for discrete blocks of time. An economic

historian would not work with 1960-80, would want to factor OPEC into the

argument, would raise doubts about the hegemony of Keynesianism in all OECD

countries, and would in any case retort that Keynesianism was in crisis during

the period of its supposed heyday and that fiscal retrenchment began well

before 1980 in some countries (Britain being a notable case).

I have problems also with the next stage, which involves dividing the OECD

into three groups on the basis of their 1990 status as having big, medium or

small public expenditure/GDP shares. The big spenders (shares of more than 50

per cent) thus comprise Belgium, Italy, the Netherlands, Norway and Sweden;

the medium (40-50 per cent) Austria, Canada, France, Germany, Ireland, New

Zealand and Spain; and the small (less than 40 per cent) Australia, Japan,

Switzerland, UK and the US. If the purpose of the exercise is to show that

between 1960-90 socio-economic welfare advanced more relatively in the small

spending group, then it matters intensely when and how we measure small. For

example, anyone who knows anything about the political and economic history of

postwar Britain will have reservations about the inclusion of the UK in the

small group, knowing full well that its ranking in the OECD in 1960 was very

different. Is a single observation, therefore, the appropriate way to proceed?

We have also the problem that the small group is dominated by the US, and

indeed this creates serious problems for the authors when it comes to the

social stability indicators where in terms of the propensity to imprison the

population and the divorce rate the US is quite out of line with the rest of

the OECD.

There is also a problem of conflation in the argument that the small group

have enjoyed the greatest relative gains in economic welfare since 1960

because they have not been afflicted by big government. As is well-known

amongst economic historians, comparative growth rates need in the first

instance to be located within a long-term catch-up and convergence framework

to accommodate the differing potential that individual economies have to grow

more rapidly than average to attain the GDP/worker-hour levels of the

productivity leader(s). There is no mention of this, and many will in any case

be unconvinced by what is described as the ‘new, modest, and understandably

controversial approach’ (p. 74) of inferring changes in socio-economic welfare

at the level of the nation state directly from improvements in the values of

the relevant socio-economic indicators. It is important to record that there

is no formal hypothesis testing here, no econometrics of any sort, and this

methodology is quite incapable of distinguishing causation from association.

For example, they argue that ‘countries with a large share of public provision

and financing of health care, such as the United Kingdom, do not show better

indicators than countries with a relatively smaller role for government in

health, such as Switzerland. It is therefore questionable as to how far

growing public expenditure is still contributing to these improvements.

Progress in health indicators seems to be more correlated with technical

progress and access to health care does not seem to differ much between

countries any more’ (pp. 91-2). What is not mentioned is the well-established

relationship between health and income (and its distribution) – as their Table

IV.2 (p. 79) shows GDP/capita was very nearly twice as high in Switzerland as

in the UK in 1990 and 2.14 times as high in 1960.

The book is on more solid ground, and makes more of a contribution, in two

areas. It provides a convincing account of how in practice the redistributive

effects of the interaction of welfare spending and tax regimes produce little

differences between the big and small spenders because when the total tax

burden becomes a large share of a country’s GDP, it is no longer very

progressive and, equally, when public transfers become very large, they tend

to be poorly targeted. Secondly, parts III and IV of the book provide a useful

summary of the Washington consensus on what the role of the state ought to be

and a blueprint for its achievement. It is thus likely to be widely read in

policy circles, but those who want more nuanced accounts of what occurred in

public spending will have to look elsewhere.

Roger Middleton’s recent books include Charlatans or Saviours?: Economists

and the British Economy from Marshall to Meade (1998), The British

Economy since 1945: Engaging with the Debate (2000) and (edited with Roger

Backhouse) Exemplary Economists: Introducing Twentieth-century

Economists (2 volumes, 2000).

References:

Castles, F.G. (1998) Comparative Public Policy: Patterns of Post-war

Transformation. Cheltenham: Edward Elgar.

Clark, C.G. (1945) “Public Finance and Changes in the Value of Money,”

Economic Journal, 55 (4), pp. 371-89.

Gemmell, N. (editor) (1993) The Growth of the Public Sector: Theories and

International Evidence. Aldershot: Edward Elgar.

Keynes, J.M. (1926) The End of Laissez-faire. London: Hogarth Press.

Reprinted in The Collected Writings of John Maynard Keynes. Vol. IX:

Essays in Persuasion. London: Macmillan (1972), pp. 272-94.

Steinmo, S. (1993) Taxation and Democracy: Swedish, British and American

Approaches to Financing the Modern State. New Haven: Yale University

Press.

Published by EH.NET (October 2000)

Andr? Hofman, The Economic Development of Latin America in the Twentieth

Century. Northampton, MA: Edward Elgar Publishing, 2000. xvi + 322 pp.

$100 (cloth), ISBN: 1-85898-852-7.

Reviewed for EH.NET by Noel Maurer, Centro de Investigaci?n Econ?mica,

Instituto Tecnologico Autonomo de Mexico (ITAM).

Latin America’s economic performance over the past fifty years has been

highly disappointing. The region’s economies have lost ground against both the

OECD countries and East Asian NICs. Many scholars have devoted a great deal of

effort in attempting to pin down the ultimate causes of the region’s economic

failure. Unfortunately, we still know too little about the immediate causes of

slow growth. Low levels of capital accumulation? Educational failure? Poor

total factor productivity growth? All of the above?

Andr? Hofman’s volume is a vital contribution to the region’s economic

history. It attempts to assess the proximate causes of Latin America’s

economic performance over the past few decades. Hofman carefully constructs

comparable time series for factor inputs for each country. He then uses the

time series to assess the contribution of each factor to the region’s growth.

Much of the book has a “just the facts, ma’am” tone which serves it well.

Hofman’s most surprising result comes from his calculations of total factory

productivity. Until 1980, changes in capital and labor inputs accounted for a

remarkably high percentage of the region’s growth. This suggests that growth

in Latin America before 1980 was not unlike growth in the Soviet Union.

Countries piled up capital and improved labor, albeit at relatively slow

rates. After 1980, TFP growth turned substantially negative. In fact, declines

in TFP overexplain the region’s poor performance.

The book’s chapters proceed in a logical way. Chapter 2 provides a brief

historical overview, and Chapter 3 identifies the patterns of growth over the

past century. Chapter 4 then discusses the difficulties is assembling coherent

and comparable time series on the region’s gross labor and human capital

inputs. The discussion is excellent, and allows the reader to accept or reject

the assumptions used in constructing the series. Chapter 5 does the same for

measures of physical capital. Chapter 6 conducts a comparative growth

accounting exercise for Latin America. Its message is one of relative failure.

Latin America’s gross capital stock per worker lagged behind the OECD and the

NICs between 1950 and 1994. The gap grew. In education, Latin America’s

failure was less glaring. It substantially closed the gap with the OECD,

although less rapidly than the NICs. TFP contributed much less than in the

OECD, and even less than in the Asian NICs.

In Chapters 8 and 9, Hofman speculates about the ultimate causes of the

region’s poor TFP performance and low level of capital accumulation. These

speculations, however, are presented as hypotheses to be tested rather than

definitive conclusions.

The volume’s largest flaw is that there is often insufficient information

about how statistical authorities collected the raw data. The lack is

particularly glaring in the case of Mexico. The above should not, however, be

taken as a serious criticism. Hofman’s achievement in collecting and

standardizing the various national series is a major contribution. The

appendices are detailed, and contain much useful data. The appendices alone

make Hofman’s book invaluable to any economic historian of Latin America.

Noel Maurer is the author of The Power and the Money: Credible Commitments

and Financial Markets in Mexico, 1876-1931, forthcoming from Stanford

University Press. His current research concerns how non-democratic and

non-constitutional governments can make credible commitments to protect

property rights even under political instability.

Published by EH.NET (October 2000)

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Howell John Harris, Bloodless Victories: The Rise and Fall of the Open Shop in the Philadelphia Metal Trades, 1890-1940. New York: Cambridge University Press, 2000. xvii + 456 pp. $44.95. (cloth), ISBN: 0-521-58435-3.

Reviewed for EH.NET by Daniel Jacoby, Interdisciplinary Arts and Sciences Program, University of Washington, Bothell.

Those of us wedded to economic and institutional labor history have much to be grateful for in Howell John Harris’s painstaking examination of the metal manufacturing labor market in Philadelphia during the period 1890 to 1940. His book examines the conditions enabling employer cooperation and in so doing establishes a bridge between class conflict driven history and neo-classical economics. This feat is performed almost effortlessly in the context of a well-structured chronological saga that is climaxed by three “bloodless” battles waged over the open shop.

The first battle ended in 1915 when the Metals Manufacturer’s Association of Philadelphia [MMA] warded off organized labor and re-established the open shop markets that it had fought for since is inception in 1903 (p. 114). The “second almost bloodless victory” belonged to labor when it closed those open shops over the course of the 1930s (p. 12). Finally, there is a much more complicated, if not controversial, third bloodless victory wherein employers managed to resculpt industrial relations so that closed shops and organized labor appear anomalous today (p. 442). The three victories are unevenly marked within the wealth of material presented. Harris corrects this with clearly designed chapters that generally follow the ebbs and flows of the business cycle and successfully demarcate finer swings in the open shop battles of business and labor.

The success of the book lies in the details that establish how employers set aside their competitive differences in order to combine to resist unionists. Harris performs this task both by analyzing key statistical and institutional features of the labor market for skilled workers and also by reconstructing the mental and social world of his metal manufacturers. In Harris’s account proprietors of middle rank are effectively workers in a republican tradition, a tradition wherein one’s “manliness” resides in the enterprise he has created. In consort with John Locke’s treatises, property is justly derived from labor and it is this that gives these proprietors their rights against the incursions of unionists. These Quaker owners constituted living rebuttal to working class presumptions that property and mobility had become empty promises. Yet, Harris’s portrait becomes less sympathetic when these heroes engage in collective and organized resistance to labor.

It is the details of this story that build interest. How do these manufacturers organize themselves to maintain employer unity in the midst of incentives to shirk on collective agreements? Can an employment bureau break strikes and blacklist union activists? Are employers capable of developing their own mechanisms to produce and enforce property rights in skill? The common problem in each of these situations is that their solution requires employers to contend with the free riders among their ranks. Their strategies to overcome free riding constitute the most satisfying aspect of this book. Harris is sophisticated in neither assuming that employers could do all they wanted, nor that competition made all attempts at combination ineffectual.

Harris guides us through the selective benefits and punishments used by the MMA to promote solidarity in the face of self-interest. Not unnoticed is the irony that these rugged employers, ever complaining of union restrictions, voluntarily submitted to collective government designed to eliminate head to head individualistic competition. Harris portrays his proprietors as businessmen disdainful even of scientific management because the overhead of administration was considered too expensive. In Philadelphia, the MMA was proud that it was the “cheapest” employers association. In one instance leaders boasted that they had crushed a strike with the help of the employment bureau for a grand cost of only $157.47 above normal operating costs (p. 124).

One of the more interesting threads in Harris’s work concerns the role of apprentices in the open shop campaigns. The Metal Manufacturer’s Association, created in 1903, made its employment bureau the main agency by which it hoped to arrest the rapid expansion of the International Association of Machinists and International Molders Union. By 1903, national membership in these unions had increased to between three and five times its 1897 level. A negotiated truce with these combatants left Philadelphia employers chafing because the agreements tolerated union rules and customs they found constraining. Apprenticeship restrictions were a particular irritant in that they blocked employers’ absolute right to hire as they pleased. Such a right was necessary if owners were to be able “to dilute the skilled component of the labor force at will, to give themselves a cheap and adequate labor supply in rush times, and to gain an improved bargaining position vis-?-vis their journeymen at all times” (p. 90). Biding their time until local agreements had lapsed, the MMA relied upon its employment bureau to secure strikebreakers, among whom were apprentices required by contract to serve out their time. The employment bureau furnished the information necessary to know that a worker was indentured and should not be lured away. To secure its rights, the MMA evidently provided legal aid to one firm that sought to enforce its indentures against enticers.

This raises one difficulty in Harris’s analysis of Braverman’s thesis that capitalism progresses by debasing skilled work. Despite their misuse of apprentices Harris suggests employers rejected the idea of dumbing down work through specialized machines and narrowly defined jobs because they participated in custom work industries in which skilled labor was crucial (p. 337). On this point, his account is inconsistent. First, most of the firms (like Link-Belt Mftg, Baldwin Locomotive and Cramps Shipyard) upon which he bases this discussion are among the larger shops not in the MMA, the association to which he generally accords primary place. Second, when it came to strike breaking, firms appeared to believe that hiring less skilled workers had few costs. In breaking the brass polishers union in 1906 the MMA borrowed skilled workers from neighboring firms, but the bureau also brought in “craftsmen and instructors — to break in ‘green hands on plain work.’ The battle won, 80 percent of the union men were not rehired, and individual piece work, with no minimum wage, and as many ‘apprentices’ — cheap adolescent labor rather than genuine trainees — as a manufacturer wanted to hire introduced” (p. 127). To be sure, Harris documents one strike in which employers lived to regret hiring incompetents, but at least of equal concern, Harris shows, is employers’ desire to secure freedom to deploy machines and rearrange work process as they deemed appropriate.

The skill issue is further confounded when the MMA is described by 1915 as working on a “new and nonconflictual” scheme to harness vocational education to relieve the burden of their “skill dependency” (p. 293). Gone, apparently, are all the skill battles, which Harris only moments earlier described. Usually astute about the national surroundings, in this instance Harris uncouples the MMA’s vocational program from the national movement for industrial education that had long been championed by manufacturers hoping to circumvent union control. True, some unionists joined the call for industrial education, but as Julia Wrigley (Class Politics and Public Schools: Chicago, 1900-1950, New Brunswick, Rutgers University Press, 1982) has shown, labor’s conception of industrial education was quite different from that of the industrialists. Only if viewed in the context of the 1920s can the vocational education movement be regarded as non-conflictual and then merely because the opponent was too weak to put up a fight.

Harris seeks to weaken Braverman’s thesis but in the process misses what his own evidence tells us — that as long as unions controlled apprenticeship, skill constituted a strategic battleground against which employers would commit almost any sacrilege, including the debasement of their own workforce. However, when unions weakened — and likely also when craft unions attained unassailable power — employers attended to the creation of a highly skilled labor force.

Harris’s delightful self-indulgences practically dictate that a reviewer must find some fault with his book. Says Harris, “We each have some right to write our own book; and now every reader has the right to read into it what he or she wishes, and the opportunity to criticize it with as much vigor as seems fitting.” One can’t help but empathize as Harris huddles up to defend himself from his critics:

The labor history in this book will be as institutional and elitist as the rest of it. Readers may think that this results in missed opportunities; that there are tantalizing hints of what this book might have turned into, had it been written by another hand. But it wasn’t. The book ranges far and wide already in its efforts to contextualize and explain the behavior as employers of Philadelphia metal manufacturers through four decades. It has been more or less, a pleasure to research, and even to write” (p. 28). Indeed, Harris’s work has been a pleasure to read, more or less. The joy of Harris’s work resides in the manner in which he substantiates his narrative. When evidence is compiled as well as it is here, the inevitable remaining ambiguities encourage fair-minded criticism. The book deserves to be mined thoroughly. Bloodless Victories is a significant achievement.

Daniel Jacoby is author of Laboring for Freedom: A New Look at the History of Labor in America (M.E. Sharpe, 1998).

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