Published by EH.NET (February 2000)

Masayo Umezawa Duus, The Japanese Conspiracy: The Oahu Sugar Strike of

1920. (Translated by Beth Cory and adapted by Peter Duus.) Berkeley:

University of California Press, 1999. xiii + 375pp. $55 (cloth),

0-520-20484-0: $18.95 (paper), 0-520-20485-9.

Reviewed for EH.NET by Edward D.

Beechert, Professor Emeritus of Labor History, University of Hawaii.

In early 1920 in Hawaii, Japanese sugar cane workers, who made up nearly half

of the work force on Hawaiian sugar plantations, struck for a wage increase.

Although the strikers eventually capitulated, the Hawaiian territorial

government cracked down on the strike leaders, bringing them to trial for

conspiracy to dynamite the house of a plantation official.

Afterward, to end dependence on Japanese immigrant labor,

the planters lobbied in Washington to lift restrictions on the immigration of

Chinese workers. Instead, the clash helped secure that passage of the

Immigration Act of 1924 (often called Japanese Exclusion Act). Originally

published in Japan in 1991, Masay o Umezawa Duus’s narrative of these events

presents a complex picture of the Oahu sugar strike tailored to the Japanese

audience. (In fact, the book won the Oya Prize and the Sincho Gakugei Prize,

the two most distinguished nonfiction prizes in Japan.) The author tries to

remedy a limited knowledge in Japan regarding Hawaii in 1920 by surrounding

the details of the strike and its aftermath with a variety of details and

material not immediately relevant to Hawaii, such as comments on the

Sacco-Vanzetti case to

illustrate the fear of radicals then prevalent.

Using newspaper sources, Japanese Foreign Office correspondence and reports and

Hawaii court records, Duus gives a detailed, blow-by-blow account of the

strike, the dynamite case which occurred after the strike, and the trial of

fifteen of the alleged conspirators. This narrative leads to the conclusion,

which examines the 1924 Immigration Act sponsored by Senator Hiram Johnson of

California. The bill added Japanese to the excluded category — now all

Asians were excluded and lower quotas were put in place for southern and

eastern Europeans. The legislation reflected the views of residents of the

Pacific coast states and was bitterly resented in Japan.

The “conspiracy” of the title stems from the news paper and sugar planters’

propaganda developed to fight the strike and the campaign to persuade Congress

to admit Chinese workers on an indenture contract to counter the perceived

dominance of Japanese workers. Hawaiian planters had been searching for the

proverbial ideal worker — cheap, docile and plentiful since 1850. Hawaiians,

Chinese, Portuguese, Japanese, eastern Europeans,

Puerto Ricans, African-Americans, poor white Americans, and Filipinos made up

the list of trials; each in turn had been found

to be unreliable,

expensive, truculent and generally unworthy. Each new group in turn was praised

as the “final solution’ to Hawaii’s “Labor Question.”

While Duus’s narrative is interesting and somewhat informative, the

conspiratorial approach results in

a misleading picture. Despite the erratic documentation, the author presents

an interesting and useful picture of the important event from a Japanese

perspective. The intense focus on actions of Japanese workers tends to obscure

the Hawaiian elements of

the situation. There is considerable confusion in the story about the events of

the Kingdom of Hawaii, its overthrow and the establishment of the Republic of

Hawaii and its subsequent annexation. Thus, chapter one is good in showing the

flow of ideas between Japan and the United States but is weak on Hawaiian

details. There is no recognition of the fact that Japanese men had been barred

from emigrating to Hawaii since 1906 and that a large percentage of the

plantation workers were born in Hawaii. The lack

of knowledge of the labor movement results in a telescoping of the labor

structure. The American Federation of Labor is described as the “largest union”

(p. 23). In an attempt to set the scene, the author describes the IWW on the

mainland as being identified as “bomb throwers,” drawing on the Haymarket

affair. A meeting at Waialua Plantation in 1913 is described as a

“meeting of white telephone operators from the mainland urging the Japanese to

join the IWW” (p. 44). A Hawaiian Sugar Producers Association (HSPA)

transcript of the IWW meeting describes one A. V. Roe, a telegraph operator,

addressing the Portuguese Camp workers at Waialuas (Beechert,

Working in Hawaii, p. 153). Lurid descriptions of the Filipino workers

being imported to Hawaii are based

on stereotypical newspaper accounts. The author seems unaware that the

Hawaiian sugar industry was desperately seeking a new supply of labor. Cut off

from Japan in 1906 and barred from China as a source, the Philippines was the

sole remaining source of cheap labor. The industry had tried to meet U.S.

objections to Asian labor by importing a variety of Europeans. The high cost

and the refusal of these to submit to the conditions of sugar employment led to

the elaborate scheme to import indentured Chinese

workers. The Hawaii Emergency Labor Commission,

formed in 1921, launched a massive campaign to persuade Congress to grant an

exemption to the Chinese Exclusion Act of 1882.

The Japanese sugar workers’ strike of 1920 had its origins in World War I

inflation. As early as 1917, the Young Men’s Association of Hawaii, a Buddhist

organization, began to hold meetings on the issue of the cost of living and the

wage scale. Made up largely of young men born in Hawaii,

these workers communicated through the Buddhist organization. Beginning in

Hilo in 1919, the Young Men’s Association issued demands for a higher wage.

“Within ten weeks organization ran like a cane fire through the four major

islands.” (John E. Reinecke: Feigned Necessity: Hawaii’s Attempt to Import

Chinese Contract Labor, 1921-1923, 1979, pp. 98-99) The HSPA issued a

warning in early 1917 to its managers that wage demands of Japanese

organizations could lead to trouble. Nowhere in the text is there any awareness

of this development. The younger workers, recalling the results of the 1909

strike, were determined not to allow the Honolulu Japanese business and

intellectual community to dominate the issue. Plantation unions, based on the

AF of L model were set up through 1919-1920.

Local leaders formed an executive committee. As negotiations broke down,

the need for planning resulted in the appointment of spokesmen. The book

focuses on these spokesmen to the exclusion of the local leadership. The

emphasis is placed on the propaganda generated by the

Hawaiian Sugar Planters Association and the two main Honolulu newspapers. The

Honolulu Advertiser was hysterical in its denunciation of the strike as

a plot by Japan “to take over Hawaii” as an outpost of Japan. No evidence is

cited,

nor is there any explanation of how such an action could occur without U.S.

response. The lack of citation throughout lends an air of popular journalism to

the book. Conversations are laid out at length, thoughts and mindsets are

described in vivid terms, all without documentation. Then at other points, the

author is lavish in documentation, as in the blow-by-blow account of the

dynamite conspiracy trial.

The problem of translation and “adaptation” is evident in a number of ways.

The leading defense attorney is misidentified. William B. Lymer is

consistently cited as Lymar. J. Edgar Hoover is listed as the Director of the

Federal Bureau of Investigation in 1920. The Bureau of Investigation,

the predecessor of the FBI, produced a report in 1921 describing the strike as

“a weapon in Japan’s strategy to take over Hawaii.” The Bureau cited the

Japanese Federation of Labor as an example of the frightening unity and

teamwork of the Japanese (pp. 220-221). The author correctly doubts that the

Japanese translator at the trial had

a sufficient command of English to produce intelligible translations for the

all-English speaking jurors. At one point prosecutor Heen is described as

objecting to a witness’ testimony on the grounds of “hospitality” rather than

hostility (p. 210). Numerous errors of Hawaiian sugar industry detail detract

from the authority of the narrative. For example, Waikiki is described as an

“uninhabited swamp”

until developed by Gov. McCarthy (p. 234). Likewise, people in Hawaii are

incorrectly described as being unable to afford white sugar because of the

high prices prevalent in 1920-1922.

The work concludes with a detailed examination of Hiram Johnson’s immigration

bill in 1923-1924 and the efforts of the Hawaii Emergency Labor Commission to

deflect the exclusion of Japanese. The chapter is entitled

“The Japanese Exclusion Act.” For a Japanese audience, the focus makes sense.

The desperate efforts of the Commission to win an exemption for Chinese

workers, the opposition of organized labor and the widespread anti-Asian

sentiment of the Pacific Coast were too much for the limited political

influence of the Hawaiian planters. However, the book does considerable

violence to an understanding of the basic issues. Although the author quotes

extensively from Reinecke’s

Feigned Necessity, the clear focus of Reinecke’s work on the labor

aspects of the situation is lost. A large part of Duus’s effort is taken up in

a minute examination of the spokesman for the Japanese Federation of Labor,

Noboru Tsutsumi. This obscures

the fact that the Federation was organized by plantation unions,

coming together only at the executive board level. Inexperience and poor

communication complicated and hindered their efforts. Despite this, the local

unions raised significant amounts of money. The fact that a majority of

Hawaii’s plantations continued production unabated and had a loss sharing

agreement through the HSPA and their insurance policy, the workers faced a

difficult barrier. The industry made extensive changes in their organization

as a result of the strike. The HSPA emerged as the dominant factor in

plantation policy, shifting the center of power from the managers to the

agency. An extensive social welfare program was initiated to alleviate some of

the worst features of plantation life. In that sense, the strike succeeded,

despite the appearance of defeat.

Edward D. Beechert is the author several books and articles on Hawaiian labor

history including Working in Hawaii-: A Labor History (1986);

“Mechanization and the Plantation Labor Supply” in S. Eakin and J. Tarver:

One World, One Institution: The Plantation (1989): and Honolulu:

Crossroads of the Pacific (1991). He is the editor (with Brij Lal and

Douglas Munro) of Plantation Workers: Resistance and Accommodation (

1993).

Published by EH.NET (February 2000)

John Coatsworth and Alan Taylor, editors, Latin America and the World

Economy since 1800. Cambridge, MA: Harvard University Press, 1999. xv +

484 pp. $49.95 (cloth), ISBN 0-674-51280-4; $24.95 (paper), 0-674-51281-2.

Reviewed for EH.NET by Richard

Salvucci, Department of Economics, Trinity University, San Antonio, Texas.

Welcome to the Cliometric Revolution, Latin Style

When I started graduate school in 1973, there were no textbooks on Latin

American economic history. Today, depending on your definition of a textbook,

there are 3 or 4 in English alone. In 1973, we argued about the Asiatic mode of

production and precapitalist economic formations. Today we discuss conditional

convergence. In 1973, bourgeois economists were the enemy. Today a bourgeois

economist is your dissertation supervisor. Welcome to the Cliometric

Revolution, Latin style. It’s been 25 years in coming,

but now that it’s come, it’s come with a vengeance.

The present anthology is an artifact of that revolution and like all

historical artifacts, it requires a bit of study to appreciate its meaning in

full. And so to begin, I’m going to quibble with the idea that what you read

here is really all that novel. After all, there’s always been some cliometric

work on Latin America, as the outstanding books of Carlos Dmaz Alejandro on

Argentina or Clark Reynolds on Mexico might attest. In my primary field,

Mexican history, you could point to things done by Luis Tellez or by Jaime

Zabludovsky as recognizably cliometric, but Tellez and Zabludovsky have gone

on to major careers in government service rather into careers as economic

historians. What’s more unusual is to find suitably trained professionals doing

purely academic work-doing economic history for a living. For that we can

thank, at least partly, a sea change in development ideologies in Latin

America, where economists in universities can now spend their time thinking

about conditional convergence (whose acquaintance they may have made in some

gringo institution) rather than about the Asiatic mode of production. And I

think I have some idea why.

For my generation, it was the fall of Allende in 1973 that was critical.

For this one, it is the fall of the Berlin Wall. That makes all the difference

in the world. You can write sympathetically about the economic history of

Cuban sugar mills without espousing the labor theory of value.

You can study the history of financial markets in Brazil without being

implicated in the overthrow of Joco Goulart in 1964. For

now, at least,

there are no gangster regimes advocating “market friendly” policies while

energetically murdering their own citizens. The ideological and political

baggage of the 1960s and 1970s is, for want of a better phrase, just so much

history. Hence

what we read here by so many relative newcomers to the field. Their authors

are students, not prisoners of the past, and that’s what makes their

scholarship worthwhile. I do have a small bone to pick with the volume’s title.

This is not a book about Latin America since 1800.

It is mostly about Argentina, Brazil and Mexico since 1870, which is not quite

the same thing. There are no Indians. There is no Caribbean or Central America.

No Andes. But worse, there are really no papers that engage with the period

before 1870 and that is a real problem. As John Coatsworth’s perceptive essay

on the nineteenth century puts it, “the available quantitative evidence shows

that Latin America became an underdeveloped region between the early eighteenth

and the late nineteenth century” (p. 26). In other words, most of the papers

in the volume-Carlos Newland’s excepted-do not address the principal issue of

Latin America’s economic history, namely, the origins of what Lant Pritchett

has called

“divergence, big time.” Even

if you argue in reply, that X (what existed before 1870) causes Y (what changed

later), the historian is liable to wonder why X occurred when it did and not

before, especially if Y is extremely profitable, the proverbial big bill on the

sidewalk.

I think

I know why. Sensible historians avoid the period before 1870 because it is a

Hobbesian world where life, not to mention some of its major actors, was nasty,

brutish and short. For most of Spanish America,

the era before 1870 (and after Independence in the 1820s) is much, much harder

to work in, let alone understand. The archives with which I am familiar (mostly

Mexican, to be sure) are a mess-disorganized,

uncatalogued, impenetrable-and very nearly impossible to utilize. Of course,

the messiness of the sources faithfully reflects the messiness of economic and

political life at the time, with unending coups, countercoups,

invasions, constitutions, blockades, wars, partitions, regulations,

proclamations, declamations, you name it. There’s no stable structure for

understanding, essentially. Unfortunately, this is where the action is,

unless you regard disorder itself as the proximate cause of poor economic

performance. As anyone reading this is probably aware, there’s really no

consensus about that either.

For this reason, I take claims made for the cliometric potential of Latin

American economic history the way I take tequila: in limited doses, and with

many grains of salt. Still,

triumphalism only infects the blurbs to the volume, for the “Introduction”

by John Coatsworth and Alan Taylor is conspicuously moderate in tone. So maybe

I shouldn’t complain. Besides, the papers are generally very good and a couple

are outstanding. One of the most coherent themes here is the importance of

financial markets and institutions in facilitating or accommodating economic

growth. This really is a new direction, at least in the Latin American context,

for I can think of little in the older historiography that makes this point

with any cogency. A very interesting paper by

Michael Twomey provides the relevant context in arguing that

“[t]he general trend of direct foreign investment [in the twentieth century]

has been downward relative to income and, probably, total capital stock” (p.

192). Portfolio investment aside, which

Twomey identifies as mainly, until 1990, loans to governments, the implication

is that domestic sources of capital were increasingly important between 1913

and 1950, the years when foreign direct investment fell sharply relative to

GDP. Twomey’s argument

frames papers by Stephen Haber, Anne Hanley, Leonard I. Nakamura and Carlos E.

J. M. Zarazaga, Gerardo della Paolera and Alan M. Taylor, and Gail D. Triner.

First, Brazil. Anne Hanley’s study of business finance and the Sco Paulo Bolsa

offers a good point of departure. In the spirit of Twomey’s conclusions,

Hanley argues that the role of foreign capital in direct investment “while

sizeable, mainly played a supporting role in the domestic business formation

that was the cornerstone of Sco Paulo’s development.”

The industrial and utilities sectors “actually found their base in the domestic

capital market” (both quotations, p. 126). And it was the impersonal mechanism

of the stock exchange rather than traditional kin-based finance that fueled “a

type of financial Big Bang” between 1905 and 1913 (p. 131). Similarly, Gail

Triner finds that the recharter of the Banco do Brasil in 1905 created a

“natural infrastructure for financial transactions” (p. 224) that supported a

“strong, centralized role for the national government in the economy.” And

like Hanley, Triner emphasizes that “[t]he banking system increasingly

accumulated and reallocated financial resources of the private sector at the

expense of either personal or other institutional channels” (p. 226, both

quotations). After 1905 the real money supply and the monetized economy grew

rapidly even as the economic predominance of Sco Paulo was consolidated.

The evolution of a modern financial infrastructure for Brazil had measurable

implications for the growth of industrial productivity in Brazil after 1890.

Stephen Haber’s sophisticated analysis of capital market regulation and the

development of a securities market argues that “one crucial piece of the puzzle

explaining the lack of industrial development

before 1890 and rapid industrial growth after 1890 was access to capital”

(p. 279). The maturation of debt and equity markets along with the

establishment of limited liability laws and mandatory financial disclosure

lowered the cost of capital. As a result, the cotton textile industry,

which is Haber’s focus, grew more quickly than it would have had traditional

patterns of kin-based and other less formal avenues of finance been maintained.

In short, “entrepreneurs who could best combine the factors of production and

choose the optimal output mix were able to mobilize capital that otherwise

would not have been available to them” (p.

279).

Argentina has always seemed baffling. Between 1870 and 1900, real per capita

product there doubled, but after 1900, it would not do so again until 1958. In

other words, the rate of real per capita growth fell from 2.3 percent per year

to 1.19 percent per year, which is some slowdown. For Gerardo della Paolera and

Alan Taylor, a capital constraint is (part of)

the answer

. The domestic financial system was simply unable to replace the dwindling

supply of British capital after World War I. Caught between the gold standard,

international convertibility, and repeated financial crises,

the monetary authority, the Caja de Conversisn, was unable to support domestic

banks and maintain convertibility at the same time. For this reason, Argentine

banks “had to maintain a higher capital cushion” than their foreign

counterparts who could borrow abroad much more easily.

“[D]omestic banks could not fill the void left by the retreat of foreign

capital after 1914″ (p. 163). A paper by Leonard I. Nakamura and Carlos E.

J. M. Zarazaga raises some questions about this argument by looking at returns

to Argentine debt instruments, which don’t

seem particularly high.

Daniel Dmaz Fuentes’ chapter on the gold standard in Argentina, Brazil and

Mexico reminds us that the Argentine peso was inconvertible between 1914 and

1927, an awkward point for della Paolera and Taylor as well.

Nevertheless, their discussion of the non-monetary aspects of financial crises

in Argentina is very stimulating. I have heard it said by some historians that

there is nothing “new” in the findings of the new economic history of Latin

America. I defy them to read della Paolera and Taylor and then tell me that. I

doubt the critics have read Bernanke’s 1983 paper and the subsequent work it

inspired. The remaining papers are somewhat more difficult to characterize

because they deal with a wide variety of subjects. Let me give

some examples.

Students of Mexican history will welcome the chapters by Graciela Marquez and

Aurora Gsmez-Galvarriato. Both make extensive use of archival data and both

question commonly held beliefs about Mexico between 1890 and 1920, the last

years of

the Porfiriato (the dictatorship of Porfirio Dmaz from 1876 through 1910) and

the opening decade of the Mexican Revolution (which lasted until 1920, 1938,

1968, or last week, depending on how you view Mexican history). Marquez shows

that it is not enough

to simply label Porfirian Mexico a high-tariff country since nominal

protection fell sharply during the 1890s. It never recovered its former levels

before the outbreak of the Revolution. Gsmez-Galvarriato looks at real wages in

the Santa Rosa textile factory in Veracruz. Stability in real wages through

1907 gave way to a sharp decline between 1907 and 1911. A marked recovery

occurred between 1911 and 1913, only to fall sharply during the bitterest years

of the civil war (1914-1916). From 1917 through 192 0, real wages recovered,

but did not rise much above their level in 1907. I think Marquez and

Gsmez-Galvarriato are saying that the stories we tell about Dmaz and the coming

of the Revolution are not likely to hold up under the careful scrutiny of a new

historiography informed by detailed industry and firm-level studies. Where

this leaves the big studies of the Revolution,

such as Alan Knight’s, which retells many of the old verities, remains to be

seen.

Both William Summerhill and Alan Dye contribute chapters that represent

aspects of larger projects. Dye’s study of the contracts between sugarcane

growers and millers in Cuba lays to rest the myth that the contracts between

growers and millers evolved to exploit the growers, upon whom they were

coercively imposed. Summerhill’s paper on Brazilian railroads concludes that

“The direct impact of the railroad in Brazil places it comfortably within the

top tier of the cases for which economic historians have constructed social

savings estimates” (p. 391). Interested readers can certainly learn more from

Dye’s Cuban Sugar in the Age of Mass Production

(Stanford, 1998) or Summerhill’s forthcoming Order Against Progress:

Government, Foreign Investment and Railroads in Brazil, 1854-1913

(Stanford, scheduled for Summer 2000).

Papers by Lee Alston, Gary

Libecap and Bernardo Mueller; Andri A. Hofman and Nanno Mulder; and Carlos

Newland round out the volume. All are well worth

reading.

A final observation. It’s ironic that economic historians of Latin America

stress the study of institutions, a theme that features prominently in this

volume as well. For those of us trained in the early 1970s, “institutional

history” was something to be avoided, the province of dullards and the

unimaginative. It was a matter of faith, enshrined in a famous article by

James Lockhart, that the only real historians of Latin America were social

historians, and, well, social historians had better things to do than pay

attention to, of all things, institutions. Institutions didn’t affect the

behavior of real people. And real historians studied real (read: ordinary)

people. My how times do change. There isn’t much doubt about who’s doing the

interesting history of Latin America these days. Not a few of them are

represented in this excel lent collection. Now if only I could get them to

explain the Asiatic mode of production to me, my life would be complete.

Fat chance.

Richard Salvucci teaches at Trinity University. He is co-author with Linda K.

Salvucci of “Cuba and the Latin American

Terms of Trade in the Nineteenth Century: Old Theories, New Evidence,”

forthcoming in the

Journal of Interdisciplinary History in Autumn 2000.

Published by EH.N ET (February 2000)

Theodore Rosenof, Economics in the Long Run: New Deal Theorists and Their

Legacies, 1933-1993. Chapel Hill: University of North Carolina Press,

1997. ix + 223 pp. $34.95 (cloth), ISBN: 0-8078-2315-5.

Reviewed for EH.NET by Michael Perelman, Department of Economics,

California State University at Chico.

This book tells a complex story about the development of the economic theories

of Keynes and Schumpeter, along with those of Alvin Hansen and Gardiner Means,

in the context of the Great Depression. While Schumpeter preferred to let the

depression run its course, the other three advocated a more activist approach.

Although Keynes’s specific policy prescriptions at the time were vague

(Perelman 1989), his basic approach was to let business be free to do as it

would choose, while creating a macroeconomic climate in which investment would

be brisk.

Hansen concurred, although the context of his policy was quite different.

For Hansen, the long run process of secular stagnation had diminished

investment opportunities so much that massive government spending was required

in order to stimulate business. At times, Keynes seemed to agree with Hansen,

but for the most part, he was vague about the particulars.

Moreover, throughout the General Theory, Keynes emphasized the role of

subjective expectations rather than objective economic conditions.

Just as Hansen dropped Keynes’s concern with the subjective element in the

investment equation, Hansen’s followers in the United States ignored his

concern with the long run forces that shape the economic environment,

giving rise to the sterile economics of the neoclassical synthesis, which

Rosenof classifies as short run Keynesianism. By the time that World War II

arrived

, this stripped-down version of Keynesianism had carried the day within the

economics profession. Activist macroeconomic policy meant little more than

infusions of government spending to keep the business cycle in check, with no

concern for the long-run economic environment.

Although Gardiner Means’s role is less familiar today, in the early years of

the Roosevelt administration, he was probably the most influential economist

among policymakers. His influence suddenly waned with the disillusionment

regarding the National Recovery Administration and the outbreak of the

depression

within the depression in 1937-38. The torch then passed to the aggregative

economic policies advocated by Alvin Hansen.

According to Means, industry consists of two unequal sect ors. On one side,

highly competitive industries, such as agriculture, live in a world of flexible

prices. On the other side, industries inhabited by a few large corporations

enjoy sufficient power to set prices at levels of their own choosing. Because

the se high prices restricted demand, employment rather than prices fall in

this sector whenever a negative shock hits the economy.

In contrast, prices collapse in the competitive sector, restricting buying

power from within that sector, compounding the deflationary shock.

For Means, the Depression required something like what we now call industrial

policy. The New Deal implemented industrial policies, but not in a fashion that

won Means’ approval. Instead, the New Deal consisted of a variety of agencies,

each operating in its own bailiwick. In contrast,

Means’s industrial policy would take the entire economy into account,

rather than a few specific industries.

Although Means thought he found support in Keynes for his writings, he was

sadly disappointed by

Keynes’s response. Ironically, each thought that the others’ economic theory

was merely a special case of his own more general theory. In time, Means came

to see Keynes as an adversary. He even proposed that expansionary monetary,

rather than fiscal policy would remove the pressures that created the

imbalances between the competitive and the noncompetitive sectors of the

economy.

The appearance of inflation in the late fifties led to the reemergence of

Gardiner Means in economic analysis and public policy advocacy. Means no

longer called for a monetary expansion. Instead he advocated a return to the

policies associated with the National Resources Planning Board, where he once

wielded enormous influence. Means’s modest rehabilitation could have never

returned him to the center of power. By that time, McCarthyism was in full

bloom.

Economists who questioned the efficiency of private enterprise were coming

under severe attack (Leeson 1997, p. 125). The safest course was to follow the

lead of the neoclassical synthesis and put questions of corporate power aside.

In the midst of Cold War hysteria,

Means’s approach was not likely to find a warm reception in influential

circles.

Even Hansen’s fiscal policies were too dangerous for the times. By 1945 the

Federal Reserve Board dropped Hansen as an adviser. According to press

accounts, complaints by bankers were a major factor. Soon thereafter, the

Eisenhower Administration purged Washington of Democratic Keynesians (Tobin

1976, p. 35).

The slow growth of the 19 50s also lent some credence to Hansen’s theory of

secular stagnation. As the postwar boom wore on, Hanson and Means were largely

forgotten again, and Keynes’s star dimmed significantly, while for some

admirers of the prosperity of the time, Schumpeter has

became an almost cult-like figure. With the stagflation of the 1970s, Means

again achieved a modicum of attention, since short-run Keynesianism seemed at a

loss at the time.

Each of the four authors under study recognized a part of the totality.

None seemed willing to incorporate the insights of the others, except for

Alvin Hansen, who was the least original of the group. Hansen enthusiastically

incorporated one side of Keynes, but not the other side that emphasized

subjectivity. Similarly, he disregarded Means, at least until the 1960s, when

they were no longer rivals for power. Rosenof attributes this failure of

communication to a resistance to on the part of his subjects to make a

sufficient break with orthodox economic theory (p.

174).

Rosenof notes that John Kenneth Galbraith managed to incorporate both the

Means and the Keynes-Hansen approach to economic theory (pp. 126-27),

stressing the need for macroeconomic policies to expand demand while paying

close attention to the nature of corporate power. Galbraith also has

affinities with Schumpeter. Both have successfully drawn upon a sociological

style of writing. However, most economists today put a premium on tight

theoretic modeling regardless of the realism of such efforts. In this

environment, the broad sweep of Galbraith’s writing appears as a defect rather

than as a strength. Because Schumpeter’s ideas resonate with the current

political climate, economists tend to forgive him for his sociological style.

Rosenof cites Paul Samuelson to buttress his case. Samuelson noted that

American Keynesians such as himself did believe that “imperfections of

competition” were “an important part of the Keynesian under-employment

equilibrium story.” Upon reflection he realizes that

“Keynes-cum-Chamberlin-and

-Means would have been better than Keynes alone”

(Samuelson 1983, p. 217; cited on p. 134).

The author’s own preferred synthesis would combine institutionalism and

post-Keynesianism. Many economists might find that mix too a theoretical for

their preferences, but Rosenof makes a strong case that the more rigorous

economics commonly practiced today is too restrictive to account for the

complex world in which we live.

References:

Robert Leeson, 1997. “The Political Economy of the Inflation-Unemployment

Trade-Off.” History of Political Economy, Vol. 29, No. 1 (Spring):

117-56.

Michael Perelman, 1989. Keynes, Investment Theory and the Economic Slowdown:

The Role of Replacement Investment and q-Ratios (NY and London:

St. Martin’s and Macmillan).

Paul A

. Samuelson, 1983. “Comment.” in David Worswick and James Trevithick,

editors, Keynes and the Modern World: Proceedings of the Keynes Centenary

Conference, Kings College, Cambridge (Cambridge, England).

James Tobin, 1976. “Hansen and Public Policy.” Quarterly Journal of

Economics, Vol. 90, No. 1 (February): 32-37.

Michael Perelman’s most recent books are The Invention of Capitalism: The

Secret History of Primitive Accumulation (Duke, May 2000), Transcending

the Economy: On the Potential of Passionate Labor and the Wastes of the

Market (St. Martin’s Press, May 2000), The Natural Instability of

Markets: Expectations, Increasing Returns and the Collapse of Markets (St.

Martin’s Press, 1999), and Class Warfare in the Information Age_ (St.

Martin’s Press, 1998).

Published by EH.NET (February 2000)

William A. Darity, Jr. and Samuel L. Myers, Jr., Persistent Disparity: Race and Economic Inequality in the United States since 1945. Cheltenham, UK: Edward Elgar, 1998. xiii + 191 pp. $80 (cloth), ISBN: 1-85898-658-3; $25 (paper), ISBN: 1-85898-665-6.

Reviewed for EH.NET by William A. Sundstrom, Department of Economics, Santa Clara University

Occasionally enlightening, often frustrating, this book examines the continuing gap in economic status between white Americans and African-Americans. The authors stake out a pessimistic position, arguing that the perceived relative economic progress of blacks during the 1960s and 1970s was largely illusory. Furthermore, they contend, the stagnation or erosion of black relative incomes since the 1970s cannot be attributed to rising general inequality or changing family structure. Rather, racial discrimination in the labor market has played an important ongoing role.

Darity (Professor of Economics, University of North Carolina) and Myers (Professor of Human Relations and Social Justice, University of Minnesota) propose a link between increased discrimination and the general trend toward greater income inequality of the last 30 years, arguing in the introductory chapter that “Job losses and earnings losses for white males who are the ‘victims’ of the unequalizing spiral will lead them to intensify their efforts to preserve their remaining occupational turf and to squeeze black workers further down the occupational ladder” (p. 3). An intriguing possibility, to be sure, but a reader expecting to find direct evidence of this endogenous discrimination will be disappointed.

Instead, much of the monograph is devoted to undermining competing explanations of changes in the black-white gap. This it does with mixed success. The authors are compelling in their claim that evidence of wage convergence between blacks and whites before the 1980s is severely biased by the exclusion of non-earners from the comparison. Whereas the median wage of black workers converged toward that of white workers during the 1960s and 1970s, convergence disappears if one includes non-workers and assigns them a wage in the lower half of the distribution. Similarly, family incomes fail to show the same racial convergence as the wages of individual workers over the same period.

Thus the evidence supports a claim of economic polarization within the African-American population during the 1960s and 1970s, with employed blacks experiencing gains relative to whites, but a substantial segment of un- and underemployed blacks (who would be labeled the “underclass”) falling further behind. Darity and Myers suggest that this mixed picture undermines the views of the “optimists,” including James Smith, Finis Welch, and Richard Freeman, who have argued that improved educational opportunities and/or diminished labor-market discrimination contributed to large gains for blacks before the 1980s.

It is not entirely clear, however, why the authors think one must reject the optimists’ explanations for progress on the part of those African-Americans who did succeed. Darity and Myers assert that the rise of a black professional class during these decades was due to “the growth in public sector employment opportunities in social welfare agencies attributable to the Johnson Administration’s Great Society programs” (p. 52), although they provide little supporting evidence. It seems unlikely that public employment explains the emergence of the black middle class as a whole.

The book’s central chapters present the authors’ analysis of data from the Current Population Survey regarding the role of the racial “skills gap” and racial differences in family structure in generating income inequality between the races. Darity and Myers present truly bleak figures documenting the widening of the racial gap in incomes for families with poorly educated family heads. Among families headed by young people with less than a high school education, the black-white ratio of family incomes dropped from about 70 percent in 1970 to about 50 percent in 1991. By contrast, the racial gap was virtually unchanged among families headed by older, better-educated persons.

In Darity and Myers’s view, this evidence tends to refute a widely held explanation of the erosion of black relative gains during the 1980s: namely, that the growing return to skills exacerbated racial inequality because blacks tended to have lower skills on average. If this were the case, argue the authors, then the least skilled whites should have done no better than the least skilled blacks. Instead, we observe the racial gap widening even among high school dropouts, suggesting that something more than skill differentials is at work. This conclusion is bolstered by earnings regression results, which suggest that racial differences in the return to schooling actually narrowed between 1976 and 1985.

The role of rising general inequality cannot be dismissed quite so easily, however. It is well established that recent increases in inequality occurred within skill groups as well as between them. In regression terms, the variance of the residual in standard earnings equations has increased. If black workers tend to fall in the lower tail of that earnings residual, whether because of discrimination or unobserved skill differences, the increased spread in the residual could also increase racial inequality, a point demonstrated empirically in the important work of Chinhui Juhn and co-authors. (Robert Margo and Thomas Maloney have also shown that the reverse process helped narrow racial pay differentials during the “great compression” of wage inequality during the 1940s.)

Darity and Myers focus much of their data analysis on the incomes of families and family heads, and naturally they must consider the role of changing family structure. Disputing the conventional wisdom, they claim that the rising rate of female headship “is not even a weak candidate” for explaining the reversal of relative black economic progress after the mid-1970s (p. 87). The reason given is essentially that rates of female headship rose as rapidly among whites as among blacks during these years.

This is true, but rather misleading. Among white families, the percentage headed by females rose from 9 percent in 1970 to 13 percent in 1991. The corresponding figure for African-Americans went from 28 to 46 percent. The proportionate increases are thus not dissimilar, but the absolute change in proportions may be more important. For instance, suppose that female-headed households earned 50 percent of two-parent households, but that within family types there were no racial income differences. Then in 1970, the black-white household income ratio would have been 0.90, falling to 0.82 in 1991 on account of the change in family structure alone.

This is not to deny that racial discrimination in job and housing markets has played a significant role in generating racial differences in family structure. But changing family structure cannot be so readily dismissed as an intermediate factor in generating trends in racial income inequality.

In fairness, later in the same chapter Darity and Myers report estimates of the impact of increased female headship on the racial income gap from a complex counterfactual exercise. They conclude that “less than 10 per cent of the increase in racial earnings inequality among family heads can be attributed to changes in the proportion of families headed by females” (p. 105). In their model, however, female headship apparently affects earnings only through its impact on labor-force participation. It is not clear that their model has captured the full impact of female headship to the extent that it affects earnings in other ways (for example because women are paid less than men).

Darity and Myers conclude their empirical analysis by noting that very little of the change in racial income inequality between the 1970s and 1980s can be attributed to racial differences in measured characteristics. Is this then evidence of differential treatment–i.e., labor-market discrimination? Darity and Myers believe so. A reader familiar with this highly contentious literature, however, will wonder about the role of unmeasured factors, including school quality and family background, which some argue show up in the much-discussed test-score gap between whites and blacks.

The book’s final two chapters discuss the political and economic ramifications of various possible remedies to the problem of racial economic inequality. Darity and Myers are deeply pessimistic about the prospects of reducing racial income inequality in the United States any time soon. They see the economic trends as largely negative, and the political trends increasingly hostile to the race-based remedies that might have the greatest chance of success.

Given all that has come before, the concluding chapter, which is in many ways the most thought-provoking in the book, seems to come out of left field with a plea for monetary reparations to the descendants of African-American slaves. For Darity and Myers, the case for reparations is not merely a matter of correcting a past injustice. As they put it, “The effects of historic deprivations are cumulative” (p. 151).

The cumulative deprivation that would be offset by reparations is the maldistribution of wealth between blacks and whites. Wealth is much less equitably distributed than income, and Darity and Myers cite recent studies finding that racial wealth differences are truly historical in origin, arising from differences in the size of inheritances rather than differences in savings rates or asset returns.

But would the wealth redistribution achieved through a one-time payment of reparations bring about the hoped-for transformation of African-American economic prospects? Those of us who are of the Rawlsian persuasion can agree with the authors that a considerable reduction in wealth inequality may be a necessary condition for fair equality of opportunity, but is it sufficient? Darity and Myers think it can be, if coupled with vigorous enforcement of anti-discrimination law and a concerted movement among African-Americans to promote entrepreneurship and economic independence, especially among the poorest. But experience provides us with very little evidence to assess this claim one way or the other.

Disillusioned with the disappointing results and declining political viability of race-based affirmative action, Darity and Myers in the end argue for the transfer of literally trillions of dollars from whites to blacks. The irony and air of unreality in this proposal are not lost on the authors, who admit that it would be “outrageous and unrealistic” to the vast majority of Americans. But what if they happen to be right that reparations offer the best chance for eliminating the persistent disparity between the races once and for all? One can hope that if the authors write another book, they will steer their considerable intellectual talents away from inconclusive exercises in crunching the same old earnings data, and toward a serious and thorough defense of the justice and effectiveness of their immodest proposal for reparations.

William A. Sundstrom is Associate Professor of Economics at Santa Clara University. He is the author of several articles on the history of racial disparities in U.S. labor markets, and is currently studying the changing occupations of African-American women during the postwar period.

?

Published by EH.NET (February 2000)

Victoria Saker Woeste, The Farmer’s Benevolent Trust: Law and Agricultural

Cooperation in Industrial America, 1865-1945. Chapel Hill: University of

North Carolina Press, 1998. xviii + 369 pp. $49.95 (hardcover), ISBN:

0-8078-2421-6; $19.95 (paperback), ISBN: 0-8078-4731-3.

Reviewed for EH.NET by Paul Rhode, Department of Economics, University of

North Carolina-Chapel Hill.

Many historical treatments of California agriculture consist mainly in

retelling old stories, peopled by stock characters familiar to the readers

of Frank Norris, John Steinbeck, and Cary McWilliams. It is refreshing to

see careful new scholarship such as Victoria Saker Woeste’s Farmer’s

Benevolent Trust, which focuses the evolution of cooperative marketing

arrangements in the Fresno raisin industry over the late nineteenth and

early twentieth centuries. Unlike the standard broad-bush approach, Woeste

concentrates on a single crop, produced in a relatively small geographic

area, which seems appropriate given the degree of diversity and

specialization prevalent in California agriculture. Moreover, she draws on

a new perspective, that of a legal historian, to chart the rise and fall of

the California Raisin Grower’s Association (1898-1904) and California

Associated Raisin Company (1912-23), and its immediate successor, Sun-Maid

(1923-to date).

“Wholesome” is the clear message that Sun-Maid’s trademark image–a

smiling, bonneted girl carrying a basket of sunny California’s bounty–is

meant to convene. But were Sun-Maid and other farmer coops really socially

beneficial organizations of small, independent producers trying to adapt to

the modern economy, as their advocates assert? Or were they merely attempts

at monopolization, hiding behind positive PR and preferential treatment

from the government? A “brotherhood of producers” or “robber barons in

disguise”? These conflicting interpretations of the coop movement are well

captured in the 1920 quote from California Associated Raisin Company’s

president, Wylie Giffen, that gives Woeste’s book its title: “Call us a

trust, if you want to, but we’re a benevolent one.”

Answering the ‘efficiency versus market power’ question regarding a given

business practice or organization form is often difficult. The story of the

raisin coops told in Farmer’s Benevolent Trust is highly nuanced, but

ultimately Woeste sides with the “robber baron” interpretation. She appears

to sympathize to the goals of the raisin growers, and agriculturists in

general, of gaining greater control over marketing and prices through

cooperation, but is strongly opposed to many of the means used to attain

these ends. Moreover, given the cooperative’s inability to control

production, she sees many of their efforts as bound to failure. Three

elements distinguish Woeste’s treatment from the more traditional accounts

of the farmer cooperative movement in the early twentieth century. First,

she provides highly detailed history of the evolving legal treatment of the

agricultural cooperatives at the state and national levels and clearly

shows that what the law said was often less important than what the lawyers

and politicians did. As one example, although the US Department of Justice

had grounds for pressing an anti-trust case against the of California

Associated Raisin Company almost from the coop’s birth, the Congress

regularly attached a rider to the department’s appropriations forbidding it

from using funds to prosecute farm organizations attempting “to obtain and

maintain a fair and reasonable price for their products.” Similarly, Woeste

shows that the impending passage of the Capper-Volstead Act allowed the of

California Associated Raisin Company to escape more serious consequences

from the Federal Trade Commission after the federal anti-trust authorities

decided they could not longer stay on the sidelines. A major contribution

of Woeste’s scholarship is to provide a much clearer picture of the

national legal environment in which the cooperative movement operated.

Second, the book gives great attention to diversity among the Fresno raisin

growers and packers, who are typically pictured as a cohesive, relatively

homogeneous community. Woeste brings to bear new evidence, drawn from ICPSR

data sets, on the structure and ethnic composition of production. And she

highlights the activities of Armenian immigrants who, despite suffering

discrimination by the local ‘white’ community, achieved considerable

success growing and packing raisins in the Fresno area. Thus, she

illustrates an interesting example where “ethnic capital” mattered.

Third and finally, Woeste sharply questions some of the means the raisin

cooperative’s members used to maintain control. In particular, the book

carefully documents the extensive use of coercion and mob violence by Sun

Maid supporters against holdouts, often Armenian growers, during the

membership campaigns of the early 1920s. (Woeste appears at times a little

surprised by the night-riding episodes, but if one thinks of the coop

membership campaigns like a union organizing drive, the threats of violence

do not appear so unexpected.)

Although such accounts of extra-legal pressure are not totally new, they

are not part of the sunny “official” line in the histories of agricultural

cooperation. And even today, these stories carry a punch. According to the

author, her journal publications about these incidents raised the hackles

of current Sun-Maid administrators, leading to them to attempt to control

her research and when unsuccessful, to adopt an uncooperative attitude

towards her work with their source materials.

There are a small number of subjects that I think could be handled better.

For example, Woeste contrasts the “success” of the California Associated

Raisin Company in the late-1910s and early-1920s with the failure of

Theodore Kearney’s California Raisin Grower’s Association at the

turn-of-the-century. She attributes the differences in performance in part

to legal and organizational changes and in part to Kearney’s combative and

authoritarian personality. I think too little attention is given to the

state of the market–the changing strength of international competition,

the growth of demand, and the effects, both intended and unintended, of the

19th amendment–in accounting for these differences. And I would have also

found useful a more detailed comparison of the performance of Sun Maid with

Sun Kist, the highly successful citrus producer’s coop.

I think reference to the recent work of agricultural economists and

economic historians (Lawrence Shepard, Gary Libecap and Elizabeth Hoffman)

analyzing farmer cooperatives, especially Sun Kist, would have improved

Woeste’s analysis. The view that coops acted like monopolists enjoying

anti-trust immunity and preferential tax treatment from the federal

government is not truly revisionist today. Finally, from the perspective of

an economist, the work contains a handful of the standard problems of

historical studies-numerous tables on market data that are not analyzed

using economic models, prices and returns which are not adjusted for

inflation, and vague statements about “overproduction.” But these are minor

quibbles that take nothing substantial away from the value of Woeste’s

contribution.

A recent examination of the University Press catalogues and conference

display tables reveals the arrival of a large new crop of books about

California’s agricultural history. One hopes they are all as insightful and

original as Woeste’s study.

Paul Rhode is author of “‘Horn of Plenty’: The Globalization of

Mediterranean Horticulture and the Economic Development of Southern Europe,

1880-1930,” (with Jose Morilla-Critz and Alan Olmstead), Journal of

Economic History (June 1999) and “Learning, Capital Accumulation, and the

Transformation of California Agriculture,” Journal of Economic History

(December 1995).

Published by EH.NET (February, 2000)

Joy Parr. Domestic Goods: The Material, the Moral, and the Economic in the

Postwar Years. Toronto/Buffalo/London: University of Toronto Press, 1999.

x + 368 pp. Appendices, notes, illustration credits, and index. ISBN

0-8020-7947-4

(paper), $21.95; ISBN 0802040977 (cloth), $60.00

Reviewed for H-Business and EH.NET by Pippa Brush, pmbrush@ucalgary.ca,

Calgary Institute for the Humanities, University of Calgary

“Getting and Spending…”

Joy Parr, in the introduction, describes her

book Domestic Goods as “an archeology of the material, moral, and

economic choices and constraints which formed Canadian commodity culture in the

two decades after the Second World War” (p.17). The title proclaims Parr’s

focus: she constructs her study

around the choices Canadian consumers made with regard to the furniture and

household appliances they bought – or chose not to buy, as in the case of

automatic washing machines [1] – in the decades of increased prosperity and

stability that followed the

austerity made necessary by the events of the war years. Her description of the

book’s project points to its methodological framework: Parr carefully and

painstakingly brings to light often-overlooked interrelationships between

female homemakers and male

designers and manufacturers, and places those complex and often contestatory

relationships within the context of governmental economic policies and the

postwar process of rebuilding the nation and securing its future stability. In

doing so, she offers a detailed and nuanced critique of Canadian material

culture from the end of the Second World War to the early 1960’s, and makes an

interesting and readable contribution to scholarship across a range of

disciplines and interests.

Parr’s project necessitates

the integration of a wide range of material and ideas but she ties her

discussion together through a series of questions which she presents early in

the introduction. While the list is rather too long to quote here, but includes

questions such as those that follow:

How much does contemporary

technology constrain how goods are made? […] How much can citizens talk back

to manufacturers and the state about domestic

goods? What can and do citizens do when, by gender, class, or nationality, they

have little influence over the shape of the material world in which they must

live? […] If householders are moved to practice what might be described as a

briskly accommodating resistance in their daily lives among goods, what makes

this resistance plausible and necessary? (pp.3-4)

The questions themselves are not simple and do not allow for any easy answers –

and Parr does not offer any. Rather, she leaves the questions with the reader

and asks him or her to reflect on them while reading. Even in the conclusion,

Parr does not attempt to answer the questions directly but points, instead, to

the complexity of the history she has presented and the implications it can

have, when carefully considered, for choices and practices today. Questions of

the material and moral, of consumption and resistance, of pleasure and

prudence, are brought together in the essays that follow Parr’s excellent and

engaging introduction, and they remain at the heart of the book – as well as

being questions that deserve further critical attention in other contexts.

Parr’s attempt to outline a specifically Canadian history of consumption for

the two decades following the Second World War presents an account that differs

from the two existing and contradictory accounts that have, she points

out, dominated and influenced understandings and readings of the patterns of

consumption in Canada. First, there has been a tendency to assume that Canada

was part of a North American picture that has “read postwar standards and

practices off the Marshall

Plan intentions for the entire North Atlantic, and […] naturalize[d] these

hortatory American norms as the intrinsic qualities of ‘consumer society'” (p.

11). Second,

there is the account that positions Canada within a colonial context,

conceiving of Canadian consumption as “‘characteristically more subdued,'”

to quote, as Parr does, British geographers Peter Jackson and Nigel Thrift,

and casting Canadians as “the most earnest and cautious among the ex-colonials”

(p. 267). Parr charts a middle path between the two, pointing out the

specificities both of the Canadian experience within the larger context of

North America and of the colonial legacy of Britain. Parr retains her focus on

the Canadian experience while still understanding and incorporating the

influences of Britain – for example, during the foreign exchange crisis of the

late 1940s – and of the United States with its dominant mass production and

very different government policies on consumption and the acquisition of

household appliances. But

she moves beyond these competing narratives of international influence to

address representations of Canadian society and behavior. At the same time she

acknowledges a tendency towards “prudence and responsibility” in the Canadian

buying public, she insists that her book is also “about sensual delights, the

pleasures of using tools well suited to the task, and about building and

defining in a time when options might have seemed few and foreclosed” (p. 267).

This is a tricky balance and Parr, for the most part,

manages to maintain it both skillfully and convincingly.

The two decades following the Second World War were characterized, Parr

suggests, by political and economic concerns with shoring up heavy industry and

building strong export markets in order to rebuild the Canadian economy after

the changes wrought by the war. Deliberate decisions to focus on building a

strong national community, with investment in the welfare state and a

commitment to income redistribution, as well as to delay the gratification of

already deferred individual wants through limits on the production of household

goods and appliances, meant that the experience of Canadians in the postwar

years was very different to the experience of Americans whose government

actively encouraged consumerism. As Parr makes clear in her chapter on the

wartime economy, “[American] government propaganda” promised that “postwar

homes would be stocked with ‘all things material in a brave new world of

worldly goods'” (p.31); Canadian government policy, on the other hand,

“focused on private but social welfare spending as the means of averting

postwar calamity” (p.31). It was concern for future stability that guided the

Canadian political economy,

and Parr does a good job both of placing that in relation to the more

optimistic stance adopted south of the border and of suggesting how the

contrasting policies worked in relation to each other.

In Canada, debates in design and manufacturing circles over questions of

modernism and international aesthetics stood in uneasy relation to consumer

demand for stability and political concerns with reinforcing a distinct

Canadian nationalism. The National Industrial Design Committee (NIDC) took a

very different approach to questions of design, function, and manufacture from

either the Canadian Association of Consumers (CAC) or the Housewives’

Consumer Association (HCA), and Parr uses these differences of opinion and

priority between the NIDC and the CAC at several points in the book to

illustrate the frequent conflicts that arose between designers and consumers,

between style and function. Parr usefully makes explicit the gendered nature of

the histories of design, manufacturing, and consumption as she locates the

history of consumption as a history primarily of

women as consumers, in contrast to the male-dominated fields of design and

manufacturing.

Parr’s book is divided into three sections, each taking as its primary focus a

different aspect of the production, consumption, and representation of material

culture: “the first focus[es] most upon economic policy, the second upon

industrial design, and the third on household technology”

(p.10). She describes the book’s organization within those sections as “a

series of relatively distinct, chronologically ordered

essays,” and goes on to point out that each of the chapters “builds in

sequence, one on another”

(p.3).

Chapters One through Five are devoted to the Canadian government’s political

and economic policies, beginning during the war and continuing into the postwar

years of the 1940s, 1950s, and early 1960s. Parr reflects on consumer

organizations, on the role of government, on the failure of liberal economic

policymakers to acknowledge the “irrational” nature of the Canadian economy in

those years, and on other related issues including attitudes to consumer

credit and saving. In Chapter Two, which is for me perhaps the strongest

chapter of the book, she explores the differences between two exhibitions of

modern style and design that took place at the Toronto

Art Gallery and the Royal Ontario Museum in 1945 and 1946. Parr uses those two

exhibitions to open up her discussion of what “modern” was taken to mean in

relation to the design, manufacture, and consumption of household appliances

and furniture in postwar Canada.

Chapters Six, Seven, and Eight address questions of design and consumption,

with the focus again on modernism and the accommodations necessary to introduce

a modern or a so-called international style to Canadian women more concerned

with comfort and durability than with design principles. In Chapter Eight, she

moves on to discuss how Canadian women effectively remade the objects they

bought for their homes, and how their choices were often made without reference

to the criteria assumed to be appropriate or desirable by designers and

manufacturers.

Chapters Nine, Ten, and Eleven present a series of tightly focused case studies

of women’s purchase decisions: Parr looks at buying a stove, a washing machine,

and a refrigerator in the early 1950s,

late 1950s, and early 1960s respectively. Each one presents an interesting and

useful case study but Parr could, I think, have spent a little less time

reiterating some of the broader ideas already well established in the earlier

chapters and focused more fully on issues specific to the decisions and

appliances in question: for example, the idea that designers and consumers

rarely agreed on what constituted a desirable product is one with which the

reader is already very familiar and of which s/he needs,

by the final section,

only a passing reminder..

The strength of Parr’s study undoubtedly lies in her ability to locate the

decisions of daily life (for example, the decision to purchase a specific kind

of washing machine) within a larger political and economic context without

losing the specificity of the experience itself. She deals with an enormous

range of material, from government policies and economic theory to sales

literature to interviews with individual women, and always maintains a coherent

and instructive narrative. In doing so, she constructs a detailed and

thoughtful history of everyday choices and practices, as well as of larger

questions of political economy, large-scale industrial production, the

aesthetics of design, and the role of gender in the acts of manufacture and

consumption. That it is located in the specificity of a Canadian context, while

taking careful account of different international influences and comparisons,

only adds to its usefulness, as the careful study of the local

helps illuminate our understanding of the global.

Parr succeeds in locating Domestic Goods within the context of existing

scholarship on the related histories of design, manufacturing, and consumerism.

In the introduction, she sets up her study in relation to other work and draws

from a variety of fields to construct her own reading of the complex

intersections between political economy, modernist aesthetics, manufacturing,

governmental organizations, and perhaps most importantly the lived experiences

of individuals and families. In her own words, Parr “puts studies of material

culture into unaccustomed company,

and therefore challenges certain disciplinary conventions” (p.3). In doing so,

she has produced an important text that has implications across a variety of

disciplines and sub-disciplines. Parr has also produced a work that challenges

us all to reconsider our own patterns of consumption and engagement with the

market economy in light of the questions she poses in her introduction, and to

work

on grounds of “reasoned and resisting hope”

to challenge the unquestioned supremacy of the market in the construction of

the world in which we now live (p.270).

Footnotes

[1] In Chapter Ten, Parr explores the fact that Canadian consumers were

noticeably

slower than American consumers to accept automatic washing machines. They

preferred, instead, the wringer machines that were considered outdated in the

United States. Parr explains this through “the traits of the Canadian

manufacturing system, the intricacies of Canadian plumbing, and the ethics of

Canadian consumer culture” (p.16).

Published by EH.NET (February 2000)

Stephen B. Adams and Orville R. Butler, Manufacturing the Future: A History

of Western Electric. New York: Cambridge University Press, 1999.

xi + 270 pp. $34.95 (cloth), ISBN: 0-521-65118-2.

Reviewed for EH.NET by Eric

John Abrahamson, The Prologue Group.

For more than a century, Western Electric supplied equipment to AT&T’s long

distance and local telephone companies as the manufacturing arm of the old Bell

System. Regulators around the country hated the situation. Many believed that

AT&T hid excess profits or bureaucratic inefficiencies in Western’s charges to

Bell System customers. Repeatedly, the federal government tried to force AT&T

to divest the company. AT&T fought these efforts and made enormous concessions

to the government to retain its vertical integration – until 1995. That year,

AT&T announced that it would divest what remained of Western Electric and

portions of Bell Laboratories to create a new company – Lucent Technologies.

Dan Stanzione, who became the president and chief operating officer of Lucent,

recognized in the birth of this new company both a need and an opportunity to

confront the past. He commissioned historians Stephen B.

Adams (Gordon Cain Fellow at the Chemical Heritage Foundation) and Orville R.

Butler (historian for the Academy of Management’s International Management

Division) to research and write Manufacturing the Future: A History of

Western Electric, and he gave them license to tell the story

“warts and

all.” Stanzione hoped that their story would convey the heritage of Western

Electric to both retirees and employees of the newly independent Lucent. But

Adams and Butler have done much more.

Manufacturing the Future chronicles the history of Western Electric

from the formation of its predecessor, Gray & Barton, in 1869 to the creation

of Lucent Technologies in 1996. It offers a classic story of vertical

integration, but treats that integration as a process that evolved over nearly

four decades, rather

than as a single event. Throughout the book,

Adams and Butler show the enormous influence of the regulatory environment on

the evolution of the Bell System’s strategy and structure. They also trace the

tension between innovation and implementation within

the context of an enormous bureaucratic culture.

Indeed, Western Electric and Bell Laboratories (formed as a joint venture

between Western and AT&T in 1925) proved capable of tremendous innovation in

science, manufacturing, and human relations. The company was an early leader

in global manufacturing. It developed breakthrough technologies in typewriters,

vacuum tubes, radio, television, motion pictures, radar, and transistors. One

could almost say that they invented the things that made the twentieth century

work. In manufacturing, Western Electric supported groundbreaking innovations

in the field of statistical process control and exported these methods to Japan

to give birth to the modern Total Quality movement. In human resources, studies

from 1924 to

1933 at Western Electric’s enormous Hawthorne plant outside of Chicago sparked

the development of the field of industrial psychology. And in the 1960s,

Western Electric emerged as a leading corporate advocate of civil rights and

affirmative action. According to the authors, AT&T’s desire to remain in the

good graces of the federal government motivated many of these initiatives as

scientific discovery, manufacturing efficiency and even defense contracting

became hallmarks of the Bell System’s commitment to universal service and good

public relations.

Yet Western Electric was often unable to reap the

returns from its own

innovations, and in many ways Western Electric’s story is a spectacular tale of

paths not taken. As Adams and Butler point out, corporate pressures to

maintain the company’s focus on domestic equipment manufacturing led to the

divestment of businesses in radio, motion pictures, electrical supplies, and

international manufacturing. To settle the government’s antitrust suit in 1956,

AT&T agreed to confine its manufacturing business to telephone equipment and

license any new technologies it developed to others. Statistical process

control languished in Western Electric manufacturing until the 1950s, despite

regulatory pressure on the Bell System to provide assurances of Western

Electric’s efficiency. And not withstanding the enormous amount of information

collected from the Hawthorne studies, the creation of a counseling program for

employees marked the only visible outcome of this effort. As Adams and Butler

conclude, the company’s monopolistic situation produced “an abundance of ideas

and innovation, but slow implementation or change.”

Manufacturing the Future provides a valuable overview of Western

Electric’s history, an excellent teaching tool for undergraduates studying the

American economy. Adams and Butler deftly summarize important chapters in

Western Electric’s history that have been covered more richly in the

historiography of the Bell System. They also enrich that literature by

refining our understanding of historical processes, especially on vertical

integration and affirmative action. However, many historians will finish the

book feeling unsatisfied.

In many ways Manufacturing the Future raises as many questions as it

answers. How did Western Electric influence the Bell System and its culture of

engineering, especially in the 1950s and 60s when two of Western Electric’s

presidents went on to become presidents of AT&T? Given the drumbeat of

literature extolling the virtues

of competition and its influence on innovation, why were Western Electric and

Bell Labs so prolific with new ideas? And what about the regulator’s concerns

about efficiency and profits? Adams and Butler suggest that the past is

traditionally believed to foreshadow the future. With Lucent, however, the

future may inform the past. Perhaps Western Electric achieved “a pattern of

efficiency” that explains Lucent’s success on Wall Street and in the

marketplace today.

However, even the authors acknowledge that

this is not a sufficient answer.

The question of Western’s efficiency and AT&T’s use or abuse of its captive

relationship leads to many of the issues at the heart of regulatory politics

and antitrust activity in the United States. Indeed, the history of

Western Electric and the Bell System opens windows onto many aspects of the

culture and economy of the United States in the twentieth century. The writing

of Western Electric’s history remains an unfinished project, but Adams and

Butler have given us an admirable guide to the territory ahead.

Eric John Abrahamson is founder and principal historian of the Prologue Group,

a California-based historical consulting firm. Among many projects,

he has written a history of the breakup of the Bell System and its

impact on California for the Pacific Telesis Group. With Lou Galambos, he is

currently working on a history of AirTouch Communications and the global

wireless industry.

Published by EH.NET (February

, 2000)

Lendol Calder. Financing the American Dream: A Cultural History of Consumer

Credit. Princeton, NJ: Princeton University Press, 1999. 377 pp.

Illustrations, notes, and index. $29.95 (hardbound), ISBN 0-691-05827-X.

Reviewed for H-Business and E H.NET by Christiane Diehl Taylor,

histaylo@acs.eku.edu, Department of History, Eastern Kentucky University.

If one had a group of historians formulate a list of key themes in twentieth

century United States history, one would be very surprised if most of

the lists did not include some variant of the topic, the emergence and

development of a consumer culture. This pivotal aspect of contemporary society

has had historians grappling with an array of issues ranging from the impact of

mass production and distribution on consumption to the role of consumer

intermediaries in the purchasing process. Yet a critical factor in the

emergence and development of a consumer culture has received less scholarly

attention than such areas as technology or advertising and public relations,

namely, the proliferation of consumer credit, and this is Calder’s focus. While

his subtitle, A Cultural History of Consumer Credit

would lead one to believe that he would deal with such issues as why consumers

became increasingly willing to take on personal debt to acquire consumer goods

or how race, ethnicity and gender affected credit access and usage, such

questions are not his focus. Rather he traces the development of two key

aspects of consumer credit: lending sources and prevailing

“authoritative” attitudes towards credit and debt between 1870 and 1940.

Calder divides his examination of these two credit related areas into three

parts. Part I discusses prevailing sources of consumer credit and financial

experts’ attitudes towards debt during the late nineteenth century. Credit

sources varied by economic class. Working class individuals turned to three

primary institutions: pawnbrokers who exchanged household items for cash;

small loan agencies, which were frequently illegal loan

sharking operations; and retailers, particularly peddlers and borax retailers,

who offered installment plans for purchasing furniture and clothing. According

to Calder, while working class individuals turned to these sources to purchase

items that helped

them maintain their standard of living, the middle class used credit to

acquire goods that improved their standard of living. For purchasing such items

as furniture, pianos, and jewelry, they relied on the book credit systems and

installment plans offered by area retailers and on family and friends. For

financing home purchases, however,

they turned to a variety of sources ranging from family members and mortgage

banks to building and loan associations and real estate professionals.

By the late nineteenth century, certain types of debt no longer carried a

social stigma. While financial advisors still emphasized the Victorian

principles of frugality, thrift, planning, and living within one’s means,

they found the use of productive credit, or credit used

to enhance one’s financial future, as wholly acceptable. In their view,

productive credit included debt incurred in purchasing a home or even such

goods as sewing machines, furniture, or pianos. In contrast, the use of

consumptive credit,

or credit which

satisfied an immediate need or wish that had little to no future value, was

unacceptable. The only exception to this condemnation of consumptive credit was

in the case of working class individuals who through no folly of their own had

to go into debt in order to acquire basic necessities.

In Part II, Calder argues that by the 1920s, the mass production of automobiles

and a wide array of consumer durables as well as increased competition between

local outlets and mass retailers spurred the expansion and legitimization of

two sources of consumer credit, personal finance companies and installment

plans. Recognition of the ever-increasing need for small personal loans and the

working class’s reliance on small loan agencies as a credit source spurred

Progressive period reformers to seek ways to eradicate the loan sharks who

comprised the majority of small loan agencies. To accomplish this, they lobbied

for states to enact Uniform Small Loan Laws that allowed small lenders to

charge slightly more than the general loan rates in exchange for accepting the

risk inherent in short-term lending. By 1932, 25 states had such laws. They

also helped to establish the American Association of Small Loan Brokers, which

in 1929 became the American Association of Personal Finance Companies. This

organization fought for state regulation of the credit industry and established

industry standards including uniform loan application forms and procedures and

advertising guidelines. Moreover, these efforts at professionalization on the

part of small loan agencies expanded their customer base to include members of

the middle class. While installment purchases of such items as farm machinery,

pianos and sewing machines were well established by the 1880s, installment

buying remained the

province largely of the working class. Yet by 1920, installment buying lost

its

class stigma and became the standard method for financing household purchases

regardless of class due to the increased demand for such expensive items as

cars and household appliances and the rising number of local retailers and

even catalog houses that responded to the burgeoning number of chain stores by

offering installment plans.

The social acceptability of consumer debt accompanied the rapid growth of

“legitimate” small

loan agencies and installment purchase plans. In Part III, Calder argues that

during the 1920s, E.R.A. Seligman served as the key figure in reinventing

consumptive credit as consumer credit and convincing financial authorities that

debt incurred for acquiring consumer goods was legitimate and worthwhile. In a

study commissioned by John J. Raskob, head of General Motors, Seligman argued

that credit purchases were now an integral part of the modern economy and

installment buying was vital to stimulating further economic growth and

productivity. The concepts of productive and consumptive credit were no longer

valid. The correct classifications were now producers’ credit and consumers’

credit, and both allowed borrowers to do things they could not otherwise do and

required individuals to pay for things as they used them. Consumer credit

required individuals to work harder and practice thrift and good financial

management since they had to make regular payments. One could not condemn

individuals for making luxury purchases since the definition of luxury varied

by individual. There was, however, such a thing as foolish borrowing, which

entailed running up debt for which one could not pay.

While the onset of the Great Depression and arguments over the role of debt in

causing the severe economic downturn slowed acceptance of Seligman’s

assertions, three depression-related events led to the eventual acceptance of

his arguments by the end of the 1930s: the further of adoption of installment

plans by hold-out retailers such as Macys, the establishment of small,

short-term loan departments within commercial banks, and the expanded role of

the federal government as a consumer lending institution through such programs

as the Reconstruction Finance Corporation, the Farm

Credit Administration, and FHA.

While Calder provides insight into the development of consumer lending

institutions and changing attitudes towards consumer debt, his study is not a

comprehensive cultural history of consumer credit because too many critical

cultural aspects are either not examined or only noted in cursory fashion. The

consumer credit sources discussed in Part I would not have existed or been able

to expand without consumer demand. Yet Part I does not explain why working and

middle class

individuals were increasingly willing to incur debt to purchase ready-made

clothing or such items as sewing machines and pianos. How did the notions of

increased affordability and accessibility due to mechanized production and

expanded distribution affect

their willingness? Did certain items become more desirable, more of a

life-necessity as individuals actually had access to the items and their costs

could be covered within a seemingly reasonable time-frame? In fact,

were individuals’ views of life’s necessities changing? How did the period’s

increased emphasis on the importance of leisure time, and the emerging notions

of time-savings and efficiency affect consumers’

willingness to buy such items as pianos through installment plans and in the

face of continuing admonitions about thrift, sound financial planning and the

avoidance of consumptive debt? Were consumers’ perceived need gratification

time-frames changing and why?

There is also the issue of power. Access to credit is not just a critical

component of purchasing power but power in general within modern day society.

While Calder indicates throughout his analysis that credit access expanded

during the late nineteenth and early twentieth centuries and suggests that

individuals were screened for credit worthiness on an informal basis or

through such formal means as credit applications, he never deals with the issue

of who and what determined credit worthiness?

How did prevailing notions about one’s economic status, race, ethnicity or

gender affect one’s ability to get consumer credit? While Calder discusses the

credit sources used by recently arrived immigrants during the late nineteenth

century, he does not deal with how the replacement of immigrant community based

loan shark operations and retailers with mass retailers and professional small

lending institutions affected recently arrived immigrants’ credit access. More

importantly, the relationship between such racial groups as African-Americans

and consumer credit is totally absent from his analysis.

Calder, however, does pay some attention to the issue of gender. In fact,

his discussion of the role of women in nineteenth century small loan operations

and how critics of consumer credit viewed women’s credit worthiness raises

intriguing questions. Calder points out that loan sharking operations often

used women to deal with

potential customers and to gain financial background information on customers.

Why women? Did women lend respectability to their operations? Were women seen

as less intimidating?

Why would they hire women when later credit operations, such as small loan

agencies viewed women as only suitable for filling clerical positions?

Moreover, as Calder points out in Part III, critics of consumers’ increased

reliance on credit saw women as both primary purchasers and abusers of credit.

They argued that women had no financial sense and therefore used credit

unwisely for unnecessary whimsical purchases or purchases that put undue

burdens on families’ financial wherewithal. Since men were rational and the

primary producers, they needed to take charge of family finances and its use of

credit. This seemingly contradictory attitude of being receptive to women as

buyers but not creditors needs more exploration since it is key to

understanding the discrimination women faced throughout the twentieth century

in financial dealings and access to capital.

While Calder’s study of

the emergence and development of consumer credit

institutions and financial authorities’ attitudes towards consumer credit

reminds historians that an examination of consumer credit is critical to

understanding twentieth century mass consumer society, it also indicates that

such an examination is incomplete unless one deals with such cultural aspects

of consumer credit as the role of race, ethnicity, and gender in credit access

and usage and underlying reasons for individuals’ increased willingness to

incur debt . Hopefully, Calder will continue to pursue the cultural dimensions

of consumer credit in future work and deal with such important issues.

Ivy Pinchbeck, Women Workers and the Industrial Revolution, 1750-1850.London: George Routledge, 1930. x + 342 pp.

Review Essay by Joyce Burnette, Department of Economics, Wabash College.

burnettj@wabash.edu

A Pioneer in Women’s History:

Ivy Pinchbeck’s Women Workers and the Industrial Revolution, 1750-1850

During the past twenty years economic historians have begun to pay more attention to the role of women in the economy of Industrial Revolution Britain, and how our conclusions might change if we no longer neglect them. We can thank Ivy Pinchbeck for blazing the trail seventy years ago. Her Women Workers and the Industrial Revolution, 1750-1850 is one of the most significant works in twentieth-century economic history both because of its merits and because of the impact it had on later scholarship. Pinchbeck consulted a huge number of primary sources, and was able to synthesize this material into broader conclusions that have shaped our understanding of women’s history. The book was a pioneering effort in the field of women’s economic history, and has served as a valuable resource for later researchers.

Ivy Pinchbeck is not one of economic history’s superstars, and relatively little is known about her. She was born in 1898. In 1930 she received her Ph.D. in Economic History from the London School of Economics, where she worked under Eileen Power. She spent her entire career (1928 through her retirement) at Bedford College, London. In 1969 she published (with Margaret Hewitt) Children in English Society, which examined English children from the sixteenth century to the twentieth century. She also published a couple of articles in the British Journal of Sociology, but her list of publications is not particularly long. Pinchbeck wrote about women’s history before it was considered an important topic, and she lived, and presumably died, in relative obscurity.

Women Workers and the Industrial Revolution is clearly the product of countless hours of research. The number of texts that Pinchbeck consults is amazing, and this wide-ranging research makes her bibliography of primary sources a valuable resource for the student of women’s history. It contains seven manuscript sources, 120 volumes of parliamentary reports, 21 newspapers and periodicals, and 208 contemporary books and pamphlets. This breadth of sources allows her to quote not only from the most famous authors such as Arthur Young and F.M. Eden, but also from more obscure sources such as the pamphlets “A Present for a Servant Maid” and “An Enquiry into the Advantages and Disadvantages Resulting from Bills of Enclosure.” Pinchbeck quotes liberally from these sources, and each chapter is filled with footnotes, providing a gold mine for the researcher. If there is an important quote in the report of a parliamentary committee, chances are high that you will find that quote in Pinchbeck’s book.

The book is divided into two sections, the first on agriculture and the second on “industry and trade.” The first section examines both female laborers, whose participation in agriculture remained high, and farmers’ wives, who withdrew from farm work during this period. The second section examines women in textiles, domestic industries, mining, metals, and various crafts. One admirable feature of the book is that it examines not only the work of poor women, but also the work of women higher up the occupational ladder. Pinchbeck examines the work of women who ran dairies, kept shops, provided medical services, and participated in a wide variety of trades. Pinchbeck finds evidence of women auctioneers and notes that facts such as this “cause some astonishment at the present day when it is so often wrongly assumed that women have only just begun to enter the business world” (Pinchbeck, p. 286).

While Pinchbeck spends most of her time describing the conditions of employment, she does on occasion pause to draw more general conclusions. Her central claim is that, on the whole, the Industrial Revolution made women better off. Initially women suffered from declining employment opportunities, but after the turn of the nineteenth century their prospects improved. Pinchbeck claims that women were better off in 1850 than in 1750 for two reasons. First, many women withdrew from the labor force and were able to enjoy more leisure and higher social standing. Pinchbeck sees the opportunity to specialize in housework as a privilege, and thus she sees withdrawal of some married women from the labor force as an improvement. While Pinchbeck notes that many women lost economic independence, she considers the gains to be large enough to make up for this loss. Noting the withdrawal of farmers’ wives from productive employment, she claims, “In the change she sacrificed her former economic independence according to the extent to which she ceased to manage her household and contributed to the wealth of her family, but for her, the new conditions meant an advance in the social scale and did not entail any material hardship” (Pinchbeck, p. 42). For Pinchbeck, the move toward a “family wage,” which allowed a man to support a family and allowed wives to withdraw from the labor force, was a clear advance.

The second way in which women were better off in 1850 was in improved working conditions for those women who remained in the labor force. Pinchbeck notes that, while contemporaries thought factory conditions were bad, these conditions were actually better than the conditions in alternative employments in domestic industry. Women entering the factories did not leave behind ideal circumstances, but domestic industries with low pay and poor working conditions. Pinchbeck concludes that “the Industrial Revolution has on the whole proved beneficial to women. It has resulted in greater leisure for women in the home and has relieved them from the drudgery and monotony that characterized much of the hand labour previously performed in connection with industrial work under the domestic system. For the woman workers outside the home it has resulted in better conditions, a greater variety of openings and an improved status” (Pinchbeck, p. 4).

When the book appeared, the topic of women’s work was marginal. A decade earlier Alice Clark had written The Working Life of Women in the Seventeenth Century, but women’s work was hardly a popular topic. When Pinchbeck’s book came out it was favorably reviewed. General economics journals such as the Economics Journal and the American Economic Review carried reviews. Scholars were familiar with the book and considered it important; Kenneth Walker, in a review of a 1948 book on factory legislation, chides the author for failing to keep up with “recent literature pertinent to this subject” such as Pinchbeck’s book. For the most part, however, the book was politely ignored. Both the topic and the book remained on the margins of economic history for five decades. The first Journal of Economic History article that cites Pinchbeck is a 1959 article on the Industrial Revolution by R.M. Hartwell. Even here, the focus is not on women’s history, but on the standard of living debate; Hartwell quotes Pinchbeck as saying that factories improved the standard of living. Pinchbeck is not cited again in a Journal of Economic History article until the 1980s.

Since 1980 Pinchbeck has received more attention because we have come to realize that an economic history that ignores women is a poor economic history (see Humphries, 1991). Pinchbeck has become required reading for students of women in the Industrial Revolution and is universally cited in current works on that topic. Humphries (1991, p. 32) calls the book a “classic text.” Jane Rendall (1990, p. 7) claims that “Pinchbeck’s work is still of great importance, and for the moment remains the major survey of the impact of industrialization on women workers in Britain.” Many works on women’s history begin with a reference to Pinchbeck. Duncan Bythell begins “Women in the Work Force” by contrasting Pinchbeck’s optimistic view of women’s opportunities to Eric Richards’ more pessimistic view. While Pinchbeck’s book was relatively neglected when it first appeared, it has stood the test of time.

For a historian relying on non-quantitative sources, Pinchbeck did an admirable job of describing the patterns and trends in women’s work. Later historians using more quantitative methods generally agree with her descriptions. A good example is Sara Horrell and Jane Humphries’ 1995 Economic History Review article, which begins with the sentence, “Ivy Pinchbeck argued 65 years ago that the changes in the British economy during the industrial revolution promoted increased dependence on male wages and male wage-earners” (Horrell and Humphries, 1995, p. 89). Using a probit equation to predict female labor force participation, they find a downward trend in female labor force participation throughout the first half of the nineteenth century, which leads them to the conclusion that “Sixty-five years on we find that our evidence largely supports Pinchbeck’s views” (Horrell and Humphries, 1995, p. 113). Other historians have also supported Pinchbeck’s claims. K.D.M. Snell’s Annals of the Labouring Poor finds that, in the early nineteenth century, farmers hired fewer workers as annual servants, supporting Pinchbeck’s conclusion that “the custom of employing annual servants who lived in the farm declined in favour of day laborers who were responsible for their own board and lodging” (Pinchbeck, p. 37). Snell’s examination of the records of parish apprentices confirms Pinchbeck’s observation that women were apprenticed to a wide variety of trades. Investigating the employment of day-laborers at a farm near Sheffield, I have found that the pattern of female employment in agriculture fits well with the pattern that Pinchbeck describes: declining female employment between 1815 and 1834, followed by increasing female employment (Burnette, 1999).

Pinchbeck’s most controversial conclusion is her claim that the Industrial Revolution made women better off. Jane Rendall (1990, p. 7) claims that “Most modern historians would see her interpretation . . . as unduly optimistic.” Many historians see the period as one during which women lost rather than gained. The disagreement seems to be mainly one of interpretation. Pinchbeck notes that many women withdrew from the labor force, and she interprets this as a gain. Women had more leisure, and more time to devote to their housework. Other historians, observing the same change, have interpreted it as a decline in women’s position as they were forced out of the labor market. Women may have gained leisure, but they lost independence and bargaining power. Davidoff and Hall (1987, p. 273), for example, note that “the loss of opportunities to earn increased the dominance of marriage as the only survival route for middle-class women.”

Occasionally Pinchbeck includes statements that resemble theories later formalized by economics. For example, in her introduction Pinchbeck states that “such occupations as were open to women were overstocked” (Pinchbeck, p. 2). This sounds like the crowding model of discrimination developed by Barbara Bergmann in 1971. At other times Pinchbeck’s theory is not so strong. A weak point in her economics is her theory of wage determination. She assumes wages were based on what one needed to survive, not on productivity. Discussing wages earned by spinners, she claims, “Manufacturers were inclined to base wages on the assumption that the spinners were already maintained by their husbands” (Pinchbeck, p. 144). She claims that the withdrawal of women from the labor force was not really an economic loss to the family because “in many instances women’s earnings only served to keep their husbands’ wages at the level of individual subsistence. In this sense the industrial revolution marked a real advance, since it led to the assumption that men’s wages should be paid on a family basis” (Pinchbeck, p. 313). This theory of wage determination probably comes from the classical wage fund doctrine, but this does not excuse her because other economists at that time recognized the weakness of this theory. Frances Gillespie, in her review of the book, notes that “Whether men’s wages were kept down to the level of their own subsistence because women and children earned their own keep, is arguable” (Gillespie, p. 419-420). Gillespie uses better economic theory when she argues that if women’s employment had any effect on male wages it was through competition in the labor market.

Pinchbeck’s book received little attention for fifty years because it took the rest of the profession that long to realize the importance of her topic. We now recognize the importance of investigating the work of women as well as the work of men, and we must thank Ivy Pinchbeck for leading the way.

References:

Bergmann, Barbara. 1971. “The Effect on White Incomes of Discrimination in Employment.” Journal of Political Economy, 79 (March/April): 294-313.

Burnette, Joyce. 1999. “Labourers at the Oakes: Changes in the Demand for Female Day-Laborers at a Farm near Sheffield during the Agricultural Revolution.” Journal of Economic History, 59 (March): 41-67.

Bythell, Duncan. 1993. “Women in the Work Force.” In Patrick O’Brien and Roland Quinault, editors, The Industrial Revolution and British Society. Cambridge: Cambridge University Press.

Clark, Alice. 1919. Working Life of Women in the Seventeenth Century. London: Routledge.

Davidoff, Leonore, and Hall, Catherine. 1987. Family Fortunes: Men and Women of the English Middle Class, 1780-1850. Chicago: University of Chicago Press.

Hartwell, R.M. 1959. “Interpretations of the Industrial Revolution in England: A Methodological Inquiry.” Journal of Economic History, 19 (June): 229-249.

Horrell, Sara, and Humphries, Jane. 1995. “Women’s Labor Force Participation and the Transition to the Male-breadwinner Family, 1790-1865.” Economic History Review. 48 (Feb.): 89-117.

Humphries, Jane. 1991. “‘Lurking in the Wings. . .’: Women in the Historiography of the Industrial Revolution.” Business and Economic History, 20: 32-44.

Pinchbeck, Ivy. 1930. Women Workers and the Industrial Revolution, 1750-1850. London: George Routledge.

Pinchbeck, Ivy. 1956 and 1957. “State and the Child in Sixteenth-Century England.” British Journal of Sociology, 7 (Dec.): 273-285 and 8 (Mar.): 59-74.

Pinchbeck, Ivy. 1969. Women Workers and the Industrial Revolution, 1750-1850. London: Augustus M. Kelley.

Pinchbeck, Ivy. 1977. Women Workers and the Industrial Revolution, 1750-1850. London: Frank Cass.

Pinchbeck, Ivy. 1981. Women Workers and the Industrial Revolution, 1750-1850. London: Virago.

Pinchbeck, Ivy, and Hewitt, Margaret. 1969. Children in English Society. 2 volumes. London: Routledge & Kegan Paul.

Rendall, Jane. 1990. Women in an Industrializing Society: England 1750-1880. Oxford: Blackwell.

Snell, K.D.M. 1985. Annals of the Labouring Poor: Social Change and Agrarian England, 1660-1900. Cambridge: Cambridge University Press.

Walker, Kenneth. 1949. Review of The Early Factory Legislation: A Study in Legislative and Administrative Evolution, by Maurice Walton Thomas. Journal of Economic History, 9(Nov.): 247-248.

–Reviews of Ivy Pinchbeck’s Women Workers and the Industrial Revolution, 1750-1850:

1. Edith Abbott, American Historical Review, 37 (Jan. 1932): 325-326.

2. George Engberg, Journal of Economic History, 31(June 1971): 519-520.

3. Frances E. Gillespie, Journal of Political Economy, 39 (June 1931): 418-420.

4. J. de L. Mann, Economic History Review, 3 (Oct. 1931): 303-305.

5. Helen Sumner Woodbury, American Economic Review, 29 (Dec. 1930): 713-722.

6. Barbara Wootton, Economic Journal, 41(Mar. 1931): 128-129.

Published by EH.NET (January 2000)

Thomas Mayer, Monetary Policy and the Great Inflation in the United States:

The

Federal Reserve and the Failure of Macroeconomic Policy,

1965-79. Cheltenham, UK and Northampton, MA: Edward Elgar Publishing,

1999. ix + 151 pp $70.00 (cloth), ISBN: 1-85898-953-1.

Reviewed for EH.NET by Stephen J. Perez, Department of Economics,

Washington State University.

Why did inflation rise to such frightening levels in the U.S. during the 1970s?

In his book, Monetary Policy and the Great Inflation, Thomas Mayer

analyzes and describes a vast amount of largely narrative evidence regarding

the formulation of monetary policy from 1965-1979. He uses a maintained

hypothesis that the Great Inflation was caused by monetary policy and takes as

his charge explaining the Federal Reserve’s willingness to accommodate the high

inflation

rates. According to Thomas Mayer,

“[t]here are several villains, and the biggest one turns out to be then

prevailing views of economists, and not malicious political interference with

the central bank, or cartel-imposed supply shocks. We have met the enemy and

he is (or rather was) us” (p. 117).

Professor Mayer uses sources ranging from the minutes of Federal Open Market

Committee (FOMC) meetings to economic textbooks of the time to interviews with

policy makers conducted in 1996 to try and sort through

several possible explanations for why the Federal Reserve pursued an

expansionary policy during the Great Inflation. The possible explanations

include: bad forecasting by the Federal Reserve, poor control over the money

supply, cognitive errors, political pressure, wage, price, dividend,

and interest rate controls (Nixon’s incomes policies), and poor economic

advice.

As a graduate student at UC Davis, I had the distinct pleasure of taking two

classes in monetary theory and policy from Professor Mayer. I

am heartened to know that he continues to attack problems with the methodical

and intellectual style with which he taught. Professor Mayer systematically

evaluates the possibility that each of the above reasons could have lead to the

Federal Reserve’s role in the Great Inflation. In each case, he makes great

use of the minutes and interviews he conducted detailing evidence both for and

against each explanation.

Is it possible that the Federal Reserve was simply misled by poor forecasts of

future economic performance? It is true that the Federal Reserve staff

systematically underestimated future inflation and overestimated potential

output. However, Professor Mayer attributes a maximum of 3 to 10% of the

inflation to these misestimates. Did poor control

over the money supply lead to excessive monetary growth? Although there may

have been an accommodative policy bias, poor control of the money supply should

have led to mistakes towards accommodative and restrictive policy.

Professor Mayer attributes a small possible role to cognitive errors such as

vagueness of policy, procrastination, a short run bias, the role of

expectations, etc. But, the most interesting analysis lies in chapters

regarding political

pressure, price controls, and the influence of economists.

Professor Mayer looks very carefully for evidence that the Federal Reserve

experienced pressure from the administration or Congress to follow an

accommodative policy. Other than a few instances, the following excerpt

summarizes the role of political influence: “The political pressures the Fed

actually experienced appear to have played only a relatively minor role in the

Great Inflation, so that direct cause of the Great Inflation was primarily the

Fed’s own inflationary proclivity. But if the Fed had been much less inclined

to tolerate inflation, political pressures might well have forced it to do so”

(p. 81).

The possibility of political pressure also plays a role in the discussion of

the role of how the Nixon wage and price controls affected

the formulation of monetary policy. Professor Mayer finds evidence that the

FOMC may have been influenced by the specter of interest rate controls if it

became too contractionary. The wage and price controls may have also lead the

FOMC to become more expansionary with the belief that the incomes policies

would hold down inflationary expectations.

Professor Mayer finds the main cause of the expansionary monetary policy to be

the correlation of the FOMC’s attitudes towards inflation with those of

academic

economists. In particular, both the FOMC and academic economists felt that

monetary policy should play a reduced role in fighting cost-push inflation,

that the cost of fighting cost-push inflation was very high, and that the NAIRU

was relatively low and

both failed to fully realize the lack of a tradeoff between inflation and

unemployment in the long run. In summary, Professor Mayer states: “My own

ranking [of causes of the Great Inflation] is to put the intellectual

atmosphere in first place, and cognitive errors, political pressures and the

wish to avoid interest-rate fluctuations, in second, third and fourth place

respectively,  Well behind these come inadequate operating procedures, and

even further behind, the pressures exerted from the imposition

of wage and price controls” (p. 120).

Monetary Policy and the Great Inflation in the United States is a very

enlightening description of how monetary policy lead to the Great Inflation.

Professor Mayer displays his typically thorough analytical skills

and clear writing style while describing a wealth of source level evidence

regarding the thought process of monetary policy makers.

Stephen J. Perez is Assistant Professor of Economics at Washington State

University. He is author of numerous works including “Data Mining

Reconsidered: Encompassing and the General-to-Specific Approach to

Specification Search.” Econometrics Journal, Vol. 2, (with Kevin D.

Hoover); “Causal Ordering and the ‘Bank Lending Channel’.” Journal of

Applied Econometrics, (Nov.-

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