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Accounting for Growth: Information Systems and the Creation of the Large Corporation

Author(s):Levenstein, Margaret
Reviewer(s):Miranti, Paul

Published by EH.NET (September 1999)

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Margaret Levenstein. Accounting for Growth: Information Systems and the Creation of the Large Corporation. Margaret Levenstein. Stanford, Ca., Stanford University Press, 1998. ix + 277p p. appendices, illustrations and index. Cloth, $49.50. ISBN 0-8047-3003-2

Review for H-Business and EH.NET by Paul Miranti, Rutgers University. miranti@everest.rutgers.edu

Margaret Levenstein has written an important book that should have a major im pact on the history of accounting and information systems and its connections to the theory of the growth of the firm. Dr. Levenstein argues that changes in corporate organization, strategy, market structure and technology serve as the drivers of modifications in the design and structure of accounting systems. This is a significant departure from the traditional approach followed by accounting historians who often focus more narrowly on the details of methodological evolution per se, placing little emphasis on other contextual factors. Central to her study is an asynchronous, three-stage categorization of accounting system development for the purposes of: (1) operational control; (2) short-term decision making; and (3) long-term capital allocations. These classifications enrich the analysis of firm practice by highlighting how changing priorities influenced information function, flows and content. They also help to avoid the rigidities inherent in such shop-worn constructs as the entity or proprietary theories that permeate many method studies in this field. The explanatory power of Margaret Levenstein’s propositions are tested by analyzing the experience of the Dow Chemical Company and its predecessor, the Midland Chemical Company during the period 1894- 1914. She persuasively argues that Dow’s accounting systems underwent an important transformation during this era as the firm made the transition from an adaptive strategy appropriate for an uncompetitive, cartelized market to an innovative strategy involving product diversification and competitive market settings. Midland Chemical, the precursor adaptive firm, only required a rudimentary accounting system to satisfy the limited information requirements necessary to operate successfully in the cartlelized market for its primary product, potassium bromide. The Dow Chemical Company, the innovative successor, on the other hand, needed a more elaborate accounting system to capture the wider array of information needed to exploit the market potential of electrochemical technology after it abandoned the bromide cartel in 1900.

Some of Margaret Levenstein’s findings are at a variance with earlier studies that dealt with the nature of the relationship between accounting information and corporate growth. She notes, for example, that capital allocation decisions at Dow were informed largely by marginal profit data rather than return on investment analysis which Alfred Chandler has identified as a major evaluative mechanism in modern corporations. This difference is probably more a function of the lack of sophistication in accounting and finance in an emergent enterprise whose management was dominated by chemists. Some AT&T subsidiaries were using return on investment as early as 1911. Moreover, it is not clear when Donaldson Brown actually developed the more elaborate Du Pont ROI calculation which included three components: profit margin, sales turnover and financial leverage. It may have been perfected after the 1914 cut-off date for the Dow study. And it did not become central to planning at General Motors until after 1921 when Brown joined the management team organized to resurrect that firm’s depleted finances. Second, Dr. Levenstein’s findings also do not support the conclusion of Johnson and Kaplan that corporate accounting practice was shaped strongly by professional accountants who were primarily concerned with the questions relating to financial reporting. At Dow professional accountants were consulted after the process of system evolution was well advanced (1900) and that their recommendations were only embraced selectively by management. Moreover, audits by independent public accountants were only performed occasionally (1900, 1905, 1910) with regular annual audits not beginning until 1911 which suggests that the linkage between the requirements of financial reporting and corporate accounting policy may have been weak. What is more surprising is that such a marginal enterprise actually engaged as advisors leading representatives of what then was a small and poorly understood profession. Professional accounting had only been licensed in New York since 1897 and was just beginning to be organized in Michigan and Ohio when Dow employed Haskins & Sells. The choice of a firm which had played a leading role in Progressive reform in Chicago and New York may imply that there is a question concerning the sociology of knowledge here that goes beyond the confines the current study. Perhaps, Dr. Levenstein’s next work on the Cleveland Trust, which provided important financial support to Dow, will shed more light on how professional accounting won acceptance among business and political elites as a means for strengthening social and economic ordering.

One dimension of Margaret Levenstein’s study which might have been expanded more is a generally excellent discussion of Dow’s haphazard capital costing policies. Initially, the firm only recorded repairs and betterment expenses. Later, seemingly arbitrary depreciation charges were recorded apparently in order to maintain surplus accounts at some desired level, perhaps conditioned by the amount of dividends management wished to pay out. The study, however, does not find any connections with contemporary developments in regulated public service enterprises where the de bate over depreciation raged because of its impact on rate bases. The accounting sections of the Hepburn Act of 1907, for example, were intended in part to require greater uniformity in depreciation practice among the nation’s railroads. More surprising was lack of discussion of the significance of the depreciation policies under the federal corporate income tax which became operative at the end of the period under survey.

Margaret Levenstein’s unique model which blends history and theory represents an important contribution to the accounting literature on a par, I believe, with the well known paradigms of such scholarly duos as Johnson and Kaplan, Meckling and Jensen and Watts and Zimmerman. Her ideas about the drivers of accounting evolution invites further confirmatory case studies to test her conclusions which were predicated on the experience of a single great firm in its formative stages of development. Dr. Levenstein’s study serves as an exemplar of the potential richness of case studies in accounting history-a genre that too often in the past has neither amplified theory nor major interpretative themes.

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Subject(s):Business History
Geographic Area(s):North America
Time Period(s):20th Century: Pre WWII

A History of the Modern Fact: Problems of Knowledge in the Sciences of Wealth and Society

Author(s):Poovey, Mary
Reviewer(s):Alborn, Timothy

Published by EH.NET (September 1999)

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Mary Poovey, A History of the Modern Fact: Problems of Knowledge in the Sciences of Wealth and Society. Chicago: University of Chicago Press, 1998. xxv + 419 pp. $49.00 (cloth), ISBN: 0-226-67525-4; $17.00 (paper), I

SBN: 0-226-67526-2.

Reviewed for EH.NET by Timothy Alborn, Department of History, Lehman College, CUNY.

Economic historians don’t tend to think much about epistemology. As they trace unfolding developments in the economy, though, epistemology has a way of sneaking up on them. To cite an example from the recent past, The Economist this past July commented on the difficulty of squaring the enormous optimism generated by the new information-technology economy (reflected in the booming stock market) with the plainly unimpressive growth rates in all sectors of the economy barring computer sales. This was apparently “a sad case of the irresistible story meeting the immovable statistic,” claimed the magazine. As if to drive home the underlying epistemological quandary, the accompanying editorial (and magazine cover) was titled: “How real is the new economy?”

In A History of the Modern Fact, Mary Poovey reinterprets classic texts in political economy, philosophy, and statistics in order to locate the historical origins of what she claims is a peculiarly modern dilemma. Whether charting economic growth or planetary motion, she claims, we moderns feel the need to ground our claims in immovable statistics; yet at the same time we are compelled to find a transcendent meaning (an irresistible story) in the mass of details. Poovey brings to this project the perspective of a literary critic who has, in the past, turned her attention to putatively non “literary” topics like Florence Nightingale and poor law reform. Her recent appointment as director of the Institute for the History of the Production of Knowledge at NYU has provided her with an institutional base from which to pursue the ambitious, and clearly historical, agenda for which A History of the Modern Fact is a blueprint.

It is indeed an ambitious book. One is tempted to apply to it Daniel Defoe’s definition of “project”, which Poovey quotes (p. 158): “a vast undertaking, too big to be managed.” The narrative moves from late-16th century British book-keeping manuals; through the debate between Gerald de Malynes and Thomas Mun on Britain’s money supply; William Petty’s writings on political arithmetic; Defoe’s essays on “projects” and mercantile conduct; Earl Shaftesbury on sociability; David Hume on conjectural history; Samuel Johnson on the Outer Hebrides; and Smith and Malthus on political economy, before concluding with a chapter on John Stuart Mill and the astronomer John Herschel. On the way, she has much to say about the history of classical rhetoric, moral philosophy, scientific societies, and the problem of induction. And for the most part, she succeeds at holding all these topics together by keeping in focus her subjects’ diverse efforts to solve the same problem: how to produce systematic knowledge about society in an era when the political basis of social order was being transformed?

Two important contexts for this problem appear in the book’s opening chapters: classical (or Ciceronian) rhetoric, which dominated the way Renaissance writers made arguments; and “reason of state” theories which viewed politics in terms of sound principles which an absolute monarch could then impose on his subjects. Poovey describes most of her subjects as struggling against one or both of these conventions on their way to inventing a new way of analyzing society. Double-entry bookkeeping, for instance, substituted plain-speaking numbers for Ciceronian excess, in the process selling the precision of balance sheets as a proxy for mercantile virtue. Thomas Mun similarly pitched his arguments against centralized monetary policy both by his recourse to precise-sounding (but wholly illustrative) figures depicting the balance of trade and by his defense of mercantile rules and expertise. And Daniel Defoe moved from tracing the tangible effects of mercantile enterprise (in his Essays upon Several Projects) to writing a conduct manual for merchants (his Compleat English Tradesman), once he had determined that real-world merchants were not capable of rising to his vicarious ambitions.

As all these examples suggest, Poovey is especially interested in what might be called the communitarian origins of the modern fact. Only once a stable community is in place, with formal rules resting on unspoken customs, can its accompanying way of knowing the world start to appear stable as well. Poovey presents each of her early modern participants in the making of the “modern fact” as falling short, in one way or another, of achieving such stability, and hence never quite securing trust in the facts they tried to generate. Neither her bookkeepers nor Mun really intended their “facts” to correspond transparently or comprehensively with “reality”; all that mattered for them was that their figures added up. And she presents other examples of people employing modern facts for premodern purposes, as when William Petty intended his political arithmetic to assist in the Hobbesian project of maintaining social order through kingly fiat.

The main arguments of A History of the Modern Fact come into focus in the chapters on Scottish moral philosophy and political economy. The subjects of these chapters first try to pin their hoped-for epistemological stability on divine design, before settling on the tools of disciplinary expertise. Poovey first traces the Scottish philosopher Francis Hutcheson’s efforts to identify abstractions like “the human mind” at work in history, the reality of which he demonstrated not mainly by reference to historical evidence, but by internal coherence and the assumption that anything constructed by God must run like clockwork. The key figure in the move away from providential design, unsurprisingly, is David Hume, who drew attention to the problem of induction that providence left unanswered. Poovey portrays Hume as solving that problem to his satisfaction by asserting that even though all theories about society or nature can only be fictions, they are useful fictions which should not be abandoned just because they can never be fully proven. For Poovey the most important implication of this insight (although one which Hume shied away from) is that its success as a solution depends on the social authority of the expert whose job it is to invent theories, now that the expert can no longer appeal to the higher authority of God. Once experts achieve both the self-confidence to assert their systematic knowledge as “real” and the social status to enforce allegiance to those assertions, she claims, the modern fact is born.

The most important of Hume’s useful fictions, according to Poovey, was that of the market system, which Adam Smith famously adopted as the centerpiece of his Wealth of Nations. She describes Smith, like Hume, as being ambivalent about claiming the expert authority which lent weight to the thoroughly modern “fact”. But she points to Smith’s famous reference to unintended consequences as paving the way for the modern economist to make such claims. Even though Smith intended his “invisible hand” as a blow to “reason of state” theorists who assumed that rulers could fully predict and hence govern the behavior of their subjects, the notion of unintended consequences also further enhanced his status as an economic expert who could discern productive results, at least in hindsight, where others saw only self-interest. Poovey next turns from Smith to Malthus, who appealed to the economic fact of overpopulation to draw attention to a less optimistic unintended outcome: procreation leads to social disaster. Because this claim was even more clearly opposed to orthodox religious teaching than Smith’s had been (and Poovey makes the same point about Ricardo’s “dismal” theory of rent), the result was to cut economists off from any possible “providentialist” interpretation that might yet discover “reality” in their theories by reference to God’s design.

With this final problem, A History of the Modern Fact comes to an end. Post-Ricardian economists are presented with a choice: try and patch back together the failed marriage between social science and natural theology, or go bravely forward, insisting ever more stridently that “facts” — and not merely fictional “systems” — do in fact prop up their theories. Poovey discusses J.R. McCulloch as a representative of post-Ricardian providentialism; and traces the development of the London Statistical Society as an example of the grim march forward. The march was grim, she suggests, because in their rush to base their social authority on the “facts” of political economy, they came face to face with the problem that neither Smith nor Ricardo had worried very much about “evidence” in the modern sense of empirical verification. Smith had relied on the rhetorical force of his striking claim that bad behavior yields good results, while Ricardo had staked his claim to expertise on internally-coherent mathematics; both, in short, had been happy to assume, along with Hume, that “fictions” could indeed be useful. The statisticians did not agree, so they simply collected facts and chastised anyone who did not do so as merely “literary”. Since the statisticians still claimed to be doing social science, this move kept religious and social critics of political economy out of that domain, which in the long run allowed for further developments in economic theory (e.g. Jevons and Keynes). But, Poovey argues, this move certainly did not pave the way for any real solution to the problem of induction. As she concludes: “By stressing the incontrovertible nature of statistical ‘facts’ … by way of contrast to the excesses and deceits associated with fiction and rhetoric, apologists for statistics were able to downplay the methodological problem of moving from whatever numbers were collected to general principles” (313-314).

Poovey’s mission in this book is, as she states, to open a dialogue about the origins and limitations of modern knowledge claims. In this sense it is primarily educative and synthetic; but not, as in a survey textbook, with the aim of filling undergraduates with relevant facts and socializing them to organize their thoughts in accordance with the norms of an academic discipline. Rather, the goal is to educate other academics to take notice of lively debates in fields outside their own, and the topics in each chapter are intended to illustrate how some of the lessons of these debates might be applied in practice. What makes the book’s ungainly structure work (to the extent that it does work) is exactly what makes a good graduate program turn out good students: readers who have already thought about some of these issues are invited to pursue them in surprising directions. The other side of this is that many historians who have spent a career examining a single thread of this story in far more detail than Poovey could possibly have done will be tempted to split hairs, or to find little value added to their area of special expertise (those who are tempted to respond to the book in this way should at least not ignore the extensive footnotes, where Poovey provides running commentary on her use of secondary sources). And economic historians who have never been interested in the problem of induction (a sizeable demographic, if Poovey’s claims are correct) will most likely not have the patience to follow her arguments through to the end. In other words, this book is not very well designed to teach old dogs new tricks.

Poovey also uses her book to speak, more elliptically, to the ongoing academic debate over the merits of “postmodernism”; indeed, given her background as a literary critic, one way of reading this book is as an inquiry into the historical origins of postmodernism. At nearly every stage of her argument, she is careful to present examples of people proposing alternatives to the “modern fact” as a means of organizing knowledge. Hume, for instance, switched from treatises to essays after 1757 in order to encourage a more open-ended, conversational approach to knowledge; Samuel Johnson’s Journey to the Western Islands of Scotland (1775) appears at the end of chapter five as a very early example of postcolonial critical theory, in which the Highlanders’ agency is used to interrogate the limits of modern rationality. And Poovey concludes her book with the outright rejection of the “modern fact” by the Romantic poets Southey and Coleridge.

These various efforts to get beyond a focus on grand theories and endless evidence, she argues, all anticipate to some extent the more general tendency of various “postmodern” writers today to “solve” the problem of the modern fact by rejecting it; by denying that knowledge needs to be about grand theories, and focusing instead on “micropolitics” or formal models. Although she doesn’t explicitly say so, much of modern economic theory, at least dating back to Debreau, takes exactly this formalist approach to opting out of the problem of induction. As Poovey recognizes, though, and as the persistence of questions like “Is the New Economy Real?” suggests, the modern fact and its associated tensions are likely to remain with us for a long time to come.

Tim Alborn is assistant professor of history at Lehman College in the City University of New York. He has published Conceiving Companies: Joint-Stock Politics in Victorian England (Routledge, 1998) and is working on a book about the social history of British life assurance.

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Subject(s):History of Economic Thought; Methodology
Geographic Area(s):Europe
Time Period(s):General or Comparative

The Voice of Business: Hill & Knowlton and Postwar Public Relations

Author(s):Miller, Karen S.
Reviewer(s):Laird, Pamela W.

Published by EH.NET (September 1999

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Karen S. Miller. The Voice of Business: Hill & Knowlton and Postwar Public

Relations. Chapel Hill: University of North Carolina Press, 1999. xiii +

261 pp. Notes, bibliography, index, and illustrations. $ 39.95 (cloth),

ISBN 0-8078-2439-9.

Reviewed

for H-Business and EH.NET by Pamela W. Laird, University of Colorado at Denver.

Listening to a Voice of Business

Public relations, like advertising, is alternatively blamed and credited for

both the good and the wicked conditions of modern times. How can a scholar

tread the perilous course of responsibly assessing the impacts of a public

relations firm, while avoiding both platitudes and alarms? Karen S.

Miller provides us with a solidly researched and insightful model in her

masterful case study of Hill & Knowlton (H&K), one of the most important public

relations firms in the United States. Instead of a false drama of blame or

credit, Miller weaves together a lively and finely tuned narrative of H&K

activities after World War II with a balanced evaluation of their impacts. She

sticks closely to her evidence, resulting in a solid and most useful study.

Moreover she knows that looking at her subjects’ output does not necessarily

tell the historian whether or not “the general

public saw,

read, agreed with, or discussed the material” (p. 112). Like advertisements,

public relations messages tell us more about their creators than their

audiences. This approach is not the stuff of which New York Times best

sellers are made, but

The Voice of Business should make the best seller list of all those

interested in how ideas combine with business activities and interests when

business people try to influence public policy, consumption, and mainstream

attitudes.

Public relations advisors and textbooks alike insist that practitioners’

most important tasks focus on clients. After all, without commitment and

participation by managerial authorities, no PR program can function. Even more

than an advertising campaign, which certainly requires some managerial

cooperation, a public relations policy or program must engage decision makers.

For instance, in an all-time classic case, public relations pioneer Ivy Lee

guided the Rockefellers’ recovery from the public opinion disaster of the 1914

Ludlow Massacre by convincing John D. Rockefeller Jr. to come to the site of

the anti-labor violence and express his sorrow and regret. Had Lee simply

issued a press statement on the Rockefellers’ behalf, it would not have

sufficed to calm public outrage at

a time when Progressive Era opinion already mistrusted Robber Barons, and

firms were more generally identified with their owners than now. In a more

recent classic, Johnson &

Johnson executives decided in 1982, at huge cost, to remove and destroy all

Tylenol packages from store shelves across the United States after seven

poisonings in the Chicago area. Even though the cyanide had been inserted by a

murderer in a single locale, with public confidence their highest priority,

Johnson & Johnson managers sought to assure consumers that they would

thereafter see only safe products on the shelves. They did not hesitate or

argue about their firm’s lack of culpability.

Miller demonstrates the merits of such focus on clients by public relations

practitioners. Th rough a series of case studies she shows how H&K’s prestige

and influence grew because founder John W. Hill early on recognized the client

as the public relations practitioner’s first audience. Selecting cases for

their importance to successive stages of H&K’s development, Miller covers the

agency’s postwar work for and relations

with the steel, aircraft, butter, and tobacco industries. The public opinion

campaigns H&K generated and waged on behalf of these business interests yield

fascinating narratives and provide Miller the means of analyzing complex

relationships between large-scale businesses,

the state, and the public. On behalf of steel interests, for instance, H&K

argued against labor militancy and state authority, taking on the task of

“popular education” about “basic economics,” that is, pro-business economics.

Through the usual armamentarium of news releases, publications,

film, radio broadcasts, speeches, and congressional testimony, plus a comic

book for school distribution, H&K attacked what

Hill called the “national problem of winning more friends for the steel

industry” (pp. 55-9).

In the early stages of the professionalization of advertising agencies, F.

Wayland Ayer raised the stature of the field by operating as a businessman

among businessmen, helping the latter to make decisions rather than just

taking their orders. John W. Hill likewise raised his profession by always

conducting himself as a peer to his clients, counseling them and speaking–not

shouting–for them. Hill expected to participate in policy making, and

believed that clients who sought only publicity risked “poor policy and bad

public relations” (p. 142). When even major clients, like the National Retail

Dry Goods Association and the tobacco industry, closed their decision-making

processes, H&K resigned those accounts.

Miller concludes that “Hill’s legacy must be viewed as mixed.” H&K’s

“manipulation of information” did influence “both the content and the quantity

of public discussion,” but its “biggest impact was not on

the general public but on its own clients” and others who already agreed with

them (p. 3). For instance, the agency helped settle the 1948-1950 controversy

over oleomargarine by “urging the butter lobby [its client] to alter its policy

to a compromise position that in turn changed legislators’

goals” (p. 72). Miller also suggests that in other cases H&K’s influence

followed in part from reinforcing the pre-existing opinions of clients and

like-minded citizens. By fulfilling its mission “to amplify the voice of

industry,” H&K “fortified executives in the face of battle” and strengthened

their resolve (pp. 189, 193).

Perhaps Miller’s strongest methodological contribution is her use of the social

science concept of issue framing. In each of her cases, she

finds H&K’s greatest impact in its “adding to the frames of interpretation used

in public debates” (p. 190). This analytical insight alone is well worth

historians’ attention, for others besides skilled, professional communicators

deliberately attempt to

frame public debates. H&K’s work for the tobacco industry during the 1950s and

1960s provides Miller’s strongest example of purposeful framing. To combat

growing evidence and fears that cigarette smoking was hazardous, H&K

“emphasized several themes within the

‘case is not proved’ frame.” At that early stage in the gathering of

antismoking evidence, H&K helped the tobacco industry to define the public

opinion problem not as a direct confrontation with scientists and their

evidence, but rather as a matter

of raising doubts about the validity of their concerns. “Medical science” had

not proven a health hazard, and H&K recommended that the industry set up a

research program to “demonstrate that a controversy existed” (pp. 129-30,

133-4). This campaign succeeded in rebuilding consumers’ confidence in tobacco

by raising comforting doubts about the challengers’ arguments. After a decline

in smoking among adults during 1953 and 1954, consumption rose again until the

Surgeon General’s 1964 report, which made it increasingly difficult to

maintain the decade-old framing of the controversy. In this case, as in others,

H&K sometimes increased the flow of information, and at other times decreased

it. More importantly, it learned to direct that flow by framing issues for the

press and the public.

Miller’s opening critiques of those who have

“overestimated the power of public

relations” initially raised my concerns that The Voice of Business

might parallel the apologists for cigarette advertising–whose modesty about

its marketing impacts before courts and legislators clashes repeatedly with

the immodesty implied by massive campaign spending. Miller,

however, is no apologist; nor is she a critic. Instead her scholarship conveys

little of her own opinions about the ethical consequences of H&K activities,

although I think I detected a sigh of relief when H&K resigned the tobacco

account in 1969. Clearly, Miller admires John W. Hill for his skills, dignity,

and his steadfast adherence to personal and professional standards, yet she

also points to his political contradictions. She frequently refers to Hill’s

political conservatism and party affiliation without positive or negative

comment.

Linking labor’s goals and state authority with the thin edge of socialism’s

wedge

, especially when arguing against President Truman’s seizure of steel mills in

April, 1951, during the Korean War, H&K fought the free enterprise battle in

each of its big postwar campaigns. Intriguing contradictions popped up,

however, such as promoting

the butter lobby’s desires that the federal government intervene in the market

by forbidding oleo manufacturers to color their product yellow. Similarly,

H&K’s extensive campaigns on behalf of the air transport industries lobbied

both Congress and the public to increase government contracts. In both these

cases, anti-government partisans unabashedly saw government action as the

solution to their problems.

Exercising the reviewer’s prerogative, what would I have asked Miller to do

differently? A broadened

perspective that included slightly fuller treatments of the public relations

story before and during the postwar period could have deepened Miller’s

analysis of Hill’s principles and practices. Similarly, although Hill’s

pro-business, politically conservative ideas are key to her story,

contextualization and explanation run thin: “Whatever the reason, Hill held

many of the characteristics and beliefs of his clients” (p. 22). The

ideological environment in which Hill and his clients operated during the early

Cold War fostered their mutual successes, and more recognition of this

could have better situated H&K and its impacts. On another track, did H&K

agents take into account issues of population diversity with which advertising

agents were learning to wrestle, or did they dismiss those outside the

mainstream middle classes as either irrelevant to decision-making processes,

or, as with labor,

opponents? A clearer sense of how H&K saw “the public’s” identity would have

enriched our picture of why they operated as they did. Surely they knew that

their field, like advertising, was moving toward stronger feedback loops with

audiences. Was it paternalism, elitism, or just inertia that kept H&K’s vision

narrow? None of these areas is essential for Miller’s story

, but I do think that brief forays would have made the book,

and her otherwise sterling analyses, more accessible to a larger audience and

more meaningful to all. Nonetheless, The Voice of Business is a must

read for all those interested in how and why

business organizations project ideas into the public arena when they seek to

influence public policy,

consumption, and popular attitudes.

Subject(s):Business History
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

Cuban Sugar in the Age of Mass Production: Technology and the Economics of the Sugar Central, 1899-1929

Author(s):Dye, Alan B.
Reviewer(s):Salvucci, Richard

Published by EH.NET (September 1999)

Alan B. Dye, Cuban Sugar in the Age of Mass Production: Technology and the

Economics of the Sugar Central, 1899-1929. Palo Alto, CA: Stanford

University Press, 1998. xi ii + 343, $55 (cloth), ISBN: 0-8047-2819-4

Reviewed for EH.NET by Richard Salvucci, Department of Economics, Trinity

University, San Antonio, Texas.

The history of Cuba is the history of sugar or so it might seem to a reasonable

observer. Indeed, so much has been written about sugar, about Cuba, and about

sugar in Cuba that you might wonder what remains to be said. The answer, after

reading Alan Dye’s study of Cuban sugar in the age of mass production, is

“plenty.” The period of Dye’s focus, 1899 through 1929, is commonly called

Cuba’s “second” sugar revolution as opposed to the

“first” revolution that occurred between about 1825 and 1845 or so. Dye brings

the elegant simplicity of mainstream economic analysis to bear on a subject

that has rarely been treated so dispassionately. If you do not know much about

Cuban history, you may find it odd to learn that simply thinking about Cuba (or

much of the rest of Latin America) in neoclassical terms is in itself a big

deal. But that it is. There was a time, not so long ago, I might add, that to

question whether all Cuba’s ills were really the result of capitalism,

imperialism and racism was to question the basis and legitimacy of the

Revolution itself. Dye knows this and picks his way

carefully through the minefield (and politics) of Cuban historiography. The

result is an impressive economic history, with as much stress on history as on

economics.

The first three chapters of the book give an accurate and informed account of

the Cuban

sugar industry between 1763 and 1898, when the lines of Cuba’s subsequent

economic development were set. This was the age of the sugar plantation, of

African slavery, of the rapid spread of sugar into the island’s fertile central

plains, and of the ingenio, which Dye defines as

“a self-contained plantation/mill complex, vertically integrated and centrally

managed.” The production of sugar grew by leaps and bounds,

coming to dominate the island’s economy, or at least it did in the west, if not

in the back ward, peasant-dominated east. Anyone unfamiliar with the history of

Cuban sugar before 1898 can read these chapters with profit. My only criticism

is that the discussion seems heavily in the thrall of Manuel Moreno Fraginals,

Ramiro Guerra y Sanchez, Fe Iglesias, and Leland Jenks. There has subsequently

been more than a little empirical work on Cuba (and quite relevantly, on

Puerto Rico as well) that would nicely buttress Dye’s conclusions but which

escapes his attention. Still, this is not a major failing. Dye’s principal

contribution begins with Chapter Four and it is on this basis that his work

should be judged.

The first thing to recognize is that Cuba faced a problem that had bedeviled

the sugar industry everywhere, namely, a long term decline in the price of

sugar. In an effort to remain competitive, producers in Cuba discarded the

model of the plantation complex that had been the bulwark of the industry

everywhere since the sixteenth century. They turned, instead,

to the continuous-process technology that yielded important economies of

scale, namely, the large, modernized, heavily mechanized central with its

attendant corps of cane farmers or colonos. The technology came to Cuba after

the conclusion of the Spanish-American-Cuban War and was disproportionately

deployed by investors from the United States who had taken over the Cuban

protectorate from Spain. Logically, the new centrales embodied the best

technology available and in so doing gained a reputation for imposing

efficiency on Cuban rivals

who would not or simply could not compete. Dye argues that this reflected not

so much capital market imperfections or credit rationing as it did the desire

of the Cubans to continue producing sugar from plants that may have been

obsolescent, but which, in view of the high price of sugar down to 1920, were

not yet obsolete. When prices suffered their inevitable fall, the Cubans found

themselves squeezed out by the Yanquis, whose success the Cubans attributed to

political clout and economic endogamy. This

makes for a good story and Dye tells it very well.

The only qualification I might add is that, while economically enticing,

Cuba offered investors from the United States other advantages. Before 1910,

most direct investment from the United States in Latin America went to Mexico

but that investment rested on the political stability imposed by the

gerontocracy of the regime of Porfirio Diaz. When the lid blew off Mexico in

1910 and Diaz decamped to Paris, the gringos jumped ship as well,

but they got off in Cuba. I believe Cleona Lewis’s work on “American”

investment overseas substantiates this. Cuba, with its complaisant political

system (the United States was given the right to intervene in the island’s

affairs in 1901 by the infamous Platt amendment to

the Cuban constitution), was a lot better than revolutionary Mexico and even

better than, say, the Philippines, which were as willing to fight the United

States as they were to fight Spain. Cuba offered diversions and the quiet life

that Mexico no longer

did. Dye’s book is also interesting on other grounds. Observing, as did Leland

Jenks, that sugar mills in Cuba continued to expand in the 1920s even as the

war-induced spike in prices (known in Cuba as the “dance of the millions”)

collapsed thereafter, Dye proposes, in Chapter Five, that adjustment costs

rather than “irrational exuberance” are the explanation. Many of the newer

mills that entered the market when prices were high were unable to expand

rapidly enough to avail themselves of economies of scale before prices fell.

Skilled supervision, social overhead capital, even well-organized domestic cane

supplies were not readily available to new entrants into the industry at

anything less than prohibitive cost. So, as is sometimes said in Latin America,

the new mills

“made haste slowly,” expanding production to optimal levels even after the

initial stimulus to entry would seem to have dissipated. Rational exuberance,

in other words. Dye cautions his readers that they might wish to skip over his

estimation of adjustment costs. I can see where my colleagues in Latin

American history might not want to go where Dye leads,

but I was repeatedly struck by the clarity and cleverness of his exposition.

In Chapter Six, Dye tackles the issue of regional specialization.

Historically, the sugar industry had spread from west to east and for most of

the nineteenth century; the western half of the island was the most

“modern.” The pattern changed dramatically in the twentieth century when the

bulk of new investment flowed to eastern provinces like Camaguey and Oriente.

Dye’s explanation for this phenomenon makes sense. Western Cuba was least

malleable in institutional terms, since prospective investors faced independent

cane farmers and a railway network adapted to pat terns of production dating

back to the 1830s. The east was relatively virgin territory. There the new

industry could have railways shaped to its own requirements and could control

cane farming by reserving large tracts of land for its own use. Eastern Cub a

thus offered advantages to the latecomer that were unavailable in the west. For

the modern-minded, this analysis is formally specified and tested using a

fixed-effects regression model in Chapter Seven, wherein Dye draws the

inevitable conclusion that history matters: “The difference of the relative

costs of cane in the east and the west was truly a consequence of the different

histories of the two parts of the island” (p. 238). Chapter Eight reflects on

the importance of factor endowments for choice of

technique.

It would be difficult for me to overstate the value of this book but even so,

there are some blemishes. The text repeats itself in more than a few places and

the repetition sometimes occurs within the compass of a couple of pages. This

is just poor copy-editing. There are also places where I thought Dye was

making things unnecessarily difficult, particularly for non-specialist readers.

Why does degree of difficulty matter? Well, here is a book that should be

required reading for all Latin American historians and not just for economic

historians or the Methodologically and Theoretically Correct. It may well be

that the Revolution in 1959 was not the result of some Big Dialectic working

its way through Cuban history, but Dye explains, in measured tones, how one

historical option after another was foreclosed to Cuba and why its problems

have consequently seemed so intractable. This may be an enlightening example of

“path dependence” but to Latin American historians of a certain age, it

recalls

the discussions of “colonial heritage” that generated so much excitement

thirty years ago.

The fact that Dye ends up where he does strongly suggests that there is no

right or wrong way to do history, just more or less fruitful and relevant ways

of doing it.

Good history is good history, and Alan Dye’s book is good history indeed.

Richard Salvucci teaches at Trinity University in San Antonio, Texas. He is

writing a book on Mexico’s “London Debt” in the nineteenth century and recently

has written a paper with his wife Linda Salvucci on the Latin American terms

of trade in the nineteenth century.

Subject(s):Agriculture, Natural Resources, and Extractive Industries
Geographic Area(s):Latin America, incl. Mexico and the Caribbean
Time Period(s):20th Century: Pre WWII

Spreading the News: The American Postal System from Franklin to Morse

Author(s):John, Richard R.
Reviewer(s):McGuire, Mary K.

EH.NET BOOK REVIEW

Published by H-Business

and EH.Net (August 1999)

Richard R. John. Spreading the News: The American Postal System from

Franklin to Morse. Cambridge and London: Harvard University Press,

1995. vii + 369 pp. Tables, endnotes, primary sources, and index.

$54.00 (cloth), ISBN 0

-674-83338-4; $18.95 (paper) ISBN 0-674-83342-2

Reviewed for H-Business and EH.NET by Mary K. McGuire, Department of History,

Southern Illinois University Carbondale.

The U.S. postal system has received surprisingly little historical attention

over the

years, and even less so in recent historical discussions of the state,

politics, political culture, and administration. Even in the latest turn

toward the state, notably among the “new institutionalists,” the postal system

has remained on the fringes of

historical inquiry. While there may be many reasons for this,

I suspect that part of the problem is a sense that it has all been said before.

After all, conventional wisdom knows that the history of the U.S. postal system

is the history of the “spoils sys tem,” of civil service reform, of the weak or

non-existent pre-New Deal federal state.

And for many historians, the study of large-scale political institutions such

as the Post Office Department is mired in the worst excesses of the

“old” political history-a place we have left behind and with good reason.

Despite some recent works that have attempted to reconsider the subject from

various perspectives, the history of the U.S. postal system seems remarkably

resistant to a sustained historical inquiry or interest.

In this work, Richard John not only directs our attention to this relatively

neglected area of study, but he does so from an innovative interpretive

position that opens new ways of approaching and understanding the subject.

Taking, as he terms it

, a contextualist approach, he examines the postal system within the historical

context of the early Republic and the role it played in important social,

political, and cultural changes taking place over a nearly seventy year period.

In an arena where too few have ventured to show the way, John has set himself

a large task-a task made larger by his insistence on understanding the postal

system as an agent of social change in its own right, with significant impact

on shaping the contours and outcome of certain critical moments.

Specifically, he is concerned “not merely to locate the postal system in

the social process, but to explore its role as a social process, and, in

particular, to consider some of the ways in which the communications revolution

that it set in motion transformed American public life” (p. 24). This is an

ambitious project equal to the size and significance of its subject, and John

does an impressive job of developing his thesis with a wealth of detailed

historical information and

deftly handled political, social, and cultural analysis.

Both symbol and reality of the federal government in the early decades of the

fledgling republic, John asks us to consider the postal system’s significance

as the centerpiece of a communications ”

revolution.” As John makes clear, this was a revolution with very decided

market implications and intentions, creating a network of federally designed

and funded transportation and communications links that drew together the

people, producers, and places

of an increasingly far-flung nation.

In the first chapters of this book, he examines the policy and structural

innovations that established and deepened federal postal dominance in this

communications revolution. But, true to his thesis,

John goes beyond a mere discussion of the politics behind this transformation

to the impact of the transformation itself on shaping a new, national, public

sphere for this new, democratic republic.

According to John, the Post Office Act of 1792 laid the cornerstone for postal

impact on American public life when it permitted the transmission of newspapers

through the mails, alongside laying the groundwork for a greatly expanded

postal network. It also protected the sanctity of the mails from surveillance

and other interference-a critically important innovation in a world context

where privacy in communications was far from a right in law or in practice.

Then, turning to one of the central political-administrative figures of the

early postal system, Postmaster General John McLean, John identifies the early

administrative innovations of this nascent bureaucratic enterprise under

McLean’s leadership. In so doing, John asks us to reconsider our assumptions

about national politics and the federal state in the early Republic

, which is an important addition to our understanding of the supposedly

“stateless” United States in the period before the New Deal. For historians of

bureaucracies and of business enterprises, John makes another significant

contribution when he identifies administrative and managerial innovations in a

time and a place where we would hardly have expected to find them. It is

virtually a commonplace among business historians to date the introduction of

middle management practices from the middle nineteenth century and the

creation of huge railway enterprises. In this study, John shows that middle

level management techniques and principles already existed in a well-defined

form within the postal system-a system which could not have functioned without

its

three-tiered administrative structure and its

“hub and spoke” distribution system.

Bringing together the federal level politics and the federal level

administrative developments that occurred under John McLean as Postmaster

General, John explores and ex plains the administrative structure being set in

place even as politics influenced and shaped the postal system that was being

developed-and more. As he concludes: “By greatly expanding the power of the

Postmaster General, the completion of the postal network threatened to tilt

the delicate balance between the postal system, the rest of the executive

branch, and the individual states” (p. 110). It was this consolidation of

political and administrative power in the federal state, in the form of the

Post Office Department, which would influence the political and administrative

battle over “spoils” and states rights in the Jackson presidential campaign and

administration. In his later chapter on the Jacksonians, John expands this

political analysis in a discussion of the efforts by Jacksonians to hold the

federal state administration accountable to their understanding of the

classical republican creed.

Rotation in office-the so-called “spoils” system-wreaked some havoc with the

administrative operations and structure of political institutions like the

Post Office Department, but it also laid the groundwork for building the mass

party system that the Jacksonians had brought into existence in the election of

1828.

This analysis of the spoils system is not altogether a new one, but John ties

it to the power of the postal system as the centerpiece of a central, federal

state-the very thing that states’ rights advocates like the Jacksonians were

concerned to limit. For political historians, the power of his analysis lies

here, by showing how the Jacksonians manipulated the power of appointment to

public office to bring together their political creed of the democratic

republic and their political

need to build the mass party that had brought them into power. In

other words, it might be said there was an internal logic to the spoils system

that, abuses notwithstanding, was not entirely at odds with earlier assumptions

about the role of the postal system in creating an informed and politically

active public among its widespread communities and citizens. The nineteenth

century notion of “the egalitarian ideal,

which held that every citizen had the necessary ability to hold public office

and in this way to participate directly in the affairs of state”

(p. 1 35), was widespread, but not until the Jacksonians would it become

policy.

But this policy, like the politics behind it, was limited to free, white men.

In one of his most fascinating discussions, John looks at the public spaces

controlled by the postal

system. Here he argues that the postal system facilitated “an imagined

community that incorporated a far-flung citizenry into the political process”

(p. 168)-and this despite, or perhaps because of, the constraints placed on

free blacks and on women in

that public space. This is a wide-ranging discussion,

which deals with the aristocratic tradition and influence in securing public

office, the introduction of the military model for public officers, the

exclusion of free blacks from mail delivery, and the problems faced by women

in the male-dominated public space of the post offices. Arguing that “official

norms helped to shape public attitudes regarding the boundaries of American

public life” (p. 142), he concludes that “(t)hrough a combination of customs,

laws, and social conventions,

the central government and ordinary Americans had together constructed a new

social type-the citizen as free, white, and male-and a new kind of social

space-an imagined community that was more or less congruent with the

territorial confines of the United States” (p. 168). As the only public

institution as widespread as the citizens of the nation it served, the postal

system was a central factor in creating and regulating that new social space.

However, it is also here,

as well as in his chapters on Sabbatarianism and on abolitionism, that some

may find it difficult to see the postal system as an agent of social

change with such powers to shape the emergent nation’s political culture and

social conflicts. John’s treatment of the Sabbatarian

controversy–transmitting the mails and opening the post offices on the

Sabbath-is compelling, as is his argument that this needs to be seen as “a

struggle over the proper role of the central government in American public life

and

not, as is often presumed, merely a struggle between competing social groups”

(p. 191).

Likewise, his discussion of the abolitionist controversy-the mailing of

unsolicited abolitionist literature to southerners-brings to light an important

incident in the

battle over states’ rights vs. federal authority in the years preceding the

Civil War. However, it is less convincing in these cases to see the postal

system as the agent of change. It seems more reasonable that the postal

system was the

medium used to provoke change, or was the space in which certain

battles over social change would be fought. John himself seems to suggest this

when he notes of the Sabbatarian controversy that “it demonstrated how easily

a small group of activists could take ad vantage of the communications

revolution

that had been wrought by the postal system, the stagecoach industry, and the

press to mobilize public support throughout the United States” (p. 202). Who

is agent and who is subject here?

I am not interested in splitting hairs, and I am more than willing to accept

the postal system as an agent of social change. And, certainly,

John seems to equate “agent of social change” with the “communications

revolution” he has so ably shown the postal system to have initiated in this

period. However, that seems to me less a clarification of “agency”

and more an opening to explore what it means for the state to act as an

agent of social change. Published in 1995, John’s study came out at a time

when new works on the state, ideology, law, policy, and institutions had

somewhat recently begun to appear-some in response to the much earlier effort

to “bring the state back in”. Many of these works take as their central

premise the notion of the state or its institutions as agents of social

change, and a vibrant discussion emerged among the political scientists,

sociologists, and historians who take the state seriously as an agent in its

own right. In a very important way, I believe John’s study contributes to that

discussion

,

although without directly engaging it, and that is to be regretted. For

example, his short conclusion takes us back all-too-briefly to the

“communications revolution” where, in his interpretation, it all began.

But after such a journey through administrative history, politics,

political culture, public life, and social conflicts, it would have helped

tremendously to tie it all together with some more generalized attention to how

the postal system acted as the agent of social change and in “shaping

the boundaries of American public life” (p. 283).

Even so, this does

not diminish the power of John’s study, or his astute

analysis of the postal system in this early period of U.S. history.

Situating this postal history in its larger historical context and political

significance, John has done a very fine job with a huge,

complex, and unwieldy subject. This is an exhaustively researched study and it

draws on a wealth of detail to make its case. More than that, it raises some

important new ways of under standing events, such as Sabbatarianism and

abolitionism, that should be of interest to historians of nineteenth century

America. Political historians will be especially interested in his treatment

of Jacksonian democracy in action and his attention to political culture and

American public life.

Business and economic historians will find his discussion of the communications

revolution and the expanding postal network useful additions to our knowledge

of government policy influences on the early development of the national

market in this period. And those of us who study the state and state formation

should find this a welcome contribution as well, not only for taking on a

neglected and important subject, but also for taking that subject in new

direction s.

Subject(s):Markets and Institutions
Geographic Area(s):North America
Time Period(s):General or Comparative

E.W. Scripps and the Business of Newspapers

Author(s):Baldasty, Gerald J.
Reviewer(s):Reed, Barbara Straus

Published by EH.NET (August, 1999)

Gerald J. Baldasty. E.W. Scripps and the Business of Newspapers.

History of Communication Series. Urbana: University of Illinois Press,

1999. 272 pp. $42.50 (cloth), ISBN 0-2520-2255-6; $16.95 (paper) ISBN

0-2520-6750

Reviewed for H-Business and EH.NET by Barbara Straus Reed, Department of

Journalism, Rutgers University.

E. W. Scripps and the Business of Newspapers is an exciting, new

offering in both paper and cloth from the University of Illinois Press.

Gerald J. Baldasty has succeeded in explaining the creation of the

first newspaper chain in America, developed by Edward Willis Scripps at the

end of the last century. Baldasty has used primary material and has made good

use of the correspondence on deposit at Ohio University, Athens. In addition,

he has included a con tent analysis of Scripps’s newspapers covering subject

matter, news sources, photos and illustrations, column inches of print and

photographs, editorial subjects, and articles’

datelines.

Baldasty, author of The Commercialization of The News in the 19th

Century (University of Wisconsin Press, 1997), places the work of Scripps

in relation to his competitors, William Randolph Hearst and Joseph Pulitzer.

They shared some journalistic values and ran successful corporations. Pulitzer

pioneered newspaper con tent, and his papers reflected a deep commitment to

public service: his crusades against corruption, fraud, and injustices of urban

life are legendary. Hearst copied many Pulitzer innovations and developed the

entertainment aspect of the paper. He openly

staged news events, investigated murders, and ran bizarre news–no matter what

the financial cost to him. Scripps’s legacy was the development of the business

side of the modern American newspaper. He concentrated on performance goals,

long-range planning

,

circulation methods, and revenue sources, among other areas. He created a

central management that made his newspapers economically efficient entities. He

embraced issues and concerns of the working class, shunning close ties to

advertising and business.

His string of papers–small,

cheap, limited in size and quality–formed a chain that became the envy of his

rivals.

The purpose of the book is to explicate Scripps’s career in American journalism

from the early 1870’s through his retirement in 1908 and,

ultimately, his death. During that time, he established or bought more than 40

newspapers, began a telegraphic news service, and created an illustrated news

feature syndicate. Baldasty’s book focuses on three business strategies Scripps

used to build his

chain: low cost, market segmentation, and vertical integration. Also, the book

describes Scripps’s efforts to free his papers from advertising and business

influences. Then too, Baldasty describes Scripps’s management structure,

used to coordinate and control his journalistic empire.

Scripps came to the newspaper business during a time of great change. He

eschewed direct competition and instead sought to serve new readers instead of

competing for established ones. In his opinion, most newspapers either

ignored or were hostile to the working class. His news stressed labor issues

and was directed to a less-educated audience.

He also practiced strict economy and his low-cost strategy meant that his

start-up costs ran well below the industry average, because of keeping staffs

small, salaries modest, and offices Spartan. His newspapers sold for just a

penny, whether home delivery or street sales,

at a time when others sold for two cents for home delivery and five cents on

the street. Moreover, Scripps avoided eastern cities because of higher costs

than in the middle-west and west.

His vertical integration strategy was represented by a telegraphic news service

he set up and a feature syndicate that distributed illustrations and soft news

for all papers in the chain. He centralized control and intensely supervised

his papers. He was opposed to running much advertising, as he kept his papers

independent of the rich and powerful so he could reach and represent working

class readers.

Scripps’s contribution to

American journalism was the key role he played in becoming a modern publisher,

building the first national newspaper chain, and recognizing the difficult

problems for mass media in using advertisers. Scripps’s business methods

influenced news gathering and distribution. His highly profitable chain

overwhelmed his competition, was accessible to readers, and established the

model that has dominated 20th century newspaper ownership. His prescient use

of marketing applied to the

newspaper industry contributed

to the business success of his newspapers and influenced the nature of news.

Baldasty has presented a very well-organized and easily understood analysis.

His work is extremely well documented.

Born on a farm in 1854, Scripps joined his older half-brother James in

developing a newspaper, characterized by independence in politics,

selling at a cheap price, being half the size of other papers of the time, and

aimed at the working class. Scripps became circulation manager, organized

newspaper routes, supervised newsboys who made deliveries, and developed an

ability to judge others. His two half-brothers backed him financially in his

effort to launch the Cleveland press in 1878. Scripps practiced extraordinary

economic measures: his business was cash-only; he demanded immediate payment

from advertisers and readers; and he carefully kept track of spending. These

daily practices resulted in a 15-17 hours-per-day job. His major goal in

establishing newspapers in Cleveland, Cincinnati, and St. Louis was not to

accomplish a great good but to succeed with a business entity.

At age 33, he succeeded in becoming president of the family business and as

president accomplished the creation of an efficient, centralized newspaper

company; he accomplished modernization of

newspaper plants and establishment of a news bureau and advertising office.

However, he learned how to produce low-cost newspapers for the working class

from his brother James during 17 years.

He then retreated from the newspaper business to develop anextraordinary

estate called Miramar, outside San Diego. At Miramar he had a private gymnasium

with inside pool, an aviary, and a sprawling ranch house with plain American

oak furniture. He owned a yacht, like Hearst and Pulitzer, but his style of

living was simple, compared to Hearst. He left the work of his newspaper

properties to a new partner,

Milton McRae, urging him simply to make money. The Cleveland and Cincinnati

newspapers, both highly profitable, formed the nucleus of his empire. He

developed and

purchased newspapers on the west coast as well,

in San Diego, Los Angeles, and San Francisco. The central office kept tabs on

each newspaper holding and evaluated performance in keeping with the policies

of E. W. He tolerated no dissent and fired those who tried. By the turn of the

century, he returned to full-time newspaper work and extended his empire up

the California coast into Oregon, Washington, Colorado, Utah, Nevada, Texas,

Oklahoma, Iowa, Indiana, and Tennessee.

Scripps used three criteria for

choosing places to begin newspapering:

could a paper strengthen his chain’s news-gathering ability, especially with

the telegraph news service? Could the papers assist other Scripps papers in

gathering regional news? Could the paper be started cheaply,

al ways a penny per day, aimed at workers? Scripps recognized that he needed a

population approaching 40,000 competing newspapers that were partisan,

expensive, influenced by business, and hostile or indifferent to labor. Scripps

had good scouts who prepared

detailed market analyses on different cities.

His telegraph news service became central to both clients and contributors,

helping to defray costs while providing news for other Scripps publications.

His focus on publishing for the working class reflected his business strategy

in segmenting the market and producing something at low cost. Scripps

capitalized on his readers’ great desire for fast-breaking news of local events

as well as national and world news. Eventually Scripps’s newspaper chain

stretched from Portland,

Oregon, to New York City with the acquisition of the telegram in 1927.

Scripps frequently developed newspapers for the purpose of sharing regional

news so that news from cities with a Scripps paper appeared in other Scripps

papers and constituted about half the telegraphic news used by the chain.

Nevertheless, expansion slowed because of limited capital and lack of

personnel. His purchase of more ranch property near Miramar ate into his supply

of capital, and he could not find a sufficient supply of men ready to start a

newspaper for him. However, he was more successful than any of his

contemporaries in initiating and purchasing newspapers. Most saw soaring

profits and he succeeded because he was careful and methodical.

The frugal entrepreneur controlled costs by ordering used presses, cheap

offices, poor-quality newsprint, and poorly-paid staff. His business ran as a

cash-only operation. He was able to preserve capital, limit operating costs,

reduce dependence on advertisers, and keep

his papers for the working class. Yet, his papers carried limited local news,

reported by small staffs, and produced on worn-out presses with old type. The

papers were not attractive and were hard to read. His penny-pinching methods

even included using pa per front and back for reporters’ copy. He controlled

costs with limited start-up capital,

relying on shared news and features and engravings for illustrations.

Scripps bragged that he could begin a newspaper anywhere in America using

merely one reporter

and one editor because of his news service.

Syndicated material accounted for 25 to 35 percent of each issue and even up to

half or three-quarters at times. Baldasty supports this assertion with a formal

content analysis of four Scripps papers created between 1903 and 1906. He

found that syndicated material constituted an average of 62 percent of

non-advertising content! He made reporters pay for their own car fare, purchase

their own lead pencils, and even banned the purchase of toilet paper so staff

members should use old newspapers.

He also admonished his business managers to buy used twine. In addition,

Scripps importantly kept distribution costs low by concentrating circulation in

the city rather than the country. He recognized that urban populations

could mean focused news gathering and cheaper distribution than suburbs or

rural areas. To avoid office expense, no records were kept of subscribers; only

newspaper carriers knew who the customers were. His economizing became a

hallmark of his career in editing and publishing. He kept his newspapers cheap

to remain true to his goal of having independent working class newspapers. He

monitored every expense. The central office created incentives for employees to

obey rules and policies and abide by surveillance systems that checked up on

them.

Company policy meant not printing Scripps’s name on the masthead. He wanted to

share markets with upscale rivals but sought to drive out labor-oriented

publications. He saw Hearst as his chief competitor and even kil led a Chicago

publication to avoid battling Hearst. He avoided all publicity, as well as any

kind of advertising. He saw the importance of attending to the working class,

publishing news about labor: strikes,

wages, hours, political organizing. Even editorial cartoons portrayed the

difficulties of Mr. and Mrs. Common People. His papers exposed trusts and

monopolies, supported collective bargaining and strikes,

supported government regulation of food and transportation industries,

and government ownership

of water and electric utilities. They advocated power for the common people by

direct election of public office and through initiative, referendum, and

recall. Workers went out of their way to support Scripps publications; they

were the only publications peaking for labor. His syndicate brought popular

cartoon characters with whom the working class could identify. He had his

newspapers devote more space to coverage of leisure and entertainment rather

than government, politics, courts, and business. News a bout plays and sports

appealed to readers; he did not avoid politics but limited its coverage.

Scripps carried a great deal of news of interest to women, as women were more

loyal customers than men. His paper sponsored contests to attract women and

printed short stories geared towards women. It is important to note that

Scripps papers offered content to working class women, about how to run a

household on a limited income, for example. At the turn of the century, Scripps

publications reported that more than 20 percent of American women worked

outside the home; few if any received adequate wages. His papers attacked job

discrimination and advocated equal pay for equal work.

Scripps wanted his newspapers to please readers, so he urged editors to make

copy

short, easy to read, and in simple language; to entertain with jokes and

cartoons, to make news interesting and easy to understand, and to use

illustrations and features lavishly. Scripps newspapers had shorter articles,

more vivid headlines, and more ty pes of non-traditional content to reach

working class readers.

Scripps died in 1926. He had only a public school education. He advocated

independence in journalism, urging that the press serve as the foundation of

democracy to provide information vital to an enlightened electorate. He felt

the press fell short in becoming a tool of the elite and ignoring or opposing

the needs of the masses. A press dominated by the few, representing the

interests of the few, was not a press able to bring the needs of democracy.

Scripps’s cause was to prove that newspapers could be owned and run by people

who were not millionaires and with not much advertising. He defined news

through the eyes of labor, and did not support political or business elites.

Scripps tried to emphasize circulation over advertising revenues and his

newspapers,

once established, limited the amount and size of advertisements accepted. He

wanted to be supported by many small businesses rather than rely on large ones.

The bottom line was that Scripps wanted to make money. He was a successful

entrepreneur through careful money management and controlling costs. Scripps

tried to create newspapers for an audience heretofore ignored. He recognized

the dangers of being dependent on advertising,

but as a result his papers were smaller, cheaper, and poorer. His papers

lacked the resources to cover local news well and his competitors provided

nearly three times more local news. He emphasized cost-cutting over quality and

judged his editors by their ability to generate profits rather than produce

quality news. His idea of central management and having papers benefit from

common resources such as features can be seen today in other newspaper chains.

He was an astute businessman and put into practice methods of

newspaper operation that have endured.

Baldasty’s analysis is crisp, well thought out and executed. He has made a

tremendous contribution by his astute insights and thorough research.

His is a significant contribution to the literature of journalism history.

Subject(s):Business History
Geographic Area(s):North America
Time Period(s):19th Century

Progress, Poverty and Exclusion: An Economic History of Latin America in the 20th Century

Author(s):Thorp, Rosemary
Reviewer(s):Taylor, Alan M.

Published by EH.NET (August 1999)

Rosemary Thorp, Progress, Poverty and Exclusion: An Economic History of

Latin America in the 20th Century. Washington D.C.: Inter-American

Development Bank, 1998. xiii + 369 pp. $24.95 (paper), ISBN: 1-886938-35-0

Reviewed for EH.NET by Alan M. Taylor, Department of Economics, University of

California at Davis.

A book that aims to survey the entire twentieth-century economic history of

Latin America is indeed a massive endeavor. In pursuing such a goal Rosemary

Thorp wisely assembled a large and talented team to help her. As her

acknowledgements make clear, without this team approach the book would not have

happened, since such an undertaking would be an almost prohibitively time

consuming effort for a scholar working alone, requiring many years of work to

cover the several countries, varieties of experience,

and the range of economic analysis–from macro to micro, intern al and

external, short and long run, and so on. Thorp was fortunate to secure

considerable logistical and resource support from the Inter-American

Development Bank for this worthy project. From that starting point she was able

to commission a group of scholar-consultants, each expert in different topics

or knowledgeable about particular countries, and from their background papers

and supporting work she sought to weave an overarching narrative. In this

aspect, the project’s design is reminiscent of, say,

the annual World Bank reports, where commissioned background work is blended

into the final product.

Beyond their acknowledgement in this book, some of the supporting actors also

get an opportunity to have their full say in a series of three

“companion volumes” published by Macmillan Press and St. Antony’s College,

Oxford, the latter being Thorp’s home base. It seems unfair to review the main

book that builds so heavily on this supporting material without giving a brief

plug for the entire cast. The titles of the three supporting volumes are:

The Export Age: Latin American Economies in the Late Nineteenth and Early

Twentieth Centuries (edited by Cardenas, Ocampo and Thorp); Latin

America in the 1930s (edited by Thorp, a second edition of her 1984

volume); and Industrialization and the State in Latin America:

The Black Legend of the Post War Years (edited by Cardenas, Ocampo and

Thorp). All three will also appear in Spanish translation published by Fondo de

Cultura Economica.

These three background

volumes–which were unfortunately not available to this reviewer–provide the

foundations for the main text. This design should prove helpful in expanding

access to the subject. Those new to the subject or those seeking a quick

overview can peruse the ma in volume. The very curious, the specialists, and

the pedants can delve in the background studies. Bundling the background papers

together in this way follows another design style that has been applied to the

history of the region –I am thinking here of

the Cambridge History of Latin America, edited by Bethell (who is also

an author in this project.)

Thus, by careful design and packaging, Thorp, the IDB, and the supporting cast

have delivered a set of diverse and complementary products that arrive in

what can only be described as a gaping hole in the marketplace. The project

might, even then, be somewhat ahead of its time. A thorough economic history of

Latin America in the twentieth century is a major task whose completion will

depend on the complete

assessment of the empirical record of development in each country. In turn,

that task will require basic data and archival work in each country to actually

construct the empirical record itself, since in many places the holes in our

knowledge are deep and the fragmentary and frail nature of the data sources

still troubling. Finally, once good data are in hand, the evaluation of the

historical record will call for the application of modern quantitative

econometric methods, insights from economic theory, and cutting-edge

institutional analysis.

Those working in Latin American economic history know that progress in all

these dimensions is uneven, varying by country, time period, and the particular

area of study. Such caveats should be borne in mind, especially since current

research on the New Economic History of Latin America is being produced at a

fast rate by an ever-growing group of scholars and their findings are

challenging many interpretations.

A serious criticism I have concerns access to the data

for the study. This is the first such long-run database of its kind, and its

construction was overseen by someone with impeccable credentials: Andre Hofman

of ECLA

(CEPAL), formerly of the Groningen group, who is personally responsible for

recent pioneering estimates of GDP and capital stocks in the major economies

of the region. Notwithstanding the preceding caveats about the quality and

comprehensiveness of historical data in the region, the data specialists for

this project distinguished themselves and did us all a great service by

piecing together so many series and benchmarks in a series of comparative data

tables for so many countries. The statistical appendix is massive and will be

the kind of data mine that future researchers will want to dig around in. Too

bad, then, that the proposed fourth companion volume which would have presented

the full database and sources has been abandoned. Still worse, an even more

efficient and simple solution to the problem of how to disseminate this data

and facilitate its use has also been ignored thus far–namely, putting it all

up on a website. I think this is a great shame. At a cost of only a small

fraction of the resources devoted to this project by the IDB (and the European

Union and others) I guess that it

would take competent web specialists only a few hours to clean and upload these

files onto a server. Then we could all enjoy the use of the data and the

project would deliver even greater benefits to the academic community. I hope

Thorp, Hofman, the IDB,

or some other folks can work out a way to do this soon.

If I have any other quibbles, they are more minor. Of course, a survey volume

can only scratch the surface and at certain points one would wish for more. Yet

I cannot help but feel that in certain places the book gets a little off track

and the use of space might have been more productive. The problem is evident to

me even in the title. Why not just Progress and Poverty? The final tag

“exclusion” is hinted at in various places, but I am still not

sure that the topic was either as fully worked out as it should be, nor whether

it is a topic best left to other studies, being too far outside the scope of

the present work. The issue is methodological. The introduction concludes on an

almost apologetic

note that statistical categorization and analysis might obfuscate the

importance of “ordinary people” for the nonspecialist reader, but then stoutly

defends our turf in noting that economic history cannot be told via “individual

cases.” Still,

having made

the argument for economic historical methodology, the author thinks it

necessary to switch at times to a historian’s methodology and include a handful

of two-page narrative “boxes” where stories of particular people are told (a

poor woman from rural Peru, an Argentine scientist –a range of experience). I

don’t question the importance of historical methodology in general, nor

case-study history in particular, but I do wonder what it adds here to what, on

most every other page, is by and large a macroeconomic history. The

conjunction of the two methodologies adds another layer of complexity to the

study. There is already so much else for the reader to follow in dimensions

temporal, spatial, in economic categories and concepts, and so on. In other

places

, there are brief paragraphs or sections touching on the “exclusion” theme–the

power of elites or the position of women–but these also appear to be an

appendage,

and do not fit in smoothly with the analytic content of the narrative and its

main thrust.

I do not mean to say that “exclusion” isn’t an important issue in Latin

America–in history or today–but only to question how well it fits into the

scheme of this book.

Having quibbled with some aspects of the project, let me still affirm that it

is a welcome addition to the bookshelf. As a reference work, this book and its

companion volumes will be some of the first places many of us go to seek an

answer to a question outside our particular specialization or country of

interest. If one needs to get the

basic facts straight concerning rates of economic growth, investment, the

pattern of trade, and other macroeconomic features of development, the many

statistical tables and (very-elegantly executed) figures will prove invaluable.

For an introductory account that signposts events during pivotal

episodes–such as the Great Depression, the import-substitution era, the debt

crisis, and the recent reform phase–the main text will serve as a good guide.

For some in-depth accounts by leading scholars on what they think is the

state-of-the-art in the field, the companion volumes–though I have not yet

seen them–have the potential to be very useful. In short, an ambitious

project, a productive outcome.

Alan M. Taylor is co-editor (with John H. Coatsworth) of

Latin America and the World Economy Since 1800 (Cambridge: Harvard

University Press, 1999).

His latest published article (with Gerardo della Paolera) is “Economic Recovery

from the Argentine Great Depression: Institutions, Expectations,

and the Change of

Macroeconomic Regime” (Journal of Economic History 59,

no. 3, September 1999, forthcoming).

Subject(s):Economywide Country Studies and Comparative History
Geographic Area(s):Latin America, incl. Mexico and the Caribbean
Time Period(s):General or Comparative

Copper for America: The United States Copper Industry from Colonial Times to the 1990s

Author(s):Hyde, Charles K.
Reviewer(s):Burt, Roger

Published by EH.NET (August

, 1999)

Charles K. Hyde. Copper for America: The United States Copper Industry from

Colonial Times to the 1990s Tucson: University of Arizona Press,

1998. xvii + 267 pp. Tables, maps, notes, and index. $40 (cloth), ISBN

0-8165-1817 3.

Reviewed for H-Business and EH.NET by Roger Burt, School of Historical,

Political and Sociological Studies, University of Exeter.

Much Needed and Overdue

For too long, mining has been the lost relation of American economic history–

rarely featured in its principal journals and hardly noticed in most

textbooks. This is largely because there have been few general/national

histories of the industry to set the parameters of the subject. In this volume,

Hyde begins to fill that vacuum. It is not a research monograph, but rather a

synthesis of the wide-ranging secondary material that has accumulated on this

subject during recent years. That material has been produced largely on a

regional basis, principally by western historians, and Hyde adopts a similar

regional structure for the book. It starts with a much-needed review of the

early foundations of the industry in the northern east-coast states and

Tennessee, and goes on to follow the western progression of the industry

through Michigan,

to Montana

, Arizona and elsewhere in the West. The story is at first one of rapid

expansion and growth, projecting America into world leadership in the industry

by the last decades of the nineteenth century, but then of gradual and

continuous contraction and decline in the face of increasing overseas

competition. The last two chapters of the book deal with these twentieth

century developments in the industry and also provide an overview of the role

of U.S. multinational mining companies in developing new mines in Africa,

South America and elsewhere.

Throughout the book, the author’s approach is very much that of the

entrepreneurial or business historian, looking at the processes of expansion

and contraction in terms of the promoters, investors and corporate enterprises

that managed them. This is not its only context–the notorious labor problems

that beset many of the mining districts in the years around the turn of the

century also receive careful attention as do many other aspects of the

industry’s economic and social development – but is a central theme and will

particularly recommend the book to a business history audience.

At a general level, the book makes an extremely important and strategic

contribution. Although there is now an extensive literature on the

history of the non-ferrous metals industries, it is all rather specialized and

localized and there have been very few attempts at this kind of national

overview. Hyde has given the subject exactly what it needs to project it onto a

wider stage and it is

to be hoped that others will attempt similar studies of other sectors of the

industry. Since they all share so much that is common in terms of technology,

labor,

managerial expertise, finance, etc. this might also result in a much-needed

single study of the sector as a whole.

However, at a more detailed level, there are several slightly puzzling and

troubling problems with the book. Firstly, on working through it,

there is really relatively little attention given to the declared aims,

set out in the introduction, to compare and contrast the character and

development of the three principal copper mining districts, and to integrate

changes at the regional level with changes in the national and global copper

industries. Similarly, the suggestion in the introduction that the book might

consider the interesting question of whether managerial short-sightedness and

incompetence contributed to the industry’s decline, never really materializes,

notwithstanding the presentation of a range of evidence to support such a

discussion. It remains very closely focused throughout on the narrative of

regional business history. Secondly, for a book that is essentially a synthesis

of existing work, the sources are sometimes limited, closely drawn and perhaps

a little dated.

For example, having referred in the Preface to Larry Langton’s Cradle to

Grave (Oxford, 1991)–undoubtedly the most important general work on the

Michigan industry to appear in recent years–no reference is made to it in the

footnotes to the chapters dealing with that region. It is almost as though

what we have here was conceived and constructed in separate parts at a

considerably earlier date and only recently assembled into the current whole.

But all of these are minor quibbles on what, overall, is re ally a very

excellent and worthwhile piece of work. In particular, it will fulfill the

strategic function of bringing more closely together the historians of mining

and smelting with the mainstream of business history, to the considerable

Subject(s):Agriculture, Natural Resources, and Extractive Industries
Geographic Area(s):North America
Time Period(s):General or Comparative

Yankeys Now: Immigrants in the Antebellum U.S.,1840-1860

Author(s):Ferrie, Joseph P.
Reviewer(s):Steckel, Richard H.

Published by EH.NET (August 1999)

Joseph P. Ferrie, Yankeys Now: Immigrants in the Antebellum U.S.,

1840-1860. New York: Oxford University Press, 1999. xii + 223 pp. $49.95

(cloth), ISBN: 0-19-510934-1

Reviewed for EH.NET by Richard H. Steckel, Department of Economics, Ohio State

University.

Immigration and mobility are fundamental features of American history.

Trans-Atlantic migration, western settlement, urbanization, and social fluidity

all played an important role in shaping the United States. Unlike the situation

in many European countries, however, the records for studying these phenomena

are rather thin. Governments in the United States never maintained population

registers, and systematic registrations of births and deaths were not well

underway until the turn of the twentieth century.

Census manuscript schedules have been widely used to glimpse families at a

point in time, but it has been difficult for historians to trace and to assess

the significance of what is known to be a central feature of the past and an

important aspect

of the present.

In Yankeys Now Joseph Ferrie breaks considerable new ground in the study

of mid-nineteenth century immigration and its aftermath. He brings prodigious

new longitudinal data to the kitchen, which he artfully seasons with other

historical

sources and skillfully prepares with econometric analysis. Demographic,

economic and social historians will feast at this table for years to come.

The quantitative center piece of Yankeys Now is a sample of 2,595

European emigrants who were listed on

ship arrival records in the port of New York between 1840 and 1850. All were

male family heads or unaccompanied males, of whom 1,456 were located in the

1850 census, 1,647 were located in the 1860 census, and 508 were found in both

censuses. For comparison purposes Ferrie also linked a sample of 4,271

native-born Americans and 667 emigrants in the 1850 and 1860 censuses.

Forward linkage in the census was achieved by electronic searches though the

names of millions of household heads that were assembled by Mormons to assist

in genealogical research. It is doubtful that a linkage project of this scale

could have been done readily more than a decade ago, when computers were

smaller and software was less developed. Ferrie devises reasonable procedures

for determining a match, limiting searches of common names, and testing for

representativeness. The percentage of men on ship lists found in either census

was about 10.6 per cent, which may seem low,

but significant losses are created by underenumeration in the

census,

mortality, return migration, errors in the indexes, and common names.

The passenger ship lists provide ethnicity and occupation, and linkage with the

censuses of 1850 and 1860 also gives county of residence, occupation and wealth

(real estate only in 1850). These longitudinal data are used to study

geographic, occupational, and wealth mobility.

Although households had many geographic options, Ferrie reports that most chose

to remain nearby. The poor were more likely to remain in New York City,

but other groups often selected urban life as well, with 45 percent of the

British, 60 percent of the Irish, and 41 percent of the Germans settling in

cities or towns of the Northeast. Somewhat more than one-half of the immigrants

settled in New York, Pennsylvania or Ohio, and the Germans were the only group

who gravitated to the west in large numbers.

The German migrants to the west chose cities about half the time,

establishing large communities in Milwaukee, St. Louis, and Cincinnati.

The book is most

informative in tracking economic change. All immigrant groups experienced some

occupational mobility from farmer or unskilled to white collar or skilled, most

of which was concentrated within a few years of arrival. Literate British and

Germans were the

most successful,

especially if they located in a rapidly growing area of the Northeast or the

South. Ferrie suggests that the low upward mobility of the Irish may have

resulted from labor market discrimination or from lack of readily transferable

general

labor market skills.

Study of wealth ownership shows, however, that the Irish caught up to the

Germans and the British by 1860, after controlling for changes in occupation

and location. The relative economic position of all immigrants improved with

length of time spent in the country. In 1850 they possessed only one-fifth the

average wealth of the native born, but by 1860 the share had risen to one-half.

Ferrie suggests that with time immigrants were better able to match their

skills with opportunities the American economy had to offer.

Scholars

have criticized community based studies of social and economic mobility for

their possible biases in analyzing only those who persisted.

After controlling for age, literacy and other characteristics, Ferrie reports

that the upper groups (white collar, skilled, and farmers) of natives and

immigrants who moved were somewhat more likely to lose occupational status. The

unskilled who left did no worse than those who remained behind. Community based

studies therefore

underestimate the extent of upward and downward mobility.

If immigration had a substantial effect on natives, one would expect to notice

the results during the high immigration rates of the mid-nineteenth century.

Ferrie analyzes this impact using a mover/stayer framework in which the

choices are urban places in the Northeast, rural places in the Northeast, and

locations outside the Northeast. Estimates of this model indicate that

immigration lowered the incomes of skilled workers, but in contrast to other

studies, the unskilled apparently benefited.

As a reviewer and potential user of the book in the classroom, I have a minor

complaint: the lines in several figures, especially 3.1, lack contrast. They

are difficult to follow in the original and will be indecipherable if

reproduced on overheads. But this is nit picking in a book that gives us such

novel and important results through extraordinary effort and ingenuity.

Generations of students will compare this book against all others in the field

of immigration history.

Richard Steckel is co-editor (with Roderick Floud) of Health and Welfare

during Industrialization (Chicago, 1997) and (with Michael Haines) of A

Population History of North America, forthcoming.

Subject(s):Historical Demography, including Migration
Geographic Area(s):North America
Time Period(s):19th Century

The Economy of Obligation: The Culture of Credit and Social Relations in Early Modern England

Author(s):Muldrew, Craig
Reviewer(s):McCants, Anne E. C.

Published by EH.NET (August 1999)

Craig Muldrew, The Economy of Obligation: The Culture of Credit and Social

Relations in Early Modern England. New York: St. Martin’s Press, 1998. xii

+ 453 pp. $69.95 (cloth), ISBN: 0-312-21565

-7.

Reviewed for EH.NET by Anne E. C. McCants, Department of History,

Massachusetts Institute of Technology.

The economic history profession has recently witnessed a resurgence of interest

in the cultural underpinnings of past economies. Prominent examples, to name

just a few, can be found in Peter Temin’s Presidential Address to the Economic

History Association in 1996, in the sweeping argument of David Landes’ The

Wealth and Poverty of Nations and of most direct relevance to the

work in question here, Deirdre McCloskey’s Presidential Address to the EHA in

1997. Muldrew’s book then makes a timely appearance, given its dedication to a

reconstruction of the “culture of credit” as it existed in England between the

sixteenth and eighteenth centuries.

Craig Muldrew (Department of History and Civilization, European University

Institute–Florence) takes as his broad subject both the material realities of

the early modern English marketplace, and the cultural milieu in which those

realities manifested themselves. Thus, he investigates probate inventories,

shop account books, household expenditure diaries and civic tax schedules, as

well as the court records of debt litigation, family correspondence, personal

diaries, sectarian sermons, and a large prescriptive literature written for

the middling householder and small tradesman. The intellectual reach of his

sources even extends to the natural law theorists of the seventeenth century,

such as Thomas Hobbes,

Richard Hooker and Gerard de Malynes to name just the most famous. In this

literature he finds, as did Max Weber and countless others after him, an almost

excessive attention paid to the themes of diligence and frugality.

But contra Weber, Muldrew does not see this primarily as evidence for the

profit motive of capitalism in its early manifestations. Rather he argues that

all this advice was fundamentally about the preservation of reputation in a

society where credit was the key to market participation, and thus wealth. It

should be further noted that the word credit for Muldrew means more the

“social communication and circulating judgement about the value of other

members of communities” than it does our more typically modern usage as a

financial sum or a claim on assets (p. 2). Thus, early modern marketplace

exchanges dependent on credit were typically solidified only after hours of

negotiation in a local tavern, over drinks and in front of witnesses. In this

insistence on the communicative (even persuasive)

aspects of the marketplace, Muldrew’s work strongly reinforces the argument

made by McCloskey that economic historians can only ignore social variables

(which McCloskey sometimes short-hands as “sweet talk”) at their peril.

The first part of the book will be the most familiar

territory for economic historians. For it is here that Muldrew makes most use

of quantitative techniques to answer a number of important questions of fact,

as it were.

He begins with an effort to reconstruct the sheer magnitude of market

transactions in early modern England, and to date with some precision the

impressive rise in marketing during the sixteenth century, from what was

already an arguably “commercial” medieval England. He attributes the economic

boom of the decades after 1550 to the expansion

of marketing stimulated by the demand generated by the demographic expansion

then underway. In fact, on the basis of a limited number of probate

inventories,

a handful of account books, and a more voluminous court record, he argues that

this was England’

s “most intensely concentrated period of economic growth before the late

eighteenth century” (pp. 20-21); and moreover, that the late sixteenth century

was not the period of absolute immiseration that it would appear to have been

on the basis of the Phelps-Brown and Hopkins real wage index. Relative poverty

may indeed have been on the rise, but he claims that at least the poor

households which were inventoried lived about as well. if not better, than

their fifteenth century peasant equivalents

(p. 32).

This latter claim is a very strong one, and probably needs much more evidence

before we disregard the implications of the real wage series entirely.

Nonetheless, much of the argument is compelling, despite the fact that it rests

only on indirect types of

evidence (admittedly from several different types of sources). What these

strong claims should really do is stimulate the profession to dig anew for yet

more data which can either confirm or refute his revisionist position,

particularly as it pertains tot he lower end of the economic spectrum.

The sixteenth century is not the only place, however, where Muldrew takes on

one of the sacred tenets of the historiography of the English economy.

Part of his project also challenges the long accepted figures for the size of

the English economy at the end of the seventeenth century as devised by the

contemporary political arithmaticians Gregory King, William Petty and Charles

Davenant. Muldrew argues that their figures, designed as they were to evaluate

the taxable

and thus cash portion of the economy, grossly underestimate the scale of all

marketing in England, dependent as most of that was on the extension of local

(oral) credit. Muldrew’s estimate for total national consumption in the latter

part of the seventeenth century

(146,000,000 pounds) is over three times greater than King’s contemporary

estimate of total household income (p 90). While this calculation depends

critically on the representatives of only seventeen household account books

from a period of

over a century and across the social scale, it does have the significant

advantage of including purchases made on credit. If Muldrew’s calculations can

be confirmed by further research (preferably with a much larger data base than

his seventeen account books), they will force us to fundamentally rethink the

magnitude of the economic transition from the early modern to the industrial

period. This could prove to be additional evidence of the significance of the

so-called “industrious revolution” of the early modern period.

This however is not Muldrew’s main agenda, but merely a by-product of his work

for other purposes. The real agenda here is to demonstrate, given the extreme

scarcity of metal coinage throughout this period, the intense reliance that

commerce of this magnitude placed by necessity on mechanisms of informal

credit.

Even more importantly, Muldrew stresses the implications of such widespread and

interlocking networks of credit for the exacerbation of tensions between the

households of consumers and producers,

which were, of course, merely the same households wearing their various many

hats. With the initial mid-sixteenth century boom, these tensions played

themselves out in an explosion of debt litigation and an outpouring of moral

literature on the perils of the prodigal (that is the indebted)

life. With time, adjustments were made to the legal system and new forms for

public credit were established which allowed credit to “become less dependent

on individual morality” (p. 329). Marketing could not only continue at its new

high level, but even expand, without the security of the social fabric being

irreparably damaged.

This is a fascinating book and one which I highly recommend. It moves

comfortably between the quantification of material life in early modern

England, and the way that life was understood by contemporaries. Historians of

the economy, and historians of ideas will both find much in this book to

stimulate further research in their respective fields. Finally, it offers a

potent

reminder that the now dominant utilitarian understanding of economic behavior

as essentially individualistic and fundamentally competitive, is not always an

appropriate model for studies of even strongly market-centered economies. Trust

(and trustworthine4ss), and by extension,

cooperative behavior, were essential to the generation of wealth by households

in early modern England. Thus it is that Daniel Defoe could write as late even

as 1726 that “He that gives no trust, and takes no trust, either by wholes ale

or by retail … is not yet born, or if there ever were any such, they are all

dead” (quoted on p. 95).

Anne E. C. McCants is the author of Civic Charity in a Golden Age: Orphan

Care in Early Modern Amsterdam (University of Illinois Press, 1997).

References:

David S. Landes, The Wealth and Poverty of Nations: Why Are Some So Rich and

Others So Poor?. New York: W.W. Norton, 1998.

Deirdre N. McCloskey, “Bourgeois Virtue and the History of P and S,”

Journal of Economic History, June 1998, 58 (2

): 297-317.

Peter Temin, “Is It Kosher to Talk about Culture?” Journal of Economic

History, June 1997, 57 (2): 267-87.

Subject(s):Markets and Institutions
Geographic Area(s):Europe
Time Period(s):18th Century