Published by EH.NET (May 1, 2000)

Francis G. Castles, Comparative Public Policy: Patterns of Post-war

Transformation. Cheltenham, UK and Northampton, MA: Edward Elgar, 1998. xi

+ 352 pp. $30 (cloth), ISBN: 1-85898-816-0.

Reviewed for EH.NET by Jim F. Couch, Department of Economics, University of

North Alabama.

Professor Francis G. Castles of the Research School of Social Sciences,

Australian National University, has undertaken quite a task in his latest work

— that of explaining the growth of government. Castles investigates twenty-one

advanced countries that are all long-term members of the Organization for

Economic Cooperation and Development (OECD), which enables the author to obtain

standardized data. Data are from three periods — 1960, 1975, and the early

1990s.

The pace of governmental growth among nations during this time was uneven.

Measuring “national trajectories of public expenditure growth in terms of their

changing share in GDP” between 1960 and 1995, “seven countries — Denmark,

Finland, Greece, Japan, Portugal, Sweden, and Switzerland-had experienced

growth of government in excess of 100 percent, whilst, at the other end of the

distribution, in the USA, outlays had grown by only 22 percent and, in the

United Kingdom, by only 35 percent” (p. 100).

Castles begins his analysis of the growth of government with World War II,

arguing that the war reshaped society. “Wartime experience had accustomed

governments to a more interventionist role, so that the task of running a

welfare state, which had seemed beyond most governments in the 1930s, now

seemed almost routine” (p. 28).

Next he investigates characteristics of the nations including their economies,

their societies, and their political systems and offers explanations for why

these characteristics may be related to public policy development. Castles

explores a wide variety of possible explanatory variables including voter

turnout, Catholicism, trade union membership, international trade, and the

seats held by left leaning and right leaning politicians. He provides a summary

of the independent variables (pages 106-108) and the justification for their

inclusion in the model.

Quantifying these variables, however, sometimes proves to be difficult. For

example, Castles calls World War II “the single most important precursor of

post-war outcomes” and defines a war impact variable ranging from 0 to 3 to

capture the severity of the wartime experience. While the extent of wartime

damage is certainly important, a scale with four values is unfortunately

arbitrary.

Also included is the age of the population because “countries with a larger

proportion of old people are likely to have had higher levels of government

expenditures” (p. 107). Castles notes that researchers suggest that large

numbers of elderly people can form a powerful interest group that is able to

engage in successful rent-seeking. Thus, as the population grows older, seniors

can demand more services from government and the welfare state will grow.

Castles ignores Olson’s (1965) Logic of Collective Action which asserts

an optimal group size for cooperative action. Larger groups do not necessarily

have greater political clout. Richard McKenzie empirically tests this

proposition in his paper “The Retreat of the Elderly Welfare State” (Center for

the Study of American Business, Washington University in St. Louis, Publication

Number 102, December 1990). McKenzie finds that as the number of seniors in the

U.S. has grown expenditures have declined.

Castles rather abruptly changes directions in the later chapters of the book by

exploring the sources of cross-national variation in male and female labor

force participation, in unemployment rates, in home ownership, and in fertility

and divorce rates.

Returning to his original theme, he explains that readers hoping for a single

explanatory key to the growth of the welfare state will come away disappointed.

Instead, “the causes and consequences of the policy actions of the state differ

widely from one policy area to another and within particular areas over time”

(p. 300). However, he does identify some surprising relationships. For example,

economic development had a smaller than expected role in the growth of the

welfare state. Overall, Castles’ work is accessible and provides much data

regarding public policy after World War II.

Jim F. Couch is an Associate Professor of Economics at the University of North

Alabama. His book, The Political Economy of the New Deal (Edward Elgar,

1998) co-authored with William F. Shughart, describes the political forces that

shaped much of the New Deal.

Published by EH.NET (March 2000)

John McDonald, Production Efficiency in Domesday England, 1086. London

and New York: Routledge, 1998, xiv + 240 pp. $85 (cloth), ISBN:

0-415-16187-8.

Reviewed for EH.NET by Maristella Botticini, Department of Economics,

Boston University.

On the cover page of John McDonald’s Production Efficiency in Domesday

England, 1086 it might be appropriate to include a warning label: “Reading

this book may have fatal consequences for certain scholars.” The reason is

simple: it takes a lot of energy and passion for a medievalist to keep reading

the book after page

14 when the author starts employing high-tech economic models (chapters 2 and

3) and fancy regressions (chapters 4). On the other hand, patient medievalists

(and other scholars as well) will be rewarded by learning that scholars have

been basically wrong

in arguing that English estates were run inefficiently by Norman conquerors.

According to McDonald (Professor of Economics at Flinders University of South

Australia) these estates were run at similar efficiency levels to comparable

production units in more modern economies, such as farms in the postbellum

U.S. South, farms in contemporary California, and surface coalmines in the U.S

(p. 137).

After a clear and insightful introductory chapter that describes the main

features of the English economy at the

time of the Norman conquest,

elucidates the data of the Domesday Book, and outlines the main themes of the

book, the reader enters with chapters 2 and 3 into a “jungle” of technical

models that explain the techniques used by the author to measure production

efficiency in agriculture. The core of the book is in chapters 4 and 6 where

McDonald applies these techniques to a sample of estates surveyed in the

Domesday Book (those of Essex lay estates).

The book addresses important questions such as: Which ten ants-in-chief ran

efficient estates? How was productivity affected by soil type, the size of the

estate, the tenancy agreement, the institutional framework of the time and the

proximity of a market center? Which inputs made the major contribution to the

net value of output? Did slaves make a greater contribution to the manorial

lord’s net income than peasants? What was the effect of feudal and manorial

systems, which discouraged mobility of inputs, on the system of production,

input productivities and total output produced? Given technology and the

institutional framework, were estates run efficiently?

Multivariate regression analysis carried out in chapter 4 indicates that

efficiency depended on the spatial location of the farm (in which hundred the

farm was located), but was not affected by the type of soil and proximity to

urban economies. Larger farms tended to be more efficient suggesting that

economies of scale were at work. Efficiency was influenced by whether an estate

was held in demesne by the

tenant-in-chief (estates being held in demesne tended to be more efficient) and

who the tenant-in-chief was. Estates with relatively more grazing were more

efficient than estates with relatively more arable or mixed farming. The

existence of some ancillary resources on the farm (beehives, mills, or

saltpans) seems to have made estates less efficient, whereas fisheries and

vineyards do not seem to have had any effect. Overall, English estates were run

efficiently by Norman conquerors. Yet the restrictions

and rigidities imposed by feudal and manorial systems had a negative impact on

agricultural efficiency (pp. 140-143).

While I highly recommend this book to both economists and historians, I think

it is worthwhile to stress some weaknesses. The first issue is why the author

does not compare medieval English agriculture to English agriculture in later

centuries. This would have been even more interesting than comparing Domesday

England to contemporary California farms or U. S.

surface coalmines. We could learn, for example, how the demise of the feudal

and manorial systems of production affected agricultural production in England,

or how the development of more important and significant urban centers

(compared to Maldon and Colchester in 1086) influenced agricultural

efficiency. Second, given that it is not always clear whether the annual value

of an estate included ancillary resources, one wonders if this can make the

comparisons of the efficiency of various estates meaningless. The author

dismisses the argument by arguing that the existence of ancillary resources

would have had opposite effects and that therefore their overall impact on

efficiency was probably minimal. But what about other incomes from feudal

rights that could have entered into the annual values of estates?

Another critical point is the organization of the book. The technical chapters

2 and 3 should have gone into large appendices. Those who know the frontier

technique are bored by reading these chapters; those who do not have the

knowledge to understand these chapters can be really discouraged from reading

the

book. A further minor criticism is of technical nature and has to do with the

multivariate regressions. The question is why the author does not include fixed

or random effects to

account for variables that do not vary across a tenant-in-chief or whoever was

running the farm. His abilities, experience, and other unobservable variables

could have affected the way he ran his estates.

The book requires a lot of patience and passion

for high-tech economy history. If one is willing to persevere and arrive at the

end of the book,

the effort is rewarded. Someone else can apply the same frontier technique to

Norfolk and Suffolk, for which, together with Essex, the Domesday Book provides

the most detailed information, and check whether McDonald’s findings still hold

for these counties. More importantly, someone can do the same exercise on

English agriculture for later periods and tell us whether and how the demise of

the feudal system affected agricultural efficiency.

Maristella Botticini’s research focuses on marriage markets, dowries,

intergenerational transfers, credit markets and Jewish lenders, and agrarian

contracts in medieval and Renaissance Tuscany. Her recent work includes “A

Tale of ‘Benevolent’ Governments: Private Credit Markets,

Public Finance, and the Role of Jewish Lenders in Medieval and Renaissance

Italy,” Journal of Economic History 60 (March 2000): 164-89 and “A

Loveless Economy? Intergenerational Altruism and the

Marriage Market in a Tuscan Town, 1415-1436,” Journal of Economic

History 59 (March 1999):

104-21.

Published by EH.NET (March 2000)

Charles P. Kindleberger, Essays in History: Financial, Economic,

Personal. Foreward by Peter Temin. Ann Arbor: University of Michigan Press,

1999. xvi + 245 pp. $49.50 (cloth), ISBN: 0-472-11002-0.

Reviewed for EH.NET by David Glasner, Federal Trade Commission.

Charles P. Kindleberger, perhaps the leading financial historian of our time,

has also

been a prolific, entertaining, and insightful commentator and essayist on

economics and economists. If one were to use Isaiah Berlin’s celebrated

dichotomy between hedgehogs that know one big thing and foxes that know many

little things, Kindleberger would certainly appear at or near the top of the

list of economist foxes. Although Kindleberger himself never invokes Berlin’s

distinction between hedgehogs and foxes,

many of Kindleberger’s observations on the differences between economic theory

and economic history, the difficulty of training good economic historians, and

his critical assessment of grand theories of economic history such as

Kondratieff long cycles, are in perfect

harmony with Berlin.

So it is hard to imagine a collection of essays by Kindleberger that did not

contain much that those interested in economics, finance, history, and policy

— all considered from a humane and cosmopolitan perspective —

would find worth reading. For those with a pronounced analytical bent (who are

perhaps more inclined to prefer the output of a hedgehog than of a fox), this

collection may seem a somewhat thin gruel. And some of the historical material

in the first section will appear

rather dry to all but the most dedicated numismatists. Nevertheless, there are

enough flashes of insight, wit (my favorite is his aside that during talks on

financial crises he elicits a nervous laugh by saying that nothing disturbs a

person’s judgment so

much as to see a friend get rich), and wisdom as well as personal

reminiscences from a long and varied career (including an especially moving

memoir of his relationship with his student and colleague Carlos F.

Diaz-Alejandro) to repay readers of this volume. Unfortunately the volume is

marred somewhat by an inordinate number of editorial lapses and mistaken

attributions or misidentifications such as attributing a cutting remark about

Pagannini’s virtuosity to Samuel Johnson (who died when the maestro was

all of two years old).

As the subtitle indicates, the essays, most of which are drawn from earlier

published work, are arranged into three categories. The financial essays begin

with perhaps the most substantial analytical essay of the collection,

“Asset Inflation and Monetary Policy,” though the analytical reflections are

presented in the course of a historical survey of the role of monetary policy

in generating or restraining financial inflation. The notion that monetary

policy has a systematic effect

on the level of asset prices is an old one and generated a considerable

literature in the 1920s when there was a widespread feeling that a) monetary

ease had contributed to the speculation that underlay an irrational boom in

stock market prices, and b)

t hat it was the duty of the monetary authority to counteract such speculation.

This view seems to have been critical in the decision of the Federal Reserve

Board to tighten monetary policy in 1929. The aftereffects of that particular

change in monetary policy are well known and have generally not been

interpreted in a way favorable to the theory linking monetary policy to asset

inflation. But Kindelberger calls our attention to other episodes of what he

calls asset inflation, especially the Japanese real estate and stock market

boom of the 1980s, and questions whether there may not indeed be some

connection between monetary policy and asset price inflation. Originally

published in 1995, Kindleberger’s discussion predates the great bull market of

1995-99. One wonders what Kindleberger would make of our most recent (and

ongoing?) episode of asset inflation.

The upshot of his discussion is that given the complexity of the real world, it

would be a mistake to impose a fixed rule on the monetary authority that

precluded it from taking policy actions based on the possibility of a linkage

between monetary policy and asset inflation. But,

in the end, Kindleberger does not persuade me that there is a systematic

relationship between monetary policy and asset inflation that could ever

provide a useful rationale or basis for the conduct of monetary policy.

Certainly there is no compelling theoretical argument for such a relationship.

One fairly well-known theory that might provide such a rationalization is the

Austrian theory of the business cycle, but Kindleberger is not otherwise

sympathetically disposed toward that particular theory. If monetary policy were

to have an impact on the level of asset prices, one possible channel would

appear to be through an effect on

expectations. But to have a significant effect on expectations of real

variables, a pretty sizeable change in monetary policy would seem to be

required. There must be something radically wrong with the conduct of monetary

policy before or after such a change.

Of course, asset inflation may be viewed as a bubble (a phenomenon usually

presumed to be a manifestation of irrationality but which can also be

reconciled with strict rationality), a topic about which Kindleberger has

written extensively. But if asset inflations are bubbles, especially

irrational ones, what is the mechanism that links monetary policy with

irrational exuberance? Presumably, the expectations on which asset prices are

based are influenced by monetary policy. But it is hard to see what role

monetary policy might have in accounting for irrational exuberance.

The problem with all theories of asset prices is that they are so profoundly

dependent on inherently subjective expectations. There are no fundamentals only

perceptions. It is misleading to suppose that there is or can be a single

correct rational expectation of the present discounted value of the future net

cash flows associated with a particular asset.

There may be some expectations that are irrational because there are no

conceivable states of the world in which those expectations would be realized.

But

there may be a whole range of expectations that are potentially realizable. And

the realizations may (indeed, likely do) in turn depend on the distribution of

expectations at large about that asset.

Expectations often do tend to be self-fulfilling, and actual outcomes are

rarely independent of expected outcomes. As we become increasingly attuned to

the pervasiveness of network effects in economic life, we may well come to view

large swings in asset values as reflecting something other than excess

volatility — perhaps the inherent volatility of asset values in which

expectations about the future are mutually interdependent and reinforcing.

In two other essays, Kindleberger evinces an unexpected (to me) interest in

the theory of free banking, a topic about which I have written on occasion.

Kindleberger is none too sympathetic to the theory, and attempts to discredit

it by recounting the widespread currency debasements in the Holy

Roman Empire in the late sixteenth and early seventeenth centuries. The Empire

set up a large number of independent local mints that were authorized subject

to some degree of imperial oversight to mint coinage more or less without

restriction. Kindleberger views the historical record as a conclusive

refutation of the free banking theory that competitive issuers compete not by

depreciating their monies but by maintaining their values. However,

Kindleberger fails to take any note of a fundamental factual issue that is

critical to his argument, which is whether it was possible to identify the

specific mint from which any particular coin had been issued. The fundamental

argument of the free banking school is that issuers compete to maintain the

purchasing power of their moneys if there is a mechanism by which an issuer’s

misconduct could be related to the coin or money it had issued. Kindleberger

simply ignores the point. On the other hand, he properly observes that there is

an externality associated with maintaining a stable unit of account, so that

money issuers do not necessarily have the appropriate incentive to assure the

optimal variation over time in the value of the unit of account. But this is an

issue different from and more subtle than whether free banking is inherently

disposed to inflation or debasement. It is at least as likely that the free

market would generate excessive deflation as excessive inflation. But as I have

argued in a book on free banking (Free Banking and Monetary Reform,

Cambridge University Press, 1989, chapter 10), there is no inherent reason why

a free banking system could not be coupled with a governmentally supplied unit

of account whose value over time would be constrained to vary in a socially

optimal manner. There may

be compelling arguments against free banking, which would involve questions

about banks’ propensities to take ill-advised risks and the necessity for a

lender of last result to prevent a cumulative breakdown in the payments system

and in the financial infrastructure generally. Kindleberger has provided

valuable historical and theoretical insights into these issues in his

voluminous past writings.

Unfortunately, Kindleberger in this volume seems to have concluded that the

case for free banking can be dismissed just a bit too easily. Both supporters

and opponents of free banking would have been better served if he had not

approached the subject quite so casually.

Other readers, I am sure, will find nits of their own to pick with

Kindleberger. We all like to find fault with our elders and betters. But that

will be just one of the enjoyments gained by reading this volume.

(The views expressed in this review do not necessarily reflect the opinions of

the Federal Trade Commission or the individual commissioners.)

David Glasner has published widely on the history of monetary thought,

policies and institutions. He is editor of Business Cycles and Depression:

An Encyclopedia (Garland Publishing, 1997).

Published by EH.NET (February 2000)

Peter D. McClelland,

Sowing Modernity: America’s First Agricultural Revolution. Ithaca:

Cornell University Press, 1997. xii + 348 pp. $45.00

(cloth), ISBN: 0-8014-3326-6.

Reviewed for EH.NET by Mary Eschelbach Hansen, Department of Economics,

American University, Washington, DC.

The Seeds of Agricultural Innovation

Sowing Modernity: America’s First Agricultural Revolution argues that

modern economic growth required discontinuities. The discontinuity that Peter

McClelland seeks is to be found

in everyday life: when did farmers begin to ask routinely, “Is there a better

way?” Professor McClelland finds the discontinuity, or revolution, in attitudes

in the years immediately following the War of 1812.

Not since Leo Rogin wrote his classic The

Introduction of Farm Machinery

(University of California Press, 1931) has an author packed so much information

about farm equipment into such a small space. Professor McClelland gives us a

reference work that should sit atop the desk of any serious scholar of

agriculture. The work goes well beyond tracing the time trend in the number of

new patents issued on farm equipment. McClelland traces the development of farm

equipment from antiquity through the Jacksonian era in order to demonstrate the

rapid rate

of innovation after 1812, which indicates to him that the search for a better

way began in earnest about that time.

The descriptive detail in Sowing Modernity is astounding. Of the

literature on Jethro Tull’s wheat drill, McClelland says: “Although every

history of the British agricultural revolution is sure to include a reference

to Tull’s machine, almost never does that literature make clear how it worked.”

(p. 70) A full page of text and two full-page illustrations do the job.

(Special congratulations are due to McClelland for convincing his publisher

that the purpose of the book could not be met without the many and detailed

illustrations.) Other innovations in equipment to plow, sow, cultivate, and

thresh receive equally detailed treatment. The

work is so thoroughly researched and uses such a wide variety of sources that

the 235 pages of text require 100 pages of notes and bibliography.

McClelland adopts the economist’s stance that farmers were rational, that is,

that farmers only deemed a new

way “better” if benefits were greater than costs. For some innovations an

estimate of costs and benefits is made with respect to initial outlay for

equipment and change in labor and animal requirements. Trends in prices of

output are rarely mentioned (excepting the discussion of reapers). This

omission does not distract from the descriptions of the innovations, but it

does lead the reader to wonder if there are regional stories to be told when

Professor McClelland extends the work, adding the “where” and

“why” questions to this volume’s answer to

“when.”

The reader would benefit from additional discussion of the sources used,

their merits and demerits, their limitations and biases. For example, might the

very existence of the agricultural papers be a lagged indicator of the

revolution in attitudes of farmers? That is, would there be a market for

information on innovation without the revolution in attitudes? If the

agricultural papers lag the revolution, Professor McClelland’s use of them to

date the revolution in attitudes might lead him to be a few years too late.

But these criticisms are minor compared to the contribution of the work.

Sowing Modernity gives economic historians an interface with the

disciplines of material culture and cultural history. The work should lead

other agricultural and economic historians to consider the 1812-1830 period

with greater interest.

Mary Eschelbach Hansen is author of numerous articles in agricultural history

including “Land Ownership, Farm Size, and Tenancy after the Civil War,”

Journal of Economic History (September 1998).

Published by EH.Net (February 2000)

Edwin J. Perkins, Wall Street to Main Street: Charles Merrill and Middle

Class Investors. New York: Cambridge University Press, 1999. xiv + 283 pp.

8p. of plates. $29.95 (cloth), ISBN: 0-5216-3029-0.

Reviewed for H-Business and EH.NET

by David L. Mason, Department of History, The Ohio State University.

mason.160@osu.edu

In this book, Professor Perkins provides an illuminating business biography of

one of the most influential figures in modern investment finance. A founder of

the nation’s largest investment banking firm, Charlie Merrill transformed the

major financial markets with his belief that people of limited resources should

have access to the same professional investment advice as the wealthy. By

pioneering the idea that middle-class Americans should become active investors

in stocks and bonds, Merrill

helped to demystify Wall Street, but more importantly offered a way for

millions to achieve a secure financial future. Significantly, his vision of a

nationwide chain of brokerage firms serving Main Street America–his most

memorable accomplishment–evolved from a lifetime of achievements.

As Perkins capably details, the business life of Charlie Merrill consisted of

three separate, but interrelated careers. Merrill was born outside

Jacksonville Florida in 1885 and educated in the North, where he graduated from

Amherst. Merrill entered the world of Wall Street by way of an old school

friend who told him about an opening in a small brokerage firm. This contact

was but the first of

a string of career-advancing personal relationships Merrill cultivated in his

professional life. After learning the brokerage business, Merrill went out on

his own and by the early 1920s had teamed up with Eduard Lynch to form Merrill,

Lynch & Co.

The new firm was stunningly profitable in the legendary Bull Market of the

1920s, providing business and institutional clients with a variety of merchant

banking services including those relating to bond issues and mergers and

acquisitions. In the process, Mer rill, Lynch achieved a positive reputation

working with new industries like motion pictures and chain stores. Merrill’s

interest in “the chains” stemmed in part from his childhood job working in his

father’s pharmacy, and he acquired interests in several

of the major firms including Safeway grocery stores. By 1928,

Merrill warned his partners and his clients that the stock market was

overvalued, and pushed for a more conservative investment strategy that by

October 1929 helped the company and its customers preserve much of their

wealth. With the stock market mired in a prolonged slump, Merrill and Lynch

sold their brokerage business to E.A. Pierce & Co., and the smaller firm became

essentially dormant as the two partners opted for semi-retirement.

By 1932, the first career of Charlie Merrill as an investment banker came to an

end.

While Eddie Lynch enjoyed a retirement of pleasure and travel, Charlie Merrill

spent the depression years managing Safeway Stores, in which he was the

majority stockholder. Although he was not a director and did not hold an

official position in the company, Merrill was a key force in helping to make

Safeway the leading chain of grocery stores in the West. The experience gave

the former investment banker crucial insights into the operation of a consumer

business, especially one that relied on economies of scale for success. In

1940, these lessons proved valuable when Merrill’s long time business associate

and fellow Amherst alumnus Win Smith encouraged him to return to his old firm

in an effort to revive its waning fortunes. Smith had joined E.A. Pierce when

it acquired Merrill Lynch’s brokerage business, and although his new employer

was the largest chain of brokers in the country, by the end of the 1930s it was

on the verge of

bankruptcy. Even as the national economy emerged from the decade long

depression, the brokerage business remained in the doldrums, and Smith hoped

Merrill would rejoin as managing director and contribute some much needed

capital. Merrill, who was tiring

of retirement, accepted the challenge, thus ending his second career and

beginning his most important part of his long business life.

The older Merrill Lynch & Co. merged with E.A. Pierce, and Merrill began

charting a future for the new firm. Although he

returned to Wall Street,

Merrill did not intend to be a merchant banker, but rather wanted to develop

investment-banking services such as retail brokerage. His work with Safeway had

shown Merrill how a broad distribution base could increase sales and revenues,

and he wanted to replicate this in the brokerage business in order to tap the

growing wealth of the nation’s middle class.

To do this, however, Merrill had to change the negative public image of

stockbrokers. Because brokers worked on a commission,

a prevailing attitude was that the main goal of brokers was to “churn and

earn” by encouraging customers to make needless trades so the brokers could

earn fees on the transactions. Merrill instituted straight salaries for all

employees as a way to dispel

these perceptions, and while this move did have the potential of reducing

broker earnings, a new company-sponsored retirement profit-sharing plan helped

minimize the loss. The firm also began to refer to brokers as account

executives, a practice still used throughout the industry, and it also

assigned customers to brokers based on clients’

investment objectives.

Merrill, whose lifelong credo was “first investigate then invest,” also sought

to improve the education of both the firm’s employees and the public. To build

the image of brokers as professionals, Merrill pioneered an in-house training

program that included courses on all aspects of merchant and investment

banking. He also increased the size and scope of the research department so

brokers could

provide their clients with current and accurate investment advise. To bring

down the veil of mystery surrounding the stock and bond markets, Merrill was

among the first to use mass-market advertisements explaining how and why people

should save for special goals like education or retirement. Although these

efforts took time to bear fruit, they ultimately helped millions gain a better

understanding of financial markets and the need for systematic savings. By the

time of Charlie Merrill’s death in 1956 his

firm was the dominant force in retail brokerage with the formal name Merrill,

Lynch, Pierce, Fenner &

Beane, known informally as “We the People”–today known as Merrill, Lynch,

Pierce, Fenner, & Smith.

Perkins’ book is an important scholarly portrait of

a leading Wall Street personality, and presents his story in a clear and

concise fashion. Perkins had a wealth of primary source material at his

disposal, and this constitutes one of the main strengths of the work. Perkins

conducted numerous interviews with Merrill’s children and business associates,

and obtained access to documents in the Merrill, Lynch archives previously

unavailable to those outside the company. Most of the source citations refer to

direct quotations; and, while this is certainly adequate for the lay reader,

historians might wish for a fuller annotation. Perkins’ deftly employs

Chandlerian business theory to place the story of Charles Merrill in a broader

perspective. Realizing that some of these concepts may be confusing to

nonacademic readers, the author provides clearly understandable explanations

for both theoretical and financial terms.

Perkins avoids the tendency of a biographer to glorify his subject. He

describes Merrill’s inability to see the potential for many financial

innovations, such as mutual funds, which he believed would never be popular

with the

investing public. Still, Perkins may be giving too much weight to Merrill’s

prescience in making early, confident predictions about the stock market crash.

The weaknesses of

this book they are minor, and do not detract from its value to scholars and the

general public. Wall Street to Main Street:

Charles Merrill and Middle Class Investors is highly recommended to those

interested in the history of finance, investment banking, or the service

industry. Perkins presents a complex story in an accessible manner,

combining rigorous historical analysis that is refreshingly free of the

intricacies of financial jargon.

Published by EH.NET (February, 2000)

Stuart D. Brandes. Warhogs: A History of War

Profits in America.

Lexington: The University Press of Kentucky, 1997. 371 pp. Tables, notes,

bibliography, and index. ISBN 0-8131-2020-9

Reviewed for H-Business and EH.NET by Jacob Vander Meulen,

Jacob@hfx.andara.com, Department of History, Dalhousie

University, Halifax,

Nova Scotia, B3H 3J5.

A new book on wartime profit-making with a title like “Warhogs” might suggest

yet another entry for the “merchants of death” school on the relationship

between private enterprise and the military in America. The

notion that the relation is inherently corrupt, and the idea that the main

beneficiaries of war are contractors, bankers, and market capitalism, have been

widely shared among Americans at least since the Pequot wars of the 1630s when

profiteering gunsmiths scandalized New England (pp. 16-17).

During the twentieth-century that perspective assumed an even more sinister

hue. Not only did merchants of death profit from war, they instigated it at

every opportunity. From the “Warhogs” of World War II to the shadowy figures

dominating the 1990’s worlds of Oliver Stone and The X-Files,

Americans have been more than willing to imagine the worst about those engaged

in war business.

Staurt Brandes’ title, however, is tongue-in-cheek. Warhogs traces

profiteering

and efforts to control it through America’s various wars from the colonial

period to the end of World War Two. The author shows how exaggerated were

common assumptions and constant charges of graft and malfeasance in military

supply. He also shows how basic such suspicions have been to popular

republicanism in America and how that ideology has continuously shaped national

policy on the business of war. Brandes wants to contribute to what he calls the

“New Military History” which, he asserts, offsets ideology and

conspiracy-mindedness by concentrating “less opprobriously on understanding

civil-military relations” (p. 357).

Brandes points to the British Army’s economic impact on early America in

helping foment militant republicanism and the American Revolution. Because

“the Royal Army dripped with corruption” (p. 38), professional standing armies

came to mean patronage, collusion, autocracy and oppression. The equation

formed an essential component of traditional anti-government and

anti-big-business ideology in America. It survived the War of Independence,

despite all George Washington’s efforts to minimize corruption in the

Continental Army. Apart from during the War of 1812, when “left-handed traders”

from New England and New York dealt with Canadian enemies, and during the

Civil War, when members of a “shoddyocracy” seemed in control of Union Army

procurement, minimal hostility for those who dealt in war materiel through the

1800s reflected the relative unimportance of the military in nineteenth-century

society and economy. Turn-of-the-century U.S. imperialism, and especially

World War One, revived the critique.

During the interwar period, Bryanite “neo-Jeffersonians” laid the regulatory

parameters of military contracting and defense-industry profits for World War

Two and into the contemporary period.

Brandes cites numerous

instances of stupendous greed and unconscionable

profiteering, but debunks much more than he confirms and always balances real

corruption and conflict of interest with overall fair

-dealing and dedicated patriotism among businessmen. He points to the

inevitable confusion of rapid war mobilization, the administrative complexity

of determining reasonable costs and profits, and the ever-growing need for

greater and more intimate cooperation between the military and its suppliers

as the technology of warfare became more complex. Warhogs is

particularly strong on war-profit politics during World War One and through

Senator Gerald P. Nye’s investigation of the munitions industry in 193 4-35.

Readers might want to compare Brandes’ dismissal of the Nye Committee’s methods

as “eerily close to the methods of Senator Joseph R. McCarthy” and the Nye

Report as “pure demagoguery” with Matthew Ware Coulter’s recent study.

Nevertheless, Brandes credits the Nye Committee and the Vinson-Trammell Act of

1934 for the general success of excess-profit taxation and renegotiated

contracts during World War Two.

Warhogs is engaging and even-handed and based on impressive research in

both primary and secondary sources. Brandes nicely traces the war-profit

controversy in popular media and literature as well as fiction and cinema.

The book closes with a chapter entitled “War Profits and Cold War Culture”

that is actually about how World War Two profits were perceived during the

immediate post-war years. Brandes does not discuss defense-industry profits

since the Cold War began, how they were regulated, or the degree to which their

legitimacy was problematic for Americans. Some readers might feel left hanging.

What happened to the neo-Jeffersonian critique of profiteering and of the

military-industrial complex during the long and expensive Cold War?

Published by EH.NET (February 2000)

Om Prakash, European Commercial Enterprise in Pre-Colonial India, New

York and Cambridge: Cambridge University Press, 1998. 396 pp. $59.95

(cloth), ISBN: 0-521-25758-1.

Reviewed for EH.NET by John Adams, Visiting Scholar, Center for South Asian

Studies, University of Virginia.

This is volume II.5 of The New Cambridge History of India which will

eventually comprise 31 separately authored titles. The New Cambridge History

contributions cover four overlapping temporal and thematic areas:

I. The Mughals and Their Contemporaries, II. Indian States and the Transition

to Colonialism, III. The Indian Empire and the Beginnings of Modern Society,

and IV. The Evolution of Contemporary South Asia. This stud by Om Prakash Om

Prakash (Professor of Economic History at the Delhi School of Economics) is the

fifth component of the second cluster. Each of the contributions to the New

Cambridge History that this reviewer has read speaks with the distinctive voice

of its author and represents an original and definitive work. There is no

requisition from the general editorship

(Gordon Johnson, C. A. Bayly, John F. Richards) to write to formula or format.

At the same time, there is the desire that the volumes connect to one another

and be firmly grounded in the best current knowledge and scholarly

interpretations. Over one-half

of these are now available and without exception fully realize the principles

of the publisher and the editorial team. If you are interested in the modern

history of the subcontinent this is the place to begin.

Two caveats are issued to the membership of EH.NET. First, the series and this

volume aim at treating economic affairs within the context of society,

culture, and politics. This diminution of the material realm to secondary

status fairly characterizes the state of human affairs in the Indian

subcontinent up to the recent present, but naturally affronts our presumed

professional preeminence. Forewarned is forearmed. Second, even the

contributions to the series that center on commerce, industry, and finance are

historical and descriptive and do not

attempt to use newly discovered or freshly catalogued evidence to advance or

debunk modernistic economic premises in the familiar mannerisms of cliometry.

Prakash, as the immediate example, re-creates historical economies for

inspection and does not strive to validate allegedly universal principles

derived distally from Lenin or Ricardo.

Those who know the bias of the present reviewer will now make the assured

prediction that he will strongly side with Prakash and forthwith utilize the

review to argue with incisiveness and wit against overly formalized economic

history, particularly in the Indian timescape where he has for so long labored.

This would be wrong. He in fact thinks that the most useful thing he can do for

that tiny group of readers that has

gotten this far into what has been a most esoteric introduction to a book

review about a most obscure subject, and are willing to continue further, is to

identify the substantial merits of Prakash’s book and to suggest where it

points towards arenas where the focused application of economic investigation

could yield big dividends. The reviewer further admits that ploughing through

factual avoirdupois in search of a bone structure at times tried his Jobian

patience.

Three fields of inquiry will adequately illustrate how Prakash’s masterly and

comprehensive volume can be approached by the intrepid economic historian.

After 1498, the Portuguese, the Dutch, the French, and the English vied

sequentially for domination of the trade between South Asia

and Europe.

Importantly, India was a geographical link to East Asia: Japan, China, and the

East Indies. Their India goods trade and balances of payments were managed by

the Europeans with an eye towards to the Europe-East Asia trade and payments

systems.

Broadly, from the European side, merchant groups; the newly formed trading

companies such as the Dutch East India Company, the French East India Company,

and the British East India Company, and others of less salience; and traders on

private account, frequently but inconstantly affiliated with the trading

companies, were the key players.

Prakash’s central accomplishment is to provide a rich account of the formation

and operations of each of these organizational instrumentalities of commerce.

He provides vibrant details about key individuals and of the ebb and flow of

on-going operations in the novel trading enterprises. No one has done it better

or more comprehensively or with superior command of the comparative motives,

structures, and results of these harbingers of the modern corporation.

What does the modest and overwhelmed reviewer hope for? A dash of Coase and

Williamson, please. Can we stand back a bit and ask exactly why these new

formations emerged, why they were a timely creation, why their boundaries were

drawn as they were vis-a-vis the melange of external contractual and customary

arrangements that guided Asian commerce? Were they indeed essential before the

Europeans could successfully engage well-established and often politically

sustained

indigenous Asian business clans and transactional networks along which goods

and finance moved? Why did the Asians not create countervailing private

organizations?

Prakash provides a good deal of data on the “triangular” trade among centers in

Europe, South Asia, and East Asia. Exports of textiles from Coromandel and

Gujarat enabled the Dutch East India Company to recruit spices in Indonesia,

while raw silk was the chief export to Japan, for example. Later, opium was

important in the British Company

‘s China trade.

Very generally, the European companies sought a profit when annual accounts

were cleared. There was the irrefragable need for the British to effect

transfers of wealth to London on the Company’s accounts as well as those of

private agents,

who were often Company employees. For most of the pre-colonial period Indians

were quite successful in sending commodities and handicraft manufactures east

and west, while absorbing large net influxes of precious metals, preeminently

silver. Prakash does

an exceptionally able job of delineating these complicated flows and balances

and depicting how they changed over time as opportunities and imperatives

varied.

The abashed reviewer wants to know more about the macroeconomic and financial

implications of

these flows. It is almost certainly wrong to argue as Prakash does in his

conclusion that the “bullion for goods”

character of India’s trade, contrasted with a “goods for goods” pattern,

“implied that the positive implications of the growth in trade for

the level of income, output, and employment in the economy were considerably

more substantial . . . .” (p. 350). This represents a peculiar affection for

simple Mercantilism as opposed to endorsing a Smithian pursuit of the wealth of

nations. One may reasonably ask about this, and other dimensions of Prakash’s

arguments (ch. 8), if India was so well-poised in the

“triangular” system of trade and payments, and the beneficiary of such positive

income, employment, and price benefits, why then was the subsequ ent income

divergence of India and Britain not the reverse of that which precipitated?

European Commercial Enterprise contains many well-designed tables,

figures, and maps. The text is replete with bounties of numbers gleaned from

company records

and other sources. Table 6.1, for instance, gives us the composition of Dutch

exports from Bengal in percentages, 1675-1785, for five benchmark years of the

111 in question. Table 3.6 shows the English East India Company’s total exports

by value to Asia,

1601-1760, and the percentage of treasure. Many of the series go up but some

go down. The profusion of numbers is impressive but less clear is their overall

pattern or meaning.

The bemused reviewer has the sense of being confronted with a 2,000 piece

jigsaw puzzle. What is impossible to find out (and this is not Prakash’s fault

or

responsibility) is how largely trade affected economic activities and people’s

lives. We know that from the middle point of the eighteenth century on, up

until the present, In dia’s trade has never amounted to more than about ten

percent of total product, and was more likely six percent or less for the past

400 years, which is what one would expect in a large,

inward-looking nation. We know that household and village subsistence

economies were predominant in India until at least the early years of the

independence era. It is very hard to sort out, and Prakash certainly

overdramatizes rather than understates, the scope and scale of commercial and

trading-sector activities in the

total picture. There is the risk of erring on the side of making the Indian

subcontinent seem altogether non-commercial and unready for encounter with the

agencies of European commerce, but it is equally misleading to exaggerate the

importance of selected commercial crops relative to the major subsistence food

grains, or to extol the small coastal enclaves and their merchant families and

castes at the expense of the much more numerous interior villages and the

multitudes of farmers and agrarian workers who had little or no contact with

the world “out there.”

These days we are correctly aware of the

fallacy of overstating the role of

Europe in the post-Columbus era of exploration, commercialization, and may one

dare say, post-Seattle, globalization. At the same time, may not the pendulum

swing too far in the other direction? Vide Prakash asserting that India was,

circa-1498, the “. . . ‘industrial hub’ of the region surrounded by west Asia

on one side and southeast Asia on the other” (p. 154). Did India

at that moment (actually India didn’t exist at that moment) possess a

“sophisticated infrastructure” whose ingredients were ” . . . a high degree of

labor mobility and the existence of a labor market, merchant groups capable of

collective defense and good

organization, development of accountancy skills, highly developed and

price-responsive marketing systems, and a sophisticated monetary and credit

structure (ibid.)?” The unprepossessing reviewer would assert that the

subcontinent did not exhibit these features but to avoid confusion would

evenhandedly aver that no other place did either.

On the whole: this is an amazingly erudite and encompassing book, which ably

serves its primary function of offering a survey of the first three centuries

of Indo-European commerce, as defined within the ambit of the New Cambridge

History program, but it does not cope effectively with topics of keen interest

to modern economic historians of any sort: the microeconomics of incentives and

agents, the macroeconomic and developmental effects of trade and financial

flows, and the nature of proto-corporate structures looked at through the

eyeglasses of transactions costs and organizational theory.

Now retired, John Adams is Visiting Scholar at the Center for South Asian

Studies, University of Virginia. He is affiliated with the Center for Middle

Eastern Studies at Harvard University; Professor Emeritus,

Northeastern University; and, President and Chief Economist, Sawhill

Associates, Chancellor, Virginia. His chief current activity is composing

financial sector reforms for Nepal under the aegis of the Asian Development

Bank and the IRIS Center, University of Maryland, College Park. He may be found

at JQA3@msn.com.

Published by EH.NET (February 2000)

Naomi R. Lamoreaux, Daniel M.G. Raff, and Peter Temin, editors, Learning by

Doing in Markets, Firms, and Countries. Chicago: University of Chicago

Press (National Bureau of

Economic Research Conference Report), 1999. vii +

347 pp. $65.00 (cloth), ISBN: 0-226-46832-1; $22.50 (paper), ISBN:

0-226-46834-8

Reviewed for EH.NET by Henry A. Gemery, Department of Economics, Colby College.

The “learning by doing” in the title of this NBER volume has little to do with

the classic case of the Horndal effect or with the productivity effects of

learning associated with the long production runs of aircraft or ship

construction. Instead, this volume deals with “scaled-up” learning by doing

concepts with an analytical reach that extends to a number of forms of

organizational learning and, in Gavin Wright’s concluding chapter, to learning

as a “national network phenomenon” (p. 296). The volume, drawn from an

interdisciplinary conference of business and economic historians,

is premised on the notion that information – its acquisition and use –

“effectively determines whether firms, industry groups, and even nations will

succeed or fail” (p. 15). Thus the learning examined in these studies falls

within that broad compass.

The first two essays examine how firms learn of the technological frontier and,

as well, learn how to appropriate best-practice technologies for competitive

advantage. In “Inventors, Firms, and the Market for Technology in the late

Nineteenth and Early Twentieth Centuries,” Naomi R. Lamoreaux and Kenneth L.

Sokoloff utilize patent data to develop a quantitative picture of the market

for technology. That market, they conclude, was well developed and thus

allowed firms to keep track of technological advances via intermediaries in the

market (patent agents and solicitors) or by direct contact with inventors. By

the beginning of the twentieth century,

however, firms increasingly attempted to move inventive activity within the

firm and that in turn required further learning on the part of the firm,

e.g., in minimizing employee turnover and insuring that patents received by

employees were assigned to the firm. The following essay by Steven W.

Usselman examines exactly this form of learning by American railroads and

their “internalization of discovery” (p. 63). Railroad managers from early in

the nineteenth century saw technical innovation in their industry as stemming

largely from “the efforts of ordinary

mechanics and engineers, not through discrete acts of patentable invention” (p.

63). Since railroads saw firm-specific knowledge as critical to the innovation

process, they not only attempted to internalize inventions but also attempted

to buffer the impact of external technical developments by forming railroad

associations and patent pools that insured patents would be cross-licensed to

the member firms. In a detailed and perceptive comment on the Usselman paper,

Jeremy Atack notes that such “… collusion stilled the winds of ‘creative

destruction’ that jeopardized the value of existing investment” (p. 101).

Forms of collusion or, more neutrally, institutionalized forms of information

interchange, were not confined to railroads. Avoiding the cartel label and yet

still providing interfirm coordination on pricing represents another form of

organization learning. In “The Sugar Institute Learns to Organize Information

Exchange,” David Genesove and Wallace P.

Mullin study a “technologically stagnant industry” (p. 106), U.S. sugar

refining from 1928 to 1936, where the learning question shifts away from

production technology to organizational innovation in interfirm information

sharing. The Institute did learn to organize and collect data while insuring

members’ confidentiality, thus allowing for “increases in the correlation of

firm decisions” (p. 133) as price and sugar stock data became available to all

members of the Institute. Not incidentally, the availability of common

information also precluded secret

price concessions.

A Supreme Court decision ended this particular form of organizational learning.

Kazuhiro Mishina’s paper on “Learning by New Experiences: Revisiting the Flying

Fortress Learning Curve” is the only paper in the volume that approaches

learning in its familiar learning curve form and the only one to draw on

econometrics in its analysis. The magnitude of the productivity increase in

Boeing’s B17 production from 1941 to 1944 was huge: the direct labor hours per

airframe dropped from 142,83 7 to 15,316, falling to nearly a tenth of the time

required at the beginning of the production run. What accounted for a

productivity increase of that size? Mishina rejects “the learning-by-doing

hypothesis that holds direct workers or engineers as the learning agent” (p.

175). Instead he finds the answer in the reduction in through-put time and “the

operating know-how that enabled it” (p. 175). No direct econometric test of

that conclusion is possible and the absence of learning taking place by direct

labor and engineers appears improbable. Not surprisingly then, Ross Thomson,

in his comment raises the question of whether the learning involved might have

been a cumulative process in which output growth, productivity growth, and

prior learning interacted.

The next two essays are intensive examinations of organizational

decision-making/learning. David Hounshell focuses on one critical meeting of

the Ford Motor Company Executive Committee on December 2, 1949. This is the

“Whiz Kid” era at Ford and Hounshell sees the meeting as defining a turning

point in Ford’s strategic course since the meeting reversed Ford’s strategy of

a decentralization of production. Hounshell asks how such a reversal came

about, explores several hypotheses, but concludes he can do no more than

speculate on the mechanisms that might have accounted for the Executive

Committee’s about-face on strategy.

Daniel M.G. Raff and Peter Temin’s essay also examines strategy decisions

within a firm, in this case two marketing decisions made by

Sears, one in the 1920s and a second in the 1980s. At the earlier date,

retailing channels were expanded from mail order operations to own retail

stores; in the latter case, financial services were added to the product array

in its retail stores. Again, as with Ford, the question is how these decisions

were made and whether they relied on the firm’s learning of its corporate

strengths and accurate perceptions of its competitive advantages in evolving

markets. Differences in leadership capability in the two eras were, in Raff

and Temin’s view, the critical variable at work. Leadership in the 1920s

focused on an attractive market that could be tapped by

“exploiting [the] firm’s existing competitive strength” (p 246). The 1980s

leadership failed in both learning the market and in recognizing Sears’

competitive strengths.

Perhaps of most interest methodologically is Leslie Hannah’s test of whether

the “lump of corporate capability” (p. 257) presumably possessed by the giant

corporations of 1912 grew or declined by 1995. Survivability to the 1995 date

is the first test, but Hannah also poses a second: among the survivors, how did

a given firm’s growth in market equity capitalization compare with a

price-deflated market index? Using those tests, Hannah notes that

“disappearance or decline was nearly three times more likely among the giants

than growth” (p. 271). Observing that high incidence of corporate decline and

failure, he turns to a consideration of what types of

“corporate architectures” and strategies

allowed large firms to “retain their position, continue to add value, and

expand their capabilities” (p.

270).

In the final essay, Gavin Wright questions whether learning should be equated

solely with changes in total factor productivity. Rather, when looking at the

learning associated American economic growth in the nineteenth century, the

learning “was substantially a national network phenomena” (p. 296). As such,

“collective national learning may reside just as much in the discovery,

expansion, and accumulation of the factors of production as in their

productivity” (p. 296). To develop his point, he examines the U.S. mineral

industry, “one of the earliest and largest American technological networks,”

(p. 307) and the development of chemical engineering as it changed the way in

which chemical knowledge was acquired.

A collection of learning-by-doing studies as diverse as these serve to expand

definitions of the forms of learning. Can one measure the learning taking place

or generalize from the case studies, as Leslie Hannah and the editors attempt

to do? The answer would appear to be: with considerable difficulty. The problem

lies not only with the diverse definitions of learning employed, but also with

the difficulty of devising any empirical measures of the learning taking

place. Once one moves beyond the patent data of Lamoreaux and Sokoloff or the

production data of Mishina, measurement is elusive. One test would appear to

be success in the marketplace,

perhaps indicated by firm size and survivors hip – a measure that Hannah

attempts to make explicit. Market success may be an appropriate measure, if the

firm’s organizational capability, its use of patented technologies, or its

“ability to collect and use information effectively”

(p. 15) represent the major forms of learning occurring and can be linked to

market outcomes. However, as Bruce Kogut points out in his comment on Hannah’s

paper, there are more variables involved. “… a firm’s duration is contingent

on the evolution of its broader competitive and institutional landscape. This

broader landscape consists of firms, workers (sometimes organized in unions),

governments, political interests, research centers,

suppliers and buyers, idea merchants, and, of course, mechanisms of financial

intermediation and corporate governance” (p. 289). With that array of

variables at work, it may be that business and economic historians will not be

able to move significantly beyond case studies in examining these larger forms

of organizational and national learning. Or, as Leslie Hannah resignedly puts

it for the large corporation case: “To date, … we have made great strides in

storytelling, but a clearer, surer recipe for sustained success for large

corporations has remained elusive” (p. 270).

Henry A. Gemery is the author of “The Microeconomic Bases of Short-Run

Learning Curves: Destroyer Production in World War II,” (with Jan Hogendorn) in

Geoffrey Mills and Hugh Rockoff, editors, The Sinews of War:

Essays on the Economic History of World War II, Ames:

Iowa State University Press, 1993.

Published by EH.NET (February 2000)

Mark Blaug, editor, Who’s Who in Economics (Third Edition). Cheltenham,

UK and Northampton, MA: Edward Elgar, 1999. xx + 1237 pp. $350.00 (cloth),

ISBN: 1-85898-886-1.

Reviewed for EH.NET by Robert Whaples, Department of Economics, Wake Forest

University.

“I have learned a great deal about our profession from editing this book and I

cannot help feeling that even a casual reading of some of the pages will convey

a vivid sense of the amazing scope and spread of interests among practicing

economists” (p. vii), writes Mark Blaug in the preface to the third edition of

this valuable reference book. Taking up Blaug’s challenge, I sat down to

browse.

The volume includes short sketches on over 1000 living and 500 deceased

economists. The alphabetically listed entries contain data on date and place of

birth, current and past posts, degrees, offices and honors,

editorial positions, principal fields of interest, publications and principal

contributions. Most of the entries for the deceased economists were written by

Blaug and have been carried over from earlier editions. The

entries on living economists rely on information provided by entrants

themselves. Some entries cover about a page and a half. Most are shorter.

The principal decision made by the editor was who to include and who to leave

out. Following the procedure used in the second edition, Blaug has adopted a

thoroughly objective method for choosing the living economists in this volume.

Those included come from a list of the 1082 most frequently cited economists

publishing in about 200 economics journals over the years 1984 to 1996. After

all, “citations are the coinage of reward in academia”

(p. viii). This selection mechanism is a strength of the work, but also, as

Blaug acknowledges, potentially a weakness, since it overlooks those whose

contributions lie elsewhere.

Such an inviting book. Whose entry should be read first? Pondering this

question, I read the multiple prefaces and noted the appendices, which organize

the entries by principal field of interest, country of residence and country of

birth. Finally, I

decided that I would begin with Edwin Gay,

whom Arthur Cole once called “the first real American economic historian.”

Gay (1867-1946) was the first president of the Economic History Association and

a president of the American Economic Association. He was

known for his research on enclosures and was the dissertation advisor to a raft

of notable economic historians (including at least four who became presidents

of the EHA). Unfortunately, I was disappointed to learn that Who’s Who in

Economics has no entry for Edwin Gay. In fact, only three of the first

eighteen presidents of the EHA (Harold Innis, Herbert Heaton, and Alexander

Gerschenkron) have entries. Perhaps this entire generation of economic

historians fell through the cracks because they were not quite well enough

known to make the deceased economists’ list and not eligible for the

widely-cited living economists’ list either. Checking the other end of the

list-the more recent presidents of the EHA-I was disappointed again. Many of

the recent presidents of the EHA are missing as well. These include Richard

Sutch and Gavin Wright, whose papers and books appear so frequently on course

American Economic History course syllabi that they merited inclusion in

Historical Perspectives on the American Economy: Selected Readings

(1995, edited by Dianne Betts and myself).

One should not overstate the omissions, however. Who’s Who includes

biographies of about one-third of EHA’s presidents (including North,

Cameron, Landes, Fogel, Easterlin, Engerman, Davi d, Abramovitz, Morris,

Williamson, Temin, McCloskey, and Goldin). It also contains entries for

Adelman, Aldcroft, Bordo, Deane, Decanio, Feinstein, Finegan, Fishlow,

Ford, Furtado, Gallaway, Genovese, Habakkuk, Hannah, Harley, Heston,

Kindleberger, Lal, Langlois, Lazonick, Leff, Lindert, Maddison, Mayer,

Mayhew, Meyer, Mokyr, Officer, Pincus, Pomfret, Rosovsky, Rostow, Schwartz,

Sowell, Wrigley, and, I’m sure, a few others with substantial interests in

economic history whom I have overlooked. Four economic historians

(Calomiris, Chandler, Eichengreen, and Hatton) would have been included but

failed to reply to the editor. Moreover, the entries on the most widely-cited

economic historians are generally very informative, especially when the

entrant’s response extends to a page or more, as in the case of Richard

Easterlin, Jeffrey Williamson or Claudia Goldin.

Still, one should not understate the omissions either. There is clearly a need

for a reference work that performs the same function as Who’s Who in

Economics, but focuses on economic historians, especially those of past

generations, like Edwin Gay, who are in danger of being forgotten. Such a

resource would be considerably strengthened if it were searchable and available

online.

Thumbing through the

entries in Who’s Who in Economics does give a unique insight into the

concerns and findings of the world’s leading economists,

so I’ll close with some wise and/or provocative words, that may be of special

interest to economic historians. (I stumbled across these while browsing and

note that these comments are somewhat atypical in comparison to the fact-filled

entries submitted by most.)

Martin Bronfenbrenner (1914-94) who had considerable interests in economic

history (especially the development of Japan) and the history of economic

thought, wrote the following concerning his own “principal contributions.”

“My principal apology for the shallowness of my footprints on the sands of

time, professionally speaking, is that I never intended to become a

professional economist. Rather I am a perpetual student flitting between

fields,

sufficiently pessimistic about the real world to accept Academia as the best

available refuge therefrom, but regretting my failure to get started in

economic journalism. I maintain that there is no such thing as a pure

economist. Economics is adulterated on one side by the keeping up of facts,

statutes and court decisions, and on the other side by applied mathematicians

and computerologists ‘all dressed up with no place to go’. I

spent the first half of my forty academic years as a ‘what does it all mean?’

theorist among the factmongers and the second half as a historian among

computer-jockeys simulating ‘obfuscation functions” (pp. 161-62).

Michael Lovell, who teaches at Wesley an University, has published broadly

beginning with work on the role of the Bank of England as a lender of last

resort in the eighteenth century and moving to topics including the

methodological problems of pre-testing bias, seasonal adjustment and data

mining; the determinants of inventory investment; rational expectations;

teenage unemployment; the effects of an endogenous money supply on the business

cycle and forced saving; product differentiation; spending on public education,

the production of economic literature and the rate of depreciation of journal

articles; and the use of citations to predict the selection of Nobel Laureates

and rank journals, articles and departments.

He closes his entry by noting, “I believe that the range of topics reflects in

large measure the inquiring nature of the students whom I have been privileged

to teach but from whom I have learned more than I have taught.”

Robert Whaples is Associate Director of EH.NET and author of “A Quantitative

History of the Journal of Economic History and the Cliometric Revolution,”

Journal of Economic History, June, 1991.

Published by EH.NET (January 2000)

E. N. Brandt Growth Company: Dow Chemical’s First Century. East Lansing:

Michigan State University Press. xxii+ 650 pp. Appendices, Select bibliography

and index. ISBN 0-87013-426-4. $39.95

Reviewed for H-Business and EH.NET by John K. Smith, jks0@lehigh.edu,

Lehigh University

Dow’s Own Story

The author of this book is a journalist who joined Dow in 1953 and later served

as director of public relations. He has written a detailed insider’s account of

the Dow Chemical Company’s history focusing heavily on Dow people. This book

supercedes Don Whitehead’s The Dow Story: The History of the Dow Chemical

Company (New York: McGraw Hill, 1968) as the most authoritative source on

the company. Whitehead’s account ends in 1968 and includes no documentation.

Brandt’s narrative is based primarily on oral history interviews, an early

round of which were done in the early 1950s,

some internal Dow documents, and material from published sources. The

strengths of the new book are its comprehensiveness–it does also have a decent

index–and its author thoroughly understands the institution he chronicles. To

his credit he does not shy away

from embarrassments and controversies. He explores the adventures of Herbert

Dow’s eccentric son-in-law, who among other things was a Nazi sympathizer in

the 1930s and got Dow support for a quack doctor hawking a purported cure for

cancer.

Brandt also gives extensive coverage of the Dow napalm and agent orange

fiascoes during the Vietnam war. The shortcomings of the book are in its

overall organization and focus. Everybody and everything is treated equally.

Some sections read as press releases strung together. The overall evolution of

the company deserves more treatment. Considerable attention is devoted to the

lives of Dow’s employees but not much said on the company’s culture. This book

is a valuable resource for anyone interested in the history of Dow.

Brandt’s account is the most useful starting point for a more structured

history of the company.