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Historical Statistics of the United States: Millennial Edition

Author(s):Carter, Susan B.
Gartner, Scott Sigmund
Haines, Michael R.
Olmstead, Alan L.
Sutch, Richard
Wright, Gavin
Reviewer(s):Williamson, Samuel H.

Published by EH.NET (October 2006)

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Susan B. Carter, Scott Sigmund Gartner, Michael R. Haines, Alan L. Olmstead, Richard Sutch, and Gavin Wright, editors, Historical Statistics of the United States: Millennial Edition (Online Version). New York: Cambridge University Press, 2006.

(Note: The price of Historical Statistics is going up on November 1 — from $825 to $990 for the five-volume print version, and from $1,250 to $1,450 for the online version purchased by individuals. The online version for libraries is more expensive and the price depends on the library’s size.)

Reviewed for EH.NET by Samuel H. Williamson, Department of Economics, Miami University.

The publishing of Historical Statistic of the United States: Millennial Edition is a major event for American economic historians. It comes in five volumes and is also accessible online. The online package will be reviewed below, but first I want to comment on the entire project.

EH.Net has already published a review of each volume and all the reviews have been full of praise. Here is a list of the volume titles, each of which is linked to its review.

1. Population — http://eh.net/bookreviews/library/1092.shtml

2. Work and Welfare — http://eh.net/bookreviews/library/1101.shtml

3. Economic Structure and Performance — http://eh.net/bookreviews/library/1096.shtml

4. Economic Sectors — http://eh.net/bookreviews/library/1088.shtml

5. Governance and International Relations — http://eh.net/bookreviews/library/1064.shtml

The work, however, is more than the sum of its parts. This is the fourth version of Historical Statistics (HS) and it is greatly expanded from the previous editions. It is also the first edition not published by the U.S. Census Bureau.

The first HS came out in 1949 as an appendix to the Statistical Abstract of the United States. The second edition was published in 1960, followed by the Bicentennial Edition in 1975. The first three editions had 3,000, 8,000 and 12,500 series, respectively. The current edition has 37,339 series that include dozens of new topics and introductory essays explaining the sources and limitations of the data presented. One of the appendices (found in volume five), written by Carmel Chiswick, explains the origins of HS and is very useful for putting the current edition in perspective.

This work has been twelve years in the making. It started in 1993 when a group of interested organizations met with representatives from the Census Bureau who indicated that they could not commit to a new edition, but would support the venture if these groups did it. In the end, over 80 scholars with the support 70 plus organizations produced this Millennial Edition. While it was a huge project that depended on the contributions of many, in my opinion, two people should be especially singled out. They are Richard Sutch and Frank Smith. Sutch organized the original meeting with the Census Bureau and (with no disrespect meant for the considerable work of the other four editors) based on my observations, he has been the chief organizer ever since. If I understand correctly, Smith has been the economics editor from Cambridge Press in charge of this project over the past twelve years — the one who has had to bear up under missed deadlines and unanticipated expenses and yet who ultimately saw the project through to the valuable, polished finished product we are enjoying today.

The delays in the project will be readily evident to most readers. For example, a large number of series are from census data, but most of the edition’s data collection was done before the 2000 census data were available. Thus, most (but not all) of the decadal series end in 1990. Many of the annual series end in 1998 or 1999, though a few extend as far as 2002. There are, however, many, many series that end at other years. For example, the twenty-seven tables on employment and industry end in eight different years from 1940 to 2000.

This quibble aside, it is important to note that each table comes with source notes, documentation and definitions that are very helpful. However, while it is understandable the editors wanted to include so many useful series, this inclusiveness may overwhelm the average user.

My review of the online version has been delayed partially because this version has been a work in progress. When I first started, there were too many programming glitches for me to give the work a fair review. However, the editors at Cambridge Press have been very open in communicating with me and in working to fix these problems. Perhaps the biggest advantage of an online version would be the ability to copy tables and paste them into a spreadsheet. However, when I initially tried this, I found that negative numbers were not formatted to be able to paste. This problem has recently been fixed.

The online version has all the tables and essays that are in the print version and reports all data in an unrounded format. There is a good search engine that is helpful in finding things, which is particularly useful if the user does not have the print version available. In addition, the version allows users to create custom tables that can combine series from all the diverse series.

The most important tool is the graphing program. By creating a custom table, the user can compare any of the series over time or in a scatter diagram. For a user accessing this program online in a library, this will be an invaluable part of the package. The user can create graphs in color and print or download them. The online user can also send tables to any email address and the recipient has ten days to view it. While the program notes that “you can download [output] in PDF and/or Excel during this time,” this appears to be only true if the recipient has an account. On the other hand, the numbers in the tables can be copied from the browser.

My tests of the graphing tool were 1) creating a custom table and then using the graphing program; 2) creating a custom table, downloading it and then creating a graph in Excel; and 3) going to the various series, copying the numbers I wanted, pasting them into Excel and creating a graph. For me the third choice won, but I must add that I am an experienced Excel user and I could not have done this if I were not logged on to HS on a computer that also had Excel. Most researchers are going to want to use Excel or some other package to graph, as the program on HS has fewer graphing options.

The Government Printing Office still sells the 1975, Bicentennial Historical Statistics edition, which is 1,200 pages in two volumes, for $114.50. The Millennium edition of five volumes, with 4,500 pages is selling for $990 as of November 1, making it more than eight times as expensive. This price may mean that these volumes will seldom be found outside university and other research libraries. With the online version at $1,450, it will even be less likely to be commonly found. On the other hand, everything but the tables and essays are available free online, so that a user can search for a table or essay and then view it for printing or downloading for $6 each

I have no idea what percent of the 37,339 series are currently still being collected and could be updated. For those that have an unchanged definition and are from public sources, such as the Census, it should be quite easy. For others that are period specific or where a base year has been updated, or the bundle has changed — such as real GDP or the various price indexes — it would be difficult or just not practical since often these revisions are to all the observations.

The online version of Historical Statistics? is a great innovation, but it would be much more valuable if it was more than a reprint of the text version and contemporary tables were updated. I would expect that one full-time researcher could update dozens of them a day. Integrating them into the format of the tables should be possible.

My other suggestion to the editors is that they publish an HS “light” with a few hundred of the most popular tables and link it to the online version. If it could be priced for less than $100, then small libraries and others could buy it and would be directed to the online version to purchase the essays and other tables for the $6.

Samuel H. Williamson, cofounder and president of MeasuringWorth (www.measuringworth.com), is Professor of Economics, Emeritus, from Miami University. In 1983 he was a cofounder of the Cliometric Society and served as its executive director for sixteen years. In 1996 he founded EH.NET and was its executive director until 2003.

Copyright (c) 2006 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net; Telephone: 513-529-2229). Published by EH.Net (October 2006). All EH.Net reviews are archived at http://www.eh.net/BookReview.

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Subject(s):Economic Development, Growth, and Aggregate Productivity
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

Craft Guilds in the Early Modern Low Countries: Work, Power, and Representation

Author(s):Prak, Maarten
Lis, Catharina
Lucassen, Jan
Soly, Hugo
Reviewer(s):Richardson, Gary

Published by EH.NET (October 2006)

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Maarten Prak, Catharina Lis, Jan Lucassen and Hugo Soly, editors, Craft Guilds in the Early Modern Low Countries: Work, Power, and Representation. Aldershot, UK: Ashgate Publishing, 2006. xii + 269 pp. $100 (cloth), ISBN: 0-7546-5339-0.

Reviewed for EH.NET by Gary Richardson, Department of Economics, University of California, Irvine.

Craft Guilds in the Early Modern Low Countries is an edited collection that summarizes the conclusions of a group of scholars who have, during the last decade, revolutionized our understanding of craft guilds in the late-medieval and early-modern Netherlands. The volume is a seminal contribution to several literatures, a must-read for scholars interested in the economy of early modern Europe, and filled with insights likely to influence scholars interested in a wide range of nations, topics, and time periods.

The collection contains nine chapters. All of them contain valuable insights. In this brief review, I try, but cannot possibly, thoroughly describe them all. My goal is to briefly describe a handful of the most intriguing and important insights in each chapter, in hopes of encouraging readers of this review to read the book.

The first chapter is “Craft Guilds in Comparative Perspective: The Northern and Southern Netherlands, a Survey,” by Catharina Lis and Hugo Soly. This chapter discusses the traditional scholarship concerning guilds, describes issues of recent interest, defines the organizations to be examined, and outlines the broad conclusions of the group. The chapter points out that “few institutions have been so omnipresent as craft guilds in the lives of such a multitude of city dwellers in so many European countries” (p. 1). The chapter notes that craft guilds had many functions. Some of the most important were occupational, social, religious, political, and mutual-aid. The chapter asks why apparently similar institutions served so many different purposes and had such varying effects. The rest of the essay answers these questions.

Chapter 2 is “The Establishment and Distribution of Craft Guilds in the Low Countries: 1000-1800,” by Bert De Munck, Piet Lourens and Jan Lucassen. This chapter examines a database of several thousand guilds representing a large portion of the occupational organizations that existed in the Netherlands over the last one thousand years. The analysis yields a number of distinct patterns. To a large extent, the rise of guilds paralleled the rise of cities and procurement of civic charters. The prosperity of guilds and cities went hand in hand. The guilds played an important part in encouraging the expansion of commerce in cities such as Bruges, Ghent, Antwerp, and Amsterdam; but also played a role in their decline, probably by inhibiting innovation and protecting the interests of members at the expense of the public interest. Guilds developed first in the southern Netherlands. On the eve of the Dutch Revolt, the pattern in the North and South was similar. The guild system had matured in most sizeable towns and cities. After the Dutch revolt, developments diverged. The economic and demographic center shifted to the North, where the economy continued to flourish and guilds continued to grow. The political success of the Reformation in the northern Netherlands caused a reorientation of guilds away from religious and towards social functions, such as care for the poor. An appendix to the chapter describes the data, which will probably form the basis for the quantitative study of Dutch guilds into the foreseeable future.

Chapter 3 is “Corporate Politics in the Low Countries: Guilds as Institutions, 14th to 18th Centuries,” by Maarten Prak. The chapter begins with the observation that “the origins and evolution of craft guilds were influenced as much by political developments as economic ones.” The evidence and analysis laid out in the chapter substantiates that statement. The first section discusses the revolutionary activities of guilds in the fourteenth and fifteenth centuries, beginning with the Battle of the Spurs, on 11 July 1302, when an army of Flemish artisans defeated a force of French aristocratic infantry. During the next two centuries, towns throughout the Low Countries provided artisans in their municipal constitution, a revolutionary act that linked guilds and local politics and the defense of urban social and political orders. Guilds’ involvement in urban politics had in important and symbiotic influence on the evolution of guilds and governments for the next several centuries. Patterns diverged between the south, east, and west. Much can be learned from studying this divergence.

Chapter 4 is “Export Industries, Craft Guilds and Capitalist Trajectories, 13th to 18th Centuries,” by Catharina Lis and Hugo Soly. The chapter examines the trajectories of industries during the late medieval and early modern eras. The chapter concludes that guilds did not intrinsically promote or impede the rise of export industries. The success or failure of industries depended upon which groups wielded economic and political control. The involvement of groups with divergent and conflicting interests in the production of export goods explains the transformations that guilds underwent over time. The organizational structure of export industries followed different courses in the North and the South. Institutional developments in Flanders and Brabant paved the way for the rise of industrial export capitalism from the fourteenth century onward, while seventeenth-century Holland reached the most advanced stage of merchant capitalism.

Chapter 5 is “Dressed to Work: A Gendered Comparison of the Tailoring Trades in the Northern and Southern Netherlands, 16th to 18th Centuries,” by Harald Deceulaer and Bibi Panhuysen. This chapter compares Northern and Southern industries during the seventeenth and eighteenth centuries, examining the relationship between women and guilds, and the extent to and ways in which women were excluded from the organizations. The comparison shows that economic challenges to the same sector in different regions could elicit entirely different institutional responses, which in turn could affect the way the market operated. In the northern Netherlands, which possessed more women and fewer men as a percentage of the population, female seamstresses grew in prominence in garment production during the eighteenth century, while in the southern Netherlands, craft guilds and the garment industry remained more exclusively male.

Chapter 6 is “Religion and Social Structure: Religious Rituals in Pre-industrial Trade Associations in the Low Countries,” by Alfons K. L. Thijs. This chapter shows that from the later Middle Ages onward, craft guilds engaged in religious activities as well as social and economic functions. Free associations of fellow tradesmen even propagated religious worship as their chief mission. Craft guilds and religious brotherhoods often existed alongside one another and were in some cases affiliated. Many craft guilds arose from brotherhoods during the early modern period. After the Reformation in the northern Netherlands, collective requiems to commemorate dead guild members ceased. The decline occurred even in the southern Netherlands, despite the eventual military and political victory of Catholicism there, because the Counter Reformation infringed upon the guild system’s religious, popular, and devotional traditions.

Chapter 7 is “A Tradition of Giving and Receiving: Mutual Aid within the Guild System,” by Sandra Bos. The chapter begins with the observation that “mutual aid for and by the members has figured among the guilds’ responsibilities from the outset” (p. 174) and that guilds struggled to overcome “the problems inherent in insuring small populations” (p. 174). The chapter goes on to explore the variety of mutual insurance systems in early modern guild associations and inquires into the role of religion, municipal administration and economic prosperity in the emergence of these systems. Before the Reformation, mutual aid was often a religious arrangement. After the Reformation, mutual aid continued to be provided, even in the Northern Netherlands, where guilds abandoned their religious roles. The mutual aid consisted of aid to craftsmen who were unable to support themselves due to illness, disability, or infirmity in old age; assistance to widows and surviving children; and funding for funerals and burials of the deceased.

Chapter 8 is “Corporative Capital and Social Representation in the Southern and Northern Netherlands, 1500-1800,” by Johan Dambruyne. This chapter investigates the sources and influence of corporate capital created and accumulated by guilds in the early modern Netherlands. Three kinds of capital are examined. The first is economic capital, or in other words, the material form of accumulated labor. The second is social capital, defined as the benefits arising from a self-sustaining network of relationships. The third is cultural capital, principally being education, science, art, and ideas. The chapter concludes that early modern guilds clearly invested in capital of all three types, but heterogeneity existed in strategies for accumulating and employing capital. Differences existed across industries, time, and towns. Differences also existed between the northern Netherlands, where guilds invested more in economic capital, and the southern Netherlands, where guilds invested more in social capital.

The last chapter, by Jan Lucassen and Maarten Prak, concludes that craft guilds in the Low Countries contributed to the economic, political, social, and religious fabric of the region. Craft guilds fostered medieval and early modern economic development. Craft guilds varied greatly in the tasks that they undertook, structures that they adopted, and ways in which they interacted with the political and cultural systems in which they were embedded. The importance of the local context cannot be overstated, yet a general conclusion can be drawn. “Guilds in the Low Countries played a highly significant role, not only in the lives of their own members, but also in shaping the societies they were part of.”

Now, it is time for my general conclusions. I believe this volume summarizes a wide range of insights into the economy, polity, and society of the late-medieval and early-modern Netherlands. It should be read by scholars interested in that period and scholars interested in the general relationship between institutions and economic development.

Gary Richardson is the author of “Guilds, Laws, and Markets for Manufactured Merchandise in Late-Medieval England,” Explorations in Economic History (2004) and “The Prudent Village: Risk Pooling Institutions in Medieval English Agriculture,” Journal of Economic History (2005).

Subject(s):Social and Cultural History, including Race, Ethnicity and Gender
Geographic Area(s):Europe
Time Period(s):Medieval

Nations, Markets, and War: Modern History and the American Civil War

Author(s):Onuf, Nicholas
Onuf, Peter
Reviewer(s):Flaherty, Jane

Published by EH.NET (October 2006)

Nicholas Onuf and Peter Onuf, Nations, Markets, and War: Modern History and the American Civil War. Charlottesville, VA: University of Virginia Press, 2006. xii + 362 pp. $45 (hardcover), ISBN: 0-8139-2502-9.

Reviewed for EH.NET by Jane Flaherty, Department of History, Texas A&M University.

The brothers Onuf move the American Civil War from a national struggle to the “larger context of conceptual change” in the Western development of liberalism and nations. Modernity, and the modern concept of nations and markets, led to the conflagration, according to the authors. “The outbreak of war between great and expansive nations is a much more predictable outcome in the modern history of the ‘civilized West,'” they suggest (pp. 179-180). Thus the American Civil War represents not just a “war between the states” but the culmination of this trajectory. “Our contention,” they declare, “is that these developments were not only historically contingent but that they could only have taken place at a specific moment in the rise of a liberal world of national markets and international exchange, of an international society of bellicose yet civilized nations” (p. 177). Far more than a study of Civil War causation, this book reflects deeply upon the forces that shaped this “modern history.” This masterful book moves the American Civil War from a national tragedy to part of the broader development of western, liberal nations, and the markets that served, and were serviced, by these nations.

Nicholas Onuf, Professor Emeritus of International Relations at Florida International University, and Peter Onuf, the Thomas Jefferson Memorial Foundation Professor of History at the University of Virginia, are two of the most respected scholars in their respective fields. This book represents their second collaboration, “as equals in ignorance,” focusing on the impact of the American republic on the “liberal world order in the nineteenth century” (p. ix). They unleash a tremendous wealth of knowledge in this study, and students of both American history and European economic thought and intellectual history will find much to digest on each page.

They have divided the manuscript into two parts. Part I traces the development of “Liberal Societies” (Chapter 2) and “Civilized Nations” (Chapter 3). “Europeans told themselves that engaging in commerce and war had made their nations more advanced — more civilized,” the Onufs argue (p. 95). Yet, this concept of what constituted a civilized nation exacerbated the sectional tension in the United States. “Two nations [within the U.S.] developed because of slavery. One defined itself as civilized because slavery gave it a prosperous economy, a genteel ruling elite, and a secure place in the liberal world. The other defined itself as civilized because commercial and industrial prowess secured its place in that same world” (p. 81). For this reason, they digressed into war, “the one to save the union and the other to save itself” (p. 108). In Chapter 4 they link this development to Adam Smith and other European enlightenment thinkers’ concept of “Moral Persons.” Finally, in Chapter 5, they show how northern and southern Americans expanded this concept into the intellectual framework of “think[ing] themselves a people” (p. 145).

Peter Onuf’s very visible hand is seen in Part II, which traces how “nationalist thinking” and the “consciousness” about “nationhood” pushed the United States to secession then war (p. 181). Chapters 6 and 7 examine how Adam Smith’s ideas of trade and markets influenced American political economy, most notably Thomas Jefferson and the National Republicans’ “oscillation between his republican optimism … and geopolitical realism” regarding trade and national economic development. “Could Americans trade freely with Europeans without compromising their independence?” the Onufs ask. “This simple question divided Americans along sectoral and sectional lines in the antebellum years and ultimately eroded the foundations of their union,” they suggest (p. 224-25). Chapter 8 chronicles the debates that followed over protection and free trade, with the authors noting the symbiotic relationship between protection and warfare. “Protectionists would prepare for war in order to secure true national independence and a more durable peace,” (259) whereas “free traders inverted protectionist logic at every point,” arguing that “protectionism was the second coming of mercantilism” (p. 272). In Chapters 9 and 10, the authors chart the development of the national identities of the North and South. “On the eve of Civil War, Americans no longer shared the founders’ fears of descending into a Hobbesian war of all against all,” the authors posit (p. 312). For Northerners, “preservation of the union meant war and success in war required the development of the modern, protective, war-making state protectionists had long advocated” (p. 303). Southerners “relocated the national ideal,” in part by moving towards commercial expansion in the late antebellum, and less surprisingly, by allowing “slavery to define the emergent southern nation” (p. 337). Thus, the brothers conclude, the “first fully modern war was the Civil War fought within the boundaries of the United States” (p. 345) yet with roots that stretched deeply into western concepts of nations, markets and war.

This book has some flaws. Primarily, it reads like a collection of essays rather than one narrative. The authors describe the book as “an essay in modern history” (p. 21). However, the overall package seems disjointed in places. Second, their thesis would need further buttressing if brought back into the broader discussion of nineteenth-century European history. For example, could not the Crimean War, which preceded the American Civil War and pitted national commercial interests of Britain and France against those of Russia, also fit the authors’ rubric of nations, markets, and wars? Finally, how could a book so rich in intellectual resources be published without a bibliography? Graduate students in particular will sorely miss not having a list of the rich bibliographic resources the authors use throughout.

What does this book offer the economic historian? First, it provides a thorough analysis of the development of transnational economic thought in the eighteenth century, and how this influenced antebellum American political economy. Their vigorous discussion of protectionism and free trade beliefs will challenge future writings on American tariff policy. Finally, they provide an economic context to the American Civil War that goes far beyond the Beardian determinism.

Jane Flaherty is the Assistant Director of Graduate Studies in the Department of History at Texas A&M University. Her book, The Revenue Imperative: Union Financial Policy during the American Civil War, will be published by Pickering and Chatto in 2008.

Subject(s):Military and War
Geographic Area(s):North America
Time Period(s):19th Century

Mobsters, Unions, and Feds: The Mafia and the American Labor Movement

Author(s):Jacobs, James B.
Reviewer(s):Dubofsky, Melvyn

Published by EH.NET (October 2006)

James B. Jacobs, Mobsters, Unions, and Feds: The Mafia and the American Labor Movement. New York: New York University Press, 2006. xxxii + 320 pp. $33 (cloth), ISBN: 0-8147-4273-0.

Reviewed for EH.NET by Melvyn Dubofsky, Department of History, Binghamton University.

A quotation from the labor leader David Dubinsky that opens this book summarizes the author’s purpose: “Racketeering is the cancer that almost destroyed the American trade-union movement.” James Jacobs, the Warren E. Burger Professor of Law and Director, Center for Research in Crime and Justice, NYU School of Law, amasses the evidence to prove Dubinsky’s claim. Jacobs asserts that the “Mafia,” or as he prefers to label it, La Cosa Nostra (LCN), turned its penetration of trade unionism into its most profitable criminal activity and the accumulation of political power. In Jacobs’ words, “the Mafia’s unique political and economic position in American society derives from its base in the labor movement” (p. xii). The LCN’s penetration of unionism explains organized labor’s dwindling power (p. xiii). Indeed, in a twist on conventional explanations of “American exceptionalism,” Jacobs cites the criminalization of trade unionism as the most singular feature of the United States.

Jacobs makes his case for the links between LCN and trade unionism not in the manner of an historian or a social scientist, but in the style of an attorney preparing a brief for the prosecution. He vacuums up every available scrap and shred of evidence to establish historical and contemporary connections between crime and unionism, seldom pausing to subject the evidence swept up with his vacuum to careful analysis or doubt. In building his case for historical connections between criminals and unions, Jacobs draws upon any publication that buttresses his point, whether or not the source is reliable, scholarly, or verifiable. For the contemporary connections between crime and unionism, he relies on his own investigative work for a state commission in New York that probed organized crime’s penetration of unions, research and publications that he compiled with the assistance of other attorneys and legal scholars, and the findings of a presidential commission on organized crime (PCOC). Jacobs appears incredulous about what he has done and what he continues to do, observing in a footnote, “… studying racketeering in the labor movement is no more antilabor than studying family violence is antifamily” (p. xiv). True enough in the abstract, but, as a book that he praises as one of the few good studies of crime within the labor movement, David Witwer’s history of corruption and reform in the Teamsters’ Union, clarifies, the enemies of trade unionism exaggerated trade union corruption and criminal penetration of unions not to clean them up, but to eliminate trade unions. Had Jacobs read more carefully the congressional debates surrounding the passage of the original National Labor Relations (Wagner) Act, the enactment of the Taft-Hartley amendments to it, and the Landrum-Griffen Act, he would have seen how the opponents of trade unionism used language and allusion to associate labor leaders with crime and corruption and to build their case that union power must be curtailed.

Nevertheless, there is simply no doubt that some unions and their officials cooperated with organized crime, that criminals gained control of many union locals and few international unions, and that criminals and corrupt union officials enriched themselves at the expense of rank-and-file unionists, exploited businesspeople (Jacobs, however, fails to point out that the corrupt union and the affected business were often part of the same criminal operation), and mulcted the public. A recent book by Robert Fitch, Solidarity for Sale: How Corruption Destroyed the Labor Movement and Undermined America’s Promise (New York, 2006), lays out a similar case with more sophistication. Anyone interested in the illicit activities that soiled such unions as the International Brotherhood of Teamsters (IBT), the Laborers’ International Union of North America (LIUNA), the International Longshoremen’s Association (ILA), and the Hotel Employees and Restaurant Employees Union (HERE), as well as many locals in the building trades, will find all the evidence they desire in the pages of this book or Fitch’s.

Yet because of exaggerations and errors that he commits, Jacobs’ disingenuous claim that his exposure of union links to organized crime is pro-labor just as abolitionists’ exposure of the horrors of chattel slavery was anti-slavery (p. 254), rings false. Let me simply cite a few of his exaggerations and errors. On p. 17, he writes, “organized crime had never before murdered a national figure of Hoffa’s stature (unless, as some people believe, it assassinated President John F. Kennedy).” Or on p. 24, “ultimately, it was labor racketeering that made Cosa Nostra part of the sociopolitical power structure of twentieth-century America.” Or that to establish the extent of criminal penetration of the labor movement “it is not necessary to pinpoint the percentages of unions or unions who … have been dominated, controlled, or affected by Cosa Nostra labor racketeers” (p. 41). Or that IBT presidents Hoffa and Williams “were indisputably direct instruments of organized crime” (p. 43). Or that corporations are more easily monitored and regulated than trade unions (p. 255). Or that socialists and communists would have more been more influential in the labor movement and that unions would have become a dominant influence in a left-wing Democratic Party in the absence of corruption and crime (p. 260). Here are several errors of fact: “Jimmy Hoffa became the undisputed leader of the Teamsters in Minnesota …” (p. 11). “Sidney Hillman … called upon Buchalter [Murder Incorporated’s most infamous hired killer] to suppress competing unions and recalcitrant employers …” (p. 25). Characterizing the Central Federated Union of New York as an AFL competitor when it was, in fact, the AFL-chartered city central (p. 78). Stating that five unions broke away from the AFL in 1938 to establish the CIO, when the initial split occurred in 1935, and one of the five unions cited, the International Typographical Union never left that AFL, and another, the International Ladies’ Garment Workers, departed CIO in 1938 (p. 81). Jacobs refers incorrectly to Walter Reuther as John L. Lewis’s successor as president of CIO (p. 81). A reviewer must caution: reader beware!

Finally, one must observe that Jacobs’ solution to the criminal penetration of unions, the aggressive use of the Racketeer and Corrupt Organizations Act of 1970 (RICO) to place international and local unions under federal trusteeships by Department of Justice-appointed trustees, can only work if it is implemented in the manner suggested by the legal scholar Clyde Summers in a quotation on p. 238: “Only by making clear to union members that corruption and not organized labor is the target of the RICO litigation can the government and the courts avoid exacerbating the very problem they seek to correct.” Jacobs does not always make that distinction clear.

Melvyn Dubofsky, Distinguished Professor of History and Sociology Emeritus, Binghamton University, SUNY, is co-editor of American Labor: A Documentary Collection (Palgrave Macmillan, New York, 2004).

Subject(s):Social and Cultural History, including Race, Ethnicity and Gender
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

Chicago’s Progressive Alliance: Labor and the Bid for Public Streetcars

Author(s):Leidenberger, Georg
Reviewer(s):Clair, David J. St.

Published by EH.NET (October 2006)

Georg Leidenberger, Chicago’s Progressive Alliance: Labor and the Bid for Public Streetcars. DeKalb, IL: Northern Illinois University Press, 2006. vii + 202 pp. $35 (cloth), ISBN: 0-87580-356-3.

Reviewed for EH.NET by David J. St. Clair, Department of Economics, California State University, East Bay.

Georg Leidenberger seeks to redefine the role of Chicago labor unions in the city’s Progressive Movement at the turn of the twentieth century. Union membership in Chicago surged from one hundred thousand in 1900 to three hundred thousand in 1903. Membership growth coincided with unprecedented labor solidarity and public support. In addition, labor expanded its agenda beyond narrow work-related issues to include broader social issues of city corruption and municipal reform. Labor created alliances and coalitions with middle class reform groups and became a driving force in the reform movement.

Leidenberger credits two new Chicago service unions with labor’s success: the teamsters and the public school teachers union. The rapid growth of membership and inter-trade labor solidarity was largely the work of the teamsters and their ability to use sympathy strikes to promote the unionization of less powerful workers. On the other hand, the teachers union and the Chicago Federation of Labor were instrumental in expanding labor’s agenda and hegemony and in breaking down the barriers to building coalitions with other progressive interests.

Leidenberger admits to feeling “nostalgia” for the day when labor unions assumed center stage in municipal reform politics and he seeks to understand the reasons for this earlier success (p. 4). While his nostalgia extends to sympathy for the sympathy strike (yes, the pun is intended), one need not be similarly disposed to benefit from this book. Whether you rejoice or recoil at the sympathy strike, Leidenberger draws on archival data to effectively document labor’s use of the tactic to expand its power and influence.

Leidenberger’s primary focus is on labor and its role in politics. Transit is essentially a case study for these issues. Transit historians will not find any discussion of the history or economics of transit per se. This may limit the book, but it does not diminish its importance. Scholars have often gazed into the transit mirror and seen different reflections: transit as city builder, transit as city unifier, transit as competing technology, transit as a business, transit as a regulated franchise monopoly, transit as a corruptor of urban politics, and transit as a civic political issue.

Leidenberger deals with the political dimension of transit and he correctly highlights the crucial issue: franchise monopoly. Indeed, it is virtually impossible to understand the economic history of transit at this time, or in subsequent periods, without an appreciation of this issue. Leidenberger also explores Chicago’s campaign to resolve the abuses of the franchise monopoly system through municipal ownership.

Leidenberger’s story is ultimately a tale of coalitions forged, then lost. Of labor solidarity and influence gained, then lost. Of strikes won, then lost. He seeks to explain both the successes and the failures.

An Introductory chapter describes the rapid increase in union membership in Chicago in the early twentieth century. Along with San Francisco, Chicago became the most unionized city in the country with more than fifty percent of its labor force in a union. The Introduction also lays out the Leidenberger’s major themes, his views on “public spaces,” and his view of streetcars as important public spaces.

Chapter One chronicles the defeat of Chicago’s Building Trade Council (an organization of the city’s traditional building trade unions) at the hands of the Building Contractors Council in the Great Lockout of 1900. Defeat resulted in the elimination of the sympathy strike by the city’s building trade unions. However, Chicago’s labor movement was soon transformed by the creation and ascendance of two new service unions; the teamsters and the teachers union. The teamsters were organized in 1901 and came to prominence in a 1902 city-wide teamster strike in sympathy with union recognition for meat packing workers. Being a service union at the core of the city’s distribution network, the teamsters were particularly well positioned to wield the sympathy strike weapon and they aggressively employed it to promote the unionization of less powerful workers in unrelated trades. Success in the 1902 strike brought the teamsters to the vanguard of labor organizing and was primarily responsible for the surge in union membership and inter-trade labor solidarity in the city.

Chicago public school teachers also formed a union in 1901. This service union was nominally white collar, overwhelmingly female, and particularly well positioned to articulate labor’s views to middle class reform interests. The teachers union and the Chicago Federation of Labor (CFL) promoted labor solidarity and were able to articulate a labor agenda that transcended narrow job-related issues. Labor’s expanded agenda included issues of city reform and the teachers union and the CFL aggressively reached out to establish coalitions with middle class reform groups to secure a prominent place in the broader progressive movement.

Chapters Two and Three discuss the role of streetcars in city politics and reform. Leidenberger characterizes public transit as the “central political question in turn-of-the-century Chicago” (p. 44). Streetcar companies figured so prominently in city politics and reform movements because they were widely perceived as abusive monopolies responsible for unsafe transit, corruption, tax evasion and abusive labor practices. At the core of the problem was the monopoly franchise system that granted private owners a monopoly over a vital urban utility. Rent seeking and corruption became the norm in Chicago and across the nation. Chapter Three chronicles the efforts of teachers to promote municipal ownership of streetcars as the solution to the transit problem and municipal reform. These efforts were bolstered by a strike by transit workers in 1904. The successful strike garnered broad public support and thrust labor to the fore in the campaign to have the city buy out the transit companies. Labor thus achieved the status of a full participant in a vital city reform issue.

Chapter Four describes the ill-fated teamster strike of 1905. The strike began in April with the teamsters striking the Montgomery Ward department store in sympathy with Montgomery Ward garment workers. However, an aggressive response from the newly-formed Chicago Employers Association escalated the conflict into a city-wide affair. Leidenberger attributes the strike and especially the escalation to an aggressive attempt by employers to crush union power. To this end, Leidenberger asserts that Chicago’s 62-mile network of underground tunnels was developed to break the teamsters’ hold on the city’s streets. Historians have usually viewed the tunnels, begun shortly before the 1905 strike, as an innovative solution to moving goods in and out of the congested central business district. Leidenberger’s assertion is a provocative departure from this view.

Strike violence, police intervention, and contentious accusations polarized public opinion and broke the union’s support from middle class progressives. The motives of teamster leaders were challenged by accusations of rampant corruption, charges that Leidenberger claims were responsible for discrediting the teamsters “for generations to come” (p. 110). In the end, the teamsters lost the strike and were forced to abandon the sympathy strike.

Chapter Five describes the failure of the municipal ownership campaign. With support for labor shattered by the violence of the teamsters strike and a daunting list of hurdles to municipal ownership posed by the courts, vacillating politicians, and “functionalist” views of regulation, the municipal-ownership candidate lost the race for mayor in 1907. In addition, the referendum on municipal ownership on the 1907 ballot was also defeated.

Chapter Six and a Conclusion trace the legacy of labor’s failed foray into progressive politics in Chicago. Leidenberger argues that with labor’s political defeat and the defeat of a unified plan for the city’s transit needs, Chicago became a politically and physically fragmented city. Fragmentation ultimately paved the way for the rise of the political machine and the automobile (initially, the only non-political transit mode).

For all of its strengths, the book is not without weaknesses:

1. Nostalgia aside, Leidenberger’s advocacy sometimes clouds his objectivity. He invariably portrays labor’s position and struggles as progressive and democratic while the actions and positions of employers and labor’s opponents are always driven by baser motives. Likewise, Leidenberger seems to see “democracy” as a favorable (to him) outcome rather than a process. One is left wondering why the defeat of municipal ownership at the polls is not a democratic outcome.

2. Some important assertions are either not adequately supported or not developed. For example, anyone familiar with Teamster Presidents Beck and Hoffa will find Leidenberger’s claim that the union’s reputation for corruption stemmed solely or even primarily from the 1905 strike less than convincing. Likewise, Leidenberger fails to develop or support his assertion that Chicago’s 62-mile network of underground tunnels was developed in order to break the teamsters’ hold on the city’s streets. While Leidenberger cites contemporary statements that make it clear that some envisioned the tunnels for this purpose, he does not delve into the claims or consider alternative motives. Nor does he show how the tunnels were used to break the 1905 strike or subsequent labor disputes. Unfortunately, his assertion remains a provocative, but unproven, claim.

3. A related problem arises in his analysis of the municipal ownership issue. While Leidenberger ties labor’s interests in transit politics exclusively to municipal ownership, he does not explain why anything short of city ownership was so unsatisfactory to labor. Did labor have no interest at all in any type of streetcar regulation short of municipal ownership? Why was municipal ownership such an all-or-nothing position for labor?

4. The reader will be left wondering what happened to the teachers union. After figuring so prominently in the initial discussion of labor’s new role in progressive politics, the teachers union seems to just fade away. Leidenberger describes the demise of teamster power in the violence of the 1905 strike, but his treatment of the teachers union is anti-climactic at best. A half-paragraph on p. 146 tersely relates the hostility of the political machine to the teachers union and the outlawing of teachers unions in 1915-17.

These shortcomings aside, Leidenberger provides an interesting, provocative, and readable analysis of labor’s role in the Progressive Movement. The strength of his work is in documenting labor’s active participation in reform issues that went beyond job-related concerns. Histories of the progressive era have often treated labor as an issue; Leidenberger effectively adds labor to the cast of players in urban reform and his book deserves the attention of anyone interested in understanding the Progressive Era.

Georg Leidenberger is Professor of History at Universidad Autonoma Metropolitana in Mexico City, Mexico.

David J. St. Clair is Professor of Economics at California State University, East Bay. He is the author of The Motorization of American Cities and is currently doing research in the history of transit in Los Angeles and nineteenth-century California economic history.

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

Dictating Development: How Europe Shaped the Global Periphery

Author(s):Krieckhaus, Jonathan
Reviewer(s):Boko, Sylvain H.

Published by EH.NET (October 2006)

Jonathan Krieckhaus, Dictating Development: How Europe Shaped the Global Periphery. Pittsburgh: University of Pittsburgh Press, 2006. x + 251 pp. $28 (paperback), ISBN: 0-8229-5914-3.

Reviewed for EH.NET by Sylvain H. Boko, Department of Economics, Wake Forest University.

This book’s stated objective is to provide an answer to the “fundamental” question: “why do some countries achieve substantial and sustained economic growth while others do not?” According to Jonathan Krieckhaus, the conventional-wisdom answer includes the prescription that countries should adopt “market-friendly economic policies … [and] invest in education and health.” However, the book attempts to distinguish itself by adopting an approach focusing on how international events affect domestic economic growth. This approach is not in and of itself new. However, the book’s central thesis is that the key determinants of growth in developing countries are heavily influenced by their colonial legacy. Krieckhaus contends that Europe played a determinant role in shaping the institutions in its former colonies. Further, he argues that the structure and outcome of growth in former colonies have been dictated externally, for example, through wars, foreign aid, and the vagaries of international markets.

In a manner reminiscent of the Dependency Theory, Krieckhaus claims that “by far, the most effective route to economic success over the last forty years” is avoidance of European colonialism. The author gives the examples of Japan, Thailand, China, South Korea, and Taiwan, as cases of countries that have shown rapid growth since 1960, while managing to avoid European colonization. Krieckhaus states further that among the countries that were colonized by Europe, those that became colonies after 1885 suffered worse because, after that date, colonialism became more exploitative. Indeed, many readers might be shocked by the book’s conclusion that Europeans “did not attempt to build state capacity or invest in human capital; rather, they imposed states that inhibited property rights.” The suggestion is that European colonization worsened the initial conditions of underdeveloped countries, thereby largely negating their chances at rapid economic growth.

Krieckhaus conducts a three-level analysis showing that countries with high levels of European settlement, such as United States, Canada, and Australia, have also traditionally experienced high levels of growth. This is because when they settle in a territory, Europeans, who have “mastered the art of sustained increase in per capita GDP,” tend to establish a capitalist system based on respect for property rights, a liberal state, and investment in human capacity. Countries partially settled by Europeans, such as South Africa, Brazil, and Algeria, show a better growth performance than countries that were extractive colonies, although the benefits tend to be confined an elite minority. Finally, the worst performing countries tend to be those in Africa and Asia, where Europeans’ interests were to “conquer, plunder, and proselytize.”

To illustrate his points, the author focuses on three case studies: Mozambique, where the Portuguese excluded the Africans from acquiring skills conducive to modernization; South Korea, which had its 1,300-year history as a unified state to draw upon as it experienced modernization under Japanese colonial rule; and Brazil. Brazil’s particularity is that it was partially settled by Europeans, the result of which is the establishment of a dynamic capitalistic economy that encompasses a portion of the society, but which has been influenced by various international shocks all the same.

The author proposes a “reconceptualization” of the growth literature to account for the fact the “international system dictated” the pattern of development throughout the world through major shocks such as wars, market shocks and foreign aid. For example, empirical results in Table 4.8 augment the standard growth model by analyzing the effect of war and aggression on economic growth. The results are mixed, depending on whether wars are defined as “economically relevant” or are of external or internal sources.

Overall, the book tackles the very important, but complex, issue of the impact of European colonization on the development outcomes of countries today. I come away from reading the book with more questions than answers, however. It is not clear to me if the author is suggesting a neo-dependency theoretical approach to growth analysis or if this is just an augmented form of the standard growth theory approach. The use of the standard (and over-utilized) econometric growth model to illustrate the suggestion of a different paradigmatic understanding of the various patterns of growth around the world presents an analytical challenge not resolved in the book. The author’s call for a “holistic empiricism,” which involves the consideration of country-level specificity and history in growth analysis also presents methodological challenges for empirical work. In addition, it is not clear whether the insights obtained from this historical approach to understanding growth and development present any policy choices for policymakers in the countries involved. For example, should periphery countries sever their ties with Europe and the rest of the “international system” in order to optimize their chances of growth? And, despite the havoc wrought on countries’ resource bases by Europe’s brutal resource-extractive colonial policies, why have vast numbers of populations in Africa continued to wallow in poverty forty years after independence? Does European colonization sufficiently explain the types of growth-suffocating policies being implemented by countries around the world or the endemic corruption present in some countries?

These shortcomings notwithstanding, the book’s attempt to deconstruct suggestions that colonization was a “civilizing” enterprise for Europe is to be applauded.

Sylvain Boko is the author of Decentralization and Reform in Africa (Kluwer, 2002).

Subject(s):Economywide Country Studies and Comparative History
Geographic Area(s):Latin America, incl. Mexico and the Caribbean
Time Period(s):20th Century: WWII and post-WWII

The “Vanity of the Philosopher”: From Equality to Hierarchy in Post-Classical Economics

Author(s):Peart, Sandra J.
Levy, David M.
Reviewer(s):Hammond, J. Daniel

Published by EH.NET (October 2006)

Sandra J. Peart and David M. Levy, The “Vanity of the Philosopher”: From Equality to Hierarchy in Post-Classical Economics. Ann Arbor: University of Michigan Press, 2005. xviii + 323 pp. $40 (cloth), ISBN: 0-472-11496-4.

Reviewed for EH.NET by J. Daniel Hammond, Department of Economics, Wake Forest University.

Peart and Levy’s book takes the reader well off the beaten track of histories of classical and neoclassical economics. In place of laws of production and distribution, the marginal revolution, and other standard topics for historians of economics, Peart and Levy take us on a historical tour of the struggle over one of the most basic premises of social analysis, what sort of creature it is that economists study. In the beginning was Adam Smith, who believed that:

The difference of natural talents in different men is, in reality, much less than we are aware of; and the very different genius which appears to distinguish men of different professions, when grown up to maturity, is not upon many occasions so much the cause, as the effect of the division of labour. The difference between the most dissimilar characters, between a philosopher and a common street porter, for example, seems to arise not so much from nature, as from habit, custom, and education (Wealth of Nations, I.2.?4).

Smith’s belief that humans are born with capacities more equal than unequal led him to build his analysis on the premise of human equality in the capacity for making decisions (analytical egalitarianism) and to look for the causes of observed differences across people and populations in the effects of institutions, incentives, and chance. Classical economists who followed Smith as analytical egalitarians included, among others, Thomas Robert Malthus, David Ricardo, Robert Torrens, Harriet Martineau, Nassau Senior, and most importantly for Peart and Levy’s account, John Stuart Mill.

By the time neoclassical economics and other varieties of post-classical economics appeared in the late nineteenth century, analytical egalitarianism was being supplanted by a belief that human beings differ in their capacities in ways that render the assumption of human homogeneity unrealistic and inappropriate. Thus, William Stanley Jevons worried that working-class consumers made poor choices and Irving Fisher compared the Irish unfavorably with the Scots in terms of their capacity for foresight. F.Y. Edgeworth argued that for analytical and policy purposes the principle “every man, and every woman, to count for one” should be used with caution. Shifting from analytical egalitarianism to a working hypothesis of heterogeneity and hierarchy led the post-classical economists to jettison another of Adam Smith’s presuppositions, that sympathy should have a role in social analysis. Smithian self-interest and the invisible hand were cleaved away from his notions of sympathy and the impartial spectator.

Peart and Levy’s objective is to explain why this transformation of economics took place. Their story is one of external forces from the scientific and literary cultures, particularly the influence of Charles Darwin. In nineteenth century England evolution was in the wind, and this fueled racist reactions to the Irish immigration in the 1840s and 1850s and the Jamaican revolt of former slaves in 1865. These events were context for the alignments of competing coalitions, classical economists and evangelicals on the side of human equality, and literary figures, anthropologists, and ethnologists on the side of human hierarchies. By the end of the nineteenth century, economics had gone over to the other side, with many economists joining “progressives” in their enthusiasm for eugenic state control of human fertility.

The historical accounts in this book are colorful and riveting, not the least because of abundant attention to the literary and scientific figures who were the classical economists’ critics, and to Victorian England’s popular culture. There are numerous illustrations from Punch magazine and other periodicals of the era and outlines of what today seem quirky ideas such as John Ruskin’s chemical political economy and the related Victorian idea that a person’s choices might actually transform their racial identity. Both are instances of malleable human nature. This is relevant for our time because the same questions with which the Victorians struggled are manifest in the popularity of books such as Steven Pinker’s The Blank Slate (2002).

Peart and Levy’s history has a moral, which is that economists’ turn from the human homogeneity assumption to heterogeneity and hierarchy need not and should not have occurred. Classical economists’ assumption that humans share the same innate capacity for making prudent choices was well grounded, even if subsequent scientific opinions indicated otherwise. They argue that classical economists had good scientific reasons for taking institutions seriously, and that economists went awry when theory was shorn of institutions. Also, implicit in Peart and Levy’s account is the notion that the best science of any era can be an insufficient if not faulty guide for social and political life.

But where does one turn apart from science? For Peart and Levy the answer is to morals. They are repulsed by the history of Victorian science which they report. It is not on scientific but on moral grounds that they disapprove. They quote Lionel Robbins on the facts and morality of the presumption of differential capacities for happiness across human populations:

I have always felt that, as a first approximation in handling questions relating to the lives and actions of large masses of people, the approach which counts each man as one, and, on that assumption, asks which way lies the greatest happiness, is less likely to lead one astray than any of the absolute systems. I do not believe, and I have never believed, that in fact men are necessarily equal or should always be judged as such. But I do believe that, in most cases, political calculations which do not treat them as if they were equal are morally revolting. (Economic Journal, 48: December 1938, 635)

Having brought the history of analytical egalitarianism forward in time from classical economics into post-classical economics in this book, Peart and Levy are now exploring Adam Smith’s sources in Stoic philosophy. Their historical project is a reminder that whether we recognize it or not, economics is and always has been grounded on visions of human nature that are not exclusively scientific. Theirs is a worthy effort to recover some of the understanding of human nature that was lost in the nineteenth and twentieth century romance with science.

J. Daniel Hammond is the editor, with Claire H. Hammond of Making Chicago Price Theory: Friedman-Stigler Correspondence, 1945-1957 (Routledge, 2006).

Subject(s):History of Economic Thought; Methodology
Geographic Area(s):Europe
Time Period(s):19th Century

Economists in Parliament in the Liberal Age (1848-1920)

Author(s):Augello, Massimo M.
Guidi, Marco E.L.
Reviewer(s):Barnett, Vincent

Published by EH.NET (October 2006)

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Massimo M. Augello and Marco E.L. Guidi, editors, Economists in Parliament in the Liberal Age (1848-1920). Aldershot, UK: Ashgate, 2005. xviii + 315 pp. $100/?55 (cloth), ISBN: 0-7546-3965-7.

Reviewed for EH.NET by Vincent Barnett, Centre for Russian and East European Studies, Birmingham University.

This book is a major part of the results of a long-term project on the academic institutionalization of economics as a discipline. According to the editors, the period chosen for investigation — 1848-1920 — represents a period of crucial change in the subject under consideration, witnessing for example the spread of classical economics and the founding of associations devoted to propagating free trade ideas. In particular, they argue that classical economics implied a precise program of institutional reforms aimed at transforming the attitudes of government vis-?-vis economic regulation. It also involved the spread of economic ideas and the attempted enlightenment of public opinion on relevant topics. With these particular points highlighted, the emphasis on the role and effect of economists in parliament is explained as following naturally from the themes that are selected for examination. In terms of goals, the editors explain that their aim was to stimulate more detailed research on the relationship between economics and politics and on the consequences of the political commitments displayed by economists.

One aspect of the book worthy of praise is the wide range of national case-studies that forms the bulk of the book. Most are European (Spain, Britain, Italy, Germany, Portugal, Belgium, Greece and France) but two are not (Japan and the U.S.). Each chapter is brimming with detailed information about the particular economists who played a role in their respective parliaments, which will be of significant use to those investigating related issues in more detail. For example, Roger Backhouse charts twenty-five economists who entered the British parliament between 1848 and 1920, including thirteen as Whigs and Liberals, three as Radicals and six as Conservatives and Liberal-Unionists. Backhouse notes that, with the exception of J.S. Mill, prominent theorists were conspicuous by their absence in this area of activity. Explaining the observed decline in the number of economists in the British parliament in the second half of the nineteenth century, Backhouse cites the poor quality of raw materials on the supply side, with few quality candidates passing through the Cambridge route. Economic theory itself underwent significant change, with the ‘marginal revolution’ coinciding with increased emphasis on the investigation of individual behavior. Backhouse concludes that the role of economists in Parliament was greatest when political economy itself chimed with political and religious arguments for desired economic policies such as free trade.

The introduction by the editors brings out various national contrasts to good effect. Reading through the chapters, the contrast between Britain and Germany is particularly striking, albeit not that unexpected. As outlined by Harald Hagemann and Matthais Rosch, prominent historical political economists in Germany like Bruno Hildebrand were openly hostile to the British classical school, and Hildebrand played a significant role in the foundation of governmental statistical offices. However, in this chapter the reader also learns that at the University of Munich, F.B.W. von Hermann laid the foundations for a German brand of classical economics. Hermann represented the electoral district of Munich in the Frankfurt National Assembly. On a different plane of contrast, the chapter on the American anomaly by Bradley Bateman asks why there were no economists in the U.S. Congress in the nineteenth century (with the single exception of F.A. Walker). Possible answers provided include lack of interest and the dominance of a liberal ‘stand back’ conception of the state. The chapter by the two editors (from the University of Pisa) on the Italian case stresses the importance of the political commitments of economists to their perceived roles in parliament, and explores the idea of political economy as a ‘science of the statesman or legislator’ that arose after Italian unification. In general the importance of national context comes through in all the case-studies that are presented.

In evaluation it is possible to say that this book is an excellent contribution to understanding the role played by economists in the parliaments of more developed countries. The scholarship is impressive and the comparative approach yields many insights. However, the book is weighted more towards the empirical documenting of the topic, rather than an in-depth exploration of the influence of currents of economic theory on the policies adopted within governmental institutions. Hence historians of economics with a penchant for the ‘internal’ history of the evolution of doctrines might be a little disappointed. Similarly the relationship between the political beliefs of economists and their economics is not fully investigated on the intellectual plane, more in terms of tracing policy links and party affiliations. But in terms of exploring the context of the role of economists in the wider world, this book can be recommended as a valuable contribution to the field.

Vincent Barnett is the author of A History of Russian Economic Thought (London: Routledge, 2005).

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Subject(s):History of Economic Thought; Methodology
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: Pre WWII

Making Chicago Price Theory: Friedman-Stigler Correspondence, 1945-1957

Author(s):Hammond, J. Daniel
Hammond, Claire H.
Reviewer(s):Freedman, Craig

Published by EH.NET (September 2006)

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J. Daniel Hammond and Claire H. Hammond, editors, Making Chicago Price Theory: Friedman-Stigler Correspondence, 1945-1957. London: Routledge, 2006. xvii + 165 pp. $120 (hardcover), ISBN: 0-415-70078-7.

Reviewed for EH.NET by Craig Freedman, Department of Economics, Macquarie University.

Economic Billets Doux — A Review of the Friedman-Stigler Correspondence

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“Indifferent! Oh no — I never conceived you could become indifferent. Letters are no matters of indifference; they are generally a very positive curse.”

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“You are speaking of letters of business; mine are letters of friendship.”

“I have often thought them the worst of the two,” replied he, coolly. “Business you know, may bring money, but friendship hardly ever does.” (Jane Austen, Emma)

Reading this volume generates reflections which are more substantial than a mere nostalgic yearning for times past. Technology has condemned to the museum archives a means of personal and business communication which had outlasted the centuries. Letters not only were for most of history the only way accurately to convey thought, emotion and information over long distances, but a method that was remarkably cheap as well. In the nineties, the rise of e-mail has largely put paid to those fondly received missives. Today, I would be hard pressed to recall the last time I received an overseas letter, although in the late eighties and early nineties such occurrences were routine. What makes this more than just a yearning for familiar ways is that technology changes not only communication channels but the very content of that medium. The style, structure and thought behind a handwritten (and perhaps even a typed) letter is definably different from the modest e-mail which is more of an off the cuff note. Moreover, e-mail is ephemeral. Few people print out and store them as they might preserve letters. So the sad news when we read this wonderful collection is that future generations will turn to the equivalent of the Stigler or Friedman archive and find a bare cupboard instead of a treasure trove of material. Future biographers and historians of thought will come to mourn this loss. What is to be done? Nothing, except to enjoy those opportunities that we still have at hand.

Claire and Daniel Hammond (both at Wake Forest University) have performed a real service in making so many of the key exchanges between Milton Friedman and George Stigler available to the interested reader. Many economists today simply take for granted the wonders these two men performed in the post-war period. They set out to overturn the then prevailing orthodoxy and (for better or worse) largely succeeded. When economists today refer so blithely to the Chicago School, they are implicitly referring to the work, effort and campaign of these two long-time friends and colleagues. (Even today, Milton Friedman still mourns the loss of his remarkable compatriot.) Though most economists, let alone the general public, will associate Friedman with the Chicago School counter-revolution to overthrow the teaching of Keynes and other heretics, it is perhaps Stigler who had in his more quiet way the greater influence (at least academically). In any case, their spheres of operation were largely separable with Stigler focusing almost exclusively on microeconomic matters. What the two did have in common, besides their fierce dedication to market principles, was the ability to sell economic ideas in a rhetorical way that had a significant impact.[1] What the letters themselves show, besides a mutual affection and respect, are the ways in which the ideas that formed the core of the Chicago School developed and the role which the two had in cross pollinating each other’s work. (This despite the fact that the only joint work they ever formally endeavored was a paid for pamphlet brought out shortly after World War Two (Roofs or Ceilings) which examined ceilings on rental prices.)

By a stroke of luck, the two were forced apart in the immediate post-war period, except for a brief year together in Minnesota (1945). Like some modern day couple forced to pursue widely separated careers, Milton Friedman went off to Chicago (1946) and Stigler to Columbia (1947) after a brief stop at Brown (1946). As a result, these two close colleagues and friends would spend the years between 1946 and 1958 largely apart except for periodic visits. Their loss was our gain.[2] This enforced separation is the reason that we now have this fascinating correspondence which reflects the way in which the two attempted to transform economics. In particular, we can discern their attempts to reshape economic methodology, as well as their changing views on such issues as equality and income distribution. As we read these letters, the outline of what would form the bedrock of the Chicago School, a distinctive take on price theory, becomes progressively clearer.

Friedman’s counter-revolution against the prevailing dominance of post-war Keynesian theory is well known by most economists. Less appreciated is Stigler’s role in defending traditional price theory against heretical challenges. At least in part through his efforts, Stigler maintained what would later be accepted as the micro-foundations of economics, defending Marshallian partial equilibrium analysis (or at least the Friedman-Stigler version) against the seemingly invincible tide of Walrasian general equilibrium theory. What both of these lynchpins of the Chicago school held in common was an unshakeable belief in the efficiency of markets. They especially viewed this form of economic structure as a bulwark of individual choice and liberty against the omni-pervasive depredations of the chronic economic planners.

There are notoriously few minor omissions or curious lacunae in this volume that I can point out, and only if strongly pressed. In the very useful introduction to this series of letters the Hammonds wonder why there is no mention made of Friedman’s pioneering work on monetary theory. Friedman’s quantity theory of money was, after all, at the heart of his counter-revolution. However, this is much like being puzzled by the lack of any direct references to the Napoleonic wars in Jane Austen’s novels. The solution is simple. This bit of geo-politics failed to fall within the attention of Ms Austen’s interests in writing her novels. She was not about to drag it into the picture by virtue of its sheer topicality. In a similar manner, George Stigler displayed only minimal interest in macroeconomic matters and claimed to possess no particular insights in this area. Instead he tended to defer to Milton Friedman’s expertise (though Stigler does provide useful comments on Friedman’s seminal work dealing with the Consumption Theory).

There is also a strange lapse in what otherwise amounts to a comprehensive set of endnotes attached to these letters. Two items transmitted by Stigler to Friedman would later appear in an idiosyncratic collection entitled The Intellectual and the Market Place and Other Essays by George Stigler (‘Stigler’s Law’ and ‘On Scientific Writing’). True, the publication date (1963) puts it outside the boundaries set by the editors. But it is still a useful bit of information to provide to interested readers.

Lastly, the Hammonds claim that the close bond between George Stigler and Milton Friedman only commenced with their mutual employment by the Statistical Research Group during the war (1943-1945). It can be easily argued that they were already close from their days as graduate students in Chicago. Though, it does seem clear that Stigler was initially closer to Allen Wallis.[3] (It was, in fact, Wallis as director of the Statistical Research Group that reunited the two.) This issue is, however, more a question of nuance and interpretation than any clear disagreement.

The very low level of my nitpicking is perhaps the best indication of my admiration for what the two editors have achieved in selecting these letters for publication. It is a work that can be enjoyed on several levels. It displays economists in their most human mode. Here we see two relatively young academics advancing their careers, discussing economics, worrying about their families, gossiping and making withering remarks about colleagues and competitors. “It may merely be prejudice, but I’m inclined to write him [Samuelson] off as an economist.” (Stigler to Friedman, p.97) “Of the many speakers only one was terrible — shallow and pretentious, Joe Schumpeter.” (Stigler to Friedman, p.96)

Let me add a minor final note which may only display a creeping onset of curmudgeonly attitude rather than anything resembling good judgment on my part. The publisher, Routledge, seems determined to prove that you can’t tell a book by its cover. In fact, you can’t determine anything about a Routledge book by its cover. The firm seems unshakeable in its belief that the more the cover is dull and indistinguishable, the more scholarly is the work. Potential readers of excellent volumes, like the one under review, are actively discouraged from opening the work rather than enticed. It would be kind to think that Routledge is taking some principled, if obscure, stand by its choices in artwork. But, the more likely explanation is that it is simply succumbing to the rather lazy option of not trying. By doing so, Routledge fails to do justice to the volumes it publishes.

References:

Stigler, George Joseph (1963) The Intellectual and the Market Place and Other Essays by George Stigler. Glencoe, IL: Free Press.

Stigler, George Joseph (1988) Memoirs of an Unregulated Economist. New York: Basic Books.

Notes:

1. “I’ve come to the conclusion that no economic theory is important unless one’s contemporaries are persuaded to adopt it. If it meets this test it is important; if it does not, it is unimportant – no matter how correct or profound it may be.” (George Stigler to Milton Friedman, March 1950, p. 112)

2. “… there is no one anywhere I would rather have as a colleague than you.” (George Stigler to Milton Friedman, October 19, 1954, p.133)

3. I base my alternative view on the recollections of Rose and Milton Friedman as well as Paul Samuelson who knew them while enrolled as an undergraduate at Chicago. Additional insights on this matter may be gained in Stigler’s own autobiography (1988).

Craig Freedman is Associate Professor of Economics, Macquarie University, Sydney, Australia and also the Director of the Centre for Japanese Economic Studies. His articles on George Stigler and the Chicago School have appeared in the Cambridge Journal of Economics, Journal of Economic Issues, Journal of Post-Keynesian Economics, Journal of the History of Economic Thought and History of Economics Review. In addition he has edited a number of volumes on the Japanese Economy.

Subject(s):History of Economic Thought; Methodology
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

The First Wall Street: Chestnut Street, Philadelphia, and the Birth of American Finance

Author(s):Wright, Robert E.
Reviewer(s):Rousseau, Peter L.

Published by EH.NET (September 2006)

Robert E. Wright, The First Wall Street: Chestnut Street, Philadelphia, and the Birth of American Finance. Chicago: University of Chicago Press, 2005. vii + 210 pp. $25 (cloth), ISBN: 0-226-91026-1.

Reviewed for EH.NET by Peter L. Rousseau, Department of Economics, Vanderbilt University.

Robert E. Wright, hailing from New York University’s Stern School of Business, continues to expand our understanding of early U.S. securities markets with his recent offering from the University of Chicago Press. If looking for an entertaining stroll through the rise and fall of Philadelphia as the hub of American finance from the late colonial period through the Bank War, one needs to go no further. At the same time, the book is a fine starting point for considering more extended research on the wide range of financial topics addressed therein.

The eleven chapters are, for the most part, organized around particular financial innovations or groups of innovations that emerged first in Philadelphia, many of which persist to the present in some form or another. But the deeper thread seems to be that, despite its eclipse by New York City around 1830, Philadelphia’s importance in setting the stage for the ascendancy of the United States as the world’s financial leader — a position achieved by the end of the nineteenth century and by some accounts well before — should not be discounted by historians and economic historians.

As Philadelphia rose to prominence as a political and economic center, it replaced London as the informational hub of the colonies, leading to a greater degree of financial integration and an end to the rather insulated existences that had prevailed for decades. Wright describes the rise of Chestnut Street with vivid narratives about the growth of the market for property rights (chapter 2), quasi-public and private banking (chapter 5), the fire and marine insurance industry (chapter 6), building societies (chapter 7), and financial securities markets. He also points out that it was Philadelphia that hosted the Federal mint and the nation’s first two central banks. Indeed, the anecdotes that Wright tells about the challenges that the mint faced in acquiring the bullion needed to perform its most basic function — challenges made more difficult by a seemingly constant need to justify its existence to legislators — are among the book’s most fascinating.

Given Chestnut Street’s precocious start as the nation’s first “Wall Street,” Wright devotes the final third of the book to explaining the fall of Philadelphia from its commanding perch atop the U.S. financial system (chapters 8-11). Here, the author recounts the familiar explanation that geographic inadequacies were at the heart of the city’s undoing — a fate sealed by New York’s unlocking the portal to the West with the Erie Canal. Wright’s explanation, however, is enhanced by a reconstruction of the life and business experiences of a less prominent yet well-established financier named Michael Hillegas. Hillegas began a modest career on Chestnut Street during its heyday and learned from some of the great financiers of that time. As some of his colleagues and mentors moved their operations to New York, however, Hillegas chose to stay behind, carving out a good living as one of the remaining “old timers.” In the end, though, the flow of human and financial capital away from Philadelphia led even Hillegas, and surely others like him, to experience increasing difficulties in keeping business from moving to New York and its more auspicious opportunities. Wright contends that it was the exodus of human capital that really spelled the end for Chestnut Street.

One point that Wright does not make explicitly, but which is nonetheless reinforced by his lively narratives, is the primal nature of real activity as the driving force behind the location and development of finance. At a time when colonial economic activity was more local in nature and commerce more international, Philadelphia’s position as an Atlantic port made it an adequate commercial center, especially since it was already a political center. It was therefore natural for the financial system to have its mainsprings there. A virtuous cycle of real needs leading to finance and promoting further real growth seems to have been the result. But as it became increasingly clear that the new nation and its large land mass was not a featureless plain, the move to New York might be seen as a classic example of Joan Robinson’s famous adage that “where enterprise leads, finance follows.” And follow it did in this case. As Chestnut Street’s best financiers headed off to New York, their expertise went with them. Only large sunk investments in plant and equipment for the Federal mint and the central bank could hold these institutions in the Quaker City, at least until political forces took care of the latter.

It is important to note that this book is not intended as a treatise on economic or financial theory as applied to the colonies or the young United States. Rather, it is solid effort to relate financial history to a wider popular audience. As such, the exposition might be a bit distracting at times to the academic reader. Yet the better understanding of Chestnut Street’s role in early U.S. growth and development that I gained from reading it was well worth an occasional diversion or two. Effectively bridging academic and non-academic audiences is a difficult feat indeed, but one that we have come to expect from a scholar as prolific as Wright. It leaves me in anticipation of what new ground his next work will cover.

Peter L. Rousseau is Associate Professor of Economics at Vanderbilt University in Nashville, TN and a Research Associate of the NBER. He is the author of “A Common Currency: Early U.S. Monetary Policy and the Transition to the Dollar,” Financial History Review (April 2006), and co-author (with Richard Sylla) of “Emerging Financial Markets and Early U.S. Growth,” Explorations in Economic History (January 2005).

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):North America
Time Period(s):19th Century