19. Heckscher, Mercantilism, I, 64.
20. Heckscher, ibid., I, 72, states that the highest officials connived at this secrecy tactic; thus the toll director of East Prussia was given the tariff of 1644 with the strict injunction not to reveal it to anyone. It is hard to understand such a strategy, unless the ill-gotten gains were being shared right up the hierarchy.
21. For an example with economic implications, see Koerner, “Linnaeus’ Floral Transplants,” on the project of cultivating foreign flora in the Swedish climate in the eighteenth century. Linnaeus’ ambition to grow tea in the north did not succeed, but he was following on and anticipating here one of the major gains to knowledge of geographical discovery.
22. I take this analysis from Tortella, “Patterns of Economic Retardation,” pp. 8-9.
23. Tortella puts it differently: the comparative disadvantage of Switzerland in agriculture, he says, was much greater. Citing Bergier, Histoire économique, pp. 106,179, he points out that from the Middle Ages on, Switzerland has imported nearly 50 percent of its food. But comparative advantage is implicitly relative, and this is just another way of saying that Swiss industry paid better—in spite of government subsidies to agriculture.
24. Tortella, “Patterns of Economic Retardation,” p. 11.
25. On this, see Tortella, “La pénurie d’entrepreneurs,” pp. 63-64.
26. Bradley, Guns for the Tsar, p. 45.
CHAPTER 17
1. Freudenberger, “The Schwarzenberg Bank,” p. 51 and passim.
2. On this banking world, see Landes, “Vieille banque et banque nouvelle,” and Bankers and Pashas.
3. For Rothschild interests in industry and transport, see the forthcoming history of the bank and family by Niall Ferguson.
4. Cf. Barbier, Finance et politique, ch. 14: “Fould apres Fould,” tracing ties of the Fould banking family to the bank Heine and others in Germany, the Gunzburgs (business successors of Stieglitz; now related by marriage to the Bronfmans) in St. Petersburg, the Lazards and Furtados in France, plus noble clans (feudal and Napoleonic) with vineyards, horses, and pocket boroughs.
5. Aside from the Société Générale of Brussels, one has the A. Schaffhausen’sche Bankverein in Cologne, a private bank driven to failure in the crisis of 1848 and then converted to the corporate form. The general impression that the brothers Pereire invented a new form comes from such studies as Plenge, Gründung und Geschichte des Credit Mobilier, as picked up by Gerschenkron in his Economic Backwardness in Historical Perspective. (The title essay goes back to 1951.)
6. The Germans too, by law of 11 June 1870. The point was whether businessmen could establish a joint-stock company with limited liability without obtaining prior government permission, whether by charter from the crown or a bill of the legislature. Tsarist Russia never got around to instituting such routine registration: by a decree of 1836, in effect until the revolution of 1917 (after which nothing mattered), any such company had to be authorized by law—F. Crouzet, in Moss and Jobert, eds., Nais-sance et mort, p. 201. In the United States, the rules varied from state to state, but despite routine incorporation in some states well before the Civil War, partnerships continued to dominate until the 1870s. One reason was that banks preferred to lend on the security of unlimited liability.
7. On “assistance for the strong,” see R. Tilly, “German Banking, 1850-1914.”
8. Ibid., p. 113. All industrial capital? Or just that held in public joint-stock companies?
9. On the triumph of trade liberalization, see Levasseur, Histoire des classes ouvrières…de 1789 a 1870, Vol. II, Book VI, ch. 5. It should be noted that this move to freer trade was short-lived. In the wake of a severe financial and commercial crisis (1873-), the major industrial nations moved back toward protection (Germany, Austria, Italy, 1878-79; France, Méline tariff, 1892). The United States, meanwhile, was imposing a much higher level of protection than prevailed in Europe (outside Russia). Only Great Britain remained faithful to free trade, although there, too, agitation for protection grew. On all this, see Bairoch, Economics and World History, pp. 16-55, who, unlike mainstream economists, argues that protection has its rewards.
10. On all this, see André Thuillier, Economic et societe nivernaises, chs. ix and x.
11. On this not infrequent shift from trade to banking, generally via a buildup of transactions in commercial paper, see Landes, Bankers and Pashas, ch. i.
12. On the Seillière and the “ascent” of Lorrain businessmen to Paris during the revolution and under the Empire, see Bergeron, Banquiers, pp. 54-55. On the Seillière role in the career of Ignace de Wendel and the later repurchase of the family ironworks, plus the later purchase of the forge of Moyeuvre, see Woronoff, L’industrie sidérurgique, p. 485.
13. For further and sometimes discordant views on this point, see Sylla and Toniolo, eds., Patterns of European Industrialization.
CHAPTER 18
1. Harris, “The First British Measures” and “Law, Espionage, and the Transfer of Technology” Cellard, John Law, pp. 180-81.
2. Landes, Revolution in Time, p. 161.
3. Young, A Six Months Tour through the North of England (2d ed., 1771), cited in Musson and Robinson, Science and Technology, p. 216, n. 3.
4. We do have instances of patriotic sensibilities triumphing over material advantage. See Landes, Revolution in Time, ch. 10: “The French Connection,” on the international competition for the invention of the marine chronometer.
5. On Boulton’s tireless search for skilled workmen (he “was always alert to French inventions in the luxury trades”), see Musson and Robinson, Science and Technology, pp. 218-21.
6. Ibid., pp. 225-27.
7. Harris, “Industrial Espionage in the Eighteenth Century,” in his Essays in Industry, pp. 164-65. Harris has given us a detailed account of one of these snoopers in “A French Industrial Spy.”
8. Harris, Essays in Industry, p. 170.
9. Ibid., p. 171. Harris points out, quite correctly, that the convergence of these spies on Britain “emphasises the centrality of technology to the industrial revolution, and confirms overwhelmingly British technological leadership.” Also that “British technological advance was cumulative and attracted attention before the major take-off into economic growth”—ibid., p. 164.
10. On Alcock, see Harris, “Attempts to Transfer English Steel” and “Michael Alcock and the Transfer of Birmingham Technology.” The second of tiiese articles notes that Alcock’s girlfriend’s father denied that she was Alcock’s mistress once Mrs. Alcock got to La Charité. But he would say that, wouldn’t he, especially since Alcock’s French competitors were using rumors of the liaison to discredit him with the authorities. (The French have since outgrown such compunctions and wonder at the puritanical zeal of the American armed forces.)
11. On the Cockerills, see Mokyr, Industrialization in the Low Countries, ch. ii; also Demoulin, Guillaume Ier, and Henderson, Britain and Industrial Europe. The above quote is cited by Mokyr from an article by Nisard, “Souvenirs de voyage, le pays de Liège,” Revue de Paris, 24 (1835): 130-46. John had two older brothers, William Jr. and James. Both settled in Prussia, where William founded a wool-spinning mill at Guben and James built machines in Aachen—Henderson, State and the Industrial Revolution, p. 113.
12. Heron de Villefosse in 1803, cited in Woronoff, L’industrie siderurgique, p. 318. The reference may be to the brief Peace of Amiens, which gave the French a chance to bring in British entrepreneurs and technicians.
13. MacLeod, “Strategies for Innovation,” p. 302.
14. Kuznets saw this era as beginning in the seventeenth century. He was too hasty in his dating. But the link is correct: it is the combination of science and technology that made the difference.
15. See a devastating critique of Réaumur’s judgment and influence by Frédéric Le Play in the Annates des Mines, 9 (1846), cited in Harris, “Attempts to Transfer English Steel Techniques,” in Essays in Industry, p. 109, n. 18. On Reaumur, see
ibid., p. 84.
16. Woronoff, L’industrie sidérurgique, p. 351.
17. Ibid., pp. 352-53.
18. On Fischer, see Henderson, J. C. Fischer. Fischer kept invaluable diaries, which have been edited and published by Karl Schib.
19. On this story, see Haber, Chemical Industry, pp. 128-36,169-98; and Travis, The Rainbow Makers, pp. 237-39, who stresses the open-mindedness of young German chemists on a technological roll.
20. Haber, Chemical Industry, p. 84.
21. Milward and Saul, Economic Development, p. 230.
CHAPTER 19
1. I take these figures from Engerman and Sokoloff, “Factor Endowments,” Table 4; see the sources cited there. It should be remembered that such estimates, especially those for earlier years, are figments, the product of heroic manipulations and guesswork, to say nothing of errors and distortions in the original data—cf. Randall, “Lies, Damn Lies, and Argentine GDP.” The matter is further complicated by the fragility of international comparisons that do not rest on purchasing power parity. If one were to incorporate the collapse of the Mexican peso in December 1994—January 1995, for example, the Mexican results would look even weaker. Whatever; the general picture of more rapid American growth is reliable. For another set of estimates, based on estate data converted to income (grossly approximate), see Garcia, “Economic Growth,” pp. 53-54.
2. See, among other discussions: Caves, “‘Vent for Surplus’ Models of Trade” and “Export-Led Growth” Baldwin, “Patterns of Development” Watkins, “A Staple Theory of Economic Growth” and Garcia, “Economic Growth and Stagnation.”
3. This is the thesis of Stanley Engerman and Kenneth Sokoloff in their essay on “Factor Endowments.” An important and ingenious analysis. For parallel arguments concerning the “endogenous” exploitation and production of raw materials (the U.S. was more than lucky), see David and Wright, “Increasing Returns.”
4. Fischer, Albion’s Seed, p. 174.
5. Smith, Wealth of Nations, Bk. IV, ch. 7, Part 2: “Causes of the Prosperity of New Colonies.”
6. Smith, Wealth of Nations, Bk. I, ch. 8: “Of the Wages of Labour.”
7. Both quotations come from Fischer, Albion’s Seed, p. 560.
8. See Hartley, Ironworks on the Saugus.
9. Cited in Oliver, History of American Technology, p. 89.
10. Fischer, Albion’s Seed, p. 860.
11. A newer generation of economic historians is not happy with what are dismissed as “intellectually unproductive cultural essentialist explanations,” “notoriously slippery and difficult to assess,” and argues for regression analysis using “clearly, specified, broadly applicable measures”—Carlton and Coclanis, “The Uninventive South?” pp. 304, 326. Aside from the question why culture should be deemed “intellectually unproductive” or “essentialist” (it may be hard to quantify, but the real question is, does it matter?), the problem with regression analysis is that it excludes what it omits and can be specified so as to leave little “unexplained” residual. It works well to measure the relative importance of the factors specified, presumably quantifiable economic variables, but is dumb on the rest.
12. Jeremy, Transatlantic Industrial Revolution, p. 254.
13. Gibb, Saco-Lowell Shops, p. 10, cited in Oliver, History of American Technology, p. 158. See also Rosenberg, “Anglo-American Wage Differences,” who suggests that although American wages for unskilled labor were higher than British, Americans could hire “best” machine makers for less.
14. On this reverse flow, see Musson and Robinson, Science and Technology, pp. 62-64. They cite Matthew Curtis, machine maker in Manchester, to a parliamentary committee in 1841: “…I apprehend that the chief part…of the really new inventions, that is, of new ideas altogether, in the carrying out of a certain process by new machinery, or in a new mode, have originated abroad, especially in America.”
15. Jeremy, Transatlantic Industrial Revolution, p. 253.
16. Ibid., p. 252.
17. See Broadberry, “Comparative Productivity in British and American Manufacturing.”
18. See Eisler, ed., The Lowell Offering.
19. On the negative aspects of factory labor, see Dublin, Women at Work, and Zonderman, Aspirations and Anxieties.
20. Quoted in Jeremy, Transatlantic Industrial Revolution, p. 253.
21. Rosenberg, Perspectives on Technology, pp. 39-40.
22. On the significance of the balloon house, see Giedion, Space, Time, and Architecture; and Rosenberg, Perspectives on Technology, p. 38. It has been argued that the variety of goods, including houses, available to British consumers, constituted an amenity that does not show up in standard income or production figures but substantially enhanced the standard of living—cf. Prais, “Economic Performance and Education,” p. 155. But a few stays in British stone and brick houses—cold even in August—would suggest that American construction, however dull and utilitarian, provided more space and comfort for the money. What is more, the nature of the balloon house is such that plumbing and electrical wiring can easily be installed in the walls, and this contributed to the early adoption of such amenities as hot and cold running water and central heating. On the other hand, the European masonry and plaster construction is significantly more resistant to fire, and this can make the difference between life and death.
23. Rosenberg, Perspectives on Technology, p. 42.
24. On the difference and on standards of interchangeability, see Landes, Revolution in Time, pp. 283-85, and ch. xix: “Not One in Fifty Thousand.”
25. Nathan Rosenberg, Perspectives on Technology, p. 17, calls this phenomenon technological convergence, because he sees different branches converging on the same techniques. But I would prefer something like technological proliferation or interrelatedness, the better to emphasize the spread of the techniques into multiple applications.
26. George Talcott, in S. V. Benet, ed., A Collection of Annual Reports…Relating to the Ordnance Department, I, 395, cited in Gordon, “Who Turned the Mechanical Ideal,” p. 746.
27. Cf. Rosenberg, American System of Manufactures.
28. Erickson, American Industry, p. 132.
29. Cited in Oliver, History of American Technology, p. 375.
30. Abramovitz and David, “Convergence and Deferred Catch-up,” p. 21. The data are taken from Angus Maddison, “Explaining the Economic Performance of Nations,” Tables 2-1 (p. 22) and 2-4 (p. 28), and are measured in PPE (purchasing power equivalent) dollars.
31. This and the quotations that follow are from Wealth of Nations, Book IV, ch. 7, Part 2: “Causes of the Prosperity of New Colonies.”
32. Wealth of Nations, Book II, ch. 5: “Of the Different Employment of Capitals.”
33. Cook, The Long Fuse, pp. 58-59.
34. Modern quantitative economic historians have tried to measure the burden of these acts on the American colonists and have argued that it was insignificant. The implication is that economic “justifications” were a pretext and that the colonists had other motives for war, or worse yet, were simple ingratcs. Aside from errors in the calculation of the burden and problems with fanciful counterfactuals of what might have been if no navigation acts, the very notion that one can quantify a perceived grievance and thereby judge whether a war is justified strikes me as naive. On this abundant debate, see Thomas, “A Quantitative Approach,” and in rejoinder, Sawers, “The Navigation Acts Revisited,” and the articles cited there.
35. Cited in Cook, The Long Fuse, p. 59.
CHAPTER 20
1. Cf. Humboldt, Relation historique, ed. Tulard, p. 252.
2. Fischer, Albion’s Seed, p. 26 and n. 5. In Virginia, a land of plantations and indenture, the ratio was 4 to 1; in Brazil a land of sugar and slaves, 100 to 1.
3. An article in the Quarterly Review, 35, speaks (p. 537) of the segmentation of Latin American society by color: “the different classes, who in process of time, more by the rules of society than by the influence of the laws, assumed a variety of rank
s according to the greater or less affinity to the white race.” Quoted in Rodney and Graham, Reports of the Present State, p. 12.
4. Cf. Fischer, Albion’s Seed, pp. 240—46, on the hierarchical values and institutions of southern England.
5. “Independence was not so much sought after by the people of Buenos Ayres, as thrown in their way”—Rodney and Graham, Reports of the Present State, pp. 28-29.
6. The contrast is Furtado’s, Economic Growth of Brazil, p. 109.
7. Cf. Faith, The World the Railways Made, p. 156, citing Ferns, Britain and Argentina: “Argentine interests were not concerned either to invest in or gain control of such undertakings, no matter how freely they might criticise their activities in their newspapers and in the halls of the Congress…it was…more profitable to speculate in land, sell cattle and wool, and institute share-cropping, all of which railways greatly stimulated by opening a way to the markets first of Buenos Aires and then the world____”
8. Mullet des Essards, Voyage en Cochinchine, p. 95.
9. The above is drawn from Rock, Argentina, p. 25. On nails, see E. A. J. Clemens, The La Plata Countries of Latin America (1886), cited in Rock, “Features of Industrial Development,” p. 8; also Mullet des Essards, Voyage en Cochinchine, p. 89.
10. Rock, “Features of Industrial Development,” p. 7.
11. The words are Sarmiento’s, writing in the 1840s, cited in Rock, ibid.
12. Juan Bautista Alberdi, Bases epuntos departida para la organizacion politica de la Republica Argentina (1852), cited by Shumway, Invention of Argentina, p. 149.
13. “Even today, Argentine church leaders are arguably the most conservative, if not reactionary, in Latin America”—Shumway, Invention of Argentina, p. 150.
14. Adelman, Frontier Development, p. 105.
15. Krout and Fox, The Completion of Independence, pp. 53-57.
16. Fish, Rise of the Common Man, p. 130. It should be noted that not everyone agreed with this general encouragement to westward settlement. The older states were opposed on the ground that such generous terms would encourage their inhabitants to emigrate, which they did in fact. And the slave states were upset by a policy that gave no special consideration to slaveowners: their allotments would be no larger than those of nonslaveowners. The aim was to promote homesteads, not plantations.
The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor Page 67