For most Americans, the automobile did not just replace the streetcar as a mean of transportation between the home and the factory. People began using their cars to go shopping, visit friends and relatives, and drive out to the countryside on the weekends to escape the noise of the city. By changing the way people worked and lived, the automobile changed the face of the North American continent. With better and cheaper transportation, cities were no longer merely a great congregation of people. Cities developed special areas for factory work, shopping districts, and suburban neighborhoods for living. They were subdivided into areas of work, consumption, and living. And many of those working in the city no longer had to live within its limits. In the words of Ralph Epstein, writing in 1927: “The countryside is not only brought nearer the city; the city itself becomes, in all but its corporate name, indeed a part of the surrounding country. New York is no longer merely Manhattan, Brooklyn, and the Bronx; it is also Long Island, Rye, New Rochelle, and indeed a part of Connecticut and New Jersey.”63
* * *
In the same way motor vehicles transformed the city, they revolutionized farming. The transition from horse to motor power was without question the greatest transformation of agriculture since the domestication of animals to substitute for human muscle. During the nineteenth century, the mechanization of farming lagged behind that of manufacturing simply because steam engines were unsuitable for unstructured environments and too expensive for most farmers.64 Even breakthrough inventions of the nineteenth century like Cyrus McCormick’s reaper were pulled by teams of horses.
As automobiles replaced horses in transportation, tractors replaced them in agriculture. The share of farms with tractors surged from 3.6 percent in 1920 to 80 percent in 1960. Over the same period, the numbers of horses and mules on farms declined from twenty-five million to a mere three million (figure 8).65 And while causing a mass redundancy of horses, they delivered a significant boost to economic growth: the economist William White estimates that the direct social savings of the tractor were in excess of 8 percent of the gross national product in 1954. Tractors eliminated huge inefficiencies, such as the fact that horses consumed a fifth of farm output.66 But while the tractor is responsible for most of the downfall of the farm horse population, motor trucks and passenger cars contributed as well by making possible new forms of swift delivery and distribution of goods. With automobiles and motor trucks, distances that had formerly taken a day by horse could be covered in an hour. Consequently, the cost of hauling fell dramatically, allowing American farms to serve larger markets.67 The widening radius of farming operations is documented by a 1921 study of Corn Belt farmers by the Department of Agriculture, which showed that after the introduction of motor trucks, many farms changed the markets for some or all of their products.68
FIGURE 8: Horses, Mules, and Tractors on U.S. Farms, 1910–60
Source: R. E. Manuelli and A. Seshadri, 2014, “Frictionless Technology Diffusion: The Case of Tractors,” American Economic Review 104 (4): 1368–91.
Motor vehicles powered economic growth well beyond agriculture. In the 1930s, transportation and public utilities together with wholesaling and retailing accounted for nearly half of economy-wide productivity growth. And trucking and warehousing accounted for about a third of the growth in the transport and public utilities sector.69 Significant investment in roads meant that by the time of the Great Depression, truckers could drive across the continent without having to go through any unpaved stretches. In response, truck registrations increased by 45 percent in the period 1929–41. During the Great Depression, businesses were able to take full advantage of the alternative and more flexible methods of distribution offered by trucking. In the cities, department stores began to employ trucks to deliver packages to surrounding rural areas, allowing consumers to just place a telephone call instead of having to drive into the city. And in short-haul transportation, trucks provided a flexible alternative to the horse in moving goods between railheads, farms, factories, wholesalers, and retailers.
The productivity trends of the interwar years reasserted themselves after the Paris Peace Treaties of 1947.70 The greatest boost to productivity was the continuation of the second transition observed by Field, enabled by motorized vehicles. But like the productivity gains of electrification, the full impact on growth of the internal combustion engine was delayed. The reason was not just the war but also that the infrastructure required to support motorized transportation was lagging. It was only after infrastructure spending resumed and accelerated with the Federal Aid Highway Act of 1956 that the full benefits of motorized vehicles could be realized.71 Until then, the railroad was deemed more effective than highway freight, as is evident from President Roosevelt’s report on interregional highways, submitted to Congress in 1944. The report argued that “all the evidence amassed by the highway-planning surveys points to the fact that the range of motor truck hauls is comparatively short. There is nothing to indicate the probability of an increasing range of such movements in the future.”72 As absurd as this prediction might seem retrospectively, the experience of World War II lent it some support. During the war, the percentage of ton-miles freight traveled by truck declined to 5.6 percent in 1943, at which time the railroads carried 72 percent of intercity freight. All the same, the relative importance of the railroads declined thereafter. By 1958, trucks carried 20 percent of all ton-miles; a figure that rapidly increased after the completion of the interstate highway system. Economists have affirmed the contributions of the highway system to postwar productivity, finding that spending on interstate highways was responsible for over a quarter of the increase in American productivity in the 1950s and 1960s, while during the 1980s it accounted for a mere 7 percent increase.73 Indeed, the heyday of trucker culture came toward the end of the golden age (1947–73) of productivity growth. In the 1970s truck drivers became the new American cowboys and were frequently romanticized in blockbuster films like Smokey and the Bandit.
While the trucking industry itself fueled American productivity, it also had significant spillover effects on transportation and trade more generally. In conjunction with the rise of the trucking industry, the container revolution was an engine of postwar growth. And containerization emerged directly from trucking. Malcom McLean, a trucking entrepreneur, invented the container as a mean of integrating the segmented industries of shipping, trucking, and railroads. The first successful container shipment dates from April 26, 1956, when McLean’s Ideal-X made its maiden voyage from Port Newark to Houston, Texas. This seemingly unspectacular shipment was, together with Christopher Columbus’s discovery of the New World, one of the key events in the history of trade. In the same way that railroads and steamships paved the way for the first wave of globalization—which abruptly ended with World War I—containerization was the technology that underlay the second wave of globalization, beginning in the postwar years. According to a recent study, the container boosted bilateral trade by 320 percent over the first five years of its adoption.74
The container did not just change the world of trade. Containerization was a driver of Smithian and Schumpeterian growth alike. Contemporaries hailed it as “an extension of our mass production techniques into the carrying of overseas trade.”75 Besides eliminating twelve separate handling steps in the moving of goods between the manufacturer and the consumer, container terminals are estimated to have increased the volume a dock laborer was able to handle from 1.7 to 30 tons per hour.76 Although the construction of such terminals was capital intensive, faster rates of throughput saved substantial amounts of capital—not to mention the capital savings associated with the associated decline in theft. A well-known joke at the New York wharves before the age of containers was that the dockmen’s wages were “twenty dollars a day and all the Scotch you could carry home.”77 Containerization put the lid on the Scotch, reducing the cost of insuring cargo in the process.
With the advent of the container, winds of change swept through American harbors. These winds
meant stormy seas for longshoremen. “Just how far it will go, no one knows, but the idea of moving domestic and overseas cargo in boxes or containers is swelling like a tidal wave,” the New York Times noted in 1958.78 Like many transformative technologies, containerization was not welcomed by everyone. Before the age of containers, ports were places crowded with thousands of longshoremen loading and unloading ships. After containerization, large crews of longshoremen were replaced by machines. All handling was gradually done with cranes and special forklift trucks. But the longshoremen were not passive bystanders. In 1958, the president of the New York district of the International Longshoremen’s Association made it clear that dockmen would not handle containers, claiming that they deprived too many longshoremen of work. “We do not propose to be drowned in this wave,” one negotiator for the longshoremen union added.79 Labor-management disputes surrounding containerization were a recurring theme through the 1960s. Yet even the unions underestimated the dramatic impact the container would have on their members’ jobs. In 1968, Thomas W. Gleason, president of the International Longshoremen’s Association, reported that the port of New York had provided 40.7 million man-hours of work, down 3.0 million man-hours from the previous year. Under pressure from containers, he predicted, total man-hours could be reduced to 28.0 million. Eight years later, when a federal court dismissed a labor-management agreement designed to protect the jobs of remaining longshoremen, the port accounted for a mere 19.0 million man-hours.80
But while the twentieth century clearly saw the spread of some replacing technologies, most progress was of the enabling sort. One reason that the horseless age was not accompanied by a jobless age is that human workers, unlike horses, have the means of acquiring new skills, which allows them to take on tasks outside the realm of machines. The automobile, the motor truck, and the tractor reduced the comparative advantage of the horse as a prime mover in agriculture and a means of moving goods and people around. The result was a gradual reduction in the horse population, not of the working population. For example, people employed by the street railroads “engaged in a struggle for existence against the competition of the private automobile and the motorbus.”81 But employment in the operation, service, and maintenance of motorized vehicles increased greatly: the occupation of truck driver is now the largest single occupation in many American states (see figure 20). In addition, vast employment opportunities were created in the production of motorized vehicles. As we shall see in chapter 8, the reduction in the demand for farm laborers was accompanied by the expansion of industry, which meant that farmworkers had good alternative job options. The automobile industry, for instance, soon grew to eclipse the railroad as the leading employer of American workers. From being an industry so unimportant that it was not even reported separately in the 1900 census, automobiles became the largest manufacturing industry in 1940. Employment in automobiles grew 765 percent faster than total manufacturing employment over the first three decades after the industry emerged.82 To put this figure in perspective, employment in semiconductors grew 121 percent faster than the overall manufacturing employment in the three decades after its invention in 1958.83 Research by Alexopoulos and Cohen affirms the general perception that motor vehicles boosted employment more than other technologies.84 And their employment contributions extended far beyond the auto industry. They also fueled job creation in supplier industries, construction, transportation, tourism, car services, and road commerce. As the historian David L. Lewis wrote in 1986, the auto industry’s glory days of the 1950s and 1960s will surely not be repeated, but it still “directly employs some 1.2 million people, while the payrolls of auto dealers, service stations, and other related businesses are several times larger. All told, the industry provides jobs for one in every six American.”85
7
THE RETURN OF THE MACHINERY QUESTION
In 1930, William Green, then president of the American Federation of Labor, wrote an article for the New York Times. The story line was a familiar one:
Today our captains of industry recount with pride increases in productivity, installation of machines.… They glory in things—in technical progress, in management, in the progress of science—but what thought do they give to musicians displaced by music reproductions; to the art of the actor, forgotten in the latest movietone; to the Morse operator displaced by the teletype; to the steel worker displaced by a new process; to the carpenter watching a house assembled by units; to the printer turned out by the teletypesetter? Such workers in thousands have been turned out without jobs, and without future employment in the craft in which they have invested their all.1
Indeed, when reading Green’s article, it is hard not to think of Friedrich Engels’s assertion that industrialists “grow rich on the misery of the mass of wage earners.”2 Yet such parallels can be taken too far. True, episodes of machinery angst emerged from time to time in the twentieth century. But while some workers struggled to adjust to mechanization, there was no Engels’s pause. As we will see in chapter 8, wages rose in tandem with productivity, working conditions improved, and America became more equal as technology progressed. It is somewhat telling that not even union leaders advocated slowing down the pace of change. Unlike Britain in the classic period of the Industrial Revolution, America in the twentieth century didn’t experience outright resistance to technological progress because, as Green went on to argue in his article, mechanization brought improved material well-being for the majority of the working population. The Industrial Revolution had shown that society as a whole could gain from technological progress over the long run but that mechanization could bring a painful period of transition for some. Green also pointed to its adverse effects on those members of the workforce whose skills were made redundant. To support workers who went through pain for the sake of society’s gain, he proposed a dismissal wage for workers to help them cope with adjustment, a shorter workweek so that leisure would become more widely shared, a system of federal employment agencies to make job matching more efficient, the provision of vocational training to update workers’ skills, and higher wages to stimulate demand and bring industries to work at full capacity.
Green was by no means alone in being concerned about the machinery question. In the early 1930s, discussions of machines stealing citizens’ jobs were featured in radio talk shows, films, and academic conferences, and the Committee on Labor of the House of Representatives even held several hearings on the subject.3 The return of machinery angst cannot be explained in complete isolation from the Great Depression, which certainly exacerbated and prolonged concerns about technological unemployment. Yet the latter was not the cause of the former. As the economic historian Gregory Woirol has pointed out, “The honor of starting the technological unemployment debates belongs to Secretary of Labor James J. Davis.”4 In a 1927 speech, two years before the outbreak of the Great Depression, Davis was the first to take note of the technological challenges facing labor:
For a long time it was thought impossible to turn out machines capable of replacing human skill in the making of glass. Now practically all forms of glassware are being made by machinery, some of the machines being extraordinarily efficient. Thus, in the case of one type of bottle, automatic machinery produces forty-one times as much per worker as the old hand processes, and the machine production requires no skilled glass blowers. In other words, one man now does what 41 men formerly did.… The glass industry is only one of many industries that have been revolutionized in this manner. I began my working life as an iron puddler, and sweated and toiled before the furnace. In the iron and steel industry, too, it was long thought that no machinery could ever take the place of the human touch; yet last week I witnessed the inauguration of a new mechanical sheet-rolling process with six times the capacity of the former method.5
But like Green, Davis was no Luddite. Technological progress, he added, must continue:
If you take the long view, there is nothing in sight to give us grave concern. I am no more concerned over
the men once needed to blow bottles than I am over the seamstresses that we once were afraid would starve when the sewing machine came in. We know that thousands more seamstresses than before earn a living that would be impossible without the sewing machine. In the end, every device that lightens human toil and increases production is a boon to humanity. It is only the period of adjustment, when machines turn workers out of their old jobs into new ones, that we must learn to handle them so as to reduce distress to the minimum.… Please understand me, there must be no limits to that progress. We must not in any way restrict new means of pouring out wealth. Labor must not loaf on the job or cut down output. Capital must not, after building up its great industrial organization shut down its mills. That way lies dry rot. We must ever go on, fearlessly scrapping old methods and old machines as fast as we find them obsolete.6
Hardly any serious commentator argued in favor of slowing down the pace of mechanization, despite the sense that manufacturing employment was beginning to wane. Two new sources of productivity data, published in May 1927 and suggesting that manufacturing employment had fallen between 1919 and 1925, had sparked the technological unemployment debates. During the 1927 December meetings of the American Economic Association, the newly compiled data naturally became a subject of intense debate. As the economist John D. Black remarked, “It is hard to believe that there was an actual decrease of 7 per cent in the number of workers in agriculture, manufacturing, mining, and railway transportation in this short period.”7 Most analysts had been assuming that the exodus from agriculture had primarily been absorbed in manufacturing.
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