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March 01, 2005

20050224 Econ 113 Lecture: Gilded Age and Progressive Era

20050224 Econ 113 Lecture: Gilded Age and Progressive Era

Two parts to this lecture:


What was Populism? Three things:

Was populism left or right? Neither. It was for the little guy, and against coastal elites. It could swing either left or right...

Populism ran out of steam and was superseded by Progressivism, which sold itself as a pragmatic movement that tried to tackle the problems of the Gilded Age.

Problem 1: Rural poverty, especially in the South (what seemed a good rural standard of living in 1840 no longer seemed good in 1900, when output per capita was at least four times higher). Solution: education and uplift; public health. Rockefeller and hookworm.

Problem 2: Urban poverty. Public health (The Jungle by Upton Sinclair). Wages and working conditions (Triangle Shirtwaist fire). Unionization--America's bloody labor history. Immigration and acculturation. Solution: Good government and regulation.

Problem 3: Large corporations. Not us, but them. Malefactors of great wealth. Monopoly prices. Quality of output. Solution: Good government and regulation.

Progressive-Era responses to these problems:

In general, the exaltation of technocrats (and sometimes direct democracy) over politicians.

Not a welfare state, not a social-insurance state, but a regulatory-commission state.

Progressivism "worked": there was no socialism in the United States

Progressiism was a minority current: Theodore Roosevelt's creation, first as president and then as spoiler-ally of the Democrats allowing Woodrow Wilson to gain the presidency.


American Industrial Supremacy

Three "competitors" for "industrial supremacy" around 1900: Germany, Britain, U.S. Britain in 1860 is the world's industrial superpower. You would think that the world's industrial superpower has an enormous advantage in being the icebreaker for new technologies. But Britain wasn't.

The high tech industries of the late-nineteenth century went elsewhere:

German edges:

British deficiencies:

American additional edges, beyond resources and scale"

Leon Trotsky in 1917: the U.S. is the furnace where the future is being forged.

Posted by DeLong at March 1, 2005 12:11 PM

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Comments

Why can't we teach both scienceandengineering *and* how to write Latin verse?

Posted by: Abby at March 1, 2005 12:36 PM


We made the American worker richer by stopping immigration.
The city workers became richer immediately because there was less competition for jobs, and the rural workers became richer when most of them immigrated to the cities. Farmers became poorer as their labor supply left and they had to do all the work themselves without the traditional 'hired man' and domestic servants to take the load off.
Increasingly even their oldest sons and youngest daughters left for the cities unless they were actually paid (directly or indirectly) for their work. At least, that's how it worked in both of my parent's families.
Even the development of internal combustion engines that wiped out demand for horse feed and nitrate/sulfate fertilisers that increased production of food were not sufficient to destroy the standard of living of rural areas once the immigration deprived urban labor markets started sucking away the surplus rural labor at higher and higher wages.
Now we've reached the point that most farmers in America work off the farm to pay for their hobby because farming (and ranching) is no longer a real job any more than hunting, fishing, or trapping is.
Most farmers are really just farming for the real estate tax advantages and to make a little money on the side while they speculate in real estate. That's why so much eastern farmland with good rainfall has converted to timber. You don't have to work so hard and you get the tax advantages anyway.
Hell, even putting the land in sugar maple beats farming.

Posted by: walter willis at March 1, 2005 12:40 PM


Brad's notes seem to imply a belief that 19th century Germany was over-industralised. A Prussian Great Leap Forward, with arguably disastrous sociological consequences for them and the entire world. In that sense, the Trotsky quote is incomplete -- there was a good furnace (US) and a bad one (Germany).

Posted by: P O'Neill at March 1, 2005 12:45 PM


You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold!

Posted by: fatbear at March 1, 2005 01:09 PM


Populism: The Minnesota Farmer-Labor Party -- probably the furthest-left party that ever ruled an American state (ca. 1932-1938) -- got a substantial amount of its support from small-town bankers. The urban-rural divide was enormous, and Minneapolis wasn't quite urban -- "urban" meant the East Coast banks.

The volatile nature of populism cannot be overstated. In 1936 a Minnesota FL Congressman was the only vote in favor of giving active support to the Spanish Republic, and in 1942 a Minnesota FL Congressman was implicated in pro-German activities. At the beginning, though, the FL Party was explicitly Left.

IMHO, Minnesota's political uniqueness came from three things. One, a lot of continental, non-Anglo-Saxon, immigrants from Europe; two, enough distance from the major centers to feel left out; and three, enough local heft to be able to resist subjugation.

Minnesota can still be flaky, but its FL tradition is a thing of the past.

Posted by: John Emerson at March 1, 2005 02:41 PM


Your list of British deficiencies (particularly the neglect of infrastructure and education) reminds me of the Kevin Phillips book, Wealth And Democracy.

Phillips argued that the US's position now is comparable to previous empires(Dutch, Spanish, British) that chose decline over reform.

Posted by: beowulf at March 1, 2005 03:49 PM


Further to the remarks about British deficiencies:-

- Infrastructure investment STOCK was high (railways, canals, shipping), which led to a low FLOW, which is what is normally meant by low investment. But the stock is what counted.

- The educational system was not poor in any sense other than the remaining points; this point is double counting.

- Britain did not lag behind in primary education, except in the sense that other countries launched programmes earlier. On the one hand, French superiority never gave it an advantage, showing that the methodology is looking at the wrong things. On the other hand, primary education - like all innovation - had a cost in harming existing stock. It is recorded that the railway signalling system had to be reworked when the supply of intelligent illiterates fell (literates were handicapped in learning it). Of course, this happened quite early - the "lag" was only in terms of milestones, who was first, not in terms of stock of educated workforce.

- The system of teaching the elite non-engineering stuff worked well. To this day, everywhere engineers are on tap, not on top. British development rested on Boulton/Watt, Rolls/Royce type partnerships analogous to film producers and directors. You NEED non-technical types to make enterprises work, as well as technical skills.

- There were no problems with the financing of industry as such. Rather, there were problems with using corporate structures without having huge backfires and agency costs, so they had been banned since the South Sea bubble; companies needed specific charters until quite late. German competition led to companies acts, but the risk materialised too.

- British investors did not usually finance the Argentinian government, but rather municipalities and enterprises in Argentina. Sovereign risk was eliminated by British hegemony then (which is what led to the bad feeling noted in another thread). The preference arose from needing new fields to conquer; it was easier to be neocolonial than to innovate, when innovation threatened past achievements. This problem persists today in company innovation in all countries, and it is never a problem for the second-runners who have less to lose.

- The British labour elite was much less interested in sharing quasi-rents than in overthrowing the social order, using industrial tactics.

Posted by: P.M.Lawrence at March 1, 2005 04:07 PM


Abby: "Why can't we teach both scienceandengineering *and* how to write Latin verse?"

Maybe the human brain was not meant to know both and would explode in a big fireball if it tried?

I mean, do you know any engineers who know how to write Latin verse (and don't have exploded heads)?

Posted by: fling93 at March 1, 2005 07:12 PM


"German edges:

an excellent system of technical education
a labor movement focused on winning votes, not sharing industrial quasi-rents."

I don't get that point. I thought that voter-getting policies generally were bad for growth, or so sayeth the dogma. Like how it's considered an advantage for the EU or the IMF to "shield" the economic systems from "democratic pressures". An stuff.

Posted by: luci phyrr at March 1, 2005 09:24 PM


So, what was the FDR Armour/Swift story?

Inquiring minds want to know.

I find that it helps to look at the history of industrialism through the lense of three industrial revolutions, three separate moments of rapid innovation and subsequent social and political change. The first, based in Britain, is the coal and steam and textiles that we all know and love. The second, based in Germany and the U.S. between about 1870 and 1930, is oil, steel, and chemicals, and electricity. The third, based in the U.S., Japan, and China from about 1960 to the future is plastics, space, and container ships.

If nothing else, it gives a slightly different angle to the question of why Germany supplanted Britain as the industrial innovater at the end of the 19th century.

Posted by: Ted K at March 2, 2005 04:59 AM


fling93: I don't know. I purposefully mushed the words science and engineering in order to make a specific point: I don't really think that they're the same thing. Is it, in fact, possible to be a true scientist and an engineer at the same time? I think it would be easier to be a good Latinist and a scientist than to combine engineering w/ pure science.

My elementary science understanding although stunted wasn't bad, and although I can't write verse, I could at one point do a pretty mean imitation of Tacitus.

Brad once wrote here that education was about teaching both the useful and the beautiful, and I think he's absolutely right that you need both.

I'm betting that Wittgenstein could handle both, but then he wasn't quite human.

Brad's economic hero Keynes was certainly literate, although it seems that he needed others to help him with the math.

Posted by: Abby at March 2, 2005 06:31 AM


Because my economics background is weak, I always hesitate to comment upon this site.
However, I am familiar with much of the historical literature about Populism, particuliarly that of the American South. I do not recognize the movement that Lawrence Goodwyn chronicled in Brad's admittedly brief description.

Posted by: Bill at March 2, 2005 08:20 AM


Thanks, google! http://www.google.com/search?client=googlet&q=marriage%20of%20iron%20and%20rye

For a second there, I thought Germany had been taken over by drunken blacksmiths.

Posted by: Paul Callahan at March 2, 2005 12:21 PM


TedK, Britain was only ever an industrial innovator in the Bill Gates sense. In the early 19th century it was generally applying the discoveries that were originally made in France. That's not knocking it, because Britain was providing most of the 99% perspiration, but the inspiration part was rarely British.

What I'm getting at here is the distinction between Watt's and Carnot's contributions, and so on.

It's also worth noting that the same relationship obtained between the USA and Germany between the 1870s and 1930s, only with more of the perspiration being German and less American. The USA was NOT a leader in innovation in either sense, "only" in commercialisation. That's not knocking that either; things like production lines were very important. I'm just pointing out that they were different.

Posted by: P.M.Lawrence at March 3, 2005 08:10 PM


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