Thursday, June 1, 2017

McCurry on Slavery's Capitalism

Stephanie McCurry reviews Slavery’s Capitalism in the Times Literary Supplement. She raises interesting questions about the implications of the treatment of capitalism and slavery in the New History of Capitalism. I, however, find myself in pretty much complete disagreement with her about two of the essays.

She declares that

“Baptist's argument about enslaved labour in cotton "labor camps" as bodily torture is completely persuasive. Walter Johnson made a very similar case, also powerfully, in River of Dark Dreams (2012). There is nothing to argue with here. Neo-classical economic historians beg to differ and have taken Baptist to task, insisting that efficiencies were the result of the introduction of superior strains of cotton seed. That technical fight goes on, but it is largely beside the point.”

I can’t figure out what she could possibly mean by “beside the point.” Isn’t the point to create interpretations of the past based upon the available evidence? That is what “the Neo-classical economists” have done and Baptist has not. It has long been known that productivity in cotton production was increasing. Why? Olmstead and Rhode collected a large amount of evidence to try to answer the question. They concluded that slaveholders used violence to coerce maximum effort from slaves and then used innovation in seeds to increase the amount of cotton that could be produced from that maximum effort. McCurry seems to simply buy Baptist’s lie that Olmstead and Rhode, as well as other economists deny the role of violence in the system. I am not going to repeat all the elements of the argument here, but you can read my earlier blog post to see why I believe Baptist’s argument is about as far away from persuasive as an essay can get. The bottom line is that Baptistic history should never in anyway be encouraged. History needs a big sign that says “Do Not Feed the Baptist.”

McCurry also writes that

“Slaves were not compelled by the power of the dollar - that is to say of capital - but by the whip.”

The problem with this statement is that the first part is contradicted by a considerable amount of evidence. There is, of course, plenty of evidence that the second part it true: slaves were motivated by the whip. But there is also a lot of evidence rewards were used as well. I am sure that my saying this will be taken out of context by some people and used to show that economists don’t believe that slaves were tortured, but nothing could be further from the truth. Whipping and other forms of physical assault were obviously widely used. There is, however, plenty of evidence that rewards, including money, were used as well. See, for instance, Kathleen Hilliard’s Master, Slaves and Exchange. If I remember correctly A Slave No More also has an interesting description of an arrangement in which John Washington was hired out to a tobacco factory. His owner got a fixed payment, and Washington got a piece rate for everything that he produced above a specified amount. The point I am trying to make here is that, while we should never downplay the brutality of slavery, it is also a disservice to the history of African American people to deny the diversity of their experiences. Slave states occupied a very large territory with diverse environments. If you include the rest of the Americas the diversity is even greater. Slaves produced a wide array of crops, manufactured a variety of goods, and performed many different services. The one thing they all had in common is that they were not free. Even if they were well treated, continuing in that condition depended on the continuing goodwill of their master (not to mention his continuing good health and economic success).

McCurry finds Baptist persuasive, but when John Majewski asks

“why Republicans opposed the expansion of slavery if the South was as capitalist, modern, diversified, thriving and innovative as the North”

she finds that

The answer he offers is not only unpersuasive; it provides a good basis for the contrary view. The North, Majewski concludes, differed from even the most modern part of the South in one important respect: "the democratization of education and innovation". "Slavery created a political economy antithetical to long-term development", which explained why Northern Republicans fought the expansion of slavery into the territories. Far from securing the kind of material and ideological convergence that is crucial to slavery's capitalism, Majewski's argument, like Shankman's, seems to confirm that slavery could generate enormous profit for Northerners while retaining a distinct political economy that served as a brake on national capitalist development.

Majewski provides considerable evidence that even in areas along the border with very similar geography, slave states invested less in education and produced less innovation. He shows that Republicans were aware of these differences and regarded them negatively.
McCurry does not provide any evidence to contradict this argument. She declares that

the critical issue in 1860 was not that Republicans saw slavery as a problem, but that slaveholding Southerners saw free labour and industrial capitalism as an existential threat. The slaveholders had once called the shots in US politics. But by 1860 the slave South was not the leading edge of anything except pro-slavery nationalism. It seceded and provoked a civil war over the future of the nation and of slavery in it.

But wasn’t it both? If Republicans had not opposed the spread of slavery into new territories, would Southerners have viewed them as a threat to the existence of slavery?

Gavin Wright’s review for EH.net remains the most insightful review of Slavery’s Capitalism


Tuesday, May 30, 2017

Quick Take on Bankers and Empire

I just finished reading Peter James Hudson’s Bankers and Empire: How Wall Street Colonized the Caribbean  

Here is John Clegg interviewing Hudson for the Brooklyn Rail.

Here is a New Dawn podcast of Hudson talking to Michael Dawson about the book.

Hudson describes the activities of America’s most important financial firms in the Caribbean during the late nineteenth and early twentieth centuries. I have been looking forward to reading the book because he studies many of the same firms that I have studied in my work on trust companies. (Institutions, Entrepreneurs and American Economic History: How the Farmers Loan and Trust company Shaped the Laws  of Business: 1822-1929; “A Failure of Regulation?: Reinterpreting the Panic of 1907,” Business History Review October 2014; and “Trust Company Failures and Institutional Change in New York, 1875-1925,” Enterprise and Society forthcoming). He is also looking at roughly the same period that I do, but he asks very different questions.

Hudson wants to understand how the actions of these firms in the Caribbean were shaped by the combination of racism and the profit motive.  He writes about racial capitalism, but do not confuse this book book with Baptist and Beckert style New History of Capitalism. They make grand claims and portray their work as the result of intense archival research, but their overblown claims are constructed from a secondary literature that is either misrepresented or concealed, and the archival references are ornamental. Hudson, in contrast, tells a story that is built from the ground up using primary sources. It is a messy story, because that is the story that emerges from the wide array of primary sources that he uses. I thought this quote from the interview with Clegg provided a nice description of my impression of the book:

I think it has helped me to understand that the project of “U.S. imperialism” was contingent, marked by an incomplete hegemony, often notable for its confusion, experimentation, and failure, defined through competing interests, and rarely triumphalist. This is not to say that it didn’t exist—or that its effects in the Caribbean, and elsewhere, were not palpable, bloody, or real. But there was always pushback and, while the U.S. state often served as the intermediary for U.S. capital in the Caribbean, oftentimes government officials tried to be a brake on the activities of banks if they felt they were not in the strategic and economic interests of the state. Before I began this project I don’t think I was aware of the role of law and regulation in mediating the relation between banking and imperialism. More often than not, banking expansion was an attempt to evade, erode, or re-write the federal regulations governing banking activity. 

The bankers in the book both compete and cooperate. They see the potential for profit, but ignorance and prejudice often leave them stumbling around trying to get hold of it. There are profits, but there are also failures. They try to use both U.S. and foreign governments to their advantage, but not always successfully. They see themselves as constrained by the law, while also trying to change the law and take advantage of operating under multiple legal regimes. The book reminded me of the end of E.P. Thompson’s Whigs and Hunters, where he describes sitting in his office, surrounded by piles of papers, trying to figure out what it all meant, because the story he had found did not fit into existing narratives about the role of law.

I’ll admit that the economist in me sometimes wanted a little more about the quantitative significance of the firms’ actions. In addition, although the references to the secondary literature, including business history, are extensive, Hudson does not address more social science oriented history. There has been a lot of recent work on institutions and financial development in history, including Latin America and the Caribbean (especially work by Haber and his students), and I’ll have to give more thought to how Hudson’s story relates to this work.


Those issues aside, however, the book tells an interesting story, and I love Hudson’s commitment to building a stories from the primary sources. Moreover, as someone who has written about the same characters, the stories rang true to me. I have tried to tell very different stories about these firms, but his descriptions of them and the people who ran them sounded like the firms and the people that I found in the sources. 

Friday, May 26, 2017

Loan Sharks

The Exchange, the blog of the Business History Conference, posted a list of new books of interest, and I noticed Loan Sharks: The Birth of Predatory Lending by Charles Geisst, published by the Brookings Institution. I hadn’t heard about the book before, but I was curious since there has been a lot of interesting work on loan sharks in the last decade or so. I was particularly interested to see if he cited my work with Mary Eschelbach Hansen ("The evolution of garnishment and wage assignment law in Illinois." Essays in Economic & Business History 32 (2014): 19-46). I looked Geisst’s book up on Google books and did a quick search. Our paper did not show up in the search.

I assumed he must cite Anne Fleming ("The borrower's tale: a history of poor debtors in Lochner Era New York City." Law and History Review 30, no. 04 (2012): 1053-1098 or "City of Debtors: Law, Loan Sharks, and the Shadow Economy of Urban Poverty, 1900–1970." Enterprise & Society 17, no. 4 (2016): 734-740.)  But she did not show up in the search either.

Michael Easterly ("Your Job is Your Credit: Creating a Market for Loans to Salaried Employees in New York City, 1885-1920." The Journal of Economic History 70, no. 2 (2010): 463-468).

Bruce Carruthers, Timothy Guinnane and Yoonseuk Lee ("Bringing “honest capital” to poor borrowers: The passage of the US Uniform Small Loan Law, 1907–1930." Journal of Interdisciplinary History 42, no. 3 (2012): 393-418).



I couldn’t find any mention of any of them.

I was beginning to think that the search function must not be working, then I searched for Geisst and there were numerous hits.


Perhaps the search in Google books is flawed. I hope that is the case. Maybe it only finds the name of the author. If the search is not flawed, I am puzzled how someone can write a book that does not cite any of the recent research on the topic. I assume from the low price that the book is aimed at something wider than a purely academic audience, but I’m not asking for a detailed historiography, just some references to relevant work.

Monday, May 8, 2017

Two Awards and Two Conferences

Between end of the semester grading and trying to work on the book on the history of bankruptcy that Mary Eschelbach Hansen and I are writing I haven't found much time to blog lately, but here are a few economic history things worth noting. 

Two Awards

Dave Donaldson won the John Bates Clark Medal. Although the prize committee’s statement does not refer to him as an economic historian, it emphasizes important work that he has done on historical topics. Most of his papers are available here at his website. Here is a Q &A with the Wall Street Journal

Naomi Lamoreaux was awarded the Lifetime Achievement Award from the Business History Conference.

Two Conferences

The program for the annual meeting of the Economic and Business History Society.


The program the NBER Summer Institute 2017 Development of the American Economy. Be sure to check back later because only two papers are linked right now,

Now back to the history of bankruptcy.

Sunday, April 30, 2017

Runaway Slave Ads

I am putting up this link to a blogpost from last year because of an article in the Washington Post about Ed Baptist's project to digitize runaway slave ads. The article quotes Baptist and, not surprisingly, does not mention that several people have already done what he claims to be doing.

Fugitive Slave Ads and the Runaway New History of Capitalism

Credit Relationships and Business Bankruptcy during the Great Depression

here is an interesting new paper by my favorite economic historian, Mary Eschelbach Hansen, and her co-author Nicholas Ziebarth.

Hansen, Mary Eschelbach and Nicolas L. Ziebarth. 2017. "Credit Relationships and Business Bankruptcy during the Great Depression." American Economic Journal: Macroeconomics, 9(2): 228-55.


Abstract

“Credit relationships are sticky. Stickiness makes relationships beneficial to borrowers in times of their own distress but makes them potentially problematic when lenders themselves face hardship. To examine the role of credit relationships during a financial crisis, we exploit a natural experiment in Mississippi during the Great Depression that generated plausibly exogenous differences in financial distress for banks. Using new data drawn from the publications of the credit rating agency Dun & Bradstreet and from original bankruptcy filings, we show that financial distress increased business exit but did not increase the bankruptcy rate. Financial distress caused both banks and trade creditors to recalibrate their collections strategies, which is revealed by changes in the geographical distribution of the creditors of bankrupt businesses.”