Peter Temin, ed. Engines of Enterprise: An Economic History of New England. Cambridge, Mass: Harvard University Press, 2000. vii + 328 pp. $24.95 (cloth), ISBN 978-0-674-00099-5.
Reviewed by David R. Meyer (Department of Sociology, Brown University)
Published on EH.Net (August, 2000)
New England has been subjected to more economic history studies than any other region, except the South, but coherent explanations of long-term change remain scarce. Breadth of colonial-period coverage contrasts with idiosyncratic case studies of nineteenth-century towns, firms, and industries; and seemingly obvious explanations of New England's economic travails during the twentieth century resting on false assumptions. This book helps rectify these gaps in our knowledge and points to future research. The essays, a result of a conference at the Federal Reserve Bank of Boston, intend to provide a survey of New England's economic history and an intellectual rationale for the Bank's creation of a New England economic history museum. Most contributors draw on their previous New England research or on their expertise with themes that are applicable to New England; thus, essays are reflective and synthetic, rather than original.
Several themes -- comparative advantage, agglomeration economies, technical change, and culture -- run through the essays, according to Temin's introductory chapter, but they serve mostly as reference points for subsequent narratives. Margaret Newell explains the economic success of colonial New England as an outcome of an imported culture that valued work, thrift, success, and consumption. This culture combined with the use of government to support the common good; the inheritance of Native Americans' capital investments in land; an aggressive shift into commercial services and supplying Caribbean slave economy; and capital investment in agriculture and manufacturing. This created numerous economic actors (wholesalers, retailers, farmers, manufacturers) who were poised to contribute to post-colonial development. Winifred Rothenberg covers the period up to the 1830s and argues that New Englanders' value system supported business enterprise. Farmers were swept into a market economy as price signals increasingly governed decision-making; they raised productivity, reduced fertility, accumulated capital that was transferred to commerce and manufacturing, and created markets to efficiently employ labor. Rural economic transformation set the stage for industrial growth, especially in cotton textiles. Peter Temin traces rapid industrialization of New England during 1830-1880, and he attributes it to the protective tariff that allowed the cotton textile industry to grow and to the large supply of women, not employed intensively in agriculture, who were available for factory work. The American System of Manufactures, based on interchangeable parts, emerged from government armories, which became leaders in the machine tool industry. Firms with access to these innovations capitalized on them to become leaders in machinery.
The standard view posits that New England drifted into decline during 1880-1940, because its top industrial sectors of textiles and shoes were not leaders in the new industrial economy based on consumer and producer durables, but Joshua Rosenbloom demonstrates errors in that interpretation. Relative, followed by absolute, decline in New England's old industries was compensated by a shift into services and growth of machinery, machine tools, and instruments, that were part of the emerging industrial economy. Consequently, per-capita income levels remained twenty to thirty percent above the national level. That success helps explain New England's transformation from manufacturing to a knowledge-based economy -- as Lynn Browne and Steven Sass document. Labor supplies adjusted to economic cycles through in- and out-migration, maintaining wage levels, and industries shifted, coincident with national manufacturing changes, from aircraft engines and electronics to minicomputers and instruments to services (computer, financial, health care). New England's leadership in higher education supported this transition to a knowledge-based economy.
The last chapter, in the form of three vignettes, includes reflections on New England's economy. Bernard Bailyn highlights the critical boost that Caribbean and southern slave economies gave to its growth during the colonial period; Merritt Roe Smith reiterates his research theme that government armories were critical to its industrialization; and Paul Krugman posits that the directions of its future economy are indeterminate.
The essays link together sequentially, and, as importantly, thematically, and major points provide building blocks for the next essay. This is a tribute to Temin's editorial skills and guidance. Therefore, readers can consider questions that span longer time frames, such as the role of education, capital investment, or industrial innovation. And, perplexing incongruities become apparent, such as: how were new industries (instruments, aircraft engines) funded and nurtured coincident with substantial decline in a large share of the industrial base (textiles, shoes)?
Although the writers reflect on previous research and synthesize it, they succeed in stimulating fascinating questions for future research. Newell's argument that New Englanders successfully built a prosperous economy on trade services, finance, and production of high value-added products for exports challenges standard views that regional economies are better off with an export staple that is widely demanded in external markets. Rather than New Englanders being forced to adapt to no staples, they grasped opportunities to move into sophisticated services with high returns on investment, and they built skills in trade and finance that were less susceptible to competition than staple exporters, who always faced competition from new, better production areas.
The essays coverage of industry, especially in the nineteenth century, point to the continuing conundrum of New England industrialization. Rothenberg has slain the argument that poor agriculture left people with no alternative but to enter manufacturing. Instead, prosperous farmers accumulated capital that was, in part, transferred to industry. Nevertheless, we are left with few factors - a large supply of women not employed intensively in agriculture and government funding of armories -- as reasons why New Englanders grasped industrial leadership during the nineteenth century, especially before 1880. These are thin reeds to explain industrialization. New England was not the only eastern region with large supplies of women not employed intensively in agriculture; New York and Pennsylvania had similar areas, but their textile and shoe industries were dwarfed by New England's. The American System of Manufactures based on interchangeable parts was not important until late in the nineteenth century, yet how does one explain widespread development of New England's metal manufactures outside the arms sector from 1840 to 1880? While armories were important, it is not clear that they were pivotal -- many private firms had leading mechanics who did not serve in armories, and even if they went to armories, they also brought their technical skills. Providence area machine shops trained many of America's leading mechanics, but their links to armories were episodic at most. The large scale of textiles and shoes, and to lesser extent, machine tools and machinery, obscure growth of other industries such as jewelry, brass, hardware, clocks, and rubber. Explanation of New England industrialization must account for them. That effort will broaden identification of factors that contributed to industrial success. This approach also provides a better base for explaining, as Rosenbloom argues, resiliency of New England's economy even with massive industrial decline during 1880-1940, and the capacity to shift into new industries after 1940 that Browne and Sass document, but only explain tentatively.
Many articles and books have covered the post-1945 decline of New England, and often they have had the facts and explanations wrong. This collection identifies some factors missing in previous studies, but it leaves important questions unanswered. Tempting targets for research include tracing links among machinery, instruments, telecommunications, and early computers. They had deep roots in the late nineteenth century, but the threads that bind them up to the 1970s remain obscure. Financial services have emerged as a major part of the New England economy, yet that sector has a rich heritage that continued to build, not only standard banking and insurance, but also venture-capital firms and investment management, some of whom go back decades. The essayists highlight the importance of New England's educated labor force and its capacity to move into new economic sectors. Briefly touched on, but awaiting more research, is the fact that New England contains the nation's greatest collection of leading liberal arts colleges and universities, providing education that has been touted as core to the new knowledge-based economy. As Krugman notes, change is not predictable. Nevertheless, these essays demonstrate that the New England economy has maintained strong links to its past, as well as idiosyncratically departing in new directions. Its specialization in liberal arts education may suggest some predictability to the future -- precise economic specialization may be uncertain, but labor force adaptability and the capacity to enter new, leading sectors may be predictable.
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David R. Meyer. Review of Temin, Peter, ed., Engines of Enterprise: An Economic History of New England.
EH.Net, H-Net Reviews.
August, 2000.
URL: http://www.h-net.org/reviews/showrev.php?id=4412
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