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³ See Temin, Peter, “Labor Scarcity and the Problem of American Industrial Efficiency in the 1850's,” The Journal of Economic History, XXVI (Sept. 1966), pp. 277–98CrossRefGoogle Scholar.

⁴ Clague, Christopher, “Labor Scarcity and the Direction of Inventive Activity: British and American Textiles, 1810–1845,” (unpublished manuscript, Harvard University, 1967)Google Scholar. Clague used data from Montgomery, James, The Cotton Manufacture of the United States of America (Glasgow, 1840)Google Scholar, and he excepts carding from his conclusion.

⁵ A more complete version of this proof may be found in Temin, Peter, “Notes on Labor Scarcity in America,” Journal of Interdisciplinary History, I (Spring, 1971)Google Scholar.

⁶ See Temin, “Labor Scarcity.…”

⁷ For a survey of the controversy in the Development literature, see Chenery, H. B., “Comparative Advantage and Development Policy,” in Surveys of Economic theory, II (London: Macmillan, 1968)Google Scholar.

⁸ David, Paul, “The Growth of Real Product in the United States before 1840: New Evidence, Controlled Conjectures,” The Journal of Economic History, XXVII (June 1967), p. 168Google Scholar.

⁹ David, “The Growth of Real Product…”, pp. 159–60.

¹⁰ In England at this same time, labor productivity in agriculture was no lower than the average for the economy as a whole. It is not clear why the relative productivity of workers in agriculture was higher in a country without a comparative advantage in agriculture (England) than in a country with such a comparative advantage (the U. S.). Deane, Phyllis and Cole, W. A., British Economic Growth, 1688–1959 (Cambridge, England: Cambridge University Press, 1962), pp. 142–66Google Scholar.

¹¹ Danhof, Clarence H., “Farm-Making Costs and the ‘Safety Valve’: 1850–1860,” Journal of Political Economy, XLIX (June 1941), pp. 317–59CrossRefGoogle Scholar; Primack, Martin L., “Farm Capital Formation as a Use of Farm Labor in the United States, 1850–1910,” The Journal of Economic History, XXVI (September 1966), pp. 348–62.CrossRefGoogle Scholar

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¹³ To harmonize this investigation with the discussion in Section III, the savings rate would have to be defined to exclude capital formation by farm labor. This is consistent with the accounting procedures normally used to calculate GNP. It requires that capital formation in agriculture be viewed as a cost of production or deduction from output, a procedure permitted for the nineteenth century by the continuous expansion of agriculture and the resultant steady stream of agricultural investment.

¹⁴ Friedman, Milton and Schwartz, Anna Jacobson, A Monetary History of the United States, 1867–1960 (New York: Princeton University Press for the National Bureau of Economic Research, 1963), pp. 300–01Google Scholar.

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¹⁶ Similar comments may be made about the depression in Europe. The severity of the European depression often is attributed to the severity of the international currency crisis. As with the monetary contraction in America, it is easy to believe that the absence of a currency crisis in Europe would have alleviated the European depression. But—to follow the parallel a little further—it is equally easy to believe that there were also many actions possible that would have alleviated the depression even with the currency crisis. No single action has been agreed upon as the sole cure for the depression. As Landes states: “The remedy varied—and continues to vary—with the economic philosophy of the doctor.” Landes, David S., The Unbound Prometheus (Cambridge, England: Cambridge University Press, 1969), p. 392Google Scholar.

¹⁷ Temin, PeterThe Jacksonian Economy (New York: W. W. Norton, 1969), p. 157Google Scholar. Although supporting evidence for this conclusion is presented in the book cited (pp. 155–65), the uncertain nature of the underlying data needs to be acknowledged here.

¹⁸ I am here extrapolating from the common observation that prices have been inflexible in the course of recent recessions. A dissenting view can be found in Stigler, George J. and Kindahl, James K., The Behavior of Industrial Prices (New York: Columbia University Press for the NBER, 1970)Google Scholar.

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²⁰ An econometric model similar in spirit to the stagnationist approach can be found in Morishima, M. and Saito, M., “A Dynamic Analysis of the American Economy, 1902–1952,” International Economic Review, V (May 1964), pp. 125–64CrossRefGoogle Scholar. There is no investment equation in this model; investment is assumed to be exogenous.

²¹ Klein, Lawrence R., Economic Fluctuations in the United States, 1921–1941 (New York: Wiley, 1950)Google Scholar, ch. iii, Clark, Colin, “A System of Equations Explaining the United States Trade Cycle, 1921 to 1941,” Econometrica, XVII (April 1949), pp. 93–124CrossRefGoogle Scholar; Duesenberry, James S., Business Cycles and Economic Growth (New York: McGraw-Hill, 1959), pp. 284–94Google Scholar.

²² Friedman and Schwartz, A Monetary History of the United States …, ch. vii. See also Warburton, Clark, Depression, Inflation, and Monetary Policy (Baltimore: Johns Hopkins, 1966)Google Scholar.

Friedman and Schwartz, it might be noted, discuss the determination of money income by money demand, while the Keynesian writers just cited discuss the determination of real income by real demand. Both sets of authors then implicitly use a price-determination equation to get from money to real income or from real to money income. Since the normal Keynesian model assumes prices to be fixed, it is not clear whether this is a difference in research strategy.or a difference in the underlying conception of the economy. See Friedman, Milton, “A Theoretical Framework for Monetary Analysis,” Journal of Political Economy, LXXVIII (March/April 1970), pp. 193–238CrossRefGoogle Scholar, for a discussion of this issue.

²³ But see Chandler, Lester V., America's Greatest Depression, 1929–1941 (New York: Harper and Row, 1970), p. 2.Google Scholar

²⁴ Temin, The Jacksonian Economy, p. 157.

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²⁸ This argument implies that velocity was a function of the interest rate, a view more often associated with the critics of these authors than with them. See Friedman and Schwartz, A Monetary History of the United States …, p. 91n.

²⁹ Philip Cagan, Determinants and Effects of Changes in the Stock of Money, 1875–1960 (New York: Columbia University Press for the National Bureau of Economic Research, 1965), pp. 235–60, 305–09.

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³¹ Gallman, Robert E., “Gross National Product in the United States, 1834–1909,” in Output, Employment, and Productivity in the United States After 1800, Studies in Income and Wealth, Vol. 30 (New York: Columbia University Press for the National Bureau of Economic Research, 1966), p. 11Google Scholar. I have cited GNCF/GNP II as the most conservative estimate of t ie change. Investment by farm labor is counted as investment. If it were not, to harmonize with the discussion in Section I, the shift would appear larger.

³² Data are from David, “The Growth of Real Product …,” p. 155; Gallman, “Gross National Product …,” p. 26; U. S. Bureau of the Census, Historical Statistics of the United States (Washington, D. C., 1960), p. 7Google Scholar. The rate of growth of the labor force did not decline until later in the century, and there are still discrepancies between the data and the theory that need to be resolved. Perhaps the temporary aid to per capita growth from this source was offset by the wartime destruction of capital. See Stanley Lebergott, “Labor Force and Employment, 1800–1960,” in Output, Employment …, p. 118.

³³ Dug to the uncertain nature of the underlying data, this estimate should be regarded only as an order of magnitude. It lies within the range of the times of adjustment computed for neo-classical growth models, although it is longer than one would expect in a reasonably flexible world. I assume that the rate and direction of technical change did not change at the same time as the savings rate. See Sato, R., “Fiscal Policy in a Neo-classical Growth Model: An Analysis of Time Required for Equilibrating Adjustment,” Review of Economic Studies, XXX (Feb. 1963), pp. 16–23CrossRefGoogle Scholar; Sato, K., “On the Adjustment Time in Neo-classical Growth Models,” Review of Economic Studies, XXXIII (July 1966), pp. 263–68CrossRefGoogle Scholar; Conlisk, John, “Unemployment in a Neoclassical Growth Model”, Economic Journal, LXXVI (Sept. 1966), pp. 550–66CrossRefGoogle Scholar

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³⁵ Deane and Cole, British Economic Groivth, 1688–1959, p. 308.