Study of ante-bellum economic development of the United States has been hampered by an acute shortage of reliable statistical data. Studies of the early capital markets are no exception to this general rule. For the years after 1856, Frederick Macaulay's excellent study provides sufficient quantitative basis for general research; but, in the earlier years, only Bigelow's single unsupported interest series provides the economic historian with statistical information on the condition of the credit market.

The invention of the airplane by Wilbur and Orville Wright in 1903 marked the beginning of an industry which has grown to be the largest single manufacturing employer in the United States. Once the airplane was invented, there was wide-spread expectation that producing aircraft would be a very profitable business.

In 1940, when our Association was founded, this paper might have borne the same title as Caroline Ware's book: The Cultural Approach to History. In the meantime, however, world events have brought economists and historians together around the problem of economic growth. So, while pursuing the same interests illustrated in my contribution to Caroline Ware's book, I have chosen the more fashionable title of “Cultural Factors in Economic Growth.”

Few stones have remained unturned in an effort to reconstruct Anglo-American history in the critical years from the Treaty of Paris in 1763 to the outbreak of the Revolution in 1775. Much has been learned by investigating such problems as public finance, colonial administration, and mercantile policy within the context of an expanded British empire. It is not always realized, however, that by the Treaty of 1763 Great Britain acquired new fields for capital investment as well as vast new lands to govern. In addition to taxation and public expenditure, such problems were raised as capital recruitment and allocation, the modification of financial institutions, and the adjustment of debtor-creditor relationships. Though distinct in certain respects, public and private finance impinged upon each other in the period from 1763 to 1775. This was especially the case after the British credit crisis of 1772, when, in addition to the controversy over tea, debtor-creditor relations between the thirteen colonies and the mother country underwent marked deterioration.

Is Economic History one subject or two? The question has been posed twice during the present century, each time by the growth of a vigorous body of research concerned with economic changes over time but developed largely in isolation from conventional economic history. In each case the new work was quantitative in method, and the result was the phenomenon of two separate bodies of scholarship—the one written in prose and calling itself economic history, the other written mainly in figures and calling itself by another name.

Since agricultural history first acquired independent status it has been carried forward without much theoretical direction. So much research has been done in the field, however, that possibly a tentative general theory for further work may now be advanced. To be useful, an historical hypothesis should probably center on some common denominator of human experience. One possible common denominator is that all men are located within, or are a certain definite distance from metropolitan unit. All those who live within a certain given zone around the metropolis have at least one common experience: they are all some specific distance from the metropolis. Furthermore, for any given group of people this one common experience may have shaped many of their ideas and actions. Since human events take place in time and space, a theory based primarily on these dimensions might be at least roughly applicable to most history.

In the eighteenth century, industry, though still a minor factor in the total economy of the Habsburg monarchy—over 80 per cent of the people lived on the land—was the object of special attention from statesmen and theorists. To them industry connoted progress and showed great promise of being the handmaiden to the evolving power of the modern state. The great teacher in this respect was Colbert, and since the late seventeenth century the rulers of the Habsburg monarchy, as those of other states, had at least paid lip service to his ideas. The static nature of society, however, all too often prevented them from putting Colbert's mercantilist principles into practice.

A Widespread belief exists that those disequilibrating international capital flows known as “hot money movements” and the associated measures instituted to regulate transactions in foreign exchange were peculiar to the post-1914 era and especially to the epoch of the “Great Depression” that commenced after 1929. It is felt that the “relative” stability of world economic and political conditions associated with the operation of the pre-1914 gold standard precluded “hot money” transfers and obviated the need to control the foreign exchange market.1 The experience of the United States during the depression of the 1890's vitiates the accuracy of this sweeping generalization. To be sure, these phenomena were largely unrecognized before the depression of the 1930's, but they nevertheless existed. The purpose of this article is to examine one such pre-1930 hot money movement, the one that occurred during the American presidential election campaign of 1896. The nomination of William Jennings Bryan as the Democratic candidate on a free silver platform at Chicago in July 1896 gave impetus to a major disequilibrating outflow of short-term funds. This condition, in turn, led to an interesting effort to control the foreign exchange market.

It is extraordinary how little is known about the engineers who produced the water wheels, steam engines, textile and other machinery of the early Industrial Revolution. In most economic histories of this period there are merely a few brief and vague references to smiths, carpenters, and millwrights, based on Smiles or Fairbairn, with no contemporary evidence whatever. Most accounts of the development of mechanical engineering normally begin with Bramah and Maudslay, from about 1800, and carry on with such renowned nineteenth-century names as Fairbairn, Roberts, Whitworth, and Nasmyth. Before the nineteenth century, we are usually led to believe, mechanical engineering hardly existed. This belief is largely based on nineteenth-century evidence. William Fairbairn, for example, stated that when he first came to Manchester, in 1814, “the whole of the machinery was executed by hand. There were neither planing, slotting, nor shaping machines; and, with the exception of very imperfect lathes, and a few drills, the preparatory operations of construction were effected entirely by the hands of the workmen.” Similarly, the Select Committee on Exportation of Machinery reported in 1841 that “[machine] tools have introduced a revolution in machinery, and tool-making has become a distinct branch of mechanics, and a very important trade, although twenty years ago it was scarcely known.”

Sir Ambrose Crowley is well known as one of the greatest of early English industrialists. His claim to distinction rests on the immense scale of his operations and on his imaginative approach to the problems of industrial organization. The group of factories he established in County Durham, near Gateshead, constituted what was believed to be the largest ironworks in Europe and was probably the largest industrial unit in the England of his day outside the naval dockyards. Sir Ambrose, whose manufacturing career began in 1682, was an iron manufacturer, converting bar iron into the end products of the iron industry—steel, steelware, nails, and a wide range of iron components and implements. He had entered this branch of the industry as a nailmaker, and nailmaking remained the mainstay of his business.

Monetary and economic difficulties in the United States in the 1830's and early 1840's have been attributed by some writers to the struggle between the supporters of Andrew Jackson's “hard currency” and Nicholas Biddle's “Second Bank.”

If we are successfully to relate our work with the main body of Economic History, we must be able to show the fundamental relationship between quantitative analysis and more conventional methods of economic historians. The historian reconstructs events of the past, and with them attempts to understand the institutions and modes of behavior associated with those events. He seeks to construct a consistent story revealing the fundamental nature and meaning to us of the past, thus creating insight into the past and understanding of it—something considerably beyond a mere account of what probably happened. However, this story must be based upon, and be consistent with, the reconstructed events of the past, “what probably happened.”

A meeting of scholars to consider problems of teaching and research in Asian economic history was held in Highland Park, Illinois, October 30–31, 1959. It was organized under the auspices of The Research Center in Economic Development and Cultural Change of the University of Chicago, and funds were provided by the Division of Social Sciences of The Rockefeller Foundation. Professor Bert F. Hoselitz chaired the sessions.

The Tsarist government played an important and fateful role in the development of the relationship between workers and employers in the early stages of Russian industrialization. Although the general character of this role is well known to historians, further study and reexamination of Tsarist labor policy, in the light of the contemporary concern with economic development, is invited by the Soviet publication in recent years of documentary evidence on nineteenth century labor problems. An attempt will be made in this article to integrate some of the new evidence with data from earlier sources in an analysis of the methods used by the Tsarist government to cope with the problem posed by internal government of industry in an era of growing labor unrest. It will focus on the period between the Emancipation and the 1905 Revolution. Russia did not become an industrial state during this period, but industry made enough progress to bring the country face to face with the modern labor problem. It was a period in which social and economic relations, rooted in feudal traditions, began to undergo significant changes in response to industrial growth. Labor unrest and protest are one of the chief symptoms of the problems inherent in this socio-economic readjustment. To understand the Tsarist approach to these problems it will be necessary to begin with a brief outline of the social milieu of Russian industrialization and of the governmental attitude toward industrial discipline and unrest before the Emancipation. The second section of the article covers the period between the Emancipation and the mideighties, during which the government did not formally regulate the internal order of the factory but was not unconcerned with the relations between employers and workers. The third section covers the period after 1886, when the internal factory order was subject to formal regulation and official inspection.

The origins of a Balkan Orthodox merchant class or classes may be traced back to the fourteenth and fifteenth centuries. Not until the eighteenth century, however, did it become sufficiently strong in wealth and number to capture the trade of Hungary, South Russia, and the eastern Mediterranean. The eighteenth century was a time of expansion of French, German, English, and Russian trade in the Balkans. It was also a time of growth of the trade of Moslem Albanian and Bosnian merchants. But, in terms of its significance to the cultural, political, and general historical evolution of the Balkan peoples, most important of all was the expansion of the Balkan Orthodox merchant: the Greek trader of Constantinople, Salonika, and Smyrna, the Greek and Orthodox Albanian merchant, sailor, and shipper of the smaller Aegean islands, the Greek, Vlach, and Macedo-Slav muleteer and forwarding agent of Epirus, Thessaly, and Macedonia, the Serbian pig-merchant of Šumadija, the “Illyrian” muleteer and forwarding agent of Herzegovina and Dalmatia, who set up business in Ragusa (Dubrovnik) or Trieste, the “Rascian” of Pannonia, and the Greek or Bulgarian of the eastern Rhodope. The Balkan Orthodox merchants were Ottoman, Habsburg, and Russian subjects, but their principal business was to bring goods into or out of the Ottoman Empire. The area of their primary business concentration stretched north and west of the political limits of the Ottoman Empire to Nezhin in South Russia, Leipzig in Germany, Vienna in Austria, and Livorno and Naples in Italy. In western Europe, they succeeded in creating an area of secondary commercial penetration.

Professor Goodrich had indicated that my function is to discuss the relevance of the concept of economic growth to the tasks of the economic historian. But I hope I may be forgiven if I touch incidentally on other sensitive and overworked areas—notably the relationship between theory and quantity on the one hand and history on the other. If the study of economic growth still meant what it did in Adam Smith's day there might be no need to be so cavalier—there might even be no need to hold this session. But a good number of intellectual bridges have fallen into the water since 1776 and it is surely necessary to examine this new construction with an eye not only to its permanence but to its utility.

Discussion from the floor served in the main to elaborate die themes announced in the three prepared contributions. The Chairman, C. Goodrich, pointed out that it was the rise of a new field, Economic Growth, and the increasing popularity of quantitative and theoretical techniques that invited some reappraisal of the goals and methods of economic history. What is the relationship between Economic History and the burgeoning field of Economic Growth ? Should economic historians direct more attention to growth phenomena, and in particular should they make greater use of the analytical and statistical methods so prominendy used in die literature of Economic Growth?

George Murphy and Arnold Zellner, who admittedly “have little taste for ghosts or spirit rapping,” seem quite ready to exhume a doctrine and place it in an “up-to-date” package. We welcome historical re-evaluations; but our joys should not preclude us from challenging unwarranted conclusions. While I cannot deliver any spirits, I can at least do some spade work to turn over a few skeletons as partial refutation of the Murphy-Zellner conclusions. In particular; I wish to contest the following statements: (r) that “it [sequential growth] shortened and modulated business cycle contractions [and] contributed to shortening and alleviating critical situations for labor as a whole” (page 420); and (2) that it was largely responsible for “keeping the percentage of the labor force unionized small” (page 408).

The successful establishment of the European Common Market on January 1, 1959, has renewed interest in the tool by which this most ambitious of all economic integration projects has been accomplished. The interest is the greater as this is only the first of three attempts to integrate economic development on a continental scale. The others are the common markets envisioned for Africa and Latin America. This article is an attempt to convey in the briefest possible space the history of economic integration that preceded the current drive toward common markets.