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Egalitarianism, Inequality, and Age: The Rural North in 1860

Published online by Cambridge University Press:  03 March 2009

Jeremy Atack  and
Fred Bateman
Jeremy Atack
Affiliation:
Associate Professor of Economics at the University of Illinois, Urbana-Champaign, Urbana, IL 61801
Fred Bateman
Affiliation:
Professor of Business Economics and Public Policy at Indiana University, Bloomington, IN 47405
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Abstract

Little is known about the distribution of wealth in the allegedly egalitarian society of the rural North on the eve of the Civil War. This paper investigates the role of the age structure of the heads of household and a life-cycle pattern of accumulation in determining the wealth distribution within that society and among the various groups that comprised it. The results suggest a need for caution in making cross-group or inter-temporal comparisons in wealth distributions without taking account of such factors.

Type
Papers Presented at the Fortieth Annual Meeting of the Economic History Association
Information
The Journal of Economic History , Volume 41 , Issue 1 , March 1981 , pp. 85 - 93
Copyright
Copyright © The Economic History Association 1981

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References

1 Gallman, Robert E., “Professor Pessen on the ‘Egalitarian Myth,’” Social Science History, 2 (Winter 1978), 195.Google Scholar

2 Soltow, Lee, Men and Wealth in the United Stares, 1850–1870 (New Haven, 1975).Google Scholar

3 Congress, U.S., “Data on the Distribution of Wealth in the United States,” Hearings Before the Task Force on the Distributive Impact of Budget and Economic Policies, 95th Cong., 1st Sess. (Washington, D.C., 1977).Google Scholar

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9 Ibid., 198.

10 For a discussion of the sample, see Bateman, Fred and Foust, James D., “A Sample of Rural Households Selected from the 1860 Manuscript Censuses,” Agricultural History, 48 (01 1974), 75–93.Google Scholar

11 As the zero wealth holders constitute a fairly large fraction of the sample, their treatment is particularly important. On the one hand, excluding them (the usual treatment in a log or semi-log model) excludes an important segment of the population and implicitly argues for a dichotomous model, but leaves no wealth variation to explain for one group. On the other hand, mimicking the behavior of the logarithmic function as wealth approaches zero by substituting a very large negative number gives undue weight to the group. Excluding the zero wealth holders results in much lower implicit accumulation rates, whereas substituting a large negative number results in much higher rates. The results reported here were derived setting the zero wealth to $I. The results are fairly insensitive over a fairly wide range of values.

12 The only equations in which age was not the most important explanatory variable were those for blacks, illiterates, and immigrants. In each case, farm ownership dominated age, but age was the second most important variable.

13 For example, the interest rate quotations given in Macaulay, Frederick R., Some Theoretical Problems Suggested by the Movement of Interest Rates, Bond Yields and Stock Prices in the United States Since 1856, NBER (New York, 1938), are in the range of 6 to 8 percent;Google Scholar the manufacturing profit rates given by Bateman, Fred and Weiss, Thomas, A Deplorable Scarcity (Chapel Hill, forthcoming) are about 20 percent;Google Scholar and agricultural profit rates given by Bateman, Fred and Atack, Jeremy, “The Profitability of Northern Agriculture in 1860,” Research in Economic History, 4 (1978) 87–125, are about 10 percent. The accumulation rates implied by the regression coefficient of age could be a linear combination of these rates.Google Scholar

14 Data are for Massachusetts in 1855, averaged for men and women. See Sydenstricker, Edgar, Health and Environment (New York, 1933), p. 164.Google Scholar

15 No person or group, of course, experienced the life cycles depicted here. Rather, in the presence of widely diffused economic growth the decline in later years might be postponed indefinitely.

16 Gaffinan, “Professor Pessen,” 197.Google Scholar

17 The only pronounced deviations from this generalization were for women, where the average age was 49 and for nonfarm household heads whose average age was 39.

18 Bureau, U. S. of the Census, Census of the Population: 1970, vol. 1, Pt. 1, section 2, P. 649.Google Scholar

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21 Atack, Jeremy and Bateman, Fred, “The Measurement and Trend of Inequality: An Amendment to Basic Revision,” Economic Letters, 4 (10. 1979), 389–93.Google Scholar See Also Formby, John P. and Seaks, Terry G., “Paglin's Gini Measure of Inequality: A Modification,” American Economic Review, 70 (06 1980), 479–82.Google Scholar

22 See especially American Economic Review, 67 (June 1977).Google Scholar

23 Pessen, Edward, Riches, Class and Power.Google Scholar

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25 wright, Gavin, “‘Economic Democracy’ and the Concentration of Agricultural Wealth in the Cotton South, 1850–60,” Agricultural History, 44 (01. 1970), 63–94.Google Scholar

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28 Soltow, Lee, Wealthholding in Wisconsin (Madison, 1971).Google Scholar