The fundamental conclusion of this paper is that technological progress is intimately dependent on economic phenomena. The evidence suggests that society may indeed affect the allocation of inventive resources through the market mechanism somewhat as it affects the allocation of economic resources generally. If this is true, then technological progress is not an independent cause of socio-economic change, and an interpretation of history as largely the attempt of mankind to catch up to new technology is a distorted one. Cultural lags undoubtedly exist in social history. The automobile—to use an obvious example—rendered obsolete many pre-existing social arrangements and behavior patterns. But the reverse is also true. New goods and new techniques are unlikely to appear, and to enter the life of society without a pre-existing,—albeit possibly only latent—demand. Even a longstanding demand may have been intensified shortly before a technique to satisfy it is invented. In addition to cultural lag, there exists technological lag—a chronic tendency of technology to lag behind demand.

It is not chauvinism or instinctive egocentrism that leads Americans to believe they have evolved a beneficent form of economic organization. For despite all its shortcomings, and, alas, they are all too many, our volitional economy has demonstrated a capacity to stimulate human effort, increase investment, improve productivity, and gradually erode diat greatest evil of all commonwealths, perceived since Plato's days: the coexistence of great wealth and abject poverty. It is therefore entirely appropriate this year, when we are commemorating two great experiments in democratic public policy, that we should examine once again the origins of our polity, for I am convinced that it was the conscious and unashamed acceptance of a system of politico-economic pluralism that made possible the vigor and the catholicity of our developing institutions. The play of these pluralistic forces again and again has saved us from hardened dogma, so that the real virtue of our history—political, economic, and intellectual—has been our flexibility, our capacity to adapt ideas and instrumentalities to tasks of high social urgency. In the process we have created an economy so complex that it almost defies description, but one so tolerant ideologically that it can be called essentially private by those who find happiness in that ascription although there can be no burking the very obvious fact that it is today inherently socialistic. For whereas one can demonstrate statistically that two thirds of all capital formation is private, by an equally plausible demonstration it can be shown that, adding corporate and personal income taxes only, more than two thirds of the revenues of American enterprise are socialized. This mixed economy is, therefore, the great, ever-improving American invention, based on the quintessential content of our variant of democracy whose trinitarian elements have been well defined as shared respect, shared power, and shared knowledge.

Leland Jenks's article describing the pervasive impact of the railroad on the American economy first as an idea, then as a construction enterprise, and finally as a purveyor of cheap transportation, has become a classic of economic history. The particular contribution of the Jenks article was not the novelty of its viewpoint, but the neat way in which it summarized the conclusions both of those who lived during the “railroad revolution” and those who later analyzed it through the lens of elapsed time. Out of this summary the railroad emerges as the most important innovation of the last two thirds of the nineteenth century. It appears as the sine qua non of American economic growth, the prime force behind the westward movement of agriculture, the rise of the corporation, the rapid growth of modern manufacturing industry, the regional location of industry, the pattern of urbanization, and die structure of interregional trade.

A notable difference of opinion exists among economic historians as to the effect of harvest fluctuations on general economic conditions. The question has arisen, specifically, in the interpretation of European experience in the eighteenth century. T. S. Ashton has suggested that good harvests, both by cheapening food and thus setting free purchasing power for others forms of expenditure, and by providing ampler supplies of agricultural products used as industrial raw materials, had a stimulating effect on the economy. J. D. Chambers and G. E. Mingay have taken the opposite view. According to them, bad harvests may have had the more beneficial effect, for the incomes of landowners and farmers were higher in lean years, and their prosperity or distress was of greater consequence than the dearth or cheapness of provisions.

The literature of American economic history is replete with discussions of the crucial role of the ferrous industries in nineteenth-century economic development. Analysis of the internal wage structure in the industry, however, has been somewhat neglected in the historical treatment.

The notion that an “Atlantic Economy” developed in the nineteenth century does not depend simply on the large movements of capital and labor from Britain to the United States. For there were movements of comparable magnitude to other areas. If the economic relations of Britain and North America are to be regarded as distinctive, it is principally because of the reciprocal movement of investment and growth in the two areas. The argument is that the periods of most rapid growth and intensive use of resources in the two economies were inversely related to each other, and that this alternation was established because there existed a common stock of resources, so that when one area drew rapidly on this stock it was at the expense of the other. At one time, investment in buildings and equipment in the United States was particularly rapid, and there was a heavy movement of migrants to America; in Britain the stream of migrants from the countryside was diverted from the industrial districts, and building and home investment were relatively depressed, but the vigorous demand for exports facilitated the flow of funds abroad. In the next period, the position was reversed; development slackened in the United States, and there was a revival of domestic investment in Britain. This, as Phelps-Brown has said, “is the pattern of the Atlantic Economy, dividing a common fund of incremental energies between its regions in varying proportions from time to time. Whether a house is built in Oldham depends on and is decided by whether a house goes up in Oklahoma.”

In the past decade there has been an extremely active interest in theevidence and importance of the twenty-year building cycle, or Kuznets cycle as Lewis suggests we call it, in both American nineteenth-century development and British development after 1870. The evidence of building cycles in the United States is perhaps more extensive and seems clearly, in the research accumulated by Kuznets, Burns and Abramovitz, to indicate a long swing in the general process of growth, not just long swings isolated to the building trades. Whereas American long swings pervade all domestic series of output, income and investment, British experience seems somewhat different. After 1870 long swings in British capital exports alternated with long swings in domestic investment in a fashion which eliminated excess fluctuations in income and output, which would have been due mainly to fluctuations in aggregate demand.

If by land policy we mean a comprehensive, well-thought-out plan that made for an efficient long-range use of our agricultural resources, we are reasonably safe in saying we had none. If we had anything that came close to resembling a policy, it was that of throwing open vast quantities of public and private lands to cultivation which resulted in maladjustments that made it difficult, if not impossible, for many farmers to adjust themselves to capitalistic methods of production and distribution. The extent of these maladjustments may be gauged in part by observing the status of agriculture on the eve of the New Deal. Shrinking foreign markets, world-wide competition, rising tariff walls, poor farm management practices, and excessive production and distribution costs were accompanied by sharp increases in indebtedness, farm foreclosures, and tenancy. Agriculture was receiving a dwindling share of the national income, capital formation was being discouraged, and farming had been relegated to a subordinate position within the economy.

The turning point in the history of the Genoese merchants in Spain was the discovery of America and the subsequent opening of trading relations with the new continent. From then on, their ascent to economic predominance in Spain paralleled that nation's emergence as the dominant power of the sixteenth-century world. Fortune gave Spain two empires simultaneously, one in the Old World, the other in the New. Spain's unpreparedness for imperial responsibilities, particularly in the economic sphere, was the springboard for Genoese advancement. Strengthening and enlarging their colony in Seville —after 1503 the “door and port of the Indies” —the Genoese prepared to move across the Atlantic in the wake of Columbus.

Between 1890 and 1950 the labor force of the United States creased by some 37.3 million workers. decade-by-decade States in-increments fluctuated widely, roughly half of the sixty-year increase (18.9 million) occurred over the first thirty years, and half (18.4 million) over the second.

Louis XIV created the Council of Trade on June 29, 1700, to advise the controller general and the secretary of the marine on economic matters. The Council was to examine

… all propositions and memoranda sent it, together with such matters and difficulties which may there arise concerning external and internal trade by land and by sea, as well as factories and manufactories, in order that His Majesty may take appropriate action on the reports which the said Council of Trade will make to him of its deliberations.

Contemporary reaction to the Homestead Act was complex in the United States, and the judgment of posterity has included much negative criticism. Whatever the real merits and defects of the Act, its impact on public opinion in Europe was not necessarily in keeping with the facts as they unfolded in America. European reactions to the famous Act are much less known than is the case with American public and expert opinion on the same subject. Standard literature on emigration and on the American image in Europe invariably stresses political freedom and economic opportunity as main motives for emigration. The Homestead Act is in most cases mentioned only in passing, as one among several factors in the motivation of prospective emigrants. In some cases it is claimed to have been a major motive but without evidence to bear out how important it was.

The year 1873 marked the zenith of the German free-trade movement, which had been gathering impact since 1818 when Prussia first established a tariff along free-trading lines. Promulgated at the peak of prosperity, the law of 1873 abolished immediately the duties on pig iron, raw steel, and ships, but, as a concession to the protectionists, only reduced the rates on other iron products and provided for their repeal on January 1, 1877. Despite the dissatisfaction of many free-traders, the latter provision opened the door for the repeal of other protective rates. Germany thus stood at the threshold of complete free trade.

Before 1850, American farms were cut from the forest, and the work of forming a farm took time. The clearing of a few acres for first crops was followed by the endless labors of improvement—fencing, building, ditching, and the ambitions of a farmer for land could load him down for life with acres to clear and keep up. Five acres of forest clearing in a year in addition to current crops was about the limit for a farm family. Improved land could be a cash crop like any other, its yield no more risky than wheat or cotton, and only a little more remote. But even farmers who specialized in clearing land for sale might count on two hundred acres or so of forest clearing as the labor of a lifetime. The work of clearing forest was extremely hard, but it could be done in off-season, and deprived a settler not of cash income but only of hours of idleness. Nearly all the tasks could be done by the little labor force under a farmer's control—by sons, or on southern plantations by slaves; and the work converted otherwise half-idle labor into an important form of farm capital.