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Prices and Progress*

Published online by Cambridge University Press:  03 February 2011

Earl J. Hamilton
Earl J. Hamilton
Affiliation:
The University of Chicago
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Extract

It May have been the ingrained pessimism of Bentham and McCulloch that provoked Carlyle to dub economics the dismal science. It surely must have been economists' concern over price theory, which they regarded and still regard as the central core of economics, that made the name stick. Studies of the role of prices in history are no less tedious and technical than price theory, and in hands no more skillful than mine they can be even more dreary. But this is not the worst of my worries. The evidence that I shall sketch supports the pessimistic hypothesis that during certain germinal periods price and wage behavior of the type that is now taking a distressing percentage of real income from all of us who live on our salaries has proved beneficial to society in the long run and that the type of price and wage behavior which would benefit most of us in the short run has had serious disadvantages. Yet I have the inner satisfaction of appearing to be objective in my thinking and fearless in airing my conclusions in a gathering of some of the worst aggrieved.

Type
Prices as a Factor in Business Growth
Information
The Journal of Economic History , Volume 12 , Issue 4 , Fall 1952 , pp. 325 - 349
Copyright
Copyright © The Economic History Association 1952

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References

1 Stanley Jevons contended that “the numerical data for estimating pleasures and pains [the basis for a true science of political economy] are more abundant and precise than those possessed by any other science. … The very abundance of our data is perplexing. There is not a clerk or bookkeeper in the country who is not engaged in recording numerical data.”—The Theory of Political Economy (London and New York, 1871), pp. 12–13Google Scholar. Naturally the numerical data recorded by clerks and bookkeepers consisted almost exclusively of the prices and quantities of goods purchased and sold and of the wages and numbers of workers employed.

2 This definition is strikingly similar to Friedrich List's contention that the goal of a national economy should be the development of productive power.—Das nationale System der politischen Oekonomie (Stuttgart and Tübingen, 1841), pp. 201–39Google Scholar.

3 For England and France, see the data collected by J. E. T. Rogers, Vicomte d'Avenel, Emile Levasseur, and others which Professor A. P. Usher has elaborated and presented in two excellent articles.—“The General Course of Wheat Prices in France, 1350–1788,” Review of Economic Statistics, XII (1930), 159–69Google Scholar; “Prices of Wheat and Commodity Indexes for England, 1259–1930,” Ibid., XIII (1931), 103–13. For Aragon and Valencia, see Hamilton, Earl J., Money, Prices, and Wages in Valencia, Aragon, and Navarre, 1351–1500 (Cambridge, Mass., 1936), pp. 59, 105Google Scholar.

4 “This is certain: the per capita consumption of spices in the late Middle Ages was incomparably greater than in our time.”—Rörig, Fritz, Mittelalterliche Weltwirtschaft (Jena, 1933), p. 17Google Scholar.

5 Earl J. Hamilton, op. cit., pp. 59–60, 105.

6 The keen analytical faculties of Richard Cantillon were never used to greater advantage than in dealing widi the effects of crying money up and down. See his Essai sur la nature du commerce en général (London, 1755), pp. 382 ffGoogle Scholar.

7 For a view of medieval monetary policy even more favorable than mine, see Einaudi, Luigi, “The Medieval Practice of Managed Currency,” The Lesions of Monetary Experience, ed. Gayer, A. D. (New York, 1937), pp. 259–68Google Scholar.

8 For example, in the Netherlands in 1946 and Western Germany in 1948.

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17 In a very stimulating and scholarly article (“Prices and Industrial Capitalism in France and England, 1540–1640,” Economic History Review, VII [1936–37], 155 ff.Google Scholar). On the basis of Knoop and Jones's suggestion that supplements in kind of money wages increased with the cost of living in the sixteenth century (“Masons' Wages in Mediaeval England”, Economic History Supplement to the Economic Journal, II [1930–33], 488Google Scholar) Nef argues that Wiebe's figures underestimate the rise in wages. But, surprisingly, the evidence adduced by Knoop and Jones consists of a few payments on only one project in 1561–69 and only one other project in 1510–13, without any indication of what was paid before these dates in either case; while they list one case in which wages were supplemented in kind in 1292. On the strength of this, they tell us that “we think it quite conceivable, however, that in the sixteenth century the practice of boarding the workers and paying them only a reduced money wage was much more commonly adopted” than in the Middle Ages. That payments in kind increased during a period in which the range of the money economy was growing rapidly and the course of money wages indicates that employers had an enormous advantage in wage bargaining is certainly not plausible. In the manuscript records of wage payments with which I have worked there is an impressive decline of payments in kind during the sixteenth and seventeenth centuries, and Wiebe found so “much evidence” of this tendency “that one can speak of it as a general rule” (op. cit., pp. 141–42). It is interesting that the lag of money wages behind food prices in 1501–1660 in the table and chart shown by Knoop and Jones (op. cit., pp. 485–86) agrees very closely indeed with the lag shown by Wiebe's computation from Rogers' price and wage series.

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19 Op. cit., pp. 378–79.

20 Hamilton, Earl J., “American Treasure and the Rise of Capitalism, 1500–1700,” Economica, IX (1929). 350–53Google Scholar.

21 (London, 1912), p. 309.

22 Ed. Lamond (Cambridge, Mass., 1893), pp. 19, 38–39, 41, 81, 86.

23 “A Comparison of Industrial Growth in France and England from 1540 to 1640,” Journal of Political Economy, XLIV (1936), 289 ffGoogle Scholar.

24 Since the French archives, particularly the Archives de l'Assistance Publique at Paris and the Archives Départementales des Bouches-du-Rhône and the Archives Communales at Marseille, are bulging with account books and documents containing excellent price and wage material extending far back into the Middle Ages and, since intellectual curiosity and culture have flourished in France, it is strange that no comprehensive and trustworthy price and wage data for France during the Price Revolution are available.

25 “Prices and Industrial Capitalism,” 155 ff.

26 John U. Nef, an extraordinarily competent scholar with qualitative data, based a thesis concerning the rise of industrial capitalism upon fragmentary prices of such heterogeneous articles as timber, firewood, logs, and brush, quoted in such variable measures as loads and bundles, compiled for France by D'Avenel, Raveau, and Hauser and his assistants under the Committee on Price History and for England by Sir William Beveridge and his assistants. In Professor Hauser's, Recherches et documents stir l'histoire des prix en France de 1500 à 1800 (Paris, 1936)Google Scholar and Beveridge's, William SirPrices and Wages in England from the Twelfth to the Nineteenth Century (London, 1939)Google Scholar, the price histories of France and England published the most recently and produced under the most favorable conditions, the quotations for firewood begin after 1550; and I find no clear evidence that prior to 1650 the prices of wood rose faster, either absolutely or relatively to other prices, in England than in France. As Professor Nef has recognized, the advances of charcoal prices in England did not exceed those of commodities in general. Charcoal is the only wood product in Sir William Beveridge's series that is both homogeneous and quoted in terms of an inherently reliable measure.

It is significant, and often overlooked, that Professor Nef accepts my thesis (set forth the first time in “American Treasure and the Rise of Modern Capitalism, 1500–1700,” Economica IX [1929], 338–57Google Scholar) that, as he puts it, “by raising prices, the inflow of treasure from America helped to keep down the costs of the labor and the land needed for mining and manufacturing, and thus encouraged the investment of capital in large-scale enterprise.”—“Prices and Industrial Capitalism,” 183–84.

27 “A Comparison of Industrial Growth in France and England from 1540 to 1640,” Journal of Political Economy, XLIV (1936), 307 ffGoogle Scholar.

28 Hamilton, Earl J., “The Decline of Spain,” Economic History Review, VIII (1937–38), 168 ffGoogle Scholar.

29 Parenti, Giuseppe, Prime richerche sulla Rivoluzione dei Prezzi in Firenze (Florence, 1939), pp. 144–56, 233Google Scholar; Fanfani, Amintore, Indagini sulla Rivoluzione dei Prezzi (Milan, 1940), p. 146Google Scholar.

30 Umrist einer Geschichte der Preise und Löhne in Deutschland, I (Leiden, 1936), 777, 784, 790Google Scholar.

31 Cf. Georg Wiebe, op. cit., p. 115.

32 A part of this loss had already been regained in the second half of the seventeenth century, when prices moved horizontally and wages rose substantially.

33 Soetbeer, Adolf, Edelmetall-Produktion und Werthverhältniss zwischen Gold und Silber seit der Entdeckung Amcrika's bis zur Gegenwart (Gotha, 1879), PP. 55, 92Google Scholar.

34 Posthumus, N. W., Nederlandsche Prijsgeschiedenis, I (Leiden, 1943), cxviiGoogle Scholar; Hamilton, Earl J., “Profit Inflation and the Industrial Revolution,” Quarterly Journal of Economics, LVI (1941–42), 257–70Google Scholar.

35 Cf. Bowley, A. L., Wages in the United Kingdom in the Nineteenth Century (Cambridge, 1900), p. 63Google Scholar; Gilboy, Elizabeth Waterman, Wages in Eighteenth Century England (Cambridge, Mass., 1934), p. 19Google Scholar.

36 In connection with the assumption that for a particular firm direct labor represented 40 per cent of costs, it is interesting that Professor Bladen found that “in 1798 direct labour cost at Wedgwood's was 40 per cent of the value of Useful Ware, and 67 per cent of the value of Ornamental.”—“The Potteries in the Industrial Revolution,” Economic History Supplement to the Economic Journal, I (1926–29), 125Google Scholar. In 1820 Malthus pointed out that “those who live upon the wages of labour, unproductive as well as productive, receive and expend much the greatest part of the annual produce….”—Principles of Political Economy (London, 1820), p. 423Google Scholar.

37 According to John Lord, in 1740–1800 British capital, exclusive of land, more than quintupled.—Capital and Steam-Power (London, 1923), pp. 182–84Google Scholar.

38 Esquisse du mouvement des prix et des revenus en France au XVIIIe siècle (Paris, 1933), II, 362, 492Google Scholar.

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40 Sée, Henri, “The Economic and Social Origins of the French Revolution,” Economic History Review, III (1931–32), 3Google Scholar.

41 Hamilton, Earl J., War and Prices in Spain, 1631–1800 (Cambridge, Mass., 1947), pp. 208 ffGoogle Scholar.

42 Les Faits et la doctrine économiques en Espagne tout Philippe V: Gerónimo de Uztáriz, 1670–1732 (Bordeaux, 1919), pp. 122–23Google Scholar.

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45 Ibid., I, 93.

46 Umriss einer Geschichte, I, 777, 784, 790.

47 Cf. Douglas Knoop and G. P. Jones, “Masons' Wages in Mediaeval England,” pp. 490 ff.

48 Tucker, Rufus, “Real Wages of Artisans in London, 1729–1935,” Journal of the American Statistical Association, XXXI (1936), 76–79Google Scholar.

49 Keen observer as he was, Adam Smith was seldom farther wrong than when he said that “in every part of Europe, twenty workmen serve under a master for one that is independent; and the wages of labour are every where understood to be, what they usually are, when the labourer is one person, and the owner of the stock which employs him another.”— Wealth of Nations, ed. Cannan, (London, 1904), I, 68Google Scholar.

50 “And were the Spanish American States to be redeemed from anarchy by again falling into the possession of any European.government, it is certain, as M. Chevalier has remarked, that they would throw largely increased supplies of silver upon the market.”—Jevons, W. Stanley, A Serious Fall in the Value of Gold Ascertained (London, 1863), p. 46Google Scholar.

51 It was in his Nigger Question, published in 1849, that Carlyle allowed “no advantage to the English labourer over the West Indian slave.”

52 Cf. Scott, I. O. Jr., “A Comparison of Production during the Depressions of 1873 and 1929,” American Economic Review, XLII (1952), 569 ftGoogle Scholar.

53 Cf. Graham, Frank D., Exchange, Prices, and Production in Hyper-Inflation: Germany, 1920–23 (Princeton, 1930), pp. 279–81Google Scholar.

54 Earl J. Hamilton, War and Prices, pp. 126–29.

55 Hamilton, Earl J., “Prices and Wages at Paris under John Law's System,” Quarterly Journal of Economics, LI (1936–37), 50–55Google Scholar; “Prices and Wages in Southern France under John Law's System,” Economic History Supplement to the Economic Journal; III (1934–37), 443–45Google Scholar.