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The Growth of U.S. Factor Productivity: The Significance of New Technologies in the Early Decades of the Twentieth Century

Published online by Cambridge University Press:  03 March 2009

Harry T. Oshima
Harry T. Oshima
Affiliation:
Visiting Professor of Economics, School of Economics, University of the Philippines, Diliman, Quezon City, Philippines 3004.
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Abstract

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Type
Notes and Discussion
Information
The Journal of Economic History , Volume 44 , Issue 1 , March 1984 , pp. 161 - 170
Copyright
Copyright © The Economic History Association 1984

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References

1 Devine, Warren D., “From Shafts to Wires: Historical Perspective on Electrification”, this JOURNAL, 43 (06 1983), 347–72.Google Scholar

2 Moses Abramovitz and Paul David point out in their paper, “Reinterpreting Economic Growth”, in American Economic Review, 63 (05 1973), p. 438, that “between the past and present century there has occurred an important change in the nature and extent of those biases [of technological changes] in the alteration of input efficiencies, and that the forces which have underlaid the rise of total factor productivity, therefore, are neither immediately identifiable with even the most refined measures of the residual, nor are they able to be so neatly disentangled as we might like from the growth of the various productive inputs, conventional and unconventional”.Google Scholar

3 See Jerome, Harry, Mechanization in Industry (New York, 1934), Chs. 3–5, for a description of the changes in machines as they affect labor utilization, and Appendix A, pp. 419–36, for machine sales.Google Scholar

4 Computed from Kendrick, John, Productivity Trends in the United States, National Bureau of Economic Research (Princeton, 1966), pp. 65–67.Google Scholar

5 Kendrick, Productivity Trends, pp. 468–75. The only exception is the beverage industry which was adversely affected by Prohibition.Google Scholar

6 Ibid., pp. 362–64. For transportation and manufacturing, see pp. 540 and 464.

7 Historical Statistics of the United Stales from Colonial Times to 1957 (Washington, D.C., 1960), p. 56 for immigration data and p. 144 for consumption data; Jerome, Mechanization in Industry, pp. 3–8, notes that the decline in immigration was largest-in the unskilled group as the decline was heaviest among eastern and southern Europeans.Google Scholar

8 See Historical Statistics of the United States, Part II (Washington, D.C., 1975), pp. 891–92.Google Scholar

9 Historical Statistics (1960), p. 94; Jerome, Mechanization in Industry, p. 3, points out that his book began as a study of the impact of the severe labor shortage on mechanization but ended as a study of the impact of mechanization on unemployment. And it was in the latter half of the 1920s that the term “technological unemployment” became prevalent, just as we are beginning to hear about it again as a new technology begins to replace labor in the 1980s.Google Scholar

10 Lebergott, Stanley, Manpower in Economic Growth: The U.S. Record Since 1800 (New York, 1964), p. 154, and the chart on p. 73.Google Scholar

11 Jerome, Mechanization in Industry, p. 251, and Historical Statistics (1960), p. 409.Google Scholar

12 This was an important factor in the rapid growth of labor-intensive industries in Japan during the 1950s and Taiwan and South Korea during the 1960s and 1970s. Manning, C., Wage Differentials and Labour Market Segmentation in Indonesian Manufacturing (Canberra, 1975), pp. 180–85Google Scholar, points out that machines operated per worker average about 30 in the automatic-loom factories compared to two or three in the semi-automatic factories, both of which still exist in Indonesia. On Japan, see Oshima, Harry T., “Reinterpreting Japan's Postwar Growth”, Economic Development and Cultural Change (07 1982).CrossRefGoogle ScholarJerome (Mechanization in Industry, p. 275) reports that in 1925, cotton goods factories were using only 12 percent hand workers compared to 86 percent machine operators of the total work force, compared with perhaps 90 percent hand workers in the early factories of the First Industrial Revolution.Google Scholar

13 Encyclopedia of the Social Sciences, Vol. 5 (New York, 1933), pp. 21–25.Google Scholar Also see Henderson, Fred, The Economic Consequences of Power Production (London, 1931);Google ScholarAnnetta, F. A., Electrical Machinery (New York, 1921);Google ScholarClark, V. S., History of Manufactures in the United States (New York, 1929).Google Scholardu Boff, Richard B., “The introduction of Electric Power in American Manufacturing”, Economic History Review, second series, 20 (12. 1967), p. 518,Google Scholar points to similar advantages, adding that electricity gave “a new lease on life” to the smaller plants. This paper is concerned with the introduction of electric power and less with spread of electrification and mechanization (including internal combustion engines) and concentrates on the pre-World War I period.Google Scholar See also Boff, Du, “Electrification and Capital Productivity”, Review of Economics & Statistics (11. 1966), and Devine, “From Shafts to Wires”, particularly the first part of the paper. in the second part, Devine stresses contributions of electric power that are ignored in this paper. I am concerned more with the impact of electric power on manpower skills and occupations.CrossRefGoogle Scholar

14 Encyclopedia of Social Sciences, Vol. 5, p. 23; see also Jerome, Mechanization in Industry, Ch. 7.Google Scholar

15 Historical Statistics (1960), pp. 607–08.Google Scholar

16 Computed from tables in Kendrick, Productivity Trends, pp. 465–75Google Scholar, by extrapolating the 1948 absolute figures in National Income and Product Accounts of the U.S., 1929–1965 (Washington, D.C., n.d.), using Kendrick's indexes.Google Scholar

17 De Garmo, E. P., Materials and Processes in Manufacturing, 4th ed. (New York, 1974), pp. 19, 911Google Scholar, notes that before the development of specialized machine tools from 1920 on “there were relatively few basic developments in machine tools”. See also Begeman, M. L. and Amstead, B. H., Manufacturing Processes, 6th Ed. (New York, 1968)Google Scholar. And UNIDO points out that the engineering industries are the main producers of machines, the “bellwether of economic development”. Engineering Industry, 4 (New York, 1969).Google Scholar

18 Jerome, Mechanization in Industry, pp. 42–54.Google Scholar Jerome notes that attachments to existing equipment can speed up operations, as in the conversion of nonautomatic looms into automatic looms. The relatively cheap ways of converting steam-driven machinery to the electrically driven machines meant capital saving. Nevertheless, the figures in Schmookler, Jacob, Invention and Economic Growth (Boston, 1966), pp. 229–30, show that the total number of successful patent applications reached 50,000 in the 1920s, the highest in U.S. history.CrossRefGoogle Scholar

19 Jerome, Mechanization in Industry, pp. 179–204.Google Scholar

20 Historical Statistics (1960), pp. 75–78.Google Scholar It may be said that although the first industrial revolution destroyed handicraft skills and created a large class of unskilled laborers, the technology of the twentieth century has progressively destroyed the latter. See Oshima, H. T., “Dualistic Theory and Postwar Asian Growth”, Malayan Economic Review (10. 1981).Google Scholar

21 See Jerome, Mechanization in Industry, pp. 122–29. As to mining, where factor productivity accelerated in the 1920s, see Jerome, pp. 365–71, for the types of machinery introduced—mainly for hauling the mined output. In transport, factor productivity started to rise before the turn of the century with the use of internal combustion engines. By 1913 Henry Ford was using a moving-belt conveyor for various assembly operations.Google Scholar

22 Historical Statistics (1960), pp. 75–78 for occupation data and p. 281 for data on yields.Google Scholar

23 Jerome, Mechanization in Industry, p. 275.Google Scholar

24 Historical Statistics (1960), pp. 76–77.Google Scholar

25 De Garmo, Materials and Processes, pp. 19, 911.Google Scholar

26 De Garmo, Materials and Processes, pp. 19, 20, 911–13.Google Scholar

27 Renshaw, E. F., Testimony, Joint Economic Committee, U.S. Congress, U.S. Economy Growth from 1976 to 1986: Prospects, Problems, and Patterns, 94th Congress, 2nd Session (Washington, D.C., 1976), p. 24.Google Scholar

28 A Carnegie-Mellon University study cited in International Business Week, August 3, 1981, pp. 48–55, estimates that in the late 1980s and 1990s about 8 million factory workers may have to be retrained (and even larger numbers for the service industries) with the spread of robotics and numerically controlled automated factories and offices.Google Scholar

29 Kuznets, Modern Economic Growth.Google Scholar

30 Historical Statistics (1960), p. 185. In private communication, Moses Abramovitz adds “…the shift away from agriculture due to other causes and the growth of services, and, more generally, white collar employment would work in the same direction quite apart from mechanization”.Google Scholar

31 The machinery/engineering industries are more service intensive. For example. machines require repair and maintenance servicing, and the sale of gasoline, oil, accessories, and replacement parts. Being larger priced goods, they require financing, advertising, retailing, and so on.Google Scholar

32 Kuznets, Modern Economic Growth, pp. 212–19.Google Scholar

33 Historical Statistics (1960), p. 49.Google Scholar

34 The growth rate of enrollment in grades 9–12 rose 7.7 percent in the 1890s, 5.3 percent in the 1900s, 8.2 percent in the 1910s, 7.0 percent in the 1920s, and then fell to 4.0 percent in the 1930s. The high growth rates in the 1890s and 1900s were a response to the low absolute levels of high school enrollment, which were, as percent of the age cohort IS to 19 years, 2.2 percent in 1880, 9.3 percent in 1900, 12.3 percent in 1910, 26.5 percent in 1920, 41.6 percent in 1930, 57.8 percent in 1940, 60.8 percent in 1950. By the 1930s nearly half of the teenagers were attending high schools (if we exclude black teenagers, very few of whom were attending high schools); note the large increase from 1910 to 1930. Historical Statistics (1976), Part I, p. 15.Google Scholar

35 See Oshima, H. T., “The Industrial, Demographic, and Education Transitions in Postwar East Asia”, Population and Development Review (12 1983).CrossRefGoogle Scholar

36 Matthews, R. C. O., Feinstein, C. H., and Odling-Smee, J. C., British Economic Growth (Stanford, 1982), pp. 32, 208Google Scholar, and Carri, J. J., Dubois, P., and Malinvaud, E., French Economic Growth (Stanford, 1975), p. 184.Google Scholar

37 Editors' note: See the review by Devine, Warren D. Jr., of the recent book by Hughes, Thomas P., Networks of Power: Electrification in Western Society, 1880–1930, in this issue.Google Scholar