The astute reader even of detective stories makes a practice of looking at the end of the book because the ending reveals the basic values of the book more quickly than any other single part of the whole. An audience is at a disadvantage unless the speaker furnishes some preliminary sketch of the problems to be explored and some brief answers to the questions to be examined. It is therefore appropriate to state the purpose of the paper in a few words. It is proposed to show that his torical analysis affords no support for the uncritical faith in progress that characterized most of the nineteenth century. The development of the power economy has not brought the abundance for all nor the general recognition of the advantages of world-wide freedom of trade that was confidently anticipated by idealists like Cobden.

I was asked to illustrate the effects of the economic leadership of adAvanced nations by an example drawn from English economic history in the Middle Ages. I have accordingly chosen the subject of Italian contribution to the economic development of medieval England. What prompted this choice was not only the contribution that the Italians in fact made but also the contribution that they are reputed to have made. Indeed their reputation for economic leadership interests me as much as their achievement. For if their reputation and their achievement are collated, something more interesting than a mere illustration of economic leadership may emerge. The illustration may well turn into a cautionary example. I hope I shall not appear immodest or perverse if I suggest that the Italian example may help to circumscribe the historical and the logical validity of the entire concept of economic leadership. For the concept that appears to mean something in historical accounts of economic forms is apt to dissolve as soon as we reach out to the fundamental forces and processes of economic growth.

The process of technical change from the economist's viewpoint may be broken down into three phases: invention, innovation, and diffusion. Invention, or the increase in technological possibilities, is the discovery or perception of new configurations of technical processes or principles that alter the array of possible production functions. An innovation consists of using any given production function for the “first” time. Diffusion is basically imitative and involves the gradual replacement of old methods by the new. One example will suffice to illustrate these distinctions. The invention of the automatic bottle machine consisted of the conception, experimentation, and model-building activities of Michael J. Owens; the pioneering efforts of the entrepreneurs at Toledo, Ohio, to demonstrate that the new production function was both practical and economically feasible constituted the innovational phase; and the gradual replacement of hand-blown and semiautomatic machine methods by the new process in both American and foreign markets involved diffusion.

From the days when John Hawkins peddled slaves at the cannon's mouth along the Spanish Main, the economic potentialities of Latin America have been a perennial lure to the mariners and merchants of northern Europe in general and to the English in particular. To them it seemed almost immoral that opportunities were being wasted there that could have been exploited to the advantage of both sides of the Atlantic. As long as those monopolistic colonial systems of Spain and Portugal lasted, contacts with the British had to remain spasmodic and often outside the law. The crop of revolutions that freed Latin America shortly after 1800 at last created a maritime and commercial vacuum. The English had done much to bring this about, and they were to do even more to exploit it. The economic development of Latin America during its first century of independence was thus greatly accelerated by the efforts of the British to secure new markets for their manufactures and new cargoes for the merchantmen flying their red ensign.

Our task here is to inquire into the relations between two familiar sets of phenomena—the economic development of the Western Hemisphere and the involvement of British investors, financiers, engineers, contractors, and financial groups in railways in that area. As a matter of convenience we shall look chiefly at the United States and Argentina, and at the time span of three quarters of a century preceding the First World War. It is no secret that during that period both countries underwent rapid development, whose contours included such matters as the effective occupation of new areas of vast extent; the growth of population, partly fed by immigration; the effective application of technological improvements to the exploitation of natural resources; an increasing complexity of the division of labor; and a rise in productivity and real income per capita, participated in by large segments of the population. During the same period, the Western Hemisphere was normally the outlet for from 40 to 60 per cent of British foreign investment, the United States and the Argentine being two of the countries chiefly affected. We are familiar with estimates that British investments in the United States, on the eve of the First World War, amounted to over 4 billion dollars, approximately 3 billion of which were in railway securities, and that something like half as much was invested in Argentina, with a somewhat smaller percentage directly in rails.

A Striking disparity exists between India's ranking as a railway power and its ranking by any other modern economic category, such as coal mined, iron and steel produced, power generated, value added by all manufacturing, or national income received per capita. Throughout the twentieth century India has had one of the world's five largest railway systems, but by most other modern categories India's economy has been among the world's weakest and least developed. I propose to begin by recounting the way in which India's railway system was developed under British leadership in the century after 1850; then I intend to turn to some possible connections between the special types of railway organization that Britain sponsored in India and the relative lack of development of other sectors of India's economy, particularly modern industry.

For at least three quarters of a century the Devil of Declining Growth has been present at French council tables, at policy-making conferences, and in the minds of strategically situated decision makers. The Devil has not always been present in the flesh, since that is not the way of devils. But he has always been at the shoulders of the holders of power, and they have usually taken him into account implicitly when not explicitly.

Today there is a plethora of pessimistic literature on the population problems of densely settled agricultural areas. It is matched, if not exceeded, in quantity by the optimistic writings of those who see economic development as a panacea for demographic ills. There is research, too, but the definitions of problems, the analytical approaches, and the conclusions reflect the cleavages of academic specializations. Demographers deprecate the realistic possibilities for economic development and so project present populations into future situations that must be catastrophic if the cynicism concerning economic expansion is justified. Economists analyze the potentialities for development and assume some mystical force in human reactions that automatically reduces rates of population increase as the material basis of living becomes more abundant. Analysis of the relations between population increase and economic development is notably deficient. The difficulty lies deeper than the naïveté of social scientists. That quantitative research for which they are prepared requires statistical materials, but those materials exist primarily for the advanced industrializing economies of Western origin. These are precisely the economies in which the relations between people and economy have been or are in process of being rationalized through controlled human reproduction. The techniques of the historian and the anthropologist must be combined with those of the economist and the demographer for the analysis of social, demographic, and economic relations within prestatistical cultures.