The three articles that follow this introductory essay reflect a rapidly growing effort in the social sciences to integrate institutional analysis with more traditional theory. In economic history, institutional analysis attempts to expand and enrich our understanding by modeling the ways in which the “rules of the game”–specifically, political and economic institutions–have affected economic behavior. By drawing on the literature of political economy, for example, economic historians can explore how institutions have interacted to affect economic performance over time.

The behavior of principals and agents in the interwar Soviet economy can be studied through the failed attempt to develop a new aviation-engine technology based on the steam turbine. Some possible approaches to the evaluation of R&D failure are outlined. Soviet R&D agents competed for funding within a command system. Principals funded ventures in a context of biased information and adverse selection. In the presence of sunk costs budget constraints on individual projects were often loose, but were tightened periodically. There is evidence of rent seeking, but not that rents were distributed deliberately as political gifts to loyal agents.

Scholars have long noted the significant impact of general purpose technologies (GPTs) on the economy. However, limited attention has been paid to exploring how they are employed to generate inventions in downstream sectors (crossover inventions), and what factors may facilitate such diffusion. In a study of the introduction of electrical technology in the late-nineteenth-century United States, we find that knowledge spillovers between industries had little influence on the geography of crossover inventions as well as the speed and productivity of crossover inventors. Instead, human capital and an environment promoting inventions in general were more important.

Following World War II millions of cotton workers, especially African-Americans, left the fields forever, and farmers mechanized the cotton harvest. Prevailing empirical studies argue that high factory wages lured farmhands away. Based on newly reconstructed data, we estimate the causes of the demise of harvest employment in 12 major cotton-producing states from 1949–1964 and find important roles for mechanization, government farm programs, higher nonagricultural wages, and falling cotton prices. On net, our estimates indicate that factors affecting farm labor demand, not labor-supply influences, caused the disappearance of hand-picked cotton—results that reverse the best econometric work to date.For helpful comments, we thank Lee Alston, Larry Neal, Werner Baer, Bill Collins, Lee Craig, Carl Moody, Beverley Peart, Eric Hilt, Michele Knapp, the participants of the workshops at Syracuse University, Northwestern University, the University of Illinois, Colby College, Harvard University, the All-Ohio Economic History Seminar (Ohio State University Economics Department), the Social Science History Association Meeting (2001), and the Allied Social Science Meeting (2002), anonymous referees and the editor, Gavin Wright. The authors assume full responsibility for errors and omissions.

This article analyzes the impact of employment institutions on Japanese-, British-, and Chinese-owned textile firms in China during the 1920s and 1930s. Despite Britain's domestic position as a world productivity leader, Japanese firms enjoyed a 70 percent productivity advantage over both British and Chinese competitors. The divergent performance of Japanese and British investments in China is explained by differences in management practice. Japanese firms had domestic experience with employment institutions similar to China's and applied labor management strategies that functioned well under these institutions. British firms lacked the institutional experience necessary to adapt management strategies to Chinese institutions.

Motion pictures constituted a revolutionary new technology that transformed entertainment—a rival, labor-intensive service—into a non-rival commodity. Combining growth accounting with a new output concept shows productivity growth in entertainment surpassed that in any manufacturing industry between 1900 and 1938. Productivity growth in personal services was not stagnant by definition, as current understanding has it, but instead was unparalleled in some cases. Motion pictures’ contribution to aggregate GDP and TFP growth was much smaller than that of general purpose technologies steam, railways, and electricity, but not insignificant. An observer might have noted that “motion pictures are everywhere except in the productivity statistics.”

“So long as the number of persons who can be reached by a human voice is strictly limited, it is not very likely that any singer will make an advance on the £10,000 said to have been earned in a season by Mrs. Billington at the beginning of the last century, nearly as great as that which the business leaders of the present generation have made on the last.”1

Alfred Marshall

In this article we present the first estimates of output per capita for the Old Northwest in the years before 1840. The results indicate that the region grew quite rapidly, even during its earliest formative years. Its performance relative to the nation depends on the definition of output.

More and more it seems that presidential addresses are an occasion for reflecting on matters of method and on the nature of scholarly disciplines. Perhaps this is because these addresses are usually given after dinner, and sated audiences are notoriously indifferent to specialized scholarship. But today we are inaugurating an innovation and have scheduled this talk for an earlier hour. This is not because we feared the membership would be too sleepy after eating to pay attention—you may be just as sleepy after a long day of papers and discussions—but rather to free you all for the gastronomic and touristic pleasures of New Orleans by night. And so, if I may presume on your gratitude for this thoughtfulness, I should like to put before you some of my own reflections on the character and direction of our discipline. I do so the more readily because I am the first president of the Association in some years now to have come to economic history from the side of history. This, I may say, is in itself a capsule symptom of the changes in the profession.

The hostile and patronizing attitudes of native Americans toward the increasing number of immigrants from southern and eastern Europe at the turn of the century raise a number of issues that bear on the history of U.S. immigration policy and on other matters. Utilizing Zellner's SUR technique, a model of settlement patterns of ten immigrant nationalities is estimated, and the appropriate F-statistics are generated to test several of these issues: (1) Did “new” immigrants behave as purposefully as contemporaneous “old” migrants from northwestern Europe? (2) Did they react as did the old migrants to a variety of socioeconomic factors? (3) Were the new migrants more dependent on the cultural support of earlier migrated countrymen? The findings indicate diverse, but purposeful, behavior within both the new and the old migrant groups with few systematic differences between them.

This paper presents evidence of long swings in the growth of Swedish population and investigates the question of the possible sources or causes of these demographic movements. I do not have a completely identified model of long swings to offer for empirical testing at this time. It is first necessary to determine the extent to which the long swings are diffused in Sweden and to provide a reliable reference chronology. With this information, the task of seeking the cause and effect relationships can proceed. Nevertheless, an analysis is attempted of the cause and effect relationship underlying Swedish emigration and the interaction of the major economic and demographic variables. In the light of these results, suggestions for further research are offered.

Among the developed countries, Australia in the period 1890–1940 experienced the fastest growth in population but the slowest in per capita income. When adjusted to incorporate the direct deflation of consumption expenditure, however, the growth of real GDP is raised by one-third, albeit to the still modest level of 0.8 percent annually. Inspection of a number of historical social indicators, not all caught in GDP, gives no support to the hypothesis of stagnant living standards. Finally, increases in life expectancy, a shorter working week, and earlier retirement also suggest substantial improvements in dimensions of standards of living not directly reflected in measured GDP. Conservatively, we estimate that living standards may have doubled over the half-century.

In this paper I intend to confine myself to one aspect of the manysided changes which came over English political economy between the publication of John Stuart Mill's Principles of Political Economy (1848) and of Alfred Marshall's Principles of Economics (1890). During this period great theoretical advances were made by W. S. Jevons and Alfred Marshall, advances which were paralleled in Lausanne and Vienna, and pushed further on the American continent by Professors J. B. Clark and Irving Fisher. I shall not attempt to summarize these contributions to pure theory, nor to estimate how wide was the gulf between the theory of Mill and the theory of Marshall (but in parenthesis I cannot refrain from suggesting that the real change in the theory of value was relatively small, while the change in the theory of distribution which derived from it was revolutionary). It is more appropriate at this first annual meeting of the Economic History Association to discuss the change in the status of economic theory in the corpus of economics as a result, mainly, of the influence of the historical school. Emphasis will be placed on the terms of peace rather than on the war of the methods, for it is my purpose to emphasize the possibilities of cooperation rather than to revive old antagonisms. I want to discuss the influence of some economic historians on economics. I shall make frequent reference to William Ashley, first professor of political economy in the University of Toronto and first professor of economic history in Harvard University and, I think, on the American continent. If I give him undue prominence this can surely be forgiven a Toronto man on this occasion.

This paper is concerned with the old economic history which developed in Britain before World War I. It would be more appropriate to call it “the very old economic history,” to distinguish it from “the old economic history” of the inter-war years and beyond, and “the new economic history,” a fragile offshoot of American enterprise only now being propagated successfully. To avoid terminological clumsiness, and to indicate clearly that the history of economic history in Britain divides into three stages, I will refer throughout this paper to Economic History I (EH I), Economic History II (EH II) and Economic History III (EH III), stages which divide chronologically at 1910–1920 and 1960–1970, and which are characterized by quite distinctive methodological features. My particular aim will be to show that EH I seems to the economist, and to the new economic historian, to be modern in content and method compared with EH II. In particular EH I had a major interest in the conditions of freedom and restraint, especially those embodied in legal institutions controlling property rights, which limited individual economic action, and devoted much effort to investigating the origins of property rights and the development of custom and law as they affected property rights. EH I, also, was more strongly motivated than EH II, both because of a belief in the power of “the historical method” for the understanding and analysis of social processes, and of participation in the great socio-economic debates of the day, especially that which attempted to define the role of the state in economic life. In contrast, EH II seems to have had no particular methodological bias, and, although often politically motivated, was not involved in contemporary debate or in the determination of current policy.

After World War I rent control became a cornerstone of housing policy in many European countries, resulting in quantity constraints on the demand for housing. The theory on complete demand systems provides a framework for analyzing the effects of these policies on consumption. As a test case, a demand model is estimated to calculate virtual rent prices for interwar Belgium. The results are well in line with historical evidence, providing insight into the extent of rationing Simulations with the demand model show that the severe rent restrictions especially favored expenditures on food.

Empirical study of a process of change requires a definition of characteristics of change to be measured, and of units for which the measurable characteristics are to be observed. The choice of characteristics was discussed in “Measurement of Economic Growth,” and in that discussion the state was assumed to be the unit of observation. The purpose here is to explore the implications of that assumption, thus in a sense providing a lengthy footnote to the earlier paper.

Puerto Rico became an American colony in 1898, achieving self-rule after the Great Depression. The standard view is that Puerto Rican living standards stagnated before the policy changes of the New Deal and it has lost ground on the mainland since the early 1970s. I show these claims are mistaken. Using a new GDP index for 1900 to 1940, I show that income per capita grew at impressive rates during direct American rule and Puerto Rico escaped the worst ravages of the Great Depression. In addition, I find the recent growth slowdown is partly a statistical artifact.

This article examines key questions about the development of Pennsylvania's mid-nineteenth-century iron industry. The analysis is based on new data and exhaustive examination of previously underutilized sources within the framework of a geographic information system (GIS). Hypotheses are tested on the timing of adoption of mineral-fuel technologies across the state; the temporal relationships between investment in ironworks, business cycles, and tariff policy; the substitutability of different types and qualities of iron; how transport costs affected iron prices; and the geographical segmentation of iron markets in the antebellum period. The findings reveal complex and dynamic patterns of regional economic development.

This article examines the impact of what is undoubtedly the most important monetary regime change in U.S. history: the founding of the Federal Reserve System. We find, using a (G)ARCH model, a significant reduction in interest rate uncertainty following the founding of the Fed. Additionally, we show that the passage of the Aldrich-Vreeland Act in 1908, another significant change in policy, also led to a reduction in interest rate uncertainty. These results are robust to alternative interest rate models, as well as to incorporating the impact of other events important to financial markets in our sample.

Rational-choice theories of the state have been used in attempts to explain how variations in policy result from differences in constraints. But these theories give little attention to how the state comes to know what the constraints are. This article provides a dramatic example of the process of discovering economic and political constraints by examining Iran's policies toward the opium trade during the reign of Reza Shah Pahlavi (1921–1941).