The patent system has lately been subjected to investigations by committees of Congress, and reforms have been proposed to meet some of the most serious criticisms. In recent publications commenting on these discussions it has been suggested that opposition to the patent system is a new development. A writer of a “history of the patent monopoly” asserted that “there never has been, until the present time, any criticism of this type of exclusive privilege,” and he attributed the allegedly new attitude to “modern witch-hunters,” “hungry aspirants to public office,” and, by innuendo, to enemies of all private property.

The tenth annual meeting of the Economic History Association was devoted to the roles of government and business enterprise in the promotion of economic development. The question was applied to cases of rapid economic growth in the past—the creation of oceanic commerce, the building of the American railroads, the rise of modern industry—and to current attempts to promote the recovery of western Europe and the economic progress of the underdeveloped countries.

The purpose of this article is to examine a significant change that took place in American public policy during the nineteenth century. For many decades American governments, especially those of states and localities, had engaged in extensive programs for the promotion of economic development by the construction or support of works of internal improvement. It may now be pertinent, at a time when so many of the less industrialized countries are engaged in programs of economic development, to ask why and when and by what processes governments in the United States came to withdraw from direct participation in the promotion of canals and railways.

It appears to legal historians that the Supreme Court of the United States must have gone off the main track in 1933 when it handed down the celebrated Appalachian Coals decision upholding a joint selling agency. Only six years before, the Court had condemned a similar collective arrangement maintained by the Trenton Potteries; and seven years later, in 1940, the Court rendered a decision in the Socony-Vacuum Oil Case that revealed an abrupt return to its generally firm attitude toward collective action on the part of business concerns. Indeed, it is difficult if not impossible to reconcile the 1933 Appalachian Coals decision with the 1940 Socony-Vacuum Oil decision, and, as prices rose and shortages developed during the 1940's, the judicial attitude toward restraint of trade in various forms became progressively stiffer and stiffer. A parallel shift in the climate of court opinion against trade associations can be noted in the 1920's by comparing the decisions near the beginning of the decade, when trade was lax and prices were soft, with those a few years later when prosperity was again in evidence. One might even pose the question: Do the courts follow business conditions, as they are alleged to follow the election returns?

Concepts of the terms of trade as a means of measuring a country's gain or loss from exchange of goods have been discussed by students of economic theory for a hundred years or more. Until comparatively recently they have remained concepts only, without substantive application, but the tremendous disturbances in trading relationships and monetary standards in the last three decades have quickened interest in the subject. The various formulas devised for the measurement of relative movements of prices and quantities of exports and imports are now used with increasing frequency for the study of relatively current situations. They have not been applied much as yet to illuminate earlier trading history, largely because of the labor involved in deriving and organizing the limited data available. Apart from this difficulty there seems to be no very strong reason why they should not be as useful for economic history as for current analysis.

When it is the custom of the day to put its questions in terms of dimension and proportion, it is hardly necessary to argue that measurement can contribute to their solution. With that granted, our attention can be devoted to the problems that arise when attempting measurement. We could list these formally, but it may be more instructive to let the problems crop up in the course of a brief review of some recent work on trends in government activity during the past half century, and also to note possible applications to this field of some ideas developing in other work in economic statistics.

The British Workmen's Compensation Acts of 1897 and 1899 were “astonishing” to contemporaries and have not been adequately explained by historians. Although passed under a Conservative-Liberal Unionist Cabinet, these acts put heavy burdens upon industry and agriculture, interests that were very influential in both of these parties. “It was no wonder that Tories asked themselves what they were coming to, nor that the usual answer to the question was that they were being swallowed by Mr. Chamberlain.”

Among the other excellent and extraordinary gifts that God has given to human kind is the knowledge of the motion of the spheres, the course of the planets and stars, and of the climatic zones under which is placed this marvelous world machine. With this knowledge we furrow that very great element, the water, and betake ourselves into almost any part of the world that we wish, with the same facility as if there were in the wide ocean a fixed road showing signs of its use, and a through highway.

Two major themes have been developed by Ernest Labrousse in his well-known works on prices and income. One, a reinterpretation of the origins of the French Revolution, does not concern us here. The other, a theory of an agriculturally determined business cycle, has recently been confirmed for the early nineteenth century by a young historian and student of Labrousse, M. A. Chabert, and forms the subject of this paper. Chabert's first work offered time series of French prices from 1798 to 1820, a hitherto neglected interval falling between the monetary anarchy of the assignats and the period covered by the tables of the Bureau de la Statistique Générale. He has followed this with a more ambitious effort, a general study of the social and economic development of France during the same years, as reflected in the price series already presented and other data assembled since.

The development of rationality in economic life, according to Werner Sombart and Max Weber, is one of the most important aspects of modern economic history. Gradually, religious and ethical considerations lose dieir influence in commercial behavior; finally, in the nineteenth century, economic judgment proceeds on the basis of its own logic. Business is liberated from noneconomic sanctions.

Any historian feels free to shift, enlarge, or contract his spatial or temporal field of attention, but the building of formal conceptions of time and space as flexible is something else. Fernand Braudel's recent book contains many revisions of judgment concerning the economic history of the centuries it treats, and also a way of handling space and time that gives the volume theoretical as well as historical interest. In his title, “the Mediterranean” refers to the region as well as to the sea. His “Mediterranean world” includes various outside areas, some remote, that have been related to the region by the activities of man in society. Peripheral mountains and deserts, for example, are considered in much detail, and four historic corridors (he calls them isthmuses) to northern waters are formally discussed. His “Epoch of Philip II” is in the first third of the book hardly a temporal “home port”; it is touched more frequently in Part II and is much used in the final section.

The paper is based upon research over a rather long period into the public activities in railroad construction in the southern states. Table I-A presents a quantitative summary of public contributions in cash, bonds, and other securities; government-endorsed bonds; remission of Federal import duties; and estimated realized values of Federal land grants prior to 1861. It represents an attempt to give a preliminary summary of the public effort. The estimates on public land grants are tentative, and other items are subject to further refinements through additional studies. It does not represent the total of the public effort, since no account is taken in this summary of the investment values of the many important public and quasi-public contributions in services, the uses of public streets and other properties, tax exemptions, and banking privileges. An adequate appraisal of these must await further research. The summary does reflect, however, some of the outstanding features of the public railroad-building effort, which will supply a useful background for the consideration of the main problem of this paper.

The effects of Federal and state land-grant policies on railroad investment, railroad policy, and regional economic development are too varied to be treated in less than a volume. And such a book would require much research that has not as yet been attempted. The following discussion presents only brief notes on a few of the reactions of railroad entrepreneurs to land-grant policy. These notes were accumulated in the course of research on other problems and are in no instance complete enough to warrant broad generalizations.

The problem to which this paper addresses itself may be posed as follows: What part in bringing about the phenomenally rapid industrial growth of Germany between about 1890 and 1914 was played by governmental activities; what part was played by the private enterprise of businessmen; and what was the relative importance of each?