Review of Joel Mokyr’s New Book

26 01 2010

Yesterday’s FT had a review of The Enlightened Economy: An Economic History of Britain 1700-1850 by Joel Mokyr
(Yale University Press). You can buy the book from, as I just did. I expect that this book will inspire Canadian historians to look at similar themes as they relate to our history.

My Christmas Break Reading

5 01 2010

Here is a list of the books I read over the Christmas break, in no particular order.

Neal Stephenson, Anathem

Andrew Lambert, The Gates of Hell: Sir John Franklin’s Tragic Quest for the North West Passage

Daniel Headrick, Power over Peoples: Technology, Environments, and Western Imperialism, 1400 to the Present

Robert E. Wright, One Nation Under Debt: Hamilton, Jefferson, and the History of What We Owe.

Peter F. Hamilton, Judas Unchained

Gordon S. Wood, Empire of Liberty: A History of the Early Republic, 1789-1815. Part of the Oxford History of the United States series. Fantastic book. Scholarly yet accessible to ordinary people– the type of historical book I admire the most.

Robert E. Wright, The First Wall Street: Chestnut Street, Philadelphia, and the Birth of American Finance

Review of T.J. Stiles, The First Tycoon

2 01 2010

Robert Whaples of Wake Forest University has published a review of T.J. Stiles‘s fantastic new biography of Cornelius Vanderbilt.  I found the book to be immensely enjoyable, despite the touches of hyperbole noted by Whaples. This book reinforces my view that Stiles is a great historian.

Published by EH.NET (December 2009)
T.J. Stiles, The First Tycoon: The Epic Life of Cornelius Vanderbilt New York: Knopf, 2009. xiii + 719 pp. $37.50 (cloth), ISBN: 978-0-375-41542-5.

Reviewed for EH.NET by Robert Whaples, Department of Economics, Wake Forest University.

Economists have always had a hard time dealing with entrepreneurs — as individuals and in the aggregate.  We sort of know what entrepreneurship is and that it can have a profound impact on economic performance, but it’s usually just too difficult to model and measure.  What we do not understand, we simply ignore and leave to others.  After all, we are firm believers in comparative advantage and studying entrepreneurship — even if it is economically important — doesn’t seem to be our comparative advantage. In the view of most economic historians, it is the rules of the game — the incentives and the institutions — that really matter, not the players.  American economic history has been cast as the story of millions of diligent and clever beavers working away and transforming the landscape.  Take one of them away and nothing of great importance will really change.  (In fact, most of us seem to believe that if you take away an entire technological complex, like the railroads, little of much importance would really change.)

Why, then, should economic historians study the careers of entrepreneurs?  Not all of us should.  But for some, the study of entrepreneurs will illuminate the past and the present — and put life into our cliometric narrative.  If any entrepreneur deserves our attention it is surely Cornelius Vanderbilt.  As T.J. Stiles aptly puts it: “One person cannot move the national economy single-handedly — but no one else kept his hands on the lever for so long or pushed so hard” (p. 7).

Vanderbilt, born on Staten Island in 1794, had only about three months of formal education.  He set to work hauling cargo and passengers across the waters surrounding New York Bay before he was a teenager and immediately showed an ambitious, enterprising streak while working for his father and soon thereafter for himself.  He entered the national stage while working for Thomas Gibbons in establishing a steamboat line between New York City and New Brunswick, New Jersey.  Vanderbilt began as captain of Gibbons’ boat, but he soon acted as the line’s general agent and played the crucial role in besting the market’s incumbent, flouting its state-back monopoly before this monopoly was famously struck down by John Marshall’s Supreme Court in _Gibbons v. Ogden_ (1824).

In the ensuing decades Vanderbilt emerged as one of the industry’s shrewdest, most relentless operators.  Stiles’ descriptions of the free-wheeling competition _and_ collusion in the steamboat industry are enough to make a game theorist’s pay-off matrix explode.  The understood rules of the game were that “the first proprietor to occupy a line assumed a sort of natural right to the route. A challenger who lasted long enough could expect an offer of a bribe to abandon the market and, should he accept it, would be expected to abstain from further competition” (p. 103-04).  As Vanderbilt’s operations grew, he repeatedly preyed on existing lines — in New Jersey, on the Hudson River and on Long Island Sound — and often took payoffs to go away.  But he occasionally straddled the line between honor and duplicity in this game.  The record is replete with episodes of buy outs, no-compete payments, and pooling arrangements, but also fierce face-to-face competition along a vector of price, speed, safety, comfort, amenities (many steamboats were essentially floating saloons), and infrastructure along with hidden ownership arrangements and rapid changes in technology.  There simply was no lasting equilibrium in this dynamic market.  Above-normal profits were fleeting, but Vanderbilt mastered the arts of motivating his employees and partners, holding down costs, making design improvements to his fleet, operating efficiently and building up a deep capital base.  “His main strength was, in a word, everything” (p. 140), as he emerged as the “Prince of Long Island Sound” — the key route between Boston and New York — by the mid-1840s.

Soon legends about his physical prowess and indomitable personality arose.  The legends became mythic with Vanderbilt’s commanding response to the ripe opportunity of transporting men to California during the Gold Rush.  As rivals struggled to build a link across Panama, Vanderbilt overcame a series of daunting political, diplomatic, financial, logistical, and physical obstacles to complete a route to San Juan del Norte, Nicaragua, up the San Juan River, across Lake Nicaragua, and down a plank road to the Pacific.  The “Commodore” himself was the first to pilot a steamboat up the Toro rapids (before explosives removed most of the obstacles).  The line opened in the summer of 1851, outflanking the Panama route, whose railroad wouldn’t be completed until early 1855.  As is the case for earlier and subsequent Vanderbilt endeavors, it appears that the biggest winners were his customers.  Unfortunately for Vanderbilt, the longer-term profitably of the line was imperiled by a series of intrigues and the filibustering of William Walker, whose armed force seized control of Nicaragua in 1855.  Stiles convincingly argues that Vanderbilt never provided assistance to Walker and was crucial in bringing about his downfall.  He also dismisses “one of the most famous letters in the history of American business,” in which Vanderbilt allegedly informed two double-crossing Nicaragua-line partners: “Gentlemen: You have undertaken to cheat me.  I won’t sue, for the law is too slow.  I’ll ruin you.  Yours truly, Cornelius Vanderbilt.”  Stiles explains that Vanderbilt “never wrote ‘Yours truly,’ . . . And it never would have occurred to him to give up legal redress” (p. 237).

Stiles is just as convincing in downplaying legends about Vanderbilt’s bawdiness and in discrediting the contention/fabrication in Edward J. Renehan Jr.’s _Commodore: The Life of Cornelius Vanderbilt_ (2007) that Vanderbilt contracted syphilis in 1839 and began to suffer from syphilitic dementia late in life.  Renehan has refused to produce the source of this diagnosis — alleged diaries of Vanderbilt’s doctor — and the contention of dementia doesn’t comport with eyewitness accounts of Vanderbilt’s active, lucid behavior.  [As if the seal the case, Renehan is now serving time in prison for selling stolen historical letters.]

Vanderbilt was a planner and an improviser.  While he oversaw the Nicaragua project, he also launched a profitable trans-Atlantic steamboat service that drove its subsidized competitor to the wall and gained control over a major New York shipyard and the city’s leading engine works.  Rather than enjoying a leisured retirement, the Commodore built his fortune up from $11 million in 1853 (about $320 million in today’s dollars according to our colleagues at to roughly $100 million at the time of his death in 1877 ($2.1 billion in today’s dollars).  This final set of triumphs came in railroading, as Vanderbilt built up stakes in struggling or underperforming lines (the Harlem, the Hudson, the New York Central, and the Lake Shore) and made them profitable. Again and again, he cut costs and improved efficiency.  Much of this appears to have come by reining in the principal-agent problem by ousting top executives who had been making self-serving side-deals, from introducing (a la Alfred Chandler) professional managers, and from carefully constructing the optimal amount of infrastructure.  These final chapters are replete with episodes of crooked politicians stung while trying to shake down Vanderbilt’s businesses (the two Harlem road corners), sharp dealing during financial panics, and unresolvable family problems.

Although Stiles occasionally interjects a bit too much hyperbole — the deep-pocketed Vanderbilt is portrayed as teetering on the brink of disaster much too often — he has done extensive archival work which enables him to draw a thorough and compelling picture of the evolution of Vanderbilt and his enterprises.  Moreover, he has a capable grasp of economic theory and economic history, which allows him to knowledgeably discuss the transformation of the economy, monetary policy, financial panics, business practices and a whole range of other important issues.  Stiles’ book joins the ranks of an encouraging string of recent biographies that have overturned misconceptions about important nineteenth-century entrepreneurs, standing alongside Murray Klein’s _The Life and Legend of Jay Gould_ (1986), Ron Chernow’s _Titan: The Life of John D. Rockefeller, Sr._ (1998), David Nasaw’s _Andrew Carnegie_ (2006) and others.

“That Vanderbilt is a great __________ (you must fill in the blank)” (Courtlandt Palmer, quoted on page 1).  T.J. Stiles’ definitive biography not only allows us to fill in this blank — it also helps fill in many blanks about how the American economy behaved during the Commodore’s life.

Interesting Legal History Article in the CHR

29 11 2009

The new (December 2009) issue of the Canadian Historical Review contains an article with an interesting title:

Bradley Miller, “A carnival of crime on our border’: International Law, Imperial Power, and Extradition in
Canada, 1865-1883”

I’m looking forward to reading this article in December.

Why Was The Industrial Revolution British?

15 10 2009

In a new book, The Industrial Revolution in Global Perspective, Robert C. Allen tackles one of the big questions in history, namely, “why did the industrial revolution take place in 18th century Britain and not somewhere in Continental Europe or East Asia?”  Allen’s answer to this important question should concern those of us who study the history of North America, since the Industrial Revolution helps to explain, inter alia, why English became the dominant language on this continent. His book will interest economic historians, historians of science and technology, and many others.

Coalbrookdale at Night, 1801

Coalbrookdale at Night, 1801

You can watch Allen talk about this book here. The video incorporates a powerpoint presentation with some really good images.

Dr Allen is a member of the Royal Society of Canada, btw.

Ronald C. White on Lincoln

3 05 2009

I’ve just finished reading Ronald C. White’s recent biography of Abraham Lincoln. (Random House, 2009). I was left feeling disappointed. To my mind, it is nearly as good as David Herbert Donald’s 1995 biography. Donald gives us a better understanding of Lincoln’s various contexts, his times as well as his life. Moreover, I detected a definite right-wing agenda in White’s account of Lincoln’s life. White presents us with a version of Lincoln that is calculated to please Republican social conservatives. For instance, the book stresses that Lincoln’s deep religious faith shaped his view of politics. The problem with this is that other authors have argued, quite convincingly, that Lincoln was a religious free-thinker, more of a Deist than anything else. Lincoln never joined a religious denomination. White gets around this inconvenient truth through various sleights of hand. For instance, Lincoln’s attendance at a services at a particular church to hear a sermon by an influential minister is described by White as Lincoln’s worshipping at a church. Every occasion when Lincoln used language reminiscent of the Bible is pointed out by White. (We all use expressions taken from Shakespeare and the King James Bible, so this is a weak argument on White’s part). The religious leanings of Lincoln’s neighbours are also pointed out, as if living next to religious people makes one religious.