EH.Net Review of O’Sullivan, Dividends of Development:

7 06 2018

Mary A. O’Sullivan, Dividends of Development: Securities Markets in the History of U.S. Capitalism, 1866-1922. New York: Oxford University Press, 2016. xvii + 384 pp. $90 (hardback), ISBN: 978-0-19-958444-4.

Reviewed for EH.Net by Jon Moen, Department of Economics, University of Mississippi.
Mary Sullivan provides a marvelous narrative covering the development of U.S. securities markets between 1866 and 1922. A major point of the book is that by looking at the historical development of U.S. securities markets through a modern, theoretical lens — one emphasizing risk sharing and the efficient allocation of financial capital — one misses much of the interplay between the productive and financial sectors in U.S. economic development. She argues that up until World War I railroad stocks dominated trading on the New York Stock Exchange in markets that were much deeper and more liquid than those for industrial stocks. One reason for this was that most industrial concerns could finance out of retained earnings, with equity issues being used more for consolidations and mergers, not long-term capital investments. This was in sharp contrast to the London Stock Exchange, where industrial securities traded widely. The dominance of railroad securities is not all that puzzling, given the immense expansion of the U.S. rail network as the country and agriculture expanded westward.

Sullivan presents her story with an enjoyable set of tables and graphs mixed together with detailed case studies and highly focused analyses of specific historical episodes. While the narrative is dense and heavily referenced, it nevertheless holds the reader’s attention. Chapter one is an extended survey of the development of U.S. securities markets. In it she argues that markets advanced in fits and starts in contrast to a more Whiggish view of the evolution of securities markets. Chapter two examines the attempts to get American brewing stocks listed on the London Stock Exchange. The volatility of the brewing stocks, not the failure of promoters or the London Stock Exchange, appears to have been the reason that they did not find a market in the U.K. This bred a further lack of interest in other American industrial stocks being promoted in the U.K. Chapter three discusses how poorly developed accounting practices and low standards for access to the New York Stock Exchange hindered the demand for industrial securities in the U.S. Chapter four begins the analysis of the role of the call loan market in the market for industrial securities around the turn of the century, and action in the call loan market becomes an important sub-plot for the remainder of the book. Chapter five highlights the role of mining stocks, particularly those of copper concerns, in fomenting the panic of 1907. It also restates the destabilizing role of the call loan market on the stock market. Chapters six and seven cover the reaction of Wall Street to the Panic of 1907 and the rise of proposals for a formal lender of last resort, culminating in the Aldrich Plan and the Federal Reserve Act. They also review the findings of the Pujo Committee’s investigation into the “money trust” on Wall Street, and O’Sullivan concludes that J.P. Morgan and his colleagues had much less control over credit than has been popularly believed. Chapter eight discusses how World War I dramatically altered U.S. markets for industrial securities, making them deep and liquid.

Her main conclusion is that the development U.S. securities markets in the later nineteenth century had not matched that of the productive sector. In particular, it was the nature of the growth in the productive sector that affected how financial markets evolved. Certainly, the dominance of railroad securities affected the development of financial markets. But the structure of the banking industry in the U.S. was also unique in comparison to Europe, and it could be argued that it was not as advanced as in Europe as well. Paul Warburg knew this, James Stillman’s protests notwithstanding. The U.S. had unit banking on top of a dual banking system, as Eugene White has carefully documented. There was also no formal lender of last resort, and a good deal of the later part of the book examines the roles of the National Monetary Commission and the Pujo Committee hearings in the push towards what became the Federal Reserve System. Furthermore, there was no significant secondary market for commercial paper in the U.S., an issue that came up regularly in the debates over currency reform. These independent topics are discussed accurately and at some length in the book, but I am not quite sure how they then relate to the issue of the development of securities markets in the U.S. Nevertheless, O’Sullivan’s depiction of the U.S. securities markets developing in fits and starts seems quite accurate.

The call loan market gets a lot of coverage in the book, and it should because the infamous pyramiding of reserves under National Banking tended to accumulate reserves in New York national banks. Without an active secondary market in commercial paper, the call loan market was about the only liquid outlet for these reserves that were needed to be available to banks on short term notice. The Panic of 1907 revealed the peril of inadvertently linking the payments system to capital markets through call loans. But what could have been an alternative to the call loan market in the U.S.? Perhaps more comparison with British and European financial markets would clarify this issue. Even with the advent of the Federal Reserve System, the call loan market did not go away. And it reappeared with a vengeance in October, 1929.

Dividends of Development is an important addition to the literature on securities markets and to the development of financial markets in general in the U.S. I view it as a useful guide for further research.
Jon Moen is Chair and Associate Professor in the Economics Department at the University of Mississippi. He has studied the Bank Panic of 1907 and its role in the founding of the Federal Reserve System. He currently is examining the limited role of the New York Clearing House as a lender of last during the National Banking Era.

EH.Net Review of Wright, The Poverty of Slavery

28 05 2018

Robert E. Wright, The Poverty of Slavery: How Unfree Labor Pollutes the Economy. New York: Palgrave Macmillan, 2017. vii + 302 pp. $45 (paperback), ISBN: 978-3-319-48967-4.

Reviewed for EH.Net by Vincent Geloso, Department of Economics, Bates College.
There are three analytical traditions regarding the consequences of slavery on the broader economy. These traditions are best illustrated in the context of the debates regarding slavery in the United States. The first is best labelled as the “cliometric” tradition initiated by Robert Fogel and Stanley Engerman. It is not the results of this group which define it but its resolute adhesion to methodological individualism as a scientific philosophy. This is what sets it apart from the second tradition whose modern representatives, Sven Beckert and Edward Baptist, play the role of antiheroes to Fogel and Engerman (the term “antiheroes” is selected to divulge the present writer’s biases and priors). They adhere to a more holistic approach where the analysis begins at the level of collectivities and then moves down to the individual. Unlike the “cliometric” group, this latter tradition is more unified in its core conclusions — that slavery established political and economic structures which still last to this day. While there are overlaps between both traditions, the third tradition overlaps both. This tradition, relying nearly universally on methodological individualism, emphasizes a broad political economy approach to the topic arguing that slavery is a form of rent-seeking which can spill over into spheres of societies in ways that impose long-term costs in excess of the private returns. This tradition is less unified than the other two.[1] In The Poverty of Slavery, Robert Wright synthesizes and expands on many key points of this tradition.

In fact, Wright’s greatest service to this underappreciated tradition is to simplify a complex body of ideas into a simple sentence: slavery is pollution. If pollution is the form that externalities take when they divorce social cost from private, then slavery was pollution. It polluted other social, economic and political institutions.

Consider the case of the infamous slave patrols in antebellum America. Slaveowners need to police their slaves who might run away if the option presents itself. Policing slaves is not inexpensive and the costs reduce the returns from owning said slaves. As such, the cost of policing is a deterrent to slavery, which is why thinkers as far back as Adam Smith considered that slaves would unavoidably be less efficient than free workers. However, slaveowners have large concentrated interests, which is in itself a strong incentive for them to organize. If they organize successfully, they can convince the state to spread the cost of policing onto the broader population. If the population that bears the cost is sufficiently large, the costly policy may be small enough on a per capita basis for those burdened to not care or not even know. Yet, slave patrols entailed a large social cost. Economic historian Jeffrey R. Hummel (2012: 123) places the annual subsidy (because that is what it was) at $4.5 million in 1850 which was a little more than fifty cents per capita (including slaves – closer to $1 per person when slaves excluded) in the U.S. South – about 0.3% of annual per capita income. And this does not include the deadweight loss of reallocating workers to tracking down slaves. For such a “small” (for lack of a better term) policy, these are heavy costs. They are also an illustration of slavery as pollution – the slaveowners polluted other institutions by co-opting them to their bidding.

Wright provides a very long list (especially in chapters 6 and 7) of channels through which this pollution materializes (beyond scarring the lives of slaves and coerced workers in many direct and indirect ways). All of these amount to the same core point, those who reap the private benefits of slavery are content with their gains even though they come at a larger social cost and they will work to find ways to drive a wider wedge between the two by shifting costs onto other parties. Hence, slavery as pollution.

Wright argues (in chapter 2) that we ought not to use his synthesis only for the purposes of analyzing slavery. Rather, it should extend to analyzing “unfree labor” on a spectrum going from “free labor” on one end to “chattel slavery” on the other end. Indeed, Wright correctly points out that there were many instances of unfree labor markets that were not as extreme as slavery but which polluted institutions in ways that hindered economic development. As relevant illustrations, one can think of the work of Melissa Dell (2010) on the mita system in colonial Peru, Sheilagh Ogilvie (2011) on feudal systems in Central Europe and Marlous van Waijenburg (2018) on the corvée system of forced labor in French colonial Africa. Wright’s synthesis provides tools to analyze the wider economic costs imposed by less extreme forms of labor coercion.

However, Wright needs to pay more attention to the role of ideas. He only spends two pages on “public perceptions.” Yet, slaveowners not only rent-seek through convincing legislators to support their interest, they also rent-seek by shaping narratives as Grynaviski and Munger (2017) point out. One ought to remember that, in the early days of the American Republic, slavery was seen as a necessary evil which would have, eventually, to be eradicated. However, this view gradually changed to one where slaves were considered lesser human beings which were not responsible enough to be free. This became the leitmotiv not only of slaveowners but also of non-slaveholding southerners. As slaveowners had the ability to shape laws, they had the ability to set the parameters of any discussion and, as such, possessed a strong advantage in imposing their preferred explanation and propositions. In a way, they increased the costs of holding an egalitarian ideology in ways which still persisted into the Reconstruction, Jim Crow and contemporary eras. This form of “intellectual” pollution was caused by unfree institutions.

Given the enormity of the stack of articles and books to be read on the topic of slavery in antebellum America alone, adding an additional volume on the pile appears futile, since it will most likely be ignored. It is likely that Robert Wright’s The Poverty of Slavery will not be an exception to this rule. This is unfortunate. Wright’s book ought to be considered as the synthesis of an underappreciated analytical tradition regarding the broader economic consequences of slavery.


1. I would place Thomas Sowell (1981) in this tradition alongside Gordon Tullock (1967) and Grynaviski and Munger (2014; 2017). Jeffrey R. Hummel also places the eighteenth-century French physiocrat Anne-Robert Jacques Turgot, the early nineteenth century French economist Jean-Baptiste Say and British political philosopher John Stuart Mill into this tradition (2012: 4-6).


Dell, Melissa. \”The Persistent Effects of Peru\’s Mining Mita.\” Econometrica 78, 6, 2010, pp. 1863-1903.

Grynaviski, Jeffrey D., and Michael Munger. \”Did Southerners Favor Slavery? Inferences from an Analysis of Prices in New Orleans, 1805–1860.\” Public Choice 159, 3-4, 2014, pp. 341-361.

Grynaviski, Jeffrey D., and Michael C. Munger. \”Reconstructing Racism: Transforming Racial Hierarchy from ‘Necessary Evil’ into ‘Positive Good’.\” Social Philosophy and Policy 34, 1, 2017, pp. 144-163.

Hummel, Jeffrey Rogers. Deadweight Loss and the American Civil War: The Political Economy of Slavery. Ph.D. dissertation, University of Texas at Austin, 2001 [2012].

Ogilvie, Sheilagh. Institutions and European Trade: Merchant Guilds, 1000–1800. Cambridge University Press, 2011.

Sowell, Thomas. Markets and Minorities. New York: Basic Books, 1981.

Tullock, Gordon. \”The Economics of Slavery,\” Left and Right, 3, 2, Spring-Summer 1967, pp. 5-16.

van Waijenburg, Marlous. \”Financing the African Colonial State: The Revenue Imperative and Forced Labor,\” Journal of Economic History 78, 1, 2018, pp. 40-80.
Vincent Geloso is the author of Rethinking Canadian Economic Growth and Development since 1900: The Quebec Case (Palgrave Macmillan, 2017).

Copyright (c) 2018 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ( Published by EH.Net (May 2018). All EH.Net reviews are archived at

CfP: Commercial Surveillance

25 05 2018

Organizational History Network

Seeing Like a Capitalist:

Histories of Commercial Surveillance in America

 A Conference at the Hagley Museum and Library

Wilmington, Delaware, November 8-9, 2018

The history of surveillance is often associated with the history of the state. However, commercial organizations in the United States – from insurance companies to audience rating firms and database marketers, to corporate personnel and auditing departments – also exercise power over citizens through systems of identification, classification, and monitoring.  The history of commercial surveillance thus intersects with key issues concerning the history of privacy, information, social sorting and discrimination, and technologies of discipline and control.

For a conference sponsored by the Center for the History of Business, Technology, and Society on November 8-9, 2018, we invite proposals that explore the history of commercial surveillance in the United States, from settlement to the present. These (non-state) surveillance activities might be found in a variety of business…

View original post 386 more words

Berle X: Berle and His World

11 05 2018


I’m sharing the program of the Berle X conference, which will be held next week at the Adolf A. Berle, Jr. Center on Corporations, Law & Society in Seattle. Needless to say, I am very excited to be presenting along such distinguished scholars.


Berle X: Berle and His World


May 17-18, 2018


MAY 17 and 18, 2018 at Seattle University School of Law


Thursday, May 17, 2018

7:30 am
Continental Breakfast

8:10 am
Chuck O’Kelley, Director, Adolf A. Berle, Jr. Center on Corporations, Law & Society

8:15 am
Keynote Address
The Honorable Leo E. Strine, Chief Justice, Supreme Court of Delaware

9:15 am
Bernard Beaudreau, Professor of Economics, Laval University
Technological and Institutional Crossroads: The Life and Times of Adolph A. Berle Jr.

10:15 am


10:30 am
Mark Hendrickson, Associate Professor of History, University of California, San Diego
“In time of stress, a civilization pauses to take stock of itself:” Adolph A. Berle from the New Era to the New Deal

11:30 am
Jessica Wang, Associate Professor of U.S. History, University of British Columbia
Looking Forward in a Failing World: Adolf A. Berle in the Interwar Years
12:30 pm


1:30 pm
Eric Hilt, Professor of Economics, Wellesley College

Berle’s “New Concept of the Corporation” in Historical Perspective

2:30 pm
Brian Cheffins, Professor of Law, University of Cambridge
The Rise and Fall (?) of the Berle-Means Corporation

3:30 pm


3:45 pm
Frank Partnoy, George E. Barrett Professor of Law and Finance, University of San Diego
Everything New is Old Again: Berle and Corporate Finance

4:45 pm
Chuck O’Kelley, Professor of Law, Seattle University
From Madonna to Caesar: The Berle-Dodd Debate in Context

5:45 pm
Conclusion of Day One

6:30 pm
Cocktails followed by dinner at the Rainier Club.  Dinner will be served at 7:30 pm.  Business Casual attire is requested
Friday, May 18, 2018

7:30 am
Continental Breakfast


8:15 am
Andrew Smith, Senior Lecturer in International Business, University of Liverpool
Jason Russell, Associate Professor of History, Empire State College, SUNY
Kevin Tennent, Lecturer in Management, University of York  
Berle and Means’ The Modern Corporation and Private Property: the Military Roots of a Stakeholder Model of Corporate Governance

9:15 am
Jesse Tarbert, Visiting Assistant Professor of History at Loyola University Maryland
Corporate Lessons for Public Governance: Wall Street Elites and the American State after World War One

10:15 am


10:30 am
Bill Bratton, Nicholas F. Gallicchio Professsor of Law, University of Pennsylvania
Gardiner Means and The Modern Corporation’s Missing Chapter

11:30 am
Elizabeth Pollman, Loyola Law School, Los Angeles
Quasi Governments and Inchoate Laws: Berle’s Vision of Limits on Corporate Power

12:30 pm

1:30 pm
Harwell Wells, Herman Stern Professor of Law, Temple University Beasley School of Law
Berle and the ‘Modern Legal Profession’

2:30 pm
Bob Thompson, Peter P. Weidenbruch, Jr. Professor of Business Law, Georgetown University
Berle: After the Trifecta

3:30 pm

Session H
3:45 pm
Nick Lemann, Joseph Pulitzer II and Edith Pulitzer Moore Professor of Journalism, Columbia University
Berle and the Twentieth Century

4:45 pm
Ewan McGaughey, Lecturer, King’s College, London, and Centre for Business Research, University of Cambridge
Democracy in America at Work: Ending the Enron Economy

5:45 pm
Closing Remarks and Thoughts



Berle X Symposium Presenters:

Bernard Beaudreau, Laval University
William BrattonUniversity of Pennsylvania Law School
Brian R. CheffinsCambridge University Law School
Mark HendricksonUniversity of California, San Diego
Eric Hilt, Wellesley College
Nicholas LemannColumbia University in the City of New York
Ewan McGaughey, King’s College, London and University of California, Berkeley
WIlliam NovakUniversity of Michigan
Chuck O’KelleySeattle University School of Law
Frank Partnoy, University of San Diego School of Law
Elizabeth Pollman, Loyola Law School, Los Angeles
Jason Russell, Empire State College
Andrew Smith, University of Liverpool
Leo Strine, Chief Justice, Delaware Courts
Jesse Tarbert, Loyola University, Maryland
Kevin Tennent, University of York
Robert B. Thompson, Georgetown University Law School
Jessica Wang, University of British Columbia
Harwell Wells, Temple University Beasley School of Law



Brad Miller on History and the Comeau Decision

3 05 2018

Prof. Bradley Miller of UBC has published some astute observations about the Canadian Supreme Court’s recent decision in the Comeau case and the court’s approach to the use of historical evidence. I take Miller’s point about the complexity of determining “authorial intent” in a document (the BNA Act) that had many Fathers.  My own view is that in parsing out the meaning of this text, historians and judges should focus on what was likely the intent of the individual who actually decided on the phrasing of the sections– the lawyer Francis Savage Reilly (1825-1883), the man in whose handwriting the various drafts of the BNA Act were composed. (I can offer a coherent explanation for why this individual’s intention should be regarded as the most important in this context, but doing so would involve drawing on philosophy and on the classic works on historical methodology by Von Ranke, Langlois and Seignobos,  and Sir Richard Evans. However, I will leave that taks to another day!).

I would add that while I was disappointed by the outcome of the case, I respect the fact that the Supreme Court took my historical argument very seriously.  Paragraphs 55 to 67 of the decision were basically devoted to unpacking what I had written and said and included direct quotations from my text. Moreover, I think that my testimony did have an impact on the Court’s eventual decision, for the Court did not change the existing interpretation of Section 121 enough to help Mr. Comeau, it did significantly change how this section of the constitution will be interpreted in the future.

Here’s what I mean. In 1921, the Supreme Court said that Section 121 only prohibits interprovincial trade barriers that take the form tariffs/customs duties. The Comeau decision holds that Section 121 was only designed to prohibit laws that whose essential purpose is to restrict interprovincial trade. [I suspect that from now on, governments that pass new laws that restrict interprovincial trade will be careful to avoid declaring their protectionist intentions in public and on the record]. I would say that I, and the lawyers I worked with, did help to “move the needle” a little bit.

It seems to me that Brad and other legal historians should do a study of “comparative originalism” that would investigate how historical information and historical expertise is processed differently by courts in the nations that have constitutional lawyers who advance originalist arguments. These nations include the US, Australia, and India and likely others as well. We know that originalist theory has evolved over the last 40 years in the US and that each variant of originalism privileges different types of primary sources and historical expertise. Balkin’s piece on new-style originalism may interest researchers. It seems to me that Leonid Sirota would be the ideal individual to lead a collaborative project that would compare how originalist jurisprudence in different countries process history.

By the way, some excellent papers on the Comeau decision have appeared online and haven’t been cited as much as they should have. I would like to draw them to the attention of readers.


Brett Capstick, “The Supreme Court of Canada’s Re-Examination of Internal Trade: The Case of Beer” (2017) Library of Parliament HillNote

Christian Whalen, “R. v. Comeau and Judicial Activism” (2016) Canadian Bar Association

Malcolm Lavoie, “R. v. Comeau and Section 121 of the Constitution Act, 1867: Freeing the Beer and Fortifying the Economic Union, (2016) Dalhousie Law Journal)

Asher Honickman, “A Marriage Made in Britain: Section 121 and the Division of Powers” (2016) CanliiConects.



La Cour, c’est qui?

2 05 2018

Double Aspect

Peter McCormick, University of Lethbridge

The Supreme Court’s recent decision in Comeau has definitely put the judicial cat among the federalist pigeons.  At first glance – we have all seen the headlines – the case is about bringing cases of cheap beer into New Brunswick (“Free the Beer!”).  On a closer look, the already enfeebled Section 121 of the Constitution Act 1867 has been effectively gutted, taking with it any realistic prospect of a major shift toward greater intra-Canadian free trade.  Along the way, the sort of trial judge’s revisiting of precedent that was so highly lauded in Bedford has been severely chastised.  An interesting case, therefore, on several levels.

The decision took the somewhat infrequent form of a “By the Court” judgment – one that is both unanimous and anonymous – which arguably makes it more emphatic while coyly veiling the identity of the judge who did the drafting. …

View original post 1,337 more words

Management History Division: Get Involved and VOTE

29 04 2018

Thanks to OHN for publicizing this very important initiative. At the time of this election, it is very important for researchers to speak with one voice.

Organizational History Network

In recent years management and organizational history has become an exciting and rapidly changing field, with new ideas and approaches transforming the field and many publication opportunities at leading journals. The AOM’s Management History Division is one of the key institutional foundations for these developments, but the Division needs involvement and support from scholars who are engaged and care about the future of the field. So please get involved. The AOM recently announced the release of the ballot for division elections. If you are already a member of the MH Division, please take time to vote!!! If you are not a member but care about management history, please join the Division, vote now, and join us in Chicago!  The instructions for joining the MH Division can be found here:

View original post