Month: March 2022

In David Montgomery’s Beyond Equality, he starts by explaining how the economy was doing low, how the introduction of the railroad and the telegraph led to production and corporation to manage “men, money, and materials” during 1847 and 1854. (Montgomery, p.4).

On the other hand, unfortunately, unemployment was high. This part interested me because it reminded me of when many people faced this situation during the covid 19 pandemic. Businesses did not have enough money and struggled to pay their workers, so many had to ‘cut off’ people. These events took place rapidly between 1861- 1865. The topic of unemployment also reminded me of what we learned last class, which happened during the Panic of 1873.

In addition, it tells us how the workers faced a competitive, hard environment because employers demanded more. They were treated bad and not paid attention to. Also, the government played a role in a way to “fostering growth and in the thinking of most entrepreneurs than did economies.” (Montgomery, p.6). In order to improve, many people joined and formed partnerships, an example can be the Cambria Iron Works, which was between Daniel J. Morrell and John Fritz, their business had land and “6,000 men and boys” (Montgomery, p.9). This partnership was known as the ‘nation’s largest fabricator of iron rails.’

Overall, Montgomery shows entrepreneurial crisis, how unemployment affected people’s lives, how the Civil War brought inflation, and how government interfered.

 

Accounting for Slavery by Rosenthal delves into the rudimentary accounting practices to “sophisticated scientific management” between the periods of early adoption of slavery to the abolition era. Rosenthal pedantically details the development of accounting practices from antebellum era plantations throughout the Americas, where hierarchies of white workers would detail minute aspects of workers, essentially diminishing them as “cogs in a machine”, to the postbellum era where the sole object was to curtail any form of negotiation that would hinder profits and low costs.

Rosenthal’s main argument for the development of accounting practices during the antebellum period is that slaves were regarded as a form of sophisticated capital machinery. Unlike the machinery that was operated in the industrial heavy north, the slaves were monitored in intrusive detail based on age, sex, strengths, punishments, and output in various conditions and aspects. The minutia of control lead plantation owners, attorneys, and overseers to finely tune their slaves that inadvertently, as a byproduct of profit-seeking, cost-cutting, and output increasing, lead the development of accounting and management practices and technology to aid this process. However, the sophistication of this “scientific management” came down to debased ploys on manipulating lives through misleading incentives and harrowing punishments which persisted in the postbellum era but in more subtle and legal means. Rosenthal also argues that the abolition of slaves purveyed new methods in scientific management to further assert control on slaves. Though never reaching the level of output during the antebellum period, postbellum scientific management shows various ploys in the legal system to curtail runaways, signing misleading contracts that resembled indentured servitude of virtually no remuneration, binding slaves to the plantation at length, and inhibiting prospects of owning or renting land.

The accounting practices in the north, in contrast to the south, were haphazard and not as conducive to higher output, and thus profit, as workers were prone to quitting and demanding higher wages and lower hours. This shows by contrast to the industrial north where human capital could not be manipulated as easily and had to be negotiated with. In conclusion, Rosenthal’s arguments elucidate a blood-stained development of the accounting and management practices that serves as the basis of our modern corporations.

In the introduction excerpt from Richard White’s book “Railroaded”, White points out how the railroad corporations created modernity through both their failures and success. Railroads at the time stood as the epitome of modernity(White, xxii). The introduction of the transcontinental railroad allowed settlement to move from east-west, instead of only north-south. This movement westward resulted in the promotion of settlement along the way, so that they can integrate these settlers into the expanding world economy. Moreover, the production from these places went beyond market capacity. This meant that the extra production harmed the environment. 

Although White argues that the idea of the transcontinental railroad is not bad, the problem was that it was not necessary to build so many railroads at the time and some are not even built in the most efficient places. In addition, this resulted in the cost in both the long term and short term to exceed their benefits. Therefore, one of the main problems was not the idea of the transcontinental railroad, but rather the execution of it. As a result, the transcontinental failed politically, socially, and economically. Furthermore, some expected the transcontinental to fail as a business and were using the failure as a way to funnel corporate resources into their own pockets. These railroad corporations either failed or ended up being rescued by nation-states. White makes a parallel to this by stating how it is similar to the 2007-2008 collapse where the combination of precipitated massive loss, receivership, government rescues, and severe economic downturns. Where in both cases government rescue results in severe economic downturns.

Overall, I believe White is trying to point out how although these railroad companies failed to turn transcontinental into a profitable business, the failures were still able to shape modern North America.

Similarly to what White said about the innovation entrepreneurs succeeding at the expense of the firm(White, xxvi). I believe this is similar to the insiders that are benefitting from the failure of the business. I thought this was similar to when a stock investor has inside information about a corporation and then uses this information to increase their own wealth. 

 

David Montgomery’s chapter on Entrepreneur and Wage Earner portrays the image of the civil war era and its different social and economic changes. Montgomery goes in dept through the specific misconceptions of the 1860s and 1870s. The boom began from the late 1830s growing 1.62 cents per year (Montgomery, pg 3). He makes an argument that most of the growth was initially from industries but later from mining, that after the 1860s industries caused an increase in production but a stall in growth. Later in the chapter, he goes into depth about the different technological advancements that lead to the growth of mining such as the railroad and the telegraph. He describes the different entrepreneurs and companies and the differences between free labor and slavery. Lastly, the different social dynamics that made the civil war era so unique with women working jobs in cotton mills and the rise of different political parties. 

Montgomery goes into the specifics before the Panic of 1873 and the causes of the different sociological changes. The author provides us evidence of how after the 1830s, 40s, there is only so much progress and wealth you can have and after a peak limit, their success has to slow down and eventually fall. He states that unemployment was high during the year 1861 which leads to the conversation of industries being the cause of the panic (Montgomery, page 5). Major companies such as Lewis, Oliver, and Philips company were held at a halt in profits.  Montgomery makes the argument that mining leads to the demand of immigrants due to the call for labor giving them up to a 12-month contract. The debate of comparing the lives of black slaves and poor whites working in enslaved wages rose but the difference is the option to be free from working rather than being beaten or killed to work. Circumstances such as Andrew Carnegie prove that ordinary people could go from working for two dollars to living a rich and wealthy life (Montgomery, pg 30). Montgomery describes the effect women had on the social construct of the patriarchy. Women work in the cotton mills while the shops are run by men. Despite the harsh conditions and bad wages paid to support only themselves, women still preferred to work rather than depend on a man to provide for them. Ethnic classes and religion lead to different political parties due to the rise of immigrants.

David Yusupov

Professor Sean Griffin

03/21/22

HIS 3410

Blog Post #2-Creative Destruction

Throughout history, many inventions influenced the course of history. The Chinese invented the wheel which helped the world to build carriages to transport people and goods quicker. Conversely, they also utilized gunpowder for fireworks but the Europeans used it to make weapons of war. Essentially, technological progress is inevitable. However, as much as technological progress is certainly beneficial there is a trade-off. The famous Austrian economist Joseph Schumpeter described a phenomenon called “creative destruction” which is basically recognizing the fact that yes, there is advancement in society, however this comes at the expense that others lose their jobs. So for example, there was the horse and the buggy and then the automobile came out, yes the automobile revolutionized travel but it led to all the workers who make buggies to be out of work. Much the same way in Richard White’s Creative Destruction there is a clear development of these trade offs.

The development and history of the railroad in the United States with relation to the idea of creative destruction is visible in Richard White’s article. Firstly, it is noted in the article that the railroad aided troops to fight Native American rebellions. Analyzing this from a creative destruction viewpoint it is easy to see that before the development of the railroad troops had to move either on foot or horse and buggy. Therefore with the advent of the railroad those professions are no longer as necessary and that creates a loss of work for those people. There is also that the railroads in Mexico for example was described as an assault on the landed people by the elites, and in the United States it caused the dispossession of the Native Americans, the degradation of the environment, waste of resources and business failures. 

These changes took place because as described before, the advent of the railroad made it possible. The railroad greatly aided in American and other colonial powers expansions. It helped troops to move around quicker, thus conquering land faster. For the railroads to be built it needed to destroy natural habitats. There were naturally going to be a waste of resources and business failures because mishaps happen when doing large scale constructions. These changes took place rapidly because the nature of the railroad was that it, as was stated before, made it possible to do activities quicker. The railroads affected many different types of people in different ways. There was a lot of use of cheap labor from the Chinese to construct the railroads. Businessmen relied on railroads to expand their businesses. As was stated before many Native Americans were unfortunately displaced.

Throughout the many history classes and texts that I have read, most related to economics refer back to the great depression and the 2008 recession, while leaving out the recessions that preceded them. In David Montgomery’s Beyond Equality, he delves into the reasons and economic conditions behind the panic of 1873, adding to my knowledge of downswings in the business cycle. Interestingly, he does not attribute the panic to a single component of industry, like entrepreneurship, the telegraph or the rise of railroads, but rather the effect such inventions have had as a whole in increasing industrial output.

Montgomery describes a change in attitude and rise of production during the mid 19th century. America had purchased fabrics and other capital that would then be used to create the final good. But, speculators wanted to raise such capital on American soil, leading to a change in priorities regarding trade and an increase in manufacturing. At face value this seems beneficial to the American economy, but as more goods flooded the market the selling price began to rise at a slower rate than the cost of inputs in the production cycle. Competition also drove down prices culminating in troubling profit numbers for business owners. This increase in industrial might was driven largely by government provided capital and the “typical family firm” began to “cast his eye more frequently toward the government than his own concern”(Montgomery 6). Railroad companies in particular looked towards the government when faced with financial hardship or a lack of financing despite laissez faire capitalism being one of the predominant economic positions during the time period. Production took off as the 1870s quickly approached with an increase in manufacturing fueling economic growth that eventually led to economic crisis.

Industries like pig iron, coal, and building related trades expanded production at tremendous rates during the 1860s, but were plagued by issues. A large amount of production was “carried on by very small firms” that surrounded giant monopolistic companies(Montgomery 10). With the rise of railroads came a rise in the demand of its inputs like steel and iron, which saw a large increase in demand(Montgomery 11). However, the costs of building railroads were more than “individual industrialists” could finance, leading to a reliance on government subsidization, as the laissez faire capitalists went against their own philosophy(Montgomery 7). Adding to this, the successful business owners promulgated the “cult of self made man”, the idea that the successful capitalists pulled themselves up from the bottom on their own, but the reliance many had on government spending would counter that idea for some capitalists(Montgomery 14).

The panic of 1873 was caused by many factors, all centered around the rise of manufacturing. Increasing manufacturing continually without taking into account pricing and supply and demand can lead to negative consequences as seen during the years of the panic. Beyond Equality explains this, and gives insight to a downward period in the business cycle I was not familiar with before.

 

In the reading, “Accounting for Slavery: Masters and Management” by Caitlin Rosenthal explains deeply about development and management of different practices of planation around the 18^th and 19^th century. Through the different methods of planation with the help of enslave individuals. Keeping track of records and development of the growth of planation.

Bookkeepers help keep records of inventory and lives lost. Bookkeepers “’credit’ the account for lives lost over the course of the year” (Rosenthal 9). Keeping track if they died due to diseases, fevers, and old age. Bookkeepers were also responsible for “maintenance and preparing food crops” (Rosenthal 29). They could be carrying letters, math, and carting.

The improvement of blueprints for a machine that preprinted forms was interesting. It was a technology that helped bring in reports of what was being produced and was used for books. During the early 19^th century, “preprinted forms guided planters…” (Rosenthal 50). This help keep track of records and maintain planation production. With the development of preprint, owners and management individuals could purchase “prepaid journals to help monitor operations” (Rosenthal 51). If these individuals were away, they could keep track of the process.

The beginning of enslaved individuals obtaining freedom. After the Civil War, planters began to slowly lose control of their own workers and would have to pay them. Since they were free, they would of leave whenever they wanted. This cause planation to fall apart as planters began to no longer “measured and monitored labor with exacting precision” (Rosenthal 159). But some enslaved individuals decided to stay with their plantation owners.

In brief, these chapters were interesting as it explains the development and management of different practices of planation around the 18^th and 19^th century. These caused the growth of different management to grow planation and keep records of the process. It was interesting to see the development of bookkeepers and prepaid forms to maintain the production of planation and workers. Looking at the aftereffects of individuals being free after plantation owners start to lose control of their enslaved people.

The nineteenth century beheld an unpresented westward migration, in which Richard White chiefly credits the creation—and failure—of the railroads to; yet his bias towards the impact of the railroad in the chapter “Creative Destruction,” underestimates major forces that drove westward expansion, diminishing his chief argument. Within the chapter, White argues that the westerly expansion of the railroads was as much a facilitator in westward migration, as it was in the corruption society, politics, and the environment. The two sections of this chapter, “Dumb Growth” and “Cattle”, exemplify the negative impact of the railroads in a broad view of nineteenth century history, but fail to account for some institutions that existed when the railroads arrived.
Initially, White argues that the railroads enabled settlements in the West through transportation of troops and supplies to subdue the native population; when this was accomplished, he argues “western railroads had to induce both producers and consumers to move west.” (White 456) Although the railroads played a large part in reducing and restricting the native population, native populations clashed with Americans and their European Ancestors in the West long before the first tracks were laid. The same can be said for the existence of western agricultural settlements. Despite the increase in traffic through the railways, White downplays, even ignores, major societal, political, and environmental aspects in westward expansion. Among these are, as previously states, the existence of agricultural settlements, as well as, and an existing market for trade in animal furs and hides, the Gold and Silver Rush, the end of Civil War, migration of the Mormon population to escape religious persecution, the impact of the Homestead Act, and the large numbers or people that migrated via land trails. In reducing the existence of these components, White creates a narrow view in which he can argue that the railroads were not only the supreme creators of the West, but also unadulterated destructive force that led to overflooding of markets and the annihilation of human and animal populations.
Ultimately, White is effective in emphasizing the impact the creation of western railways had on the expansion—for better or worse—of the United States, but his argument is not compelling enough to overcome the realities that these are not sole aspects in the realization of what Americans considered their manifest destiny. In failing to make this argument, it is difficult to concur with the principal argument of the chapter, which is that the creation of railroads, rather than human conduct functioned as “creative destruction” in the nineteenth century. White raises several questions in the chapter:
“The development of the region would have been delayed without multiple transcontinentals, but what would have been lost? Mines that glutted the market for silver? The Catastrophes that befell cattle and buffalo on the Great Plains? The suffering of those who settled lands that could not sustain them all over the West? The calamities that afflicted Indians who lost their land, their way of life, and often their lives?”(White 461)
However, these questions do not emerge from the development of railroads, rather they reveal the needs and desires of those seeking to utilize any means, including the railroads, to achieve western expansion in the United States. Overall, White’s failure to make a connection between the railroad and the surrounding circumstances of nineteenth century America hinder his assessment of the railroads as “creative destruction.”

Within Richard Whites “Introduction” from Railroaded he dives in on the evolution of the railroad system and how railroad corporation came to be hated because they had monopolized the greater areas and territories when settlers were lured into moving to places on the belief on being able to produce, yet they would be producing for these monopolized companies. Richard White argues that the transcontinental railroads of the late 19th century were political, business, and social failures that should not have been constructed when and where they were. The excerpt also discussed American and Canadian politics that fueled the reform movements of three countries, due to this in the late 19^th century these railroad failures were essentially the key piece to the complicated development of modernity and the historical role of corporations.  The excerpt also discusses the utter uprooting of older ways, and the formation of new technology in the hands of new men with a new form of corporate organization.

Railroaded also emphasizes on financial capitalist, the use of credit and the financial markets as the central engine of corporate growth and expansion. It was quoted in saying “It was not capital that built the railroads but credit, and that capital was ultimately the risk in the railroads for the men who controlled them.” Capitalist such as Jay Gould, Henry Villard, Thomas Scott just to name a few were entrepreneurs who bought bonds that allowed the railroads to proceed. The markets that were used and exploited were historical, they had state involvement, regulations, and military protection. Throughout the excerpt we can also depict how it is not whether governments shape markets, but how they shape them within social and cultural practices, it also establishes a kind of networking between politics and business that persists to this day. Essentially corruption is quite simple: It’s the trading of public favors for private goods, and that’s what happens repeatedly with the railroads and the federal government.”

Many entrepreneurs obtained great fortunes, but had created inefficient, costly, and dysfunctional corporations. These corporation although did create innovation in production, it became a problem because they built railroads that were better left unbuilt and flooded the market with products that had little to no need. Upon the trajectory of the time, it was shown that these investments would have been better off in other sectors of the economy, also many disbursed large amounts of capital and labor for no prosperity. The Transcontinental was built ahead of its time, railroads such as this one reshaped then sense of time and space.

The section about the business of accounting journals and those that profited from them in Caitlin Rosenthal’s Accounting for Slavery was particularly interesting. 

The cotton industry in the 1840s-1850s was still going strong and plantation owners, in their need to increase efficiency and profits, looked towards accounting books to gather, organize, and compare data. The demand was there as Rosenthal described southern planters as having an obsession with data, testing out different strategies to get the most out of their slaves like incentive systems varying in complexities from threat of violence to payment systems. 

While accounting books were already being made and used around this time, it was Thomas Affleck’s accounting books that the demand for such journals began to grow. Affleck greatly profited from publishing his Plantation Record and Account Book due to its complex but intuitive design. Affleck specifically designed it so that anyone with a simple understanding of mathematics could use it, advertising it as a way for plantation owners to delegate bookkeeping to other employees which allowed those owners more time for other business matters(Rosenthal, 88).

Even though his journals were among the most popular in the south, Affleck still had trouble maintaining such a business. For example, Affleck would publish his journal in different versions each aimed towards plantations of various sizes though most of the very big plantations had any use in them, even still using only some parts of it(Rosenthal, 92). There was also the problem of trying to find a printer company that would consistently print Affleck’s journal, Affleck needing to hire several to keep up with demand. Even still that wasn’t enough since Affleck would at times still not have any journals to sell(Rosenthal, 92). Rosenthal even states that saying that the journals sold well was only something Affleck said with calculations and sales hard to verify(Rosenthal, 91).

Maybe it’s because of my major in accounting that I took an interest in this small detail in the grand scheme of things. The fact there was a demand for such data collection I believe really showed how much this data mattered to plantation owners and how important was in their business.