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In An Empire of Wealth: An Economic History of the United States, John Steele Gordon has produced a fascinating overview of the rise of the United States as a world economic power. Gordon, a regular contributor to American Heritage magazine and the author of many books on American business, combines an understanding of the big picture by zooming in on the fascinating, memorable anecdotes that drive home his points. He begins with the colonies and explains how each one was shaped by very different initial conditions and outlooks brought by the immigrants. The less hospitable soils of the northern colonies led to a diverse and innovative economy that proved more dynamic than that of the south. Whaling led to shipbuilding which led to more industry and entrepreneurship. Gordon has a keen understanding of the role of transportation in shaping and growing the economy. The early turnpikes and the Erie Canal were crucial to economic development. But nothing matched the impact of the railroads, which knitted together vast stretches of the growing nation. It was the speed of railway transportation which led to the time zones we use today - the "local time" in each town just wasn't good enough anymore. One of the best features of the book is its illumination of long-forgotten aspects of the early American economy. Few readers will know that in the early 19th century, ice was a major U.S export. Enterprising New Englanders used sawdust (from another great export industry, timber) to insulate ice harvested from frozen lakes. American ships delivered it to places like Rio de Janeiro, Calcutta and Hong Kong. The era of the robber barons is covered with gusto, and Gordon, while detailing the harsh business practices of the times, shows that monopolies often led to lower prices and more innovation. He points out that the giving of vast sums to charitable institutions by the very rich was and is a uniquely American practice with no counterpart in Europe. The reader will be struck with the descriptions of the American economy in the Second World War- of how a civilian manufacturing base was transformed into a huge machine for turning out armaments. Between 1943 and 1945, the vast plants of the Ford Motor Company built tanks, engines and tractors - and only 37 automobiles. Of course, as the economy grew, taxation and government spending grew, too. There seemed to be no way to stop it. Although "impoundment" of federally appropriated funds is usually associated with Richard Nixon, we find out that every president from Jefferson to Nixon used this technique. We also learn that the changing of the budget process in 1974 in the wake of Watergate led to the federal budget really spinning out of control. A short review cannot do justice to this wonderful book. Read it and be amazed at the diversity and dynamism of the American economy. (Harper Collins, 2004, 419 pps, $26.95) |
We learn, for example, that the character of New York was shaped by the mercantile-minded Dutch who settled it. Tobacco was the cash crop that made the southern colonies economically viable, as well as the cause of the labor shortage that led to the importation of slaves from Africa.
