In 1852 the Secretary of the Treasury reported that there were “no incorporated banks in regular and active operation” in Arkansas, California, Florida, Illinois, Iowa, Texas, and Wisconsin—seven of the thirty-one states then in existence—in the District of Columbia, nor in the two organized territories, Minnesota and Oregon. In most of these jurisdictions corporate banking was constitutionally prohibited; in others it was kept out by current opposition. At the same time it was a state-controlled monopoly in Indiana and Missouri, as it was a little later in Iowa. Going to the opposite extreme, Michigan in 1838 made banking free. Her experiment was eventually repeated by Illinois, by Wisconsin, and by Indiana. Meanwhile, there were unincorporated banks throughout the region, though their creation of credit was probably small compared with that of incorporated banks.

In attempting to fit a phase of the American Revolutionary era into this program on economic unrest, I am not concerned with the factors leading up to the conflict. Historians have traced these in the evolution of the colonies, in changes in Great Britain and, for that matter, in much of Europe, over the long years of peace as well as in the era of controversy. They are complex factors in which thought, whether social, political, or economic, may be far removed from the action that it influences. My concern is with the economic setting in Pennsylvania at the end of the decade of protest and with the rapid changes in price relationships in the early war years which made for unrest within a period of unrest.

In 1696 the British began to keep records of their imports and exports in terms of money values. For this purpose, tables of prices were prepared first for England, and subsequently for Ireland and for Scotland, with the rates based, it is said, on market conditions at the time. Some adjustments in the initial valuations were made in the early years, but thereafter, for over a century and a half, the same prices were used in calculating “official” values. For imports and re-exports they supplied the sole basis for computing money values throughout this period. For exports of domestic produce and manufactured goods, however, a concurrent series of declared values was begun when a convoy tax was imposed ad valorem in 1798; but this series, though continued after the war, has been overshadowed by the “official” valuations which attained something of the respectability of a time-hallowed tradition. Year after year through peace and war, dearth and plenty, high prices and low, the clerks meticulously multiplied their quantities by these unchanging rates. In other words, British “official” trade values became progressively more useless as measures of current market values until the system was reformed in 1854. As a result, historians and economists are faced with frustration or distortion in any question dependent on a fairly accurate knowledge of the course, or the terms, or the balance of British trade in the period.

The subject of technology, it has long been agreed, is of vital interest to the economic historian, as well as to the historian of science. the latter connection my ignorance is such that I can do no more than make a few hesitant observations, largely inspired by a very competent adviser. In the former connection I should presumably speak with greater assurance, because my own research for a good many years has been concerned with medieval society. But with regard the difficult problem of technological advance and its significance, must confess that I can ask many more questions than I can answer—as will be seen from what follows. Such questions must be faced by anyone who considers history more than an antiquarian hobby. For what phase of historical investigation can be more important than the development of the industrial society in which we live ? Precisely where is taking mankind nobody knows. We historians—medievalists and others—must at least remark its novelty and try better to understand it by explaining its origins.

The significant place of credit in everyday business is not a new phenomenon. If the last few centuries have witnessed a rapid development in the character and extent of credit facilities, it is still far from certain that the relative importance of credit is today greater than it was in the medieval period, or during the intervening centuries. In any case it is undeniable that the business affairs of men, from paupers to princes, have frequently required credit in one form or another. The king with his wars and splendid court, the noble with his extravagant ways, and the merchant with his speculative ventures have been the colorful debtors of history and fiction alike. The Jew, the Lombard, the Medici or Fugger, the goldsmith, and finally the modern professional banker have appeared as the masters of credit. But credit transactions have not been limited to these groups alone. As R. H. Tawney has pointed out, such a society as that of Elizabethan England was composed largely of small property holders, chiefly farmers and artisans. These yeomen, artisans, and small businessmen were often in need of loans to expand or retrieve their estates. Where did they find the credit they required?

I Take it that what lies in the back of the minds of most of us when a subject like this comes up is the problem of the relation between economic unrest and political and social change, and more especially, the kind of change we call a revolution. We all know those for whom the solution of this problem is very simple: they say “look for the economic motive” as innocently as if they said “cherchez la femme.” Even at a more mature level of thinking the problem is still often put in such a way that something economic always lies at the bottom, or pulls the trigger, or provides the main impulse, or—and this is the precious word—“determines” everything.

Defense of a historical survey of the business corporation in this country seems hardly necessary. Students of its place in the present economy, even students of the well-recorded “trust” movement of the 1890's and later decades, need this background, if only to test the hypothesis, not infrequently encountered, that the business corporation of pre-Civil War days was largely confined to the fields of banking, insurance, and public utilities.

In looking back over a hundred years to John Stuart Mill's Principles of Political Economy and to the Communist Manifesto, joint product of Karl Marx and Frederick Engels, it is difficult not to be influenced by the stereotypes of “bourgeois” and “Marxian” economists that have developed in the process of doctrinal controversy. (It is sometimes as difficult to recognize the “orthodox” economist from the description of the “Marxian” as it is to recognize the “classical” economist from the description of the “Keynesian.”) But the difficulty does not lie simply in the probability that adherents of each school will caricature the leaders of the other, emphasizing contrasts; there is an equal probability that the modern adherents of each school will caricature their founders, emphasizing points that have come to be important. The “historical” Marx and Mill have to be sought with the special care that arises from an awareness of these difficulties.

The economic distress and the new concern with social problems in England in the 1840's, which underlay the reformulations of political economy in that decade, had also an extensive and significant reflection in imaginative literature. While the novel with a thesis, even a social thesis, was nothing new, it was only in the forties that English literature began to deal on a major scale with the social problems raised by the industrial revolution. One can sense in the novels of this decade an increased urgency and pressure, a more daring and direct attack. This emphasis is so marked that one critic has attempted a correlation between literature and socialism, and has sought to find in the novels of Dickens the same type of social observation and emotional reaction that prompted the analyses of Karl Marx. While such a thesis goes too far and is almost certainly invalid, one can nevertheless find in these novels a historical meaning of a different sort, more complex, but also more interesting and suggestive to the historian.

Seven or eight years ago our Association and its common-law bride, the Committee for Research in Economic History, earnestly set about producing offspring. One cluster of them, it was expected, would look like examples of laissez faire in the United States. In 1943 we inspected these infants in the form of four papers read at our annual meeting; more recently they have been maturing into books. And now we are obliged to acknowledge that they have disappointed the anticipations of their parents by looking rather more like state intervention than like laissez faire. The announcement of Louis Hartz's study, Economic Policy and Democratic Thought: Pennsylvania, 1774-–1860, is not untypical of the comments on all of them which have been consistently made by relatives, friends, and scholarly reviewers. That announcement says: “Through his critical appraisal of Pennsylvania, a leading state in the formative years of the Republic, Mr. Hartz advances the perhaps startling thesis that the contemporary theory of laissez-faire’ actually embraced a vigorous concept of state economic responsibility.”

On December 11, 1847, the Journal des chemins de fer, founded and edited in Paris since 1842 by an Englishman, declared that the French rentes had fallen as much as if the government was about to be overthrown. The King, who was ill in body at the time, yet perfectly comfortable in mind, recovered, but on February 24, 1848, he and his government fell in a revolution that was as sudden and dramatic as it was triumphant. Among its leaders were Socialists, like Louis Blanc, who controlled a considerable body of workingmen, some of whom belonged to the building trades and the domestic industries of the capital, while others had been brought to Paris some years before to work on the fortifications. They were moved first to the barricades; then, after being victorious there, to the national workshops organized by Louis Blanc, now a member of the provisional government, who had proclaimed on behalf of the workingmen the “right to work,” as the most important organ of the workingmen, L'Atelier, had proclaimed the limitation of hours, the right to organize, and a minimum wage. These demands seem reasonable to us now, but they were thought dangerous then, not only by a majority of the provisional government, but also by the majority of the new legislature and of the French people.

When a given population is able to produce more goods and more services than are required for its subsistence, the concentration of an economic surplus becomes possible. Such concentration has always involved the formation of a class structure. Part of the population performs the physical labor of economic production; it becomes the working class. Other segments of the population performing services other than physical labor receive portions of the economic surplus. They become the possessing and, usually, the ruling classes.