Though the economy of Italy has been transformed in the one hundred years since its uninfication, the various regions have experienced quite different degrees of development. Southern Italy, including Sicily and Sardinia, all of which comprises 40 per cent of the land area and, today, about 37 per cent of the population, has lagged far behind the North.

Central banking institutions during the past quarter-century have been almost free of the constraints that inhibited their actions during the nineteenth century. The special conditions under which earlier central banking institutions were formed and operated frequently have been lost to view; and while contemporary observers have come to regard the first two Banks of the United States sympathetically, the functional evolution of these institutions within the framework of specie standards has been largely neglected. The period between the end of the Second Bank and the organization of the Federal Reserve System is subsequently treated as the Dark Ages of monetary policy, better forgotten than deplored.

At the beginning of the seventeenth century, Japan was just emerging from a long period of internal strife and was beginning to settle down under a centralized feudal system introduced by the newly established Tokugawa government. In the following period of peace, economic development was very rapid. Along with commercial development and the monetization of important sections of the economy, a system of credit institutions evolved, notably in Osaka, which by the end of the century was not inferior to those existing in Europe at that time. The financial innovations and developments of the first half of the century were systematized in the latter half, and the resulting credit system became an indispensable part of Japan's economic life. In particular it played an important part in facilitating the spurt in Japan's economic development which occurred roughly between 1690 and 1740.

Although Germans have made major contributions to the study of historical economics and the discipline of economic history, the pioneer work on the enterprise, that lies beneath them all, has been done by Americans. Such continental newcomers to the field as the journals Histoire des Entreprises or Tradition, and the Hamburg Research Center in Entrepreneurial History (Wirtschaftsgeschichtliche Forschungsstelle e. V.) are only now catching up with an important set of data which have been ignorantly neglected. Their approach to economic history, mainly through entrepreneurial history, has the great strengdi of forcing a reconciliation between actual entrepreneurial behavior and the implications of rigorous historical analysis. But it also has evident limitations. The problem of social and economic placement of entrepreneurs, seeking to determine the general effect of their policies, hinges upon quantitative generalization that cannot be derived from particular histories of enterprises remaining within the framework of the firm. One of the major aims of this paper is to show the Hamburg Research Center's recognition that an increasing part of the interest in the history of the enterprise should focus on broader questions that transcend the limits of monographs on firms, questions diat relate business development to economic change.

The decades of the 1820's, 1830's and early 1840's form a fascinating period i n the process of American nineteenth-century development. In many ways that era represents a classic case of interdependence between developed and underdeveloped economies through the movements of factors, goods and specie. During these formative years in American development, the United States was predominantly a single primary product exporter, her rate of economic expansion very much a function of the state of the external market for cotton. The flow of capital moves in the classic fashion, from capital-rich Great Britain to capital-scarce America, but varying with relative degrees of expected returns; that is, varying with the relative rate of development between the two countries. But the period from the 1820's to 1840's exhibits another interesting aspect as well: it reveals the first substantial evidence of a long swing in the rate of American economic development.

Mr. Williamson's comments on my article leave the issue between us ambiguous. I welcome this opportunity further to develop my own views regarding the turbulent period of the 1830's and early 1840's.

First of all, I believe that Williamson has overstated his case in attributing to me disregard of the importance of internal events in the United States. I advanced the hypothesis that the primary disturbing factor in the period 1834–1845 was an increase, and then a decrease, in the flow of funds into the United States, and the problem I wished to examine was the response in the American economy to this initial disturbance. As indicated in my article, the emphasis placed on external factors does not mean that internal events in the United States were negligible.