Carville E. and Hoffman R. (1980) Why did industrialization happen in the North not the South?

Carville Earle and Hoffman Ronald (Dec. 1980) “The Foundation of the Modern Economy: Agriculture and the Costs of Labor in the United States and England, 1800-60” The American Historical Review 85/5: 1055-1094.


Introduction

Traditionally (so-called Habakkuk thesis), labour shortage is said to be the cause of the mechanization of the American agriculture in the early 19th century. The authors have compared the Northern grain-belt, the South slave-based and the English agriculture to check that claim. In the North (monoculture), extensive use of labour was only necessary for the harvest, which created an available and cheap workforce for the urban industries, and allowed savings to be invested in mechanized agriculture. In England (diversified agriculture) and in the South, the labour season took most of the year hence the wages were going up. In the English case it hindered the use of machinery in the agriculture and in the South the industrial take off all together.

Literature review

Peter Temin’s critics of the Habakkuk thesis: (1) not more workforce scarcity in England than in the US (no wages difference), (2) American industry produced cheaper machines, (3) as a result producing was cheaper in the US. If anything unskilled labour force was cheaper in the US (compared to skilled) and, thus, an intensive use of them should have been the short-term rational choice for the US capitalists (Don Adam and N. Rosenberg).

The authors’ critic of the revisionist theory

Monthly wage were similar, but US rural workers had mostly seasonal jobs up to 1860s (farm boys were coming from Chicago for a series of 1 to 2 weeks contracts). Most of the farm workers of the grain belt had only four months of employment a year. In comparison English rural workers had more or less all-year-long employment (Norfolk four-course rotation type of crop) and contracts could reach 6 to 12 months. In the UK a labourer could earn up to $170 a year, while only $40 (plus 30 to 40% worth of subsistence farming) in the US.

“Clearly, labour in the America grain belt was cheap and it did not take a very high urban salary to induce these unskilled workers from rural to permanent urban employment.”

Definitions

Transfer wage = lowest wage for which a worker would reallocate himself.

Many firms, alternatively, were only recruiting during the low season (as opposed to harvest season) and were only paying a subsistence salary below the monthly salary obtained in the agriculture (i.e. labour exploitation). As workers were reallocating themselves in the cities wages went up (because of relative rural labour shortage and industrial competition in the urban clusters, thus becoming independent from agricultural seasonality) but not dramatically.

What antagonized rural labourers was as much the low wages as the uncertainty of low season employment (may happen or not). The authors estimate the transfer wage at $190/215 in the North (urban life being more expensive the transfer wage is higher than the total rural income). In comparison, in the cotton belt, the wage of the white rural workers (not involved in actual farming which was for the slaves costing half the price of a yearly salary for a white labourer, but in overseeing the slaves) had incomes from $300 to over $1000 which made it impossible for the industry to set up a reasonable transfer wage in the South.

In the North and Midwest the job market was not under competitive conditions. The highest wages being only a few months a year in the agriculture, the urban employers could install an economic exploitation paying the workers well below the marginal productivity. By comparison, the seasonal jobs’ salaries during the summer in the urban areas was more then doubling.

Temporary urban employment (paid slightly more than the subsistence income) was enormous. The population of Chicago was doubling every winter. On the other hand, white labourers wages in the South were so high that railroads constructors had to import workers from Europe or from the North (free black workers were rare and slaves seen as inapt to the industrial tasks).

In the 1850s, the North labour scarcity appeared, but a minimal mechanization enabled the entrepreneurs to keep the wages low in the fields and the cities (whose job market was still indexed on the countryside’s). The oligopolistic employers still managed to keep the wages significantly lower than the marginal product (un-perfect labour market on the demand side).

On the contrary, the Southern entrepreneurs were inhibited by the fact that the marginal product and more was used to pay the work force. Nowadays, in developing countries a high transfer wage can be artificially created by legislations. The wages variations in Pennsylvania were synchronised between rural and urban area, suggesting a single labour market. Mechanization seems not to have been intended in order to increase unskilled labour productivity but to maintain the output while cutting the costs. The English didn’t adopt the new technology because they were using cheap skilled labour (which by contrast was

One Response to Carville E. and Hoffman R. (1980) Why did industrialization happen in the North not the South?

  1. Kadzi Mutizwa says:

    Hi:

    I’m with a NYC-based labor journal and we’re interested in reprinting an image found on your site in our Spring 2010 issue.

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