Abstract

The United States established a record of economic growth in the nineteenth century unmatched by other nations. What has not been recognized is the role of the distribution of income in generating an aggregate demand that sustained such growth. By comparing the economies of Great Britain and the United States, this article demonstrates that the egalitarian distribution of farmland in the sixteen states of the US North generated a roughly egalitarian distribution of farm income that resulted in a broad demand for goods and services. Britain’s lopsided agrarian economy, in which the bulk of the rural population was poor, had a weak domestic demand and had to obtain overseas markets, by international trade and by forging an empire, to gain the consumers necessary to sustain an industrial economy. Northern farms generated most of the demand for consumer goods beyond a subsistence bundle. By estimating yearly income for various income categories in northern agriculture, manufacturing, and service activities (banking, commerce, nonmanufacturing and nonagricultural labor), it becomes obvious that free-state agriculture was responsible for 47 to 58 percent of supra-subsistence purchasing ability.

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NOTES

1. Stanley Lebergott, “Labor Force and Employment, 1800–1960,” in National Bureau of Economic Research, Studies in Income and Wealth, vol. 30: Output, Employment, and Productivity in the United States after 1800 (New York: Columbia University Press, 1966), 126–27 (hereafter cited as NBER, Output).
2. Jeremy Atack and Fred Bateman, To Their Own Soil: Agriculture in the Antebellum North (Ames: Iowa State University Press, 1987), 3–4; Robert William Fogel, Without Consent or Contract: The Rise and Fall of American Slavery (New York: Norton, 1989), 103–4; Peter D. McClelland, Sowing Modernity: America’s First Agricultural Revolution (Ithaca: Cornell University Press, 1997); Lee A. Craig, To Sow One More Acre: Childbearing and Farm Productivity in the Antebellum North (Baltimore: Johns Hopkins University Press, 1993); Martin Bruegel, Farm, Shop, Landing: The Rise of a Market Society in the Hudson Valley, 1780–1860 (Durham: Duke University Press, 2002); Clarence H. Danhof, Change in Agriculture: The Northern United States, 1820–1870 (Cambridge, MA: Harvard University Press, 1969); Alan L. Olmstead and Paul W. Rhode, Creating Abundance: Biological Innovation and American Agricultural Development (Cambridge: Cambridge University Press, 2008); Donald H. Parkerson, The Agricultural Transition in New York State: Markets and Migration in Mid-Nineteenth-Century America (Ames: Iowa State University Press, 1995).
3. The importance of slavery to national growth is implied, along with its superiority to free labor, in Robert W. Fogel and Stanley L. Engerman, Time on the Cross: The Economics of Negro Slavery, vol. 1 (1974; rprt. New York: W. W. Norton, 1989), 191–97. Somewhat paradoxically, Fogel and Engerman’s findings are now celebrated by the new history of slavery in Edward E. Baptist, The Half Has Never Been Told: Slavery and the Making of American Capitalism (New York: Basic Books, 2014); Sven Beckert, Empire of Cotton: A Global History (New York: Alfred A. Knopf, 2015); and Walter Johnson, River of Dark Dreams: Slavery and Empire in the Cotton Kingdom (Cambridge, MA: Harvard University Press, 2013).
4. Peter H. Lindert and Jeffrey G. Williamson, Unequal Gains: American Growth and Inequality since 1700 (Princeton: Princeton University Press, 2016), 96–139; William N. Parker, Europe, America and the World: Vol. 2, America and the World (Cambridge: Cambridge University Press, 1991), 43–44; Stanley Lebergott, “Labor Force and Employment, 1800–1960,” NBER, Output, 128–30; Douglass C. North, The Economic Growth of the United States, 1790–1860 (New York: W. W. Norton, 1966), 4–5, 7–9; Paul Wallace Gates, The Farmer’s Age: Agriculture 1815–1860 (New York: Holt, Rinehart, and Winston, 1960); Fred A. Shannon, The Farmer’s Last Frontier: Agriculture, 1860–1897 (New York: Harper and Row, 1945).
5. The broad generalization that the secondary literature has focused on supply (production), not demand, can be noted by the lack of treatment of aggregate demand in economic history texts such as Stanley L. Engerman and Robert E. Gallman, eds., The Cambridge Economic History of the United States, vol. 2: The Long Nineteenth Century (Cambridge: Cambridge University Press, 2000); Jeremy Atack and Peter Passell, A New Economic View of American History, 2nd ed. (New York: Norton, 1994); Lance E. Davis, et al., American Economic Growth: An Economist’s History of the United States (New York: Harper and Row, 1972); and Jonathan Hughes and Louis P. Cain, American Economic History, 5th ed. (Reading, MA: Addison-Wesley, 1998). Most histories of the distribution of wealth and income have reported Gini coefficients, but the relation of Gini coefficients to aggregate demand is undefined; see, e.g., Lindert and Williamson, Unequal Gains.
6. Atack and Bateman, To Their Own Soil, chpt. 14; Lindert and Williamson, American Inequality, 41–42, 135–39, 161–62, 204, 249. For treatment of the US agricultural sector in the nineteenth century, see Thomas Weiss, “Long-Term Changes in US Agricultural Output per Worker, 1800–1900,” Economic History Review 46 (Mar. 1993): 324–41. The dominating role of productivity in economic investigation can be seen in the work of Robert E. Gallman, who argues that agricultural productivity gains occurred later in the nineteenth century rather than earlier. But the connection between agriculture and GNP growth was muddied; Gallman did not tie agricultural demand to the rapid economic growth of the United States in the nineteenth century. Robert E. Gallman, “The Agricultural Sector and the Pace of Economic Growth: U.S. Experience in the Nineteenth Century,” in Essays in Nineteenth Century Economic History, ed. David C. Klingaman and Richard K. Vedder (Athens: Ohio University Press, 1975), 48–57.
7. Stanley L. Engerman and Kenneth L. Sokoloff, “Institutions, Factor Endowments, and Different Paths of Development Among New World Economies,” in How Latin America Fell Behind, ed. Stephen Haber (Stanford: Stanford University Press, 1997), 260–306; repeated in Journal of Economic Perspectives 14 (Summer 2000): 217–32. This whole literature is suffused with the question of whether inequality hinders or stimulates economic growth. For a good discussion, see William Easterly, “Inequality Does Cause Under-development: Insights from a New Instrument,” Journal of Development Economics 84 (Nov. 2007): 755–76. A favorable view of this approach, evidently now called “unified growth theory,” is seen in Oded Galor, Omer Moav, and Dietrich Vollrath, “Inequality in Landownership, the Emergence of Human-Capital Promoting Institutions, and the Great Divergence,” Review of Economic Studies 76 (Jan. 2009): 143–79. I was somewhat aware of the Engerman and Sokoloff argument by their monographic publications, such as Stanley L. Engerman and Kenneth L. Sokoloff, Economic Development in the Americas since 1500: Endowment and Institutions (Cambridge: Cambridge University Press, 2012), but one of the initial reviewers of this essay alerted me to this vast literature by economists, most of it focused on the late twentieth century, and I thank them for it.
8. Jan de Vries, The Industrious Revolution: Consumer Behavior and the Household Economy, 1650 to the Present (Cambridge: Cambridge University Press, 2008), ix.
9. Elizabeth Waterman Gilboy, “Demand as a Factor in the Industrial Revolution,” in Europe and the Industrial Revolution, ed. Sima Lieberman (Cambridge, MA: Schenkman Publishing, 1972), 263–76.
10. D.E.C. Eversley, “The Home Market and Economic Growth in England, 1750–80,” in Land, Labour and Population in the Industrial Revolution: Essays presented to J. D. Chambers, ed. E. L. Jones and G. E. Mingay (London: Edward Arnold, 1967), 222–31; see G. N. von Tunzelmann, “The Standard of Living Debate and Optimal Economic Growth,” The Economics of the Industrial Revolution, ed. Joel Mokyr (Totowa, NJ: Rowman and Allanheld, 1985), 215–17.
11. Eversley uses the figures offered by Gregory King, Joseph Massie, and Patrick Colquhoun, who attempted depictions of national income in their time (1690, 1759, and 1801–1803). The latest installment on the accuracy of their numbers is Peter H. Lindert and Jeffrey G. Williamson, “Revising England’s Social Tables,” Explorations in Economic History 19 (Oct. 1982): 385–405. E. D. Schwarz notes that the revisions of Lindert and Williamson are not inconsistent with Eversley’s demarcation lines for supra-subsistence spending; E. D. Schwarz, “The Standard of Living in the Long Run: London, 1700–1860,” Economic History Review 38 (Feb. 1985): 29.
12. Comments of strike leaders Charles McCarthy and Alonzo Draper, at Coopers Union in New York City, in “The Strikes in New England: Labor Against Capital,” New York Herald, Mar. 28, 1860, 10. The $300 per year total is a standard in the literature; see Bruce Laurie, Artisans into Workers: Labor in Nineteenth-Century America (New York: Noonday Press, 1989), 127–28; Edgar W. Martin, Standard of Living in 1860: American Consumption Levels on the Eve of the Civil War (Chicago: University of Chicago Press, 1942), 393. For the numerous treatments of wages, all of which rather repeat themselves, see Clarence D. Long, Wages and Earnings in the United States, 1860–1890 (Princeton: Princeton University Press, 1960), 40–43; Wesley C. Mitchell, Gold, Prices and Wages under the Greenback Standard (Berkeley: University of California Press, 1908), table 42, p. 154, 165–71; Stanley Lebergott, Manpower in Economic Growth: The American Record since 1800 (New York: W. W. Norton, 1964), 296–300; Emerson D. Fite, Social and Industrial Conditions in the North during the Civil War (New York: Macmillan, 1910), 184–95.
13. On the basic income needed to live in the great cities, see Stuart Blumin, The Emergence of the Middle Class: Social Experience in the American City, 1760–1900 (Cambridge: Cambridge University Press, 1989), 109–113. Walter Licht put the basic necessary income for a family of four between $250 and $400; see Licht, Industrializing America: The Nineteenth Century (Baltimore: Johns Hopkins University Press, 1995), 68–70. The question of what dollar amount needs to be assigned a “subsistence” income is and always will be debatable. However, the annual maintenance cost of a slave (somewhere estimated between $45 and $65) seems too low for the free population. The “starvation wages” of antebellum urban women in the needle trades led to $150 as an appropriate annual subsistence wage, and $150 is not far off what English agricultural laborers earned, and no one considers them sustainers of high consumption demand. As given in the narrative, the $350 and $400 boundaries were selected because at these annual income levels the probabilities are people who earned them could engage in consumption purchases at a significant level.
14. Peter H. Lindert and Jeffrey G. Williamson, “English Workers’ Living Standards During the Industrial Revolution: A New Look,” in Economics of the Industrial Revolution, ed. Mokyr, salaries from Figure 9.1, 188; see also table 9.2, 180.
15. For the antebellum period, descriptions of wealth/income distribution have been offered by, as a sampling, Gavin Wright, The Political Economy of the Cotton South: Households, Markets, and Wealth in the Nineteenth Century (New York: W. W. Norton, 1978); Roger L. Ransom, Conflict and Compromise: The Political Economy of Slavery, Emancipation, and the American Civil War (Cambridge: Cambridge University Press, 1989); Atack and Bateman, To Their Own Soil‘; (implied in) Fogel and Engerman, Time on the Cross; Clayne Pope, “Inequality in the Nineteenth Century,” The Cambridge Economic History of the United States, vol. 2, ed. Engerman and Gallman, 109–42; Lindert and Williamson, Unequal Gains. This article will not employ Gini coefficients for the reason, stated above, that the relation between the coefficient and the structure of aggregate demand is unexplored and undefined. Moreover, it is difficult to decide exactly what the coefficient tells us about a society, what a number indicating a “good” distribution versus a “bad” distribution is, and whether the change from a Gini of 0.55 to 0.60 has any substantial meaning. To illustrate the interpretive problem with Gini coefficients, consider the findings of Robert Allen concerning England in 1867 versus Peter Lindert and Jeffrey Williamson. Allen wrote that the extreme inequality in English income decreased from 1798 to 1867, achieving a Gini of 0.48 in the latter year. Lindert and Williamson report a Gini of 0.511 for all the United States in 1870 (0.496 for white households only); they thereby showed that the United States had a worse distribution of income than England by the Gini coefficient, in the years from 1867 to 1870 (roughly comparable years). However, in a figure giving the top 1 percent of income earners’ share of total income, the US elite in 1875 had about 9 percent of total income (and had been somewhat stable 1850–1875), but the elite in England Wales in 1875 had about 28 percent of total English income. The Gini coefficients tell a different story than the percent of income possessed by the elite, and I would guess most historians and other scholars would find the percentage held by the elite (or by deciles) more informative than the Gini coefficient. See Robert Allen, “Class Structure and Inequality during the Industrial Revolution: Lessons from England’s Social Tables, 1688–1867,” Economic History Review 72 (Feb. 2019): 88–125; Lindert and Williamson, Unequal Gains, Gini of 1870 in table 6.4, pp. 154–55, and graph in figure 5.4, p. 120.
16. On the matter of northern land distribution, there is a large literature, but in general see Gates, The Farmer’s Age; and James L. Huston, The British Gentry, the Southern Planter, and the Northern Family Farmer: Agriculture and Sectional Antagonism in North America (Baton Rouge: Louisiana State University Press, 2015), chpt. 4. On Native American displacement, consult Philip Weeks, “Farewell, My Nation”: American Indians and the United States in the Nineteenth Century, 3rd ed. (Chichester, UK: John Wiley and Sons, 2016), chpts. 1–3; John P. Bowes, Land Too Good for Indians: Northern Indian Removal (Norman: University of Oklahoma Press, 2016).
17. Wright, Political Economy of the Cotton South, 26; Ransom, Conflict and Compromise, 64; Lindert and Williamson, Unequal Gains, table 5.7, p. 116. For the importance of agriculture in the nineteenth century and its equitable distribution, see Jeremy Atack and Fred Bateman, “The ‘Egalitarian Ideal’ and the Distribution of Wealth in the Northern Agricultural Community: A Backward Look,” Review of Economics and Statistics 63 (Feb. 1981): 124–29; and Atack and Bateman, To Their Own Soil, 3–5. The interpretation of the Gini coefficient may be given as follows: It is usually worse for wealth than income; the 0.642–0.7 for the Americans at the time of the Revolution (Alice Hanson Jones) is generally considered good for a society, while above 0.800 (Lee Soltow) is considered lopsided, and early twentieth-century figures for the US were above 0.900. For income, a coefficient, it seems, below 0.4 seems unusually good, while above 0.45 indicates a bias, and above 0.5 represents strong inequality. Lindert and Williamson show strong inequality (above 0.5 for England/Wales and the Netherlands between 1750 and 1870; they have the thirteen colonies in 1774 at 0.437 and the US in 1860 at 0.529. James L. Huston, Securing the Fruits of Labor: The American Concept of Wealth Distribution 1765–1900 (Baton Rouge: Louisiana State University Press, 1998), table 1, p. 84; Lindert and Williamson, Unequal Gains, figure 5.3, pp. 119–20.
18. US Department of the Interior, Eighth Census, vol. 1: Population of the United States in 1860 (Washington, DC: Government Printing Office, 1864), occupations listed at the end of each state population totals; US Department of the Interior, Eighth Census, vol. 2: Agriculture of the United States in 1860 (Washington, DC: Government Printing Office, 1864), 221 (size of farms in acres), 222 (number of farms).
19. It should be remarked that Atack and Bateman believed that “farmers without farms” was a dubious category as they found from their sample that such individuals had $3,000 in real estate, which, as they remarked, “was more than adequate for a viable farm anywhere.” Atack and Bateman, To Their Own Soil, 44–45.
20. Stanley Lebergott, “Labor Force and Employment, 1800–1960,” 160.
21. Atack and Bateman included Maryland, Missouri, and Kansas in their sample; I have excluded them. They also did not include Maine, Rhode Island, and Massachusetts; I used the tenancy rate for Connecticut as the tenancy rate for those states. The categories of farm size for Atack and Bateman were, in acres, 1–10, 11–20, 21–30, 31–40, 41–60, 61–80, 81–120, 121–160, 161–320, and above 320. The Census farm sizes were in acres, 3–10, 11–20, 21–50, 51–100, 101–500, 501–1,000, and greater than 1,000. For translation of the census figures into the Atack and Bateman figures I did the following: the census 3–10 acres stood for A&B (Atack and Bateman) 1–10; census 11–20 into A&B 11–20; 0.33 × census 20–50 for A&B 21–30; 0.33 × census 20–50 for A&B 31–50; 0.33 X census 20–50 + 0.20 × census 50–100 for A&B 41–60; 0.40 × census 61–80 for A&B 50–100; 0.40 × census 50–100 + 0.05 census 101–500 for A&B 81–120; 0.10 × census 101–500 for A&B 121–160; 0.40 × census 100–500 for A&B 161–320; and 0.45 census 101–500 + 1.0 × census 501–1,000 and 1.0 × census above 1,000 for A&B > 320. I used figure 13.4 on page 234, blew the graph up 150 percent twice, measured the heights of tenant and yeoman profit per farm size category, and then used the length (in centimeters) against the y-axis of income (on the graph measured in $500 increments) to make estimates of average income. Atack and Bateman, To Their Own Soil, table 13.4, p. 240; Eighth Census: Agriculture, 221–22.
22. The total gross income received by these sixteen northern states in table 2 amounts to $983 million. Atack and Bateman calculate gross farm income for twenty northern states as $1.2 billion. Marvin W. Towne and Wayne D. Rasmussen, the standard authorities, put total 1860 US farm income at $1.484 billion. My income offerings in tables 2 and 3 are consistent with these figures. Atack and Bateman, To Their Own Soil, 240; Towne and Rasmussen, “Farm Gross Product and Gross Investment in the Nineteenth Century,” in National Bureau of Economic Research, Studies in Income and Wealth, vol. 24: Trends in the American Economy in the Nineteenth Century (Princeton: Princeton University Press, 1960), table 1, p. 265 (hereafter cited as NBER, Trends).
23. The “Families and Free Population” are given in US Department of the Interior, Eighth Census, vol. 4: Statistics of the United States (Including Morality, Property, &c.) in 1860 (Washington, DC: Government Printing Office, 1866), 351. When the number of farms is divided by 0.636, the result is 1,913,811, which is strikingly close to the occupation number of farmers and farm laborers listed in the census (2,063,145).
24. Using Atack and Bateman, a figure of $109.52 was calculated for farm labor, taking from table 13.7 (cost of labor plus board) and averaging the cost for the northern states in the table minus Missouri, Maryland, and Kansas, and getting $13.69 per month. Atack and Bateman, To Their Own Soil, 242. By their narrative, farm laborers signed contracts usually for eight months, creating a cost per year of $109.52. I could have used the standard $130 or $140 per year and the results would still be the same. I then distributed the 635,000 farm workers in the following categories and subtracted their costs from the overall gross income of the farm: farm size northeast yeoman > 320 acres, 5 farm laborers; Midwest farm yeoman > 320 acres, 3 farm laborers; northeast yeoman farms 161–320 acres, 2 farm laborers; Midwest farms 161–320 acres, 1 farm laborer; northeast tenant farm > 320 acres, 3 farm laborers; Midwest tenant farm > 32 acres, 3 farm laborers; northeast yeoman farm 121–160 acres, 2 farm laborers; Midwest yeoman farm 121–160 acres, 1 farm laborer; and northeast yeoman farm 81–120 acres, 1 farm laborer.
25. US Department of the Interior, Eighth Census, vol. 3: Manufactures of the United States in 1860 (Washington, DC: Government Printing Office, 1865). This volume gave manufacturing activity by category in each of a state’s counties; at the end of the county listing, a summary table was provided that gave the information aggregated for the entire state for each manufacturing category.
26. Female wages were calculated as 50 percent of male wages; that figure was derived from Mitchell, Gold Prices and Wages under the Greenback Standard, table 34, p. 103, table 41, p. 155; Susan Estabrook Kennedy, “If All We Did Was to Weep at Home”: A History of White Working-Class Women in America (Bloomington: Indiana University Press, 1979), 35–37, 52–53; Claudia Goldin, Understanding the Gender Gap: An Economic History of American Women (New York: Oxford University Press, 1990), 101.
27. For example, see gradations given in Anthony F. C. Wallace, Rockdale: The Growth of an American Village in the Early Industrial Revolution (1972; rprt., New York: W. W. Norton 1980), 62.
28. On women and children in the 1860 labor force, see Lebergott, Manpower in Economic Growth, 52–53. For the problems caused by the small shop, the hand trades, and independent producers, see Robert E. Gallman, “Commodity Output, 1839–1899,” in NBER, Trends, table 1, fn c, p. 16; Lebergott, “Labor Force and Employment, 1800–1960,” 178–81.
29. Lindert and Williamson tend to divide the nation into regional sections, aggregate wages and incomes for those in the pursuits of agriculture, manufacturing, and services; they also base their analysis on per household income. Those numbers are not useful in my presentation. See Lindert and Williamson, Unequal Gains, chpt. 5.
30. The calculation is that 18.1 percent of manufacturing males averaged a wage above $400; 40.1 percent of males in manufacturing averaged a wage above $350. It is well known that laborers could supplement their income by taking in boarders and putting their children to work; this was probably most true for skilled artisans. I have no way to calculate how many working families could supplement their income and by how much and so have to admit this as a defect of this study. (I could make more heroic assumptions, but the less heroism the better). Yet even still, most artisans were probably already at the $400 or $350 annual income boundaries and so any enhancements in their annual income would not upset the conclusions in this article. Those making $300 or less were probably stuck at a marginal existence without the capacity in supra-subsistence consumption. It may be argued that incomes above subsistence could permit purchases of textiles and food items to sufficiently create the mass demand to power an industrial revolution if there were enough urban workers; whether that was the case in the United States in 1860 is possible but not likely.
31. Edward C. Budd, “Factor Shares, 1850–1910,” in NBER, Trends, table A-1, p. 392.
32. Economists have long griped about the defects of the 1860 census; see Robert A. Margo, “Labor Force in the Nineteenth Century,” in Cambridge Economic History of the United States, vol. 2, ed. Engerman and Gallman, 234–35; Long, Wages and Earnings in the United States, 38–41; Lebergott, “Labor Force and Employment,” 178–81.
33. There are problems trying to translate occupations into families. If one went strictly by the numbers listed for occupations, the percentages would be: farmers, 22.11 percent; farm laborers 11.55 percent; farmers without farms, 5.55 percent, manufacturing establishments, 1.81 percent; male manufacturing workers 14.88 percent; female manufacturing workers 4.34 percent; professions, 2.08 percent; female service workers (basically servants) 9.04 percent; entrepreneurs in service 3.09 percent; and all other service workers 25.56 percent.
34. It is worth noting the difference in income distribution between northern agriculture and northern manufacturing. Although the following numbers are flawed, they in general show the main point: the computed Gini coefficient for table 1 (agricultural gross income by size and type of farm) is 0.3342, while that for manufacturing in table 3 is 0.5369. The flawed figure for manufacturing stems from the lack of knowledge of the true costs of production and the actual number of property owners; instead of the number of entrepreneurs, I just used the number of establishments as the proxy, which is obviously wrong. However, total manufacturing income in tables 3 and 4 equal about $691 million, of which $385 million is entrepreneurial, all of which is in the 10th decile; the top 10 percent of the manufacturing population had about 56 percent of all manufacturing income. In agriculture, the 10th decile held 27.5 percent of agricultural income. In the explanation of the worsening of income distribution in the antebellum decades, it should be stressed that the worsening was not happening in agriculture but in the other sectors of the economy. See Lindert and Williamson, Unequal Shares, chpt. 5.
35. Among the others are barbers, chemists, civil engineers, daguerreotypists, dancing masters, engineers, explorers, firemen, intelligence agents, janitors, lawyers, librarians, musicians, music teachers, opticians, poets, riding masters, showmen, trappers, veterinarians, and ventriloquists.
36. The scattered information on professionals includes Lebergott, “Labor Force and Employment,” 143; Martin, Standard of Living in 1860, 343 (lawyers and doctors $1,000–$2,000; entrepreneurs $20,000); Lebergott, Manpower in Economic Growth, using Kuznets for entrepreneurial income $4,023, p. 147, ministers $426–$1,000, 331; Blumin, Emergence of the Middle Class, 114–16, 273–74.
37. On this I am not alone. Lindert and Williamson confessed they had no idea of banker incomes; Lindert and Williamson, Unequal Gains, 134–35. There is little material on income originating in trade and finance prior to 1869. The work of Richard A. Easterlin is based entirely on commodity production; Richard Easterlin, “Interregional income Differences,” in NBER, Trends, 105–125, 132. Lindert and Williamson did include services and trade in their estimate of gross domestic product ($5.246 billion), which was 26 percent higher than the usual standard (about $4.163 billion); their estimate is probably more accurate than earlier estimates; Lindert and Williamson, Unequal Gains, 97.
38. By the same distribution as manufacturing, I mean that male workers in service were divided into the same income categories as manufacturing in table 3 and for entrepreneurs in table 4.
39. The generalization that American domestic demand originated in the family farm economy and powered the national economy could have been formulated by 1960 and probably earlier. Paul Wallace Gates understood the middling nature of the northern farmer and hypothesized, on the basis of one farm in New York and excluding the cost of farm labor, that its gross income amounted to $1,639; he believed this figure was representative of the entire northern farming community. His estimate has not been far from that of modern economic historians. Lee A. Craig estimates New England farm income at $1,641, Midwestern farm income at $952, and frontier farm income at $795; Jeremy Atack and Fred Bateman put farm income averages for New York and eastern states around $1,250, and for western states at about $800. It has been known since the 1940s that the average manufacturing worker income was about $300 per year. Almost every scholar writing on the subject since the 1840s has said that rich merchants and entrepreneurs were few in number and thus represented a tiny fraction of the population. Just looking at the census of 1860 occupation totals in manufacturing, estimating the number of professionals and those in the mercantile community, and comparing them to the 1.2 million northern farms would have ineluctably led to the conclusion that the major source of domestic demand in the United States was coming from the northern family farm. Gates, The Farmer’s Age, 247–78; Craig, To Sow One More Acre, table 3.2, p. 58; Atack and Bateman, To Their Own Soil, 238–39.
40. The gross figures in this paper generally agree with those of economic historians. The personal income I derive for these 16 states is: $983 million for agriculture (includes $250 annual income for 330,240 farmers without farms), $167 million for professionals, $680 million for manufacturing, and, assuming that the services had the same income distribution as manufacturing, $1,083 million for services. Thus, in this paper, personal income for these 16 states equals $2,892 million. Fogel and Engerman offer a northern total personal income of $2.590 billion ($141 per capita times the population of 18,368,000); Fogel and Engerman, Time on the Cross, vol. 1, table 4, p. 248. Lindert and Williamson report a total personal income for the North of $3.358 billion; they include $602.7 million in property income, which I have not accounted for; Lindert and Williamson, Unequal Gains, table 5.2, p. 99.
41. The number of merchants and bankers based on the occupation tables of northern states in the 1860 census is as follows: 77,588 merchants, 2,156 bankers, 2,147 bank officers, 6,374 traders, 1,434 speculators, and 12,826 dealers.
42. E. P. Thompson listed the wages of workers in the coach building trade in 1818; the weekly wage of painters for these luxury coaches was £3 to £4 per week, making a possible yearly income of £150 to £200, which at roughly $5 per £1, is in American terms about $1,000. Precious few Americans made $1,000 per year; I count 161 of them, plus 154 who made between $900 and $1,000 [they were 166 gold assayers in Pennsylvania ($1,100), and, from New York, 134 photographers ($995), 16 fancy goods workers ($970), 2 artificial eyeball makers ($900), and 2 windlass employees ($900). They are found in Census of 1860, vol. 3, Manufactures.] These individuals might be proprietors or professionals, but the census listed them under the category of “Number of Hands Employed.” E. P. Thompson, The Making of the English Working Class (1963; rprt. New York, Vintage Press, 1966), 236.
43. Robert E. Gallman, “Economic Growth and Structural Change in the Long Nineteenth Century,” tables 1.6 and 1.7, pp. 22–23. The emphasis on the years from 1830 to 1845 has been around for a long time; Gallman, “Commodity Output, 1839–1899,” in NBER, Trends, 13–71; Gallman, “Gross National Product in the United States, 1834–1909,” in NBER, Output, 3–17.
44. Huston, The British Gentry, the Southern Planter, and the Northern Family Farmer, tables 4.3 and 4.4, pp. 80–81.
45. The 4 percent GDP growth rate calculated for 1820 to 1900 comes from the new numbers for GDP per capita in those years times the population; these numbers are the revisions offered by Jutta Bolt, Robert Inklaar, Herman de Jong, and Jan Luiten van Zanden, Maddison Project Database, version 2018, “‘Rebasing Maddison: New Income Comparisons and the Shape of Long-Run Economic Development,” Maddison Project Working Paper 10. The data is offered in excel sheets, and I used the dates of 1820, 1860, 1870, 1900, and 1920 for gross domestic product and population for Great Britain and the United States. The authors offered two series for the gross domestic product per capita (all based on 2011 US dollars); one, called cgdppc, used multiple benchmarks; the other was rgdpnapc, or real gross domestic product, which was American (dollars, I presume) per capita, and according to the authors’ instructions it is the series to be used for comparisons between countries.
46. For the strange journey of American income distribution in the twentieth century, see, besides Lindert and Williamson, Unequal Gains, Robert J. Gordon, The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War (Princeton: Princeton University Press, 2016).
47. The Maddison numbers from Angus Maddison in The World Economy, vol. 1: A Millennial Perspective (Paris: OECD Development Center, 2001), are found in table A1-b, p. 186, and table A1-c, p. 187; the revisions were calculated from the rgdpnapc series in Bolt, Inklaar, de Jong, and van Zanden, Maddison Project Database, version 2018, “Rebasing Maddison.” I did not calculate growth rates for other European nations but assumed that Great Britain was the economic leader.
48. For political institutions, see Robert C. Allen, Tommy E. Murphy, and Eric B. Schneider, “The Colonial Origins of Divergence in the Americas: A Labor Market Approach,” Journal of Economic History 72 (Dec. 2012): 889; for role of resources and cotton, North, Economic Growth of the United Growth States, 2–7, 66–70; Thomas Weiss, “Economic Growth before 1860: Revised Conjectures,” in American Economic Development in Historical Perspective, ed. Thomas Weiss and Donald Schafer (Stanford: Stanford University Press, 1994), 11–27; see discussion in Atack and Passell, New Economic History View of American History, chpt. 1. For a popular treatment emphasizing the inheritance of individual liberty from the British, see John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power (New York: Harper Perennial, 2004), xvii.
49. Because most of the secondary literature is on England and Wales, England will be referred to instead of Great Britain, which includes Scotland and Ireland, which are often excluded from statistical analysis. For percentages in agriculture of male workers, see N.F.R. Crafts, “The Industrial Revolution,” in The Economic History of Britain since 1700, vol. 1: 1700–1869, 2nd ed., ed. Roderick Floud and Donald McClosky (Cambridge: Cambridge University Press, 1994), I, table 3, 45; E. A. Wrigley, Poverty, Progress, and Population (Cambridge: Cambridge University Press, 2004), table 4.12, p. 124. On land consolidation in England see David Cannadine, The Decline and Fall the British Aristocracy (New Haven: Yale University Press, 1990), 2–10; J. V. Beckett, “Agricultural Landownership and Estate Management,” in The Agrarian History of England and Wales, 1850–1914, vol. 7, ed. Jane Thirsk and E. J. T. Collins (Cambridge: Cambridge University Press, 2000), 693–758; or Peter H. Lindert, “Who Owned Victorian England: The Debate over Landed Wealth and Inequality,” Agricultural History 61 (Autumn 1987): 25–26, 36–42. The low pay of workers can be seen in Lindert and Williamson, “English Workers’ Living Standards during the Industrial Revolution,” table 1, p. 12.
50. Robert C. Allen, The British Industrial Revolution in Global Perspective (Cambridge: Cambridge University Press, 2009), 27–29, 35–40 (on subsistence), 25–54 (on the high wage British economy); Allen, “Class Structure and Inequality during the Industrial Revolution,” 88–125.
51. Allen, “Class Structure and Inequality during the Industrial Revolution,” tables 3 and 4, pp. 105–106.
52. Carlo M. Cipolla, Before the Industrial Revolution: European Society and Economy, 1000– 1700, 2nd ed. (New York: W. W. Norton, 1980), 8–15; Fernand Braudel, Capitalism and Material Life, 1400–1800, trans. Miriam Kochan (1967; rprt., New York: Harper and Row, 1973), 44–45, 52–53, 73, 91, 97–113; Roger Price, An Economic History of Modern France, 1730–1914 (1975; rprt, New York: St. Martin’s Press, 1981), 54, 61, 192, 201–203; Ivan Berend, An Economic History of Nineteenth-Century Europe: Diversity and Industrialization (Cambridge: Cambridge University Press, 2013), 42, 147–165; Robert S. Duplessis, Transitions to Capitalism in Early Modern Europe (Cambridge: Cambridge University Press, 1997), 60–61, 76–79.
53. Jerome Blum, The End of the Old Order in Rural Europe (Princeton: Princeton University Press, 1978), 116 (quotes on peasantry), 178 and chpt. 1 (on seigniors), 17–21 (on land distribution), chpt. 2 and 105–112 (on the peasants, landless, and serfs), chpt. 4 (on the powers of the seigniors), 73–79 (on taxation rates). This depiction of the sufferings in preindustrial Europe can also be read in Robert Allen’s depiction of the diets of various European nationalities; Allen, British Industrial Revolution in Global Perspective, 29–32. Although I use the phrase “European nations” broadly, probably the Netherlands and Switzerland should be excepted. It should also be noted that the Engerman-Sokoloff interpretation of landed inequality ruling economic growth over time has not, so far as I can tell, been used to explain Eastern and Western European growth patterns; most of the literature in “development economics” focuses on the twentieth-century world.
54. E. A. Wrigley, Poverty, Progress, and Population, 5–9, 68–86; L. A. Clarkson, The Pre-Industrial Economy of England, 1500–1750 (London: B. T. Batsford, 1971), 232–34; J. D. Chambers, Population, Economy and Society in Pre-Industrial England (Oxford: Oxford University Press, 1972), 140.
55. Atack and Bateman, To Their Own Soil, 270. This observation has relevance for the much-debated question of how and why Europe diverged economically from the rest of the world and produced the industrial revolution. For most of the countries, Kenneth Pomeranz has declared that they were headed to a “cul de sac” in development and that Europe only escaped the dead end (meaning inability to take care of growing populations) by creating empires and importing commodities—that is, imperialism. Kenneth Pomeranz, The Great Divergence: China, Europe, and the Making of the Modern World Economy (Princeton: Princeton University Press, 2000). Although Irma Adelman and Cynthia Taft Morris have included land concentration as an important component in slowing economic growth and agricultural maturation, their findings stress no single factor, such as land distribution, but they see instead the operation of joint institutional factors to promote or retard economic growth. Their findings are largely for the period from 1875 to 1915. Irma Adelman and Cynthia Taft Morris, “The Role of Institutional Influences in Patterns of Agricultural Development in the Nineteenth and Early Twentieth Centuries: A Cross-section Quantitative Study,” Journal of Economic History 39 (Mar. 1979): 159–76, esp. 175–76.
56. See Gilboy, “Demand as a Factor in the Industrial Revolution,” 263, 267; Schwarz, “Standard of Living in the Long Run,” 24–41; Thompson, Making of the English Working Class, 236–41; Clarkson, Pre-Industrial Economy in England, 228–30.
57. On consumer goods beyond subsistence see Allen, British Industrial Revolution in Global Perspective, 49; Fite, Social and Industrial Conditions in the North; Lebergott, Manpower in Economic Growth, 149, 334–35; Martin, Standard of Living in 1860; Robert R. Russell, A History of the American Economic System (New York: Appleton-Century-Crofts, 1964), 383–84.
58. H. J. Habakkuk, American and British Technology in the Nineteenth Century: The Search for Labour-Saving Inventions (1962; rprt., Cambridge: Cambridge University Press, 1967). See Allen, British Industrial Revolution in Global Perspective, 15, 33, 41–43; Joel Mokyr, “Technology and Change,” in Economic History of Britain since 1700, vol. 1, ed. Floud and McCloskey, 32–33. As to the rise of mass production techniques, see David A. Hounshell, From the American System to Mass Production, 1800–1932: The Development of Manufacturing Technology in the United States (Baltimore: Johns Hopkins University Press, 1984); Margaret Walsh, The Rise of the Midwestern Meat Packing Industry (Lexington: University Press of Kentucky, 1982).
59. Gary M. Walton and James F. Shepherd, The Economic Rise of Early America (Cambridge: Cambridge University Press, 1979), 46, 75–85, 141 (on per capita economic growth); Peter Mancall and Thomas Weiss, “Was Economic Growth Likely in Colonial British North America,” Journal of Economic History 59 (Mar. 1999): 17–40.
60. Of course, their explanations about British economic evolution are considerably more detailed and sophisticated that the brief explanation given here. Allen, British Industrial Revolution in Global Perspective, 106–118, 127; Wrigley, Poverty, Progress, and Population, 272, 281.
61. David R. Meyer, The Roots of American Industrialization (Baltimore: Johns Hopkins University Press, 2003), chpts. 1–3. The importance of the rural-urban trade in stimulating economic growth was forcefully posited earlier by Diane Lindstrom, Economic Development in the Philadelphia Region, 1810–1850 (New York: Columbia University Press, 1978). The urban-rural connection in fostering capitalism has been around for a long time; see, e.g., Lewis Mumford, The City in History: Its Origins, Its Transformations, and Its Prospects (New York: Harcourt, Brace and World, 1961).
62. Figures from US Bureau of Commerce, Historical Statistics of the United States, series A 195–209, p. 24–37 (population), and Series K 550–563, p. 518 (cotton); Fogel and Engerman, Time on the Cross, vol. 1, table 4, p. 248 (income averages per sections), and figure 26, p. 91 (cotton prices). The Bureau of the Census figure has a higher number of bales in 1859 than the Fogel and Engerman point on their graph, figure 25, p. 90.
63. See James L. Huston, The Panic of 1857 and the Coming of the Civil War (Baton Rouge: Louisiana State University Press, 1987), 122–26, 217–19, 221–24.
64. Beckert, Empire of Cotton; Johnson, River of Dark Dreams; Sven Beckert and Seth Rockman, eds., Slavery’s Capitalism: A New History of American Economic Development (Philadelphia: University of Pennsylvania Press, 2016).
65. Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, MA: Harvard University Press, 2014); Lindert and Williamson, Unequal Gains. There is a considerable discussion of the effects of the distribution of income on aggregate demand in Edward J. Shapiro, Macroeconomic Analysis, 4th ed. (New York: Harcourt, Brace, Jovanovich, 1974), 147–50. Robert Gordon has stressed income inequality as one of the “headwinds” lowering American economic growth after 1970; Gordon, Rise and Fall of American Growth, 608–24.