More on cross-border mergers

For the views of Italy's minister for European affairs on cross-border mergers, see Giorgio La Malfa, "Cross-border M&A does not suit most banks," Financial Times, 2 June 2005, 15.

Most interesting part: "Finally and crucially: the bigger, the less flexible. There are specific, lcoal circumstances even for banking. Italy's industrial production, and with it a large share of the country's wealth, is based on small and medium-sized enterprises, often clustered in lcoal districts. Most of these companies are too small to raise capital on the markets. Access to credit is their lifeline. And local banks have traditionally provided this credit. They have developed over the years a detailed knowledge of their clients' needs that is hard to replace. It is thus a legitimate concern that flexibility and specialisation could be lost in the process of banking consolidation."

There's now a large political-economy literature on flexible specialization as a mode of production in Italy (for an early example, see Charles Sabel and Michael Piore, The Second Industrial Divide).

Access to local knowledge and large-scale banking are not necessarily incompatible, however. Case in point: At the Business History Conference in Minneapolis last month, I heard a paper (by Fed Reserve scholars, if I remember right) on bank branching via merger in California. There the parent banks have tended to retain local executives and managers precisely because of their detailed knowledge of the local community.

Pressures for federal regulation of American insurance companies

Joseph B. Treaster, "Coalition Seeks a Federal Insurance Regulator," New York Times (natl. ed.), 15 June 2005, C5.

Here's an(other) instance of business pressure for federal in place of state regulation. Business interests (at least the big players) seem fairly united behind the initiative to create "an efficient, uniform regulatory structure" nationwide in place of the usual "patchwork" or "mosaic" of regulation by 50 states (the article doesn't use the latter terms but they are typically used by critics of state regulation). The proposed solution is to give companies the option to be regulated by Washington or their home state. Critics suspect that insurers and bankers see federal regulation -- in the current political environment in Washington -- as a means of deregulation. "'If the federal government was a little less laissez-faire, the insurers and banks wouldn't be doing this,' said J. Robert Hunter, insurance director at the Consumer Federation of America."

The American practice of leaving incorporation policy and broad areas of regulation (insurance, banking) to the state governments seems increasingly anachronistic in an age of globalization. But in many ways it serves effectively to minimize regulation because the state governments have encountered serious legal-structural or political obstacles to regulation since the 1850s.

Background reading on insurance: Peter J. Wallison, ed., Optional Federal Chartering and Regulation of Insurance Companies (Washington, D.C.: The AEI Press, 2000).

Well, so much for my effort to write expediently!

HVB Group-UniCredito merger

Heather Timmons, "2 European Giants Betting Banks Can Blur Borders," New York Times (natl. ed.), 15 June 2005, C6. Cross-border (German-Italian) bank merger.

Click here for the geneaology of the HVB Group. HVB = Hypo- und Vereinsbank or HypoVereinsbank, and its lineage extends back to the Bayerische Hypo- und Wechsel-Bank AG (1835). The HypoVereinsbank headquarters in Munich had rather extensive archival records, but when I worked in them in the late 1990s, there was a good possibility that the archive would be closed as a cost-cutting measure. Whether that has happened, I don't know, but it would be a significant loss for historians.

Changing format

Well, my plans for this blog clearly aren't working out the way that I had envisioned. I just can't seem to find time to write up reflective notes about news items that are relevant to my research or teaching, and if I can't do it in the summer, when will I ever be able to? But I don't want to revert to clippings, since I can never find time to organize them either; they just sit around in piles on my desk.

So -- with due apologies to anyone who may have been "listening in" on my browsings -- I'm going to take a more expedient approach. I'll just make brief note of news articles and indicate ever so briefly (cryptically?) why they are interesting. Now let's see if that's a more effective way of keeping track of useful news.

Wealth and democracy

Whoa! For a mixture of the usual and a few unusual reasons, I've been totally swamped since spring break. Maybe blogging is like exercising -- once you get addicted to it, you can't live without it (so I hear), but until then it's tough to find time for it when the going gets tough. Well, I have a small stack of clippings to report on and I'll chip away at those (so to speak) as time allows. It's finals week here.

For the moment, just a quick comment about Cornell economist Robert H. Frank's column in this morning's New York Times about the estate tax. Popular support for repeal of the estate tax seems to run high, he writes, but how one asks the question can (as usual) make all the difference, and he illustrates this with the results of a (very) small comparative survey.

Robert H. Frank, "Economic Scene: The much-reviled estate tax: efficient, fair, painless as possible and misunderstood," New York Times, May 12, 2005, C2.

Perhaps, as he suggests, when people register opposition to the estate tax, they're really just saying that they oppose taxes in the abstract. But, still, what is striking is the way that concentrations of wealth have become so acceptable, politically and socially. In the usual discourse, there's hardly any recognition that concentrations of wealth might pose a fundamental challenge to a democracy and that the estate tax helps to level the playing field and to stave off the rise of a monied aristocracy in the United States.

Andrew Carnegie, one of the wealthiest Americans in the late nineteenth century, supposedly favored an estate tax (so I understand--I haven't verified this myself) because he thought people should do what he did, work their way to wealth. Granted, he had social access to investment circles (see Pamela Laird's forthcoming book, Pull), and it was arguably more difficult to climb the ladder of capitalism by the late 19c precisely because of the gigantic increases in scale that he and men like him wrought in the world of business. But, in his extensive philantropic activities (e.g., Carnegie-funded public libraries), he did put his money where his proverbial mouth was.

Further reading on this theme: Entering the title of this post reminded me of Kevin Phillips' book by the same title. Also, see the collection of essays entitled Ruling America: A History of Wealth and Power in a Democracy, edited by Steve Fraser and Gary Gerstle.

Ramifications of German Saabs

General Motors' recent decision to produce Saabs in Germany rather than in Sweden raises a host of interesting issues:

1. Do consumers care where cars are produced? GM, citing American-made BMW and Mercedes SUVs, doesn't think so. Saab lovers might be different, except that those (like yours truly) who really loved Saabs -- and thus might have cared -- abandoned the car after GM bought the company and changed the Saab's feel.
2. It is an example of the kind of competition among states to attract or retain business that has gone on in the U.S. since the interstate mobility of capital increased around the 1850s -- but now it occurs on an international scale. In this case, Sweden's offer to improve transportation between the Saab facility and the local port "drew cries of foul from German officials," the New York Times reports. This kind of promotional competition is the flip side of the "race to the bottom" or "competition in laxity" that has shaped regulation by the American states since the mid-nineteenth century.
3. It also offers a good example of the way that the ability to shift production among plants -- first gained in the wave of horizontal consolidations that culminated in the Great Merger Movement at the turn of the 20th century -- can alter the balance of power between labor and capital, if labor is not also organized on a scale that matches that of capital. In this instance, multinational GM negotiated with nationally based unions in Germany and Sweden. According to the Times, "[a] crucial ingredient [in GM's decision] was a new job contract [in the German plant] that reduced annual wage increases, or in some cases froze wages, and made labor rules more flexible." The German union "also agreed on a plan to reduce the work force by 9,500 by the end of 2007."

Mark Landler, "G.M. Picks Germany, Not Sweden, as Home of New Saabs," New York Times (natl. ed.,) 3/5/05, B3.

Process vs. social conservatives

I'm certainly not the first one to notice that the Republican position on the proper role of government these days seems rather contradictory. An article in the Times this morning on the Schiavo story, however, introduces an illuminating distinction. There is no "Republican position" as such -- instead, Republicans are divided between "social conservatives" and "process conservatives" (quoting David Davenport of the Hoover Institute). For social conservatives, social issues trump concerns about the allocation of power within the fractured American political structure, while the priorities of process conservatives are exactly the opposite.

Adam Nagourney, "G.O.P. Right Is Splintered On Schiavo Intervention," New York Times (natl. ed.), 3/23/05, A14.

"Social" works in the Schiavo case, but a broader term is needed to encompass those conservatives for whom certain economic issues (e.g., deregulation) also trump concerns about federalism or separation of powers.

More on the "diversity of time"

It is difficult to understand how people dealt with time on a daily basis before standard time zones were created in the early 1880s.

Case in point: Williams's New-York Annual Register for the year 1834 includes "A TABLE FOR THE EQUATION OF TIME For Regulating Clocks and Watches for the year 1834" (p. 21). The column headings are the months of the calendar, and the row headings are the alternate days of the month (1, 3, 5, etc.). Each cell gives a number of minutes and seconds and either "fast" or "slo." At the bottom of the table appears the following explanation:

How to Set a Clock or Watch by the above Table. -- EXAMPLE. -- January 1st, I find by looking into the table, that the Clock to be right must be 3 minutes and 49 seconds faster than the Sun-dial : therefore, I set it so much faster. And so of the rest. -- Twelve o'clock is the best time to a set a Clock or Watch by a Sun-dial.

NOTE. -- A Sun-dial shows Solar or Apparent Time, but a Clock, &c. should be set to Mean or Equal Time, as the Table directs.

So clocks had to be adjusted every other day to be "right," that is, set to Mean Time; and, although it doesn't say so, one has to assume that this table was accurate only for the longitude of New York City.

Lowest long-term interest rates in 300 years?

The Guardian Online reports on new research by Professor David Miles, Morgan Stanley economist, suggesting that "long-term interest rates [i.e., yields on 30-year government bonds], adjusted for inflation, could be at their lowest for the past 300 years." He isn't able to explain why, apparently, but the implication is that such low levels are not sustainable.

Charlotte Moore, "Low rates mean long-term liablities," The Guardian, March 14, 2005.

Neo-mercantilism

Update on the Chinese company Lenovo's offer to buy IBM's PC business: the Committee on Foreign Investment in the United States, "a multi-agency group," has, according to Steve Lohr in today's New York Times, okayed the deal, which had rung alarm bells at the highest levels of the Bush administration and prompted "a full investigation, which occurs in far fewer than 1 percent of cross-border deals." The agency's deliberations are secret -- not much of a surprise there.

Steve Lohr, "Sale of I.B.M. Unit to China Passes U.S. Security Muster," New York Times, 3/10/05, C7.

The article ends on an interesting, rather cryptic note (perhaps due to poor editing?). The second-to-the-last paragraph offers a comment from a member of a Congressional group, suggesting that "Congress [should] . . . review the authority of the investment committee, which dates from the cold war [sic]." The last paragraph quotes an Illinois Republican who "plan[s] to push for hearings to see if the committee's role should be expanded to 'take more account of economic security as well as military security.'"

There's a slippery slope -- defining "economic security." It's difficult these days to discern a coherent Republican position on the role of government; or is this it: minimal in rhetoric; maximal (neo-mercantilist) in practice?

H. Potter unit

Update on my beautiful Toshiba R-100 ultra-ultralight laptop (codename Sherlock), on which my husband inadvertently sloshed some chicken soup: it arrived at the hospital (Toshiba Notebook Depot) in Louisville, KY, a week ago (3/2/05), is still there, and is still in a coma.

I know this because I can check its status on the web (as I do several times a day), where I can read the (rather cryptic) notes that the technicians have entered. (Techno-twits like myself love this kind of thing -- kudos to Toshiba!) When the technicians got to it last Friday (3/4/05), three entries appeared in rapid succession. The first two entries were labeled "Repair in progress" with various notes about keyboard failure, will not power up, and the like. The last entry was more ominous: "On hold," a string of parts information including "sysbrd" (I recognize "system board," the heart and soul of a computer, when I see it), then "H. Potter unit." Hmmmm, I said, frowning, what could this be.

Thinking it might be code of some sort related to Harry Potter (yes, I read one), maybe to suggest that Sherlock had taken on magical properties, I googled various permutations: no results. So yesterday I called Toshiba's support number to see if I could find out more. The gentleman I spoke with, looking at the same info on the web, didn't know what "H. Potter unit" might mean, but he put me on hold, called the Depot, then returned to inform me that they expected the system board to arrive next Wednesday -- a week after it was ordered: is it coming from Japan?!

Shortly after this, a friend called to inquire about Sherlock and I mentioned this cryptic reference to Harry Potter. His daughter, now 14 years old, has been a Harry Potter nut since the first novel was published. A little later he called me back to tell me that he told her about it and she said -- I can just hear the knowing way in which she said this -- "Oh, 'Harry Potter unit': that means it takes a wizard to fix it." I'm sure she's right. What a powerful impact a little chicken soup can have.

Monopsony and vertical integration

For the last week or so, I've been teaching about the history of vertical and horizontal integration and their many ramifications in the late 19th century. Vertical integration was the new strategy of the period, developed by men such as Andrew Carnegie (iron and steel) and Philip Armour (meatpacking) who strove singlemindedly to drive costs out of the production process (to put it in today's parlance). The way that Wal-Mart, its core business focused on retailing, uses its great market power vis à vis its suppliers (see earlier post) to drive costs out of the supply chain seems like the functional equivalent of vertical integration in this respect.

Which is the "better" strategy--outright control or preponderant market power? There's no universal answer; it depends on the context, says the historian (an economist may answer differently). Carnegie's markets in the late 19th century were sufficiently large and stable that the risks of investing in control of supplies, labor, and distribution facilities were minimal and the reductions in unit costs that could be achieved by controlling all aspects of the process were substantial. Market conditions since the 1960s have become much more volatile for a variety of reasons, so investing in dedicated facilities/capabilities carries a much higher risk that market conditions will shift and render those facilities/capabilities useless. In this context, it makes more sense to retain the flexibility of contract relationships, using market power instead of outright control to force cost reductions.

A cautionary tale

This is the time of the semester when everyone--students and faculty alike--gets a bit stressed and . . . accidents happen.

As I reported about a month ago, my quest for an ultra-ultralight laptop ended happily with a Toshiba R-100, an amazing machine: 2.2 lbs. without powercord or extra battery; about 3 lbs with either of those two. (For household purposes, it's codenamed Sherlock, by the way -- long story.)

Well, this weekend, my husband showered it with chicken soup and it's had some proverbial wires crossed ever since. I don't know exactly what the keyboard is doing since I can't enter my password properly, but it's clearly making a hash of keyboard input. On Toshiba's advice, I removed the battery and let it dry out for 48 hours. Still no recovery. Now it's on its way to the Toshiba Notebook Depot in Louisville, KY, where (we are desperately hoping) the laptop wizards will make it good again for not toooo much money.

So be careful out there! More news to follow.

Product placement's long history

Who knew that product placement had such a long history? Stuart Elliot's New York Times column, Advertising, reports that Turner Classic Movies is doing a product placement series, based on research done by Jay Newell, an asst. prof. at Iowa State. On the trail of products spied in movies, Newell tracked down "a trove of evidence of product-placement agreements" in the 1930s. The earliest dated back to 1896.

Stuart Elliot, "Advertising" [column], New York Times, 2/28/05, C8.

"The irregularity and diversity of time"

A letter to the editor of the North American Review in 1815 begins this way:

Sir,
I address you on a subject which causes some inconvenience here [Boston], and probably, the same difficulty exists in other parts of the United States; this is the irregularity and diversity of time. There is no common standard, and every district is regulated by a clock of its own. The difference between the time in Boston, and the villages about it, is always considerable, and in some instances it varies upwards of half an hour. There is generally this difference at least between Salem and Boston; this often interferes with appointments in business, and in certain circumstances a criminal might be able to prove an alibi on this very ground. . . . It would be a great convenience to many persons, if every city and village had a horizontal [sun]dial in some publick, central situation. The clocks and watches might then all be regulated by this, and time would have a common regulator.

"Regulation of Time," North American Review, vol. 1:3 (September 1815): 334-335.

The writer's proposal was a very modest one and would not have standardized time, as we know it, over great stretches of the landscape. Standardization occurred in two stages over the nineteenth century. First, American railroads developed a patchwork of dozens of different time zones (the "hardscrabble" system of some 55 time zones, if I remember right). Then in 1880s, in an effort to pre-empt moves in several state legislatures and in Congress to legislate standard time zones (one proposal was for a single, nationwide zone), the railroads, newly organized in a national association, reduced their motley collection to our present-day time zones.

More on currency

More on American currency since 1861 from the Federal Reserve Bank of San Francisco's American Curreny Exhibit:

Federal Reserve notes are the only U.S. currency issued today. Federal Reserve notes were initially issued in denominations ranging from $5 to $10,000. The $100 note has been the largest denomination printed since 1946. In 1969, all notes greater than $100 were retired because of declining demand.

The design of Federal Reserve notes has changed some over the years. In 1929, the size of the notes was reduced. It also was decided that all currency would have a portrait on the front. Denominations under $100 would have buildings or monuments on the back. The inscription "In God We Trust" was added in 1955.

How could something so familiar be so new?

The Federal Reserve introduced the one dollar bill in . . . believe it or not, 1963. That's according to the Federal Reserve Bank of San Francisco's excellent website, American Currency Exhibit, which offers historical background as well as lots of beautiful images of currency since the colonial period. I polled a number of colleagues on my corridor the other day and all were, like me, astounded to realize that an object so much a part of everyday life could be so new.

Automation '50s : : Nanotech '00s

The state of nanotechnology today -- the bottom-up process of manufacturing by assembling atoms and molecules, first envisioned in 1959 by physicist Richard Feynman and more elaborately in 1986 by K. Eric Drexler -- resembles that of automation in the 1950s. Experts and novelists imagine "fantastical future possibilities" for nanotechnology (in the words of a Times reporter yesterday), while actual progress proceeds at a "more mundane" level.

Kenneth Chang, "Tiny is Beautiful: Translating 'Nano' into Practical," New York Times, 2/22/2005, natl. ed., D: 1-4.

For a fictional treatment of nanotechnology, I especially like Neal Stephenson's The Diamond Age: Or, a Young Lady's Illustrated Primer.

Among experts and novelists on automation in the 1950s, John Diebold, author of the classic Automation: The Advent of the Automatic Factory (1952), played the role of evangelist, while Kurt Vonnegut, who caught wind of "numerically controlled machine tools" while working as a publicist at General Electric, envisioned the darker side in his novel Player Piano, also published in 1952. (By the way, I'm not endorsing Amazon.com by linking to its records for these books, but its "search inside this book" tool is so useful.)

Negotiating the shoals of monopsony

Interesting story in the Times this morning about the lawn mower manufacturer Toro and its successful efforts to sell its machines through Wal-Mart without undermining its brand or alienating its traditional dealers: in effect, Toro has managed to resist the monopsonistic power relations that have generally accompanied Wal-Mart's rise to dominance in retailing.

Dan Mitchell, "Manufacturers Try to Thrive on the Wal-Mart Workout," New York Times, 2/20/05, sec. 3: 3.

Reminders of spring

Coupled with this morning's wet, slushy snow, the Times' article on Saturday about the shareholder proposals that nuns are preparing for shareholder meetings serves as a reminder that spring -- and the shareholder-meeting season -- is around the corner. This time I'm going to keep a closer eye out for reports of shareholder meetings in Germany, where attendance at the meetings of the biggest companies can reach phenomenal numbers (in the 10,000s). What a contrast with the U.S. (with the lone exception, to my knowledge, of Warren Buffett's meetings).

Leslie Wayne, "Shareholders Who Answer to a Higher C.E.O," New York Times, 2/19/05, B: 1-2.

Reminder in the brouhaha at Harvard

Today is becoming a day of reminders. The ruckus at Harvard over President Larry Summers' remarks about women and aptitude for science and engineering offers two reminders:

1. the people who live inside mentalités are the least well-positioned to perceive them; and
   
2. sexism still doesn't carry quite the social stigma that racism does.

Closing off "avenues of pursuit"

The class-action law that President Bush signed on Friday has been getting a lot of attention, as has the U.S. Chamber of Commerce's successful lobbying on behalf of it and other legislative changes. Two interesting aspects to the class-action story, which seeks to foreclose the state courts as a forum for pursuing multistate class-action law suits in which aggregate claims exceed $5 million:

• As historian James McPherson once observed, "states' rights" ideology as a rule has served as a means to achieving some more fundamental goal than as an end in itself. Here's a(nother) case in point, where one might have expected states' rights-friendly Republicans to oppose legislation that mandates removal to the federal courts. Instead, they have taken the lead in nationalizing the issue.
• It also serves as a reminder that exploiting or fiddling with the American political structure has been a potent weapon in political struggles since the adoption of the Constitution. Legal historian Harry Scheiber pointed out the "avenues of escape," inherent in the structure, that businesses used in the nineteenth century to escape regulation. The structure creates, in effect, multiple opportunities across branches, levels, and geographic units of government for "forum shopping" in search of favorable legal treatment. Branch-jumping,level-jumping, and jurisdiction-jumping (within branches or levels) are all possible avenues of escape or pursuit, depending on the circumstances. In this case, the U.S. Chamber of Commerce (formed at the instigation of the Department of Commerce and Labor in 1912, by the way) and its allies seem to have succeeded in closing off the "avenue of pursuit" offered by the state courts, which have generally been seen as friendlier forums than the federal courts.

David Rogers and Monica Langley, "Bush Set to Sign Landmark Bill on Class Actions," Wall Street Journal, 2/18/05, A: 1, 7; Stephen Labaton, "Quick Victories Encourage Business Lobby," New York Times, 2/18/05, C: 1,2; Gretchen Morgenson and Glen Justice, "Taking Care of Business His Way: Hardball Tactics at U.S. Chamber," New York Times, 2/20/05, sec. 3: 1, 7.

Always room for improvement

Writing is to an historian like math is to a physicist, and no matter how good you think you are as a writer, I tell my students, you can always do better. On this point, the New York Times offers Verlyn Klinkenborg's testimony this morning in his "appreciation" of Miss Gould, the New Yorker's "venerable arbiter of style" who died the other day:

I never met Miss Gould [he writes]. But deep in a box at home are the proofs of articles I once wrote for The New Yorker, and in the margins is the handwriting of Eleanor Gould Packard . . . . I thought I knew a lot about the English language at the time. I had a Ph.D. in English literature from Princeton, an old-fashioned kind of doctorate with an emphasis on literary history and textual editing. So it came as a surprise to see those proofs. . . .

I reacted the way I suppose many writers did when they first saw a Gould proof--with disbelief and dismissal. But a writer soon learns to welcome anyone who can offer real insight into the nature of prose, and that Miss Gould could certainly do. I learned from her neatly inscribed comments that even though I was writing correctly--no syntactical flat tires, no grammatical fender-benders--I was often not really listening to what I was saying. That may seem impossible to a reader who isn't a writer. But Miss Gould's great gift wasn't taking writers seriously. It was taking their words seriously. No writer, at first, is quite prepared for that.

Verlyn Klinkenborg, "The Point of Miss Gould's Pencil," New York Times, natl. ed., 2/16/05, A26.

Shall I admit it? I love Verlyn Klinkenborg's writing in the same way that I love Marc Bloch, discoveries in archives, a good mystery, and estate-saling.

Where are the women capitalists?

Harvard Library has just opened a new online collection called "Women Working, 1870-1930." This is the first in its Open Collections initiative, supported by the William and Flora Hewlett Foundation. It provides online access to digitized resources from Harvard's collections on women's work between the Civil War and the Great Depression. The collection currently includes 2,396 books and pamphlets, 1,075 photographs, and 5,000 pages from manuscript collections.

It may give incidental attention to women as capitalists, but, as is true in the academic field of women's history generally, the emphasis is overwhelmingly on women as laborers.

Democracy and corporate governance

An article in the business section of the Times on Sunday profiled Emil Rossi, a California hardware store owner and corporate investor who for some thirty years has been agitating for greater "democracy" in corporations. He reminds me of Lewis Gilbert, "America's corporate conscience" (according to a media account), who was active from the 1930s through the 1950s (maybe longer--I'm working from memory here; for details, check the intro to my book when it finally appears).

What is striking to me as a historian is how severely limited the concept of democracy in corporate governance has been in the twentieth century. Here it means "[t]he notion that the majority of shareholders should rule," which, despite the Bush administration's pursuit of it in the Middle East, the author tells us, "is still treated as a quaint one, at best, in most American boardrooms." But "the majority of shareholders" doesn't mean majority in numbers of individuals, which is how one normally thinks of democracy, but majority of shares. Still, making shareholder resolutions binding on boards of directors would constitute a big step in restoring control by the owners of the corporation--and in that limited sense restoring democracy.

Patrick McGeehan, "The Agenda: No Democracy on These Ballots," New York Times, 2/13/o5, 3:4.

Female authority in the classroom

Want some insight into the "work" of being a female faculty member? Check out Dr. Crazy's post, "Thinking About Authority" (which I got onto via insidehighered.com).

I once happened to mention to a couple of male colleagues my annoyance at undergraduates, invariably male, who address me by my first name -- a transparent power play, even if they don't always realize what they're doing. My colleagues were astounded that any undergrads would do such a thing; they had never experienced such a thing. Which left me astounded in turn.

New source of higher ed news

The NY Times carries a report this morning on a challenger to the Chronicle of Higher Education, www.insidehighered.com, which was founded by veterans of the Chronicle. It's available online only and is free.

What isn't clear on the site or in the Times article is who is paying for it. "Where did the money come from to do that?" -- it's amazing how seldom people (e.g., students) stop to ask this basic question. Here's an example in a story that appeared, believe it or not, in the newspaper's business section! The article does discuss the Chronicle's advertising revenue, so one might infer that Inside Higher Ed will live off advertising, too. But there are no advertisements in evidence on the site, and its "Who We Are" page lists eight staff members. Who's paying for all this?

The business of slavery, no. 2

A new online exhibit at the Schomburg Center for Research in Black Culture (Harlem, NY) is called "In Motion: The African-American Migration Experience," and one section of it deals with the domestic slave trade, a topic, as I noted in an earlier post, that has been much neglected by business historians. The site offers images, maps, graphs, and text on various facets of the slave trade.

Text adventure game -- World's Columbian Exhibition, 1893

Here it is, only the fourth week of the semester, and I'm (still) totally backlogged (sigh). Maybe I'll take up historian Patricia Limerick's funny idea of setting up an "apologies" booth at one's professional society 's annual meeting (Western Historical Quarterly 32 (Spring 2001): 5-23). In any case, from now on, when I don't have time for anything more, I'll make only the briefest notes about items of interest (rather than letting the newspapers pile up on the coffee table). Example:

Review of a "text adventure game" set at the World's Columbian Exposition in Chicago, 1893: Brendan I. Koerner, "The Goods: A Game with a Low Body Count," New York Times, 1/30/05, sec. 3: 2.

Counter-factual history

Cynthia Crossen's columns ("Déjà Vu") in the Wall Street Journal are always a pleasure to read. (Of course, when I finish it, I hope she'll find my book on the history of shareholder voting rights -- how and why one-vote-per-share voting rights came to dominate in the U.S. during the 19th century but not in Europe [= British, France, or Germany] -- interesting enough to warrant a column!)

On Wednesday last week, her column concerned "alternative history" or what is sometimes called counter-factual history. It's true that a few rather far-fetched counter-factual histories gave the genre a bad name, but in one sense counter-factual history is like comparative history: we (historians and everyone else) engage in them all the time on a casual basis, almost as a reflex. It's hard to imagine arriving at any new insight into past events without either measuring those events against other events we know about or speculating about what might have happened instead, had certain (apparently causal) events taken a different course.

Cynthia Crossen, "Déjà Vu: 'What Ifs' Don't Thrill Historians, but They Raise Intriguing Issues," Wall Street Journal, natl. ed., 2/2/05, B1.

Comparing unemployment rates

"The number of unemployed people in Germany rose to five million last month, the most in the post-World War II period, as the government transferred some longtime welfare recipients to the jobless rolls," reports Mark Landler in the New York Times. As a result the German unemployment rate stands at 11.4 percent. Last year's unemployment rate in U.S., he notes, was only 5.4 percent.

Mark Landler, "German Joblessness Rises as Benefits Are Reduced," New York Times, 2/3/05, C5.

What a striking contrast, further enhanced if one goes by the German rate of 12.1 percent reported in the International Herald Tribune and by the news that the U.S. "unemployment rate dropped to a three-year low of 5.2 percent in January" 2005.

Carter Dougherty, "Jobless Rate in Germany Hits Record," International Herald Tribune: The IHT Online, 2/3/05; Eduardo Porter, "Labor Market Expanded at Modest Rate in January," New York Times, 2/5/05, B: 1,4.

The obvious inference is that the U.S. economy is doing much better than the German, since its unemployment rate is less than half of the German rate.

But how much better is not as obvious as it might seem. As Porter goes on to observe, the latest drop in the U.S. rate came "because hundreds of thousands of people stopped looking for jobs and dropped out of the labor force." (Porter, B1) Meanwhile, the German rate rose because some long-term unemployed workers not previously counted were added to its unemployment rolls. Both the numerator (numbers of "unemployed") and the denominator (size of the labor force) matter, and how they are defined varies by country. On the intricacies of such comparisons, see Constance Sorrentino, "International Unemployment Rates: How Comparable Are They?" Monthly Labor Review, June 2000, 3-20.

Wouldn't it be nice if the major media developed some rule of thumb for translating unemployment rates across countries, rather than merely citing the numbers as if they measured exactly the same thing?

Ultra-ultralight laptop

Last month I thought my principal choices for an ultra-ultralight laptop (as close to 2 lbs. as possible) were the IBM Thinkpad X40 and the Panasonic Toughbook W2. But the Thinkpad X40 doesn't have a touchpad, and the W2 has limited RAM and a built-in optical drive, which I don't particularly care about and which therefore just adds unwanted weight.

The resolution? I got a Toshiba R100 instead. Don't know how I initially overlooked it, except perhaps that it just wasn't being reviewed as much. In any case, what a gem -- 12.x" screen, very spacious keyboard, and it weighs 2.2 lbs. (sic) with one battery or, with a second battery that gives a total of 6.5 hours of uptime, 3.03 lbs. Extraordinary.

Research Assts. - kitty pix

Snoozing under the dictionaries.


Ready for the next assignment.

Organized labor in the U.S. - back to the early 1900s

The percentage of American workers who are members of unions dropped to 12.5% in 2004, the New York Times reported the other day. That includes public-sector workers. The rate for private-sector workers is a mere 7.9%, "the lowest level since the early 1900s."

American unionization levels peaked at nearly 35% in 1945. This compared favorably with the West German peak of 36% in 1951, it should be noted, although the U.S. and Germany have obviously diverged on this dimension since the 1950s.

Steven Greenhouse, "Membership in Unions Drops Again," New York Times, 1/28/05. For the American peak: Paul Boyer, ed., The Oxford Companion to United States History (New York: Oxford University Press, 2001), 429; for the West German peak: Wendy Carlin, "West German Growth and Institutions, 1945-90," in Economic Growth in Europe Since 1945, ed. Nicholas Crafts and Gianni Toniolo (New York: Cambridge University Press, 1996), 467.

Concentration begets concentration

The proposed Proctor & Gamble-Gillete merger illustrates the historical tendency of concentration in one line of business to foster defensive concentration as suppliers or customers try to restore a balance of power. As the New York Times' reporters put it this morning, "The friendly transaction reflects just how much the balance of power has shifted from consumer products makers to the giant discount retailers, mainly Wal-Mart, in recent years. The deal is a bid by two venerable consumer-products giants to strengthen their bargaining position with the likes of Wal-Mart, which can now squeeze even its largest suppliers."

Andrew Ross Sorkin and Steve Lohr, "Proctor Is Said to Reach a Deal to Buy Gillette," New York Times [natl. ed.], 1/28/05, A1, C14 (quotation from A1).

Mercantilism and IBM-Lenovo

In talking in lecture the other day about the set of 18th-century policies that constituted what came to be called "mercantilism," I pointed out that, except for the matter of establishing formal colonies, the policies actually look very familiar to us today--for example, the U.S. has sought for most of the twentieth century to keep specific technologies out of foreign hands, generally on national-security grounds. In this sense, it's more accurate to think of mercantilism not as a historical phenomenon confined to the 18th century, but as a set of policies that have great attractions in times of intense international rivalry.

So here's the IBM-Lenovo deal in the news again: turns out that three House Republicans are asking the Bush administration to investigate whether the deal "poses a risk to national security" (reporter Steve Lohr's words).

Steve Lohr, "I.B.M. Deal in China Faces Scrutiny Over Security Issue," New York Times [natl. ed.], 1/27/05, C5.

revision 2/8/05: see also Steve Lohr, "Is I.B.M.'s Lenovo Proposal a Threat to National Security?" New York Times [natl. ed.], 1/31/05, C6.

Synergy redux

The concept of "synergy" outlived the conglomerate movement in the 1950s and 1960s. Recent example of contemporary usage comes from stock analyst Timothy Horan, discussing the Cingular -AT&T Wireless merger: "Investors are going to give them the benefit of the doubt because the synergies are ahead of them."

Matt Richtel, "Drop in Quarterly Earnings for Cingular," New York Times [nytimes.com], 1/25/05.

Airlines = railroads?

When is an airline really just a railroad? When its industry is de-regulated. "Airline executives say they never anticipated that deregulation would precipitate a crisis as deep or as long as the present one," Micheline Maynard reported in the New York Times on Sunday. But anyone familiar with the "cut-throat" competition that prevailed in the American railroad industry in the late 19th century wouldn't be surprised by it. What is interesting is that it took so long back then for expert observers outside of the industry to understand the peculiar competitive dynamics induced by high fixed costs--and that they are hardly any better understood today.

Micheline Maynard, "Coffee, Tea or Regulation? As Grumbling Grows About Airlines, Some Eyes Turn to Washington," New York Times, 1/23/05, sec. 3, pp. 1, 4, 12 (quotation from p. 4).

Speaking of govt-bus partnership

Speaking of the U.S.'s long tradition of government-business partnership in matters technological, . . . Stevel Lohr reports in the New York Times this morning that six technology companies are "forming a consortium [called Globus Consortium] to accelerate the adoption of utility-like grid computing in the corporate world." As with so much of twentieth-century technology, the federal government served as incubator and midwife of Globus Consortium's software for grid computing. "The government provided most of the early finances to develop the software," he writes, "which is freely shared, open-source code."

Steve Lohr, "New Group Will Promote Grid Computing for Business," New York Times, 1/24/05, C7.

Who provided that early financing? Based on past history, the likeliest candidate would be the Department of Defense's Defense Advanced Research Projects Agency or DARPA, and sure enough, as it reported in 2002 (go to http://www.darpa.gov and search for "grid computing"), it was involved, along with the Department of Energy and IBM.

Shareholder democracy?

From the Wall Street Journal, 1/18/05, B2, yet another indication that the more democratic voting rights that predominated in the early nineteenth century--yes, even in the United States--still prevail in some companies in Europe, in this case, an Austrian company. The WSJ reports that "German engineering company Siemens AG failed to persuade the required number of VA Technologie AG shareholders to change a rule that limits investors' voting rights to 25% regardless of the size of their stake." Dropping the proportional cap on total votes, which had been a condition of Siemens' takeover offer, required a 75% majority (also typical of earlier practice) and Siemen's motion received only 73.2% of the votes cast.

Lessons of history - #2, the dynamics of a federal system

Re. Laura Mansnerus, "New Jersey Faces Tough Competition for Stem Cell Scientists," NYT, 1/17/05, A16: From a historical perspective, one of the fascinating developments since 1980 (the end of the New Deal era, it seems) has been the revivial of state governments as potent policymakers. This story is about the competition among some American states--most recently, New Jersey--to develop stem-cell research capabilities, now that the Bush administration has removed the federal government from this field of activity. Interstate competition will prove to be a boon for stem-cell research, at the same time that it produces, in the words of Daniel Perry, president of the Coalition for the Advancement of Medical Research, "duplication and splintering in research," hence, "a crazy-qult pattern across the U.S." The dynamic here is the same as that in the history of incorporation policy in the U.S., one of the few policy areas not to have been federalized between the 1880s and the 1970s. In incorporation policy, interstate competition brought about the (in)famous "race to the bottom" (that is, towards ever laxer regulation) and it's hard to see how a similar result can be avoided in this case.

Lessons of history - #1, govt-bus partnership

"Is less government really better for business? Not if history provides a reliable guide." So reads the subtitle of Jeff Madrick's column, "Economic Scene," in Thursday's New York Times (NYT, 1/20/05, C2).

Madrick is absolutely right. The only problem is that he doesn't sort out differences over time in the roles of the federal and state government. As a result, he neglects to mention that "an active partnership between government and business" actually generated enormous controversy before the Civil War when the government in question was the federal government. This was largely because acceding to an activist federal role in promoting internal (transportation) improvements, banking, or domestic manufacturing threatened to open the door to federal abolition of slavery. "An active partnership between government and business" did indeed characterize the U.S. in both the nineteenth and twentieth centuries, but the locus of government action shifted from the state to the national level in the nineteenth century as the biggest businesses crossed state lines with increasing frequency. Regulation of steam boilers on interstate waters (1850s - if I remember right) and creation of the Interstate Commerce Commission to regulate interstate railroad rates (1886) marked the first steps, and the decisive movement came during the New Deal.

Capita, capital, capitalism

What do capita (as in per capita) and capital (as in capital punishment) have to do with capitalism, wonders a friend in northern MN. Up there it's been really cold--serious double-digits below zero--which gives people lots of time to think up questions like this. His answer: capita is the plural of caput, which mean "head," and capital means wealth. So if you own many coins with the ceasar's head on them, you have much capital. Well, maybe, but it's clearly time to refresh my memory of the history of the words capital and capitalism.

Wordorigins.com: "The . . . term, capital, has various senses, meaning punishable by death, principal, a seat of government, and wealth used in an investment. This word derives from the Latin caput, meaning head. It made its way into English from Old French via the Normans."

OED Online: Among its definitions of capital as a noun is the following: "3. A capital stock or fund. a. Commerce. The stock of a company, corporation, or individual with which they enter into business and on which profits or dividends are calculated; in a joint-stock company, it consists of the total sum of the contributions of the shareholders. Also, the general body of capitalists or employers of labour, esp. with regard to its political interests and claims (cf. LABOUR n. 2b). b. Pol. Econ. The accumulated wealth of an individual, company, or community, used as a fund for carrying on fresh production; wealth in any form used to help in producing more wealth. " First instance of use cited: "1611 COTGR., Capital, wealth, worth; a stocke, a man's principall, or chiefe, substance" (= Randle Cotgrave, A dictionarie of the French and English tongues 1611).

It defines capitalism as: "The condition of possessing capital; the position of a capitalist; a system which favours the existence of capitalists." First use: "1854 THACKERAY Newcomes II. 75 The sense of capitalism sobered and dignified Paul de Florac."

Finally, a small extract from the entry on capitalism in Raymond Williams, Keywords: A Vocabulary of Culture and Society, rev. ed (Oxford, 1983), 50-51 (original emphasis):

Capitalism as a word describing a particular economic system began to appear in English from eC19 [early 19th century], and almost simultaneously in French and German. Capitalist as a noun is a bit older . . . [he then cites Thomas Hodgskin's use of it in Labour Defended against the Claims of Capital (1825).] This is clearly the description of an economic system.

The economic sense of capital had been present in English from C17 and in a fully developed form from C18. Chambers Cyclopaedia (1727-51) has 'power given by Parliament to the South-Sea company to increase their cpaital' and definition of 'circulating capital' is in Adam Smith (1776). The word had acquired this specialized meaning from its general sense of 'head' or 'chief': fw [immediate forerunner word] capital, F[rench], capitalis, L[atin], rw [root or ultimately traceable word], caput, L -- head.

More coming soon -- life has been exceptionally hectic in the last week or two with the beginning of the semester, a kitty with diarrhea, and local rezoning issues coming to a head.

Diminishing varieties of capitalism?

Yesterday's Handelsblatt reported that Allianz, Münchener Rück, and Commerzbank just sold their shares of MAN (Maschinenfabrik Augsburg-Nürnberg). Their combined holdings amounted to 25% of MAN's capital (valued at more than a billion euros), and they had held the shares for more than thirty years. "The sale [translating roughly] constitututes one more step down the road to dismantling the close relationship between financial and industrial firms in Germany," the article observes. MAN now has only one major shareholder (the insurance firm Axa), which has 5% of its shares; the other 95% are widely dispersed (= "Streubesitz"), which is more in line with U.S. conditions.

"Großaktionäre steigen aus -- MAN jetzt allein unterwegs," Handelsblatt, 13 January 2005, 1.

By the way, newspaper readers, if you haven't checked out Pressdisplay.com, do so! It offers (for a modest price) access to some 200 newspapers from around the world, and the resolution is fabulous.

Worldly history

Yesterday's New York Times carried an obituary for Robert Heilbroner, author of The Worldly Philsophers: The Lives, Times, and Ideas of the Great Economic Thinkers. Currently in its seventh edition, the book has been in print continuously since 1953. What an amazing achievement (not to mention that he wrote it as a twerp, academically speaking).

Teaching "worldly history"--that is, the history of capitalism or any of the subfields that compose it: business, economic, political economic, technological, etc. history--is always a challenge because most students who are attracted to history gravitate to social, political, or cultural history and are put off by anything smacking of the "economic." This semester I will be teaching a comparative history seminar on the U.S. and German political economies since the 1870s. I'm using Heilbroner's Worldly Philosophers as one of the course's foundation stones in hopes that it will get the students past their fears of the economic and give them a basic knowledge of the historical range of perspectives on economic change before we delve into the details of the U.S. and German political economies.

The seminar should be a lot of fun since the U.S. and Germany, industrial upstarts that they were, looked more similar than different in the 1870s but ended up in our own time as exemplars of opposing models of capitalism (liberal vs. coordinated market economies--see, for example, Peter A. Hall and David Soskice, Varieties of Capitalism).

Corporate governance has arrived?

As a New York Times editorial observes today: "corporate governance, a relatively obscure issue a few years ago, has now grown big enough to generate its own scandals."

"New Twist on Corporate Goverance," NYT, 1/11/05, A26, emphasis added--the rest of piece is about the "forced resignation" of the director of Yale's International Institute for Corporate Governance.

The creation of Yale's institute in 1999 was one sign that corporate governance had become a recognized "issue" in the academy, its importance affirmed by the corporate scandals of recent years. But business historians have been much slower on the uptake. Aside from a few works by legal historians and the 1932 classic, Private Property and the Modern Corporation by Berle and Means, there are hardly any studies of the history of corporate governance, especially in the years before the 1930s.

Why so little attention by historians? One reason is that business historians tend to conflate the history of big business, on which a great deal of research has been done, with the history of corporations. As a result, most of my colleagues don't realize how little we actually know about the history of corporations per se.

More on Yukos and jurisdiction shifting

Is it me or the season? Doesn't seem like there's much of interest these days in the business pages -- or maybe it's just that I'm too swamped with the approaching semester and a variety of other obligations to keep up.

In any case, here's the only item of note recently: More on Yukos' efforts to shift its battle with the Russian government to U.S. terrain in Simon Romero and Erin E. Arvedlund, "U.S. Court to Hear Arguments for Dismissal of Yukos Case," NYT, 1/7/05, C5.

Catching up - quick notes on clippings

Survived the holidays (sans snow); two new kitties are keeping the household busy; and only two weeks until the new semester begins - ye gads.

More on the transnational, transcultural aspects of the IBM-Lenovo deal: David Barboza, "Outsourcing to the U.S.," NYT, 12/25/04, c1, 2, on Lenovo's relocation of its headquarters to Armonk, NY, in the wake of its purchase of IBM's PC unit.

Obituary for Richard J. Barnet, co-author of Global Reach (1974) on multinationals: NYT, 12/24/04, A16.

On the mysteries of hedge funds that trade convertible bonds (an innovation of nineteenth-century railroads, by the way): Susan Pulliam, "How Hedge-Fund Trading Sent a Company's Stock on Wild Ride," WSJ, 12/28/04, A1, 6.

One advantage of the online edition of the Wall Street Journal over that of the New York Times: WSJ articles include illustrations; those for the NYT don't, although one may purchase copies of photos (not graphics, which is a big loss for teachers like me who like to use them in the classroom--guess I'll keep clipping in some instances).

Wal-Mart, together with the Department of Defense and the Food and Drug Administration, is pushing its suppliers to adopt the new technology of radio tags and meeting some resistance: Barnaby J. Feder, "Despite Wal-Mart's Edict, Radio Tags Wil Take Time," NYT, 12/27/04, C3. Historical echoes: the fate of Philadelphia's independent, small-scale textile producers after the rise of powerful customers (department stores), and the U.S. Ordnance Department's lengthy efforts to develop interchangeable parts manufacturing technology.

Obituary for James L. Ling, builder of conglomerates: NYT, 12/26/04, 31.