Capitalism at the Center and on the Margins

You don’t need me to tell you that business is booming in the history of capitalism. But if you have somehow failed to notice the tsunami of conferences and convention panels, the roundtable discussions in journals like the Journal of American History, and reports in the New York Times and other newspapers, then Brian Murphy’s Building the Empire State and Brian Luskey’s and Wendy Woloson’s Capitalism by Gaslight offer a good sense of the vibrancy of this young but maturing field. Both books offer something important and new to the history of capitalism. Murphy’s book revisits a problem that is familiar to readers of the older literature in business history, political history, and political economy—the politics of incorporation and other government subsidies to private enterprise—to offer a novel and unprecedentedly rich interpretation of the nexus between political and economic power in the early republic. The essays collected by Luskey and Woloson provide new (and usually fascinating) empirical explorations of little-known enterprises on the margins of production, exchange, and legality. In the process, they broaden historians’ vision of what capitalist enterprise was in the nineteenth century, while still replicating some of the dominant interpretive tendencies of the field.

In Building the Empire State, Brian Murphy builds on one of the key insights of recent work in the history of capitalism: that the government has been an essential player in every phase of capitalist development. His unique contribution is twofold. He reconstructs the political methods, incentives, and institutions by which men of capital induced state actors to favor their enterprises with charters of corporation and other exclusive benefits. In doing so, he shows how state governments with limited administrative reach managed to launch ambitious projects of economic development. The central figure in this mutual encouragement was the “political entrepreneur,” a ubiquitous character who married political to economic power, employing both as capital with which to accumulate more of each. Legislatures’ power to incorporate businesses, he writes, flung open “the doors of statehouse chambers” to wealthy men anxious to gain the exclusive legal privileges that corporate charters conveyed. Opportunity in state politics and in the highest levels of business was “dominated by an economy of influence in which financial capital readily purchased political and regulatory power” (p. 7).

Murphy focuses his study on New York State from the 1780s through the 1820s, painstakingly (and often elegantly) reconstructing how “political entrepreneurs” (who included men like Alexander Hamilton, Aaron Burr, and Robert R. Livingston) courted the support of legislators. Lobbying, making public appeals, assembling coalitions committed to a particular development project, and offering individual legislators a stake in their enterprise were all standard methods for winning legislative aid. When successful, these activities begat a process of recursive escalation. Once the state legislature began granting corporate charters and other favors, it encouraged powerful men throughout the state to imitate their predecessors in hopes of winning similar favors. Similarly, once a bank won a corporate charter, it gave its board of directors ample credit, which allowed them to lend to their current and prospective political allies. In this way, corporate charters helped create “institutional networks of obligation and dependence” that could be “mobilized to build partisan electoral support,” as well as further to lobby the legislature (pp. 23, 89).

These favors, alliances, and dependencies—and the businesses and politicians that organized them—were a core element of the political order of the early republic. Corporations served as a focal point of political conflict. They occasioned a full airing of competing visions of economic development. They played a central role in ending conflict between Whig and Loyalist elites in the aftermath of the Revolution. By 1800, banks provided the material benefits needed to anchor individual...