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  • Capital in the Nineteenth Century by Robert E. Gallman and Paul W. Rhode
  • Sean Adams (bio)

Capital, National Bureau of Economic Research, Economics

Capital in the Nineteenth Century. By Robert E. Gallman and Paul W. Rhode. (Chicago: The University of Chicago Press, 2019. Pp. 381. Cloth, $65.00.)

The National Bureau of Economic Research (NBER) underwrote scholarly activity in several critical areas during the postwar period. Among them was the attempt to employ econometric methods to the historical development of the United States. Although the task of measuring growth and output is straightforward today, the research methods employed in order to find reliable statistics, comparing cycles of growth in diff erent eras, and assessing periods of dynamic change blend a dogged determination to scour the archives for accurate data with the ability to assess the meaning of it through quantitative analysis. The eminent economic historian Robert Gallman devoted five decades to this task; his life’s work in understanding the extent and nature of American economic growth over the long nineteenth century has provided incalculable benefits to scholars in the field. This work was cut short by his passing in 1998, but now, thanks to the NBER, we have a single volume dedicated to Gallman’s research on a critical topic—the nature of American capital formation. Capital in the Nineteenth Century, expertly edited by Paul Rhode, compiles and completes a large share of Gallman’s work, in consultation with former research assistants, colleagues, and unpublished notes. In the end, the reader is offered an insight into the methods and conclusions of one of the giants of the econometric revolution in American history.

The concept of capital, of course, is a slippery one that evades simple definition. Does it only represent the physical goods that are used in the creation of other goods? Should it include the skills and knowledge of workers? What about cleared and improved land? Rather than engage in [End Page 516] wide-ranging debates, Gallman and Rhode fall on the cautious side in rebuilding national product. Their view of capital stock is a conservative one, in keeping with Gallman’s reluctance to speculate when reliable data was not forthcoming. There are two notable trends here. First, Capital in the Nineteenth Century does not consider human capital—either the skills and talent provided by free laborers or the uncompensated labor provided by enslaved Americans—in its calculations. Throughout his career, Gallman regarded enslaved African Americans as people, not inputs in the same vein as livestock, when he made his calculations of the South’s capital stock. This distinction might have run counter to those of historical actors, but it reveals the need for value judgments amidst the hard calculations of econometrics, and in that regard Gallman’s opinion was clear. Second, the data here reveal that agricultural land, and in particular improved agricultural land, provided the bulk of American capital gains over the course of the nineteenth century. Of course, the work of both enslaved and free Americans would have shown up in this figure, albeit indirectly. This second point is an important one, as it counters much of what we assumed about the industrial origins of nineteenth-century economic growth. “Much of the investment activity in the long nineteenth century was mundane,” Gallman and Rhode assert, “and did not involve sophisticated new machines or technologies” (13).

From 1774 to 1900, American capital stock did increase substantially, by a multiplicative factor of 276, according to Gallman’s conservative and careful estimates. After a careful consideration of how capital stock may be measured by the book value of machinery, improvements, and other physical investments; the market value of the same; or the reproduction cost of them; the volume republishes a series of estimates wrung from the incomplete and sometimes inconsistent data produced by nineteenth-century actors. After 1840, census records improved, but even with that development the kind of measurement undertaken by Gallman required painstaking research, the application of various indices and modifiers to account for inflation and depreciation, and a willingness to abandon lines of inquiry when they lacked empirical verification. Specialists in the field can certainly take a deep dive into the methodology...


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