An address delivered by Dr. Ralph M. Hower at the Annual Meeting of the Business Historical Society.

I propose to interpret my subject rather liberally and to concentrate upon what seem to me to be some fundamental changes in retailing—ranging the whole of the 19th century, but focussing attention especially upon the years from 1850 to 1875, a period of great innovation. And please note that all my remarks have to do with American experience.

To start, then, let me sketch briefly the retailing picture in the larger American cities about 1850. In general the principle of specialization dominated the scene: both retail and wholesale trades were split up, by types of merchandise, into single-line or specialty stores. If you examine the advertisements and business directories of the period, you will find a really astonishing array of stores, each of which confined itself to a narrow range of goods.

In this study of lending in the emergence of a modern steel industry in the United States, I analyze the evolving interaction between borrowers and lenders in historical context. I show how “relationship lending” (that is, credit allocation in which personal contacts play a major role) can go wrong, despite good intentions at the outset, and that institutional conditions exert an important influence on how lenders and borrowers negotiate conflicts. Particularly important in the case of Moses Taylor and Joliet Iron & Steel Company were the uncertain jurisdictions and political maneuvering that stemmed from structural peculiarities of the U.S. legal system, peculiarities that belie claims of its efficacy for protecting creditor interests. Although this failure of relationship lending might seem to imply negative consequences for economic development, I show that, at least in this case, the opposite interpretation is more compelling.

In the years from 1880 to 1910 the Pacfiic Northwest went through a development that appears to have been broadly typical. This boom stage, a nonrecurrent frontier phenomenon, is actually the process of integrating the developing area with the national economy. The patterns set in the pliant boom era by forceful “ground floor operators” are likely to harden into long-term permanence.

As production workers in late-nineteenth-century American heavy industry moved towards regular use of concerted action, including the strike, to gain their demands, employers generally adopted rigid policies of opposition. That it was a frightening period for manufacturers, with prices for their goods steadily falling and widespread business failure, has been emphasized by Edward C. Kirkland and others. But lack of scholarship in business archives has improverished labor-management history on this point. Professors Skaggs and Ehrlich offer one case history, based on a study of the “inner truth” of such a conflict in the 1880s. It confirms the suspicion that it was not practical economic imperatives but a long-run policy to maintain the principles of paternalism that often accounted for the intransigence of management.