Economic Signific of Culture

7/30/2019 Economic Signific of Culture

1/19

Economic History Association

On the Economic Significance of CultureAuthor(s): Harold A. InnisSource: The Journal of Economic History, Vol. 4, Supplement: The Tasks of Economic History(Dec., 1944), pp. 80-97Published by: Cambridge University Press on behalf of the Economic History Association

Stable URL: http://www.jstor.org/stable/2113261 .Accessed: 09/07/2013 15:41

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp

.JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of

content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms

of scholarship. For more information about JSTOR, please contact [email protected].

.

Cambridge University Press andEconomic History Association are collaborating with JSTOR to digitize,

preserve and extend access to The Journal of Economic History.

http://www.jstor.org

This content downloaded from 193.225.200.93 on Tue, 9 Jul 2013 15:41:14 PMAll use subject to JSTOR Terms and Conditions
http://www.jstor.org/action/showPublisher?publisherCode=cuphttp://www.jstor.org/action/showPublisher?publisherCode=ehahttp://www.jstor.org/stable/2113261?origin=JSTOR-pdfhttp://www.jstor.org/page/info/about/policies/terms.jsphttp://www.jstor.org/page/info/about/policies/terms.jsphttp://www.jstor.org/page/info/about/policies/terms.jsphttp://www.jstor.org/page/info/about/policies/terms.jsphttp://www.jstor.org/page/info/about/policies/terms.jsphttp://www.jstor.org/stable/2113261?origin=JSTOR-pdfhttp://www.jstor.org/action/showPublisher?publisherCode=ehahttp://www.jstor.org/action/showPublisher?publisherCode=cup


2/19

PRESIDENTIAL ADDRESSOnthe Economicignificuncef Culture

IEDWIN F. GAY, my predecessor, n the inauguralpresidentialaddress

of thisAssociationdescribed he continuityof thehistoryof economichistory fromEurope to North Americaas illustrated n his own work. Asyoursecondpresident representa later stageof this continuity,a studentof ChesterW. Wrightwho in turn was a student of Edwin Gay. I am in asenseone of EdwinGay'sgrandsons.This, particularlyas it appealsto mystrongScottish nterest ngenealogy,provides heonly satisfactoryexplana-tionI have beenable to findof thehonoryou havedonemein appointingmehis successor.Forthe same reason t is a sourceof satisfaction o me that mysuccessorcan be said to fill the interveninggapas one of EdwinGay'ssons.In calling his paper"The Tasks of EconomicHistory"Edwin Gay com-pels me to continuehis analysis by discussing he limitations of economichistory or of thesocial sciencesor morespecificallyof the framework f theprice system.In pointingto tasksorwhat may bedone,he has left the ques-tion of theirboundariesor what cannot be done. In attemptingto answerthis questionperhapswe canimproveourperspective egardingheplaceofthe fieldof economichistoryandin turn of the social sciencesin Westerncivilization.We needa sociologyor a philosophyof the social sciences andparticularly f economics,an economichistoryof knowledgeoran economichistoryof economichistory.Economichistorymayenableus to understandthe backgroundof economicthoughtor of the organizationof economicthoughtor of thought n the socialsciences.The influenceof the Greeksonphilosophyandin turn on universitiescompelsus to raise questionsaboutthe limitationsof the social sciences.

We must somehowovercomewhat LeslieStephencalls the "weakness oromnisciencewhichinfectsmost historicalcritics."'TheWalrus ndtheCarpenterWerewalking loseathand:Theywept ikeanythingoseeSuchquantities f sand:"Ifthiswereonly cleared way,"Theysaid,"it wouldbe grand."

'History of English Thought in the Eighteenth Century (London, 1876), x, 438.8o

This content downloaded from 193.225.200.93 on Tue, 9 Jul 2013 15:41:14 PMAll use subject toJSTOR Terms and Conditions
http://www.jstor.org/page/info/about/policies/terms.jsphttp://www.jstor.org/page/info/about/policies/terms.jsphttp://www.jstor.org/page/info/about/policies/terms.jsphttp://www.jstor.org/page/info/about/policies/terms.jsp


3/19

On theEconomicSignificanceof Culture 8"IfsevenmaidswithsevenmopsSweptt forhalf a year,Do you suppose,"heWalrus aid,"That hey couldgetit clear?""I doubt t,"saidthe Carpenter,Andsheda bitter ear.

Economics mplies the applicationof scarcemeans to given ends, and thevast rangeof socialphenomena ompelsa similarstrategyof approach.

Withinthe broadsubjectof the social scienceswe can see clearlythe useof obvious strategies.The impactof the naturalsciencesand machine n-dustryhasbeenevident n theemphasisonpecuniaryphenomenawhich areparticularly uitedto mathematicsand mechanicaldevicesdeveloped n re-lation to mathematics.As slot machineshave been built up around hesizesandweightsof variousdenominations f coins so therehas beena tendencyfor economics o be built up aroundthe monetarystructure.Walter Leafwroteof three maincausesdisposingmento madness-love, ambition,andthestudyof currencyproblems,with the last namedas theworst.Bambergerwrotethat peoplego madbecauseof love andbimetallism.Sorokinhas de-scribedthe importanceof the quantitativeapproachn modern ociety, fit-tinglyenough n fourlargevolumes,and has deplored he emphasison eco-nomic questionsas peculiarto the approach.

Left to themselves ll findtheir evel price,Potatoes, verses, turnips,Greek,and rice ...2

The pecuniary lantof economics s as evident n Veblen's laboration f thepecuniaryeconomyof North Americaas in the discussionby monetarytheoristsof liquiditypreference. needhardlyreferto the workof the com-mittee on pricestudiesand the importantcontributionsof those workingunderits directions,mentioning only the studies of Bezanson,Cole, andHamilton.

The widespreadnterestin pricesreflectedn economicsandin economichistoryhaseffectivelybroadened he approach o historyand corrected hebias which emphasizedmilitary exploits or political activities.3The stateand otherorganizationsof centralizedpowerhave had a vital interest in

2 Cited in A. S. Collins, The Profession of Letters: A Study of the Relation of Author toPatron, Publisher, and Public, 1780-1832 (London: G. Routledge and Sons, 1928), p. I20.3 See H. A. Innis, "The Penetrative Powers of the Price System," The Canadian Journal ofEconomics and Political Science, IV (I938), 299-3 I9.



4/19

82 HaroldA. Innisrecordsof their activities and have given powerfuldirection o the study ofpolitical, legal, constitutional,and ecclesiasticalhistory.The mechanicsofarchivalorganization ave given enormous mpetusto thewritingof historyfrom the standpointof centralizedpower.Administrativemachineryandpreservation f recordshave impressedon historicalwriting the imprintofthe state and fostered he biaswhichmadehistorythe handmaidof politics.In the eighteenthcentury rigid censorship osteredevasions n the form ofhistorieswrittenas political weapons.Aninterest n historyis still fosteredas a meansof strengtheninghe churchor thestate,and the demandsof par-ticulargroupsarereflectedevenin economichistory.The honorificpositionof military, legal, and ecclesiasticalgroupsis evident in the history text-book,a form of historicalwritingwhichis extremelysensitive to politicaldemandsand to nationalistic nterests.Scholarships harassedby the de-mandsof pressuregroups.Eventhoughpricehistoryhas a bias of its own, tcancheck tendencies avorable opowergroups.Economichistorycanpointto the dangersof biasand thenecessityfor a broaderperspective.

On the otherhand,the pecuniaryapproach,whenall pervasive,tends toobscure hesignificanceof technologyandworkmanship.t has threatenedto make economicsa branchof higheraccountancy.The modernendencyo findmentalsatisfactionnmeasuring verything y afixedrational tandard, nd thewayit takes orgrantedhateverything an berelated oeverything lse,certainly eceives rom heapparently bjective alueof money,andthe universal ossibility f exchangewhich hisinvolves, strongpsychologicalmpulse o becomea fixedhabitof thought,whereas hepurelylogicalprocess tself,when t onlyfollows ts owncourse,s notsubject o theseinfluences, nd t thenturns heseaccepteddeas ntomereprobabilities.'

Concentrationon the price system, driven by mathematics,involvesneglectof the technological onditionsunderwhichpricesoperate.The use'Ernst Troeltsch, The SocialTeachingof the ChristianChurchesLondon: George Allenand Unwin, I93I), I, 408. For a suggestive account of the far-reaching implications of objec-tivity reflected by the mathematics of the price system, see the description of baseball in Vic-tor 0. Jones, "Box Score!" Newsmen's Holiday (Cambridge: Harvard University Press,

1942), pp. i62-82: "The one thing which distinguishes baseball from all other sports andwhich has been the main reason for 'organized baseball's' hold upon the public is its develop-ment of a statistical side" (pp. i65-66). For a discussion of the importance of statistics inpolitical propaganda see F. C. Bartlett, Political Propaganda (Cambridge: Cambridge Uni-versity Press, 1940), pp. 93-4. "When a statement is 'quantified' it seems to convey to themajority of persons a superior certainty, and it passes without question."-Ibid., p. 94. TheGallup Poll has possibly made politics more absorbing. But statistics has been particularlydangerous to modern society by strengthening the cult of economics and weakening othersocial sciences and the humanities.



5/19

On theEconomicSignificanceof Culture 83of liquiditypreferenceas a concept in the study of economichistory em-phasizesshort-runpointsof viewacceptable o the pricesystem rather hanlong-runpointsof viewwhichnecessitateperspective.Anequilibrium f ap-proaches o thestudy of economicphenomenabecomesexceedinglydifficultto achievewith the insistenceonshort-runnterests and the obsessionwiththepresent.There s in thesocialsciencesa liquiditypreference ortheoriesconcernedwith the presentwhich s moredangerousn its implications hanliquiditypreference s to monetary tability.Marx and his followers harp-enedawarenessof pressuregroups and emphasized he importanceof thestudyof technologyand themeansof production.WhileSchumpeter as at-temptedto bridge the pecuniaryand the technologicalapproachesand toavoidthe dangerof concentrating n the pricesystem andtheprofitmotiveandon technology,his effortshavemeant the sacrificeof too much in bothapproaches ndparticularlyn the technological.Moreoverhe deliberatelyneglectstheimportantworkof politicalhistorians.The late N. J. Silberlingmadea moresuccessfulattempt to co-ordinate he political,pecuniary,andtechnological pproachesbut his workwaslimited by nationalboundaries.In part,theweaknessof the technological pproachhas beena result of therestrictedknowledgeof technicaldevelopment.The workof Nef oncoal,ofUsher on mechanical nventions,and of a largenumberof studentsin thefieldmust besupplementedxtensively.Suchworkmustemphasizenotonlytechnicalchangesbut their significance o economicand political institu-tions.Theinterest nlegislation,courtdecisions,andlegal systemsshownbyCommonsshouldbe integratedwith the work of the historian of prices,technology,andgovernment.SirHenrySumnerMainemade a commentofprofoundsignificancewhen he pointedto the interrelationof legislation,prices,andtechnologyand themathematicalbias.

Experience hows hat innovatingegislations connected otso muchwithScienceas with the scientificairwhichcertainsubjects,not capableof exactscientificreatment,rom ime otimeassume.To thisclassofsubjects elongedBentham'scheme fLaw-Reform,nd,aboveall,PoliticalEconomy s treatedby Ricardo.Bothhave beenextremelyertilesourcesof legislationduring helast fiftyyears.5

The vast rangeof studiesof businesscyclesand theirsignificance o un-employmentwouldgainperceptiblyby the integrationof basicapproaches.The conflictbetweentechnologyand the pricesystemdescribedby Veblen

'Popular Government (London, i885), p. I46.



6/19

84 Harold A. Innisin TheEngineerandthe PriceSystem, n whichtherestrictionson technol-ogy have been of primaryconcern, can be resolved more easily with abroaderperspective.A broader ynthesis wouldenableus to counteract heregression n thoughtshownby Schumpeter ndPolanyiwho regardmonop-oly as a means of resisting the effectsof obsessionwith the short run. Intechnologyas in the pricesystem, advancehas been supportedby mathe-matics, but theeffectiveness f the applicationof mathematics ariesin thetwofieldsandmaymakefordivergence ather hanconvergencenthestudyof economicphenomena s a whole.Since therehas beena veryperceptiblelag in the spreadof mathematics n relation to the pricesystem,engineersand scientistssuch as Douglas and Soddy,social-credit heorists,techno-crats,and others have takenadvantageof the gap. But it is possiblethatGodis nota mathematician s somephilosopherswouldhaveus believe.The intensivedemandsof technologyon students in the social scienceshavecontributed o thenarrowness f its approach ndsuchnarrowness asbeenintensifiedby the emphasis hat politicalandmilitaryhistory put onnationalism.The important contributionsof geography have been re-strictedtostudiesof localization uch as thoseofAlfredWeberandof Usher.The significance f basicgeographiceatureshas beensuggestedby Mahanfrom the standpointof the sea and by Mackinder rom the standpointofcontinental andmassesbut they havenot beenincorporated ffectively neconomichistory.Nor dowe haveaneffectivestudy of air.In a generalwaywe are familiarwith the influenceof the sea on the developmentof demo-craticinstitutions n Greeceandof theland onthecentralizingendenciesofRome. Althoughwe can trace the influenceof Romaninstitutions in thecodified aw of Europeandin the RomanCatholicChurchas adaptedto acontinent,and can see the growthof parliamentarynstitutionsand Pro-testantism n theAnglo-Saxonworld n relation o thedemandsof the sea, itmay be doubtedwhetherwe appreciate heirsignificance o economichis-tory. But the effectsof geographymay be offsetby technology n that thedevelopment f defensive acticsled to thegrowthof feudalismand the useof gunpowder roughta return o efficientoffensive actics and to increasingcentralizationn the Westernworld.Geography rovides hegrooveswhichdetermine he course and to a largeextent the characterof economic ife.Population,n termsof numbersandquality, andtechnologyarelargelyde-terminedby geographicbackground, ndpoliticalinstitutionshave beentoan importantextentshapedthroughwars n relationto this background.



7/19

On theEconomic Significanceof Culture 85II

Geographyhas been effective n determining hegroovesof economic ifethrough ts effectson transportation nd communication. he lowercosts oftonnageby sea than by land strengthened he position of Great Britain inthe developmentof tradein morebulky commoditiessuited to industrialgrowthand expansion.France,Spain,and Portugalwith a continentalback-grounddevelopedconnectionswith the continentalhinterlandsof the NewWorld.Asthelate MaxHandmann uggested, he Anglo-Dutch radingsys-tems expandedn relation o the sea, continental eudalism n relation o theland. The expansionof GreatBritain was in termsof the migrationof Eng-lishmen and the development of industries, either, as in the northerncolonies,by using English labor n the productionof bulky commoditiesor,in the tropicalregions,by organizing mported aboron a largescale for theproductionof sugarand cotton. Spanish eudalismand militarismexploitednative labor primarilyfor preciousmetals, and French feudalismfor furs.British expansion inked trade with naval strength and limited financialburdens,whereasFrenchexpansionmeant trade and military strengthandenormousdemandson finance for the constructionof forts and the main-tenance of garrisonsand bureaucracies.But British maritime expansionmeant parliamentarynstitutionsand decentralization haracteristic f theAnglo-Saxonworld. Federalismbecame an important feature. In Canadafeudalismcontinued n the ownership f naturalresourcesby the provincesandproducedhe dual mixtureof a capitalisticfederalgovernment ndceu-dalisticprovincialgovernments.

The advantagesto Great Britain of maritime expansionand of access,with low costsof navigation, o cheap suppliesof bulky goods wereaccom-paniedby the developmentof coalminingandindustry.Coalbegan to pullraw materials rom the fringesof the Atlanticbasinandbeyond,andto pro-videthepower orconversionof the rawmaterials ntofinishedproducts orexport.The effectivenessof the pull beganto varywith distances,and dis-tanceschangedwith improvementsn manufacturingand particularly ntransportation.Timberand cotton from the northernand southernpartsof North Americacould be transported o GreatBritain,and penetrationto the interiorwith canals and railways broughtsteadily expanding radefirst in wheat and then in the productsof animalhusbandry.Successivewavesof commodities espondedo theloweringof costsofnavigationacrossthe Atlantic and of transportation o the interior. As wheat production



8/19

86 Harold A. Innismoved to theinterior,olderareasbecameconcernedwith the productionofothercommodities.Englandshiftedher fields from arable and to pasture.In these broad rendswesee thebasis of the stages outlinedby Grasandhisstudentsin the descriptionof the growthof the metropolitaneconomy.Inthegeneralmigrationandshift in productionof raw materialsand,in turn,of semifinished ndfinishedproducts,we cansee the problems hat the lateFrederickTurnerdescribed n his work on the frontiers.Disturbancestothese more or less regulartrends werea result of suddendevelopmentsnwhichcosts werelowered,of geographic actors such as access to the greatplains and obstructionby mountains,of cyclonic activatessuch as accom-paniedthe gold rushesaround he fringesof the Pacific,and of the develop-ment of newsourcesof power n the openingup of thecoalregionsof NorthAmerica.

The emergenceof a complexindustrialand trading structurecenteringaboutthe coal areasof the Anglo-Saxonworldassumednot only improve-ments in transportationbut also in communication.Correspondence e-tween individuals and firmswith slow navigation,on which Heaton hasthrownmuchlight, was inadequate o meet the demandsof large-scale n-dustryandlarge-scale onsumption.The rapidandextensivedisseminationof informationwas essential to the effectiveplacingof labor,capital,rawmaterials,andfinishedproducts.OscarWilde wrotethat "private nforma-tion is practicallythe source of every largemodernfortune,"'and the de-mandfor private nformationhastened hedevelopment f communications.The applicationof steampower to the productionof paper and,in turn, ofthe newspaper, ollowedby the telegraph,and the exploitationof humancuriosityand its interestin newsby advertisersanxious to dispose of theirproductscreatedefficientchannels or thespreadof information.The state,acting throughsubsidies,the post office, ibraries,and compulsoryeduca-tion,widened he areasto which nformation ould be disseminated.Demo-cratic forms of governmentprovidednewsandsubsidiesfor the transmis-sionof news.As Carlylewrote,"He whofirstshortened helaborof copyistsby deviceof movable ypeswasdisbanding iredarmiesandcashieringmostkingsandsenates,andcreatinga whole new democraticworld:he had in-ventedtheart of printing."'With the rise of a vast areaof publicopinion,whichwas essential to therapiddisseminationof information,and the growth in turn of marketingorganizations,he expansionof credit,and the developmentof nationalism,

6An Ideal Husband, Act II.'Sartor Resartus (London, n. d.), p. I28.



9/19

OntheEconomicSignificance f Culture 87the vast structure previously centering about religion declined. Eric Gillwrote, "Where religion is strong, commerce is weak," but religion played animportant role in the growth of commerce. The significance of religion tocivilization has been described by Max Weber, Tawney, Toynbee, andothers. Centralized religious institutions checked fanaticism but their limi-tations were evident in the emergence of dissent. Leslie Stephen wrote that"the full bitterness which the human heart is capable of feeling, the fullferocity which it is capable of expressing is to be met nowhere but in religiouspapers." Adam Smith in his comments on religious instruction noted thehandicaps of the established church in England. The clergy had.... many of them become very learned, ingenious, and respectable men; butthey have in general ceased to be very popular preachers.The methodists, with-out half the learning of the dissenters, are much more in vogue. In the church ofRome, the industry and zeal of the inferior clergy are kept more alive by thepowerful motive of self-interest, than perhaps in any established protestantchurch.The parochial clergy derive, many of them, a very considerablepart oftheirsubsistence from the voluntary oblationsof the people; a source of revenuewhich confession gives them many opportunitiesof improving.The mendicantorders derive their whole subsistence from such oblations. It is with them, aswith the hussarsand light infantry of some armies; no plunder,no pay.8The restraining influence of religious institutions has limitations, and dis-senting groups and philosophical systems emerge on their fringes. Centrali-zation is followed by decentralization.

The printing press and commerce implied far-reaching changes in the roleof religion. In Victor Hugo's famous chapter in the Notre Dame de Parisentitled "This Has Killed That," he writes: "During the first six thousandyears of the world .... architecture was the great handwriting of the humanrace." Geoffrey Scott has described the effects of printing:Three influences, in combination, turned Renaissance architecture to an aca-demic art. They were the revival of scholarship,the invention of printing, thediscovery of Vitruvius. Scholarshipset up the ideal of an exact and textualsubservience o the antique; Vitruviusprovidedthe code; printingdisseminatedit. It is difficultto do justice to the force which this implied.The effectiveinflu-ence of literaturedependson its prestige and its accessibility. The sparse andjealously guarded manuscriptsof earlierdays gave literature an almost magicalprestige,but affordedno accessibility; the cheap diffusionof the printing presshas made it accessible,but strippedit of its prestige.The interval betweenthesetwo periodswas literature'sunprecedentedand unrepeated opportunity.In this

8'Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (NewYork: The Modern Library, I937), pp. 791-92.



10/19

88 Harold A. Innisinterval Vitruvius came to light, and by this opportunityhe, more perhaps thanany other writer,has been the gainer.His treatise was discoveredin the earlierpart of the fifteenth century, at St. Gall; the first presses in Italy were estab-lished in I464; and within a few years (the first edition is undated) the text ofVitruviuswas printed in Rome. Twelve separateeditions of it were publishedwithin a century; seven translationsinto Italian, and others into French andGerman.Alberti foundedhis greatworkupon it, and its influence reached Eng-land by I563 in the brief essay of John Shute. Through the pages of Serlio,Vitruvius subjugated France, till then abandonedto the trifling classicism ofFrangois I.; throughthose of Palladio he became supreme n England.9

The book destroyed the edifice, and in the religious wars and the FrenchRevolution it destroyed social institutions as well. Brooks Adams wrote:That ancient channel [the church]onceclosed,Protestants had to open another,and this led to deification of the Bible, .... Thus for the innumerable costlyfetishes of the imaginativeage were substitutedcertainwritingswhich could beconsulted without a fee. The expedient was evidently the device of a mercantilecommunity.'0Leslie Stephen in a letter to Charles Adams wrote:I always fancy that if one could get to the truth,the Puritanbelief in the super-natural was a good deal feebler than Carlyle represents. The man-of-businessside of them checked the fanatic, and the ironsides beat the cavaliers as muchbecause they appreciatedgood business qualities, as because they were "God-fearing"people.""'We that look to Zion,' wrote a gallant Anabaptist admiral of the age,'should hold Christian communion. We have all the guns aboard."It is scarcely necessary to elaborate on the significance to the economicdevelopment of European civilization of the emphasis which Calvinism puton the individual. This significance was reinforced by the adaptability of thealphabet to the printing press, private enterprise, and the machine, and bythe consequent spread of literacy, trade, and industrialism. The Chinesewere handicapped by a language ill adapted to the printing press exceptthrough support of the state, and there was consequently no expansion ofcommerce adequate to defeat the demands of religion. We are told of the

'Geoffrey Scott, The Architecture of Humanism: A Study in the History of Taste (NewYork: Charles Scribner's Sons, 1924), pp. I94-95.10 The Law of Civilization and Decay: An Essay on History (London: S. Sonnenschein andCompany, I895), pp. 150-5I.' F. W. Maitland, Life and Letters of Leslie Stephen (London: Duckworth and Company,

19o6), pp. 448-49.' John Morley, Oliver Cromwell (London: Macmillan and Company, I919), p. 478.



11/19

On the EconomicSignificanceof Culture 89handicapsof a religionwith innumerabledevils and gods in contrastwiththe efficiencyof Christianitywhich reducedtheir numbersand enhancedeconomicefficiency.Onthe otherhand,Burckhardthas described he tyr-anny of religionswhich emphasizedotherworldliness, stablisheda hier-archyto guardthe entrance o otherworlds,andparticipated n the mostbitterwarfare.Morleywroteof "themost frightful dea that has evercor-rodedhumannature-the ideaof eternalpunishment" ndof its deadeningeffects on the interest in social reform.The terrifyingthreatsof a singleorganizationwhichinspiredLordActonto write that "all powercorruptsand absolutepowercorruptsabsolutely"wereevadedby the printingpressandcommerce.Religionhas beenvitally relatedto the mysteriesof life and deathand tothe family.Thedeclineof the ChurchnEuropereflected heimpactof birthcontrol on the confessional.The importanceof the biologicalbackgroundstressedby Knight in his discussionof the sociologicalsignificanceof thefamilywas evident n feudalsocietieswith or withoutprimogeniture asedonland and militarypower.Religioussectshave fosteredthe accumulationofwealthover ong periodsby intermarriagef families.Whereas heChurchin its fightfor sacerdotal elibacyas a meansof preventing he dispersionofwealthleft itself opento the lootingof its monasteries, he Jewsandothersectshavebeenpersecutedbecauseof thebuildingupof largefortunes.Oneneedsonly to point to the studiesof the Jewsin relation to tradeand eco-nomic developmentand to the peculiaritiesof economicorganization nvarioussects, for examplethe interest of the Quakersin developingin-dustriesaroundnonintoxicatingbeverages, o appreciate heirsignificance.We have no clear understandingof the economicsof death and bequest(with apologiesto Wedgwood) n relationto the redistributionof wealthamonggroupsandsects.In the UnitedStates the importanceof religionto the growthof tradeisshown n thelargenumbersof denominational eriodicalsandtheirpromis-ingreturns oadvertisersn a nationalmarket.Significantly, mong he firstadvertiserswho were alert to these possibilities were those large-scaledealersin humancredulity,the patent-medicine irms.Sir William Oslerwrotethat"thedesire o take medicine s perhaps hegreatestfeaturewhichdistinguishesman from animals."' Patent medicinecapitalizedan age offaithin miraclesby emphasizing uresand led to thegrowthof advertising,trade,andscientificdevelopment.The railroadand the telegraphsteadilyincreasedthe efficiencyof advertisingmedia-chiefly weeklies,monthlies,

3 Harvey Cushing, The Life of Sir William Osler (Oxford: Clarendon Press, I925), I, 342.



12/19

90 Harold A. Innisand quarterlies-which created a national market. In a country of vast ex-tent the dailies expanded in relation to metropolitan markets and flourishedby sensational appeals to larger numbers. After the invention of the electriclight and the reduction of fire losses, the department store provided the ad-vertising essential to their success.

The newspaper, with the technological advances evident in the telegraph,the press associations, the manufacture of paper from wood, the rotary press,and the linotype, became independent of party support and became con-cerned with an increase in circulation and with all the devices calculated tobring about such an increase to meet the demands of advertising. The phe-nomenal increase in the production of goods and the demands for moreefficient methods of distribution stimulated the expansion of newspaperproduction, and newspapers stimulated production by widening and intensi-fying the market.

By the beginning of the twentieth century the new journalism directed byPulitzer, Hearst, and Northcliffe had become entrenched in the Anglo-Saxonworld. The Spanish-AmericanWar and the South African War were the pre-ludes to its supremacy. Bismarck, even before i900, spoke of the power ofthe press. It had done a great deal of harm.

It was the cause of the last threewars, .... the Danish press forced the Kingand the Government o annexSchleswig; the Austrian and SouthGermanpressagitated against us; and the Frenchpresscontributedto the prolongationof thecampaignin France."On January 28, i883, he said:You have only to look at the newspapersand see how empty they are, and howthey fish out the ancient sea-serpent in order to have something to fill theircolumns.The feuilleton is spreadingmoreandmore,and if anythingsensationaloccurs, they rush at it furiouslyand write it to death for whole weeks. This lowwater in political affairs, this distress in the journalisticworld, is the highesttestimonialfor a Ministerof ForeignAffairs.'Bagehot wrote, "Happy are the people whose annals are vacant but woe tothe wretched journalists that have to compose and write articles therein."Sir Wemyss Reid, editor of the Leeds Mercury, claimed that the interest ofthe English public in foreign affairs began with the The News's agitationover the Bulgarian atrocities in i876 and Gladstone's shrewdness in capital-

14Moritz Busch, Bismarck: Some Secret Pages of His History (New York: The MacmillanCompany, i898), II, 175.1 Ibid., p. 346.



13/19

On the EconomicSignificanceof Culture 9 Iizing the agitation. From that time public opinionnever returned o its in-terestin domesticproblems.As the "ancientGothicgenius, that sun whichsets behindthegiganticpressof Mayence"was crushedby the book, so thebook was crushedby thenewspaper. n turn the newspaperwas destinedtofeel the effectsof the radio.With Victor Hugo we can say, "It is the secondtowerof Babel of the humanrace."

IIIIn all this we can see at least a part of the background f the collapse of

Westerncivilization which begins with the present century.The compara-tive peaceof thenineteenthcentury s followedby a period nwhichwe havebeenunableto find a solutionto the problemof law and order,and have re-sortedto forcerather hantopersuasion, ulletsrather hanballots."Iknowonly two ways in whichsocietycan be governed-by publicopinionand bythe sword,"wrote Macaulay.But Croker,representing he Conservativeposition,claimedthat we governby the law saving us fromextremesof gov-ernmentby publicopinionorby the sword.The ruleof law became ess effec-tive.WhereBismarckhad beenable to useTheTimes,TheDaily Telegraph,andThe PallMall Gazetteandsay, "It was easier,cheaper,morehumane osupplythe English journalswith newsthan to fight England,"'6 is masterhand was gone,and the newspapershad grown beyondcontrol. They hadbecomesomethingmore than his descriptionof "just printer's nk printedon paper."Wherediplomacyby paragraphshad reachedthe point that areferencen TheTimesservedas a check to Frenchdebates,The Timeswasnow notherhands.Northcliffehadcontrolof a powerwhichcouldbreak heAsquithcabinet during he war. PresidentTheodoreRoosevelt and the bigstickhad beencreatedbytheAmericanpress.This vastnewinstrument on-cernedwithreaching argenumbers f readers endered bsolete hemachin-ery formaintainingpeacewhich hadcharacterizedhe nineteenthcentury.Guizotwroteof the greatevil of democracy,"It readilysacrifices he pastand the futureto what is supposedto be the interest of the present,"andthat evil was accentuatedby the reignof the newspaperand its obsessionwith the immediate. But to paraphraseHilaire Belloc we must say ofdemocracy,

Alwayskeepa hold of nurseForfearof finding omethingworse.(New Russell Young, M. D. R. Young, ed., Men and Memories: Personal Reminiscences

(New York and London: F. T. Neely, I901), P. 271.



14/19

92 HaroldA. InnisLippmann's esertionof thestudy of rationalizingprocessesas developed

with GrahamWallas,following he emergence f Freudianconcernwiththeirrational,was a significant tep. It wouldscarcelybe decent n this gather-ing to refer to the implicationsto the social sciences,but one notes withalarm the changingfashionsin economics.The breakupof the classicaltraditionof economicss an indicationof the powerful nfluenceof fashionsin our times. At one time we are concernedwith tariffs,at anotherwithtrusts,and still anotherwith money.As newspapers eldomfind it to theirinterest to pursueany subject for more than three or four days, so theeconomistbecomesweary of particular nterestsor senses that the publiciswearyof them andchangesaccordingly.And this paper will be cited as anobsessionwith the obsessionwith the immediate.There is need for a studyof economicsand insanity supportingthat of Durkheimon religionandsuicide.

The inabilityof the twentiethcenturyto finda solution to the eternalproblemof freedomand poweris basicallysignificant o the study of eco-nomichistory.When the climate of opinionmakesimpossibleany concernwith the past or the future,the studentfinds it exceedinglydifficult o dis-cover an anchorageora pointof view from whichto approach he problemof European ivilization.A recognitionof factorsaffecting rrationalitys abeginning.The church, he armyand the police,industry,and possiblythedrink trade have beenpowerfulforces affecting anaticism.A study of thedrinktrade cannot be undertakenhere, but the coffee houses in Englandafterthe Puritanrevolutionn the middleof theseventeenthcenturyweak-ened the positionof the tavern and providedcentersof discussionwhichundermined he positionof the Stuarts.A changeof the whole drinkinghabitsof the UnitedStates followedthe dumpingof tea in Bostonharbor,and it maybethat the devotion o coffeehas hadimportantpoliticalresults.The relationbetweenbeveragesandintelligentdiscussionoffersan interest-ingbridgebetweeneconomichistoryandpoliticalhistory.The drink tradehas beensignificant or tradeandwar.The economichistoryof NorthAmer-ica mightbewrittenaround hestruggleof brandy upportedby the Frenchagainstrumsupportedby the English.It was the consideredview of C. C.Buell, who in the i 88o's edited the reminiscencesof generalsof the CivilWar for Century,that it "wasa whiskeywar. With few exceptions,likeHoward,all theuniongeneralskeptthemselvesgoingwithhard iquor.Themen who came throughand succeededwere the ones whocould standup totheirdrink."'

'lWill Irwin, The Making of a Reporter (New York: G. P. Putnam's Sons, I942), p. I46.



15/19

On the EconomicSignificanceof Culture 93The fundamental roblemof civilization s thatof government rof keep-

ing people quiet, or followingMachiavelli"to content the people and tomanage henobles."All politicianswill echo the wordsof Lord Melbourne,"Damnthem! Why can't they keepquiet?"Weare awareof the devicesoforientalempiresand of the empiresof CentralAmerica hrough helinkingof religion o thestate. TheJewishandMohammedaneligionspersistedbyvirtueof disciplineand the use of force.Greeceused the army andnavy assourcesof resistance o externaldomination,and Romeused the armyandthe roadas meansof domination.Countrieswith a revolutionary raditionacquiredadaptabilityanda beliefin the powerto accomplish hangeby in-dividual efforts,but the right and ability to protestis not paralleledby anability to acceptresponsibility.Vitality assumesthe ability to reorganizeefficiently.But a revolutionaryradition s saferin thestate thaninreligion.In Germanyas the homeof the printingpressa revolutionary radition nreligionwas supportedby the state. In England he religiousrevolution ol-lowedthe revolutionof the state andfacilitatedthe outbreakof Puritanismand the growthof trade.In Canada he revolutionaryraditionmissed theFrench n thechurch,andin turnthe English n thestate,with themigrationof Loyalists after the Revolution,and providedthe basis for mutualmis-understanding.Weakeningof the Churchas a device to destroy fanaticismby theinventionof printing, herise of Protestantism, ndtheemergence fphilosophyn theAgeofEnlightenmenteft commerce s thegreatstabilizer.Its influencewas evidentin the comparativepeace of the nineteenthcen-tury.SamuelJohnson aid that therewere "fewwaysin whicha man can bemore innocentlyemployedthanin gettingmoney."

Rationalitywhichaccompanieshepricesystembrings ts ownhandicapsin the formationof monopolies.Large-scale ffectivemechanization f dis-tributionnecessitateda single priceand the search for devicesto preventoutbreaksof competitivewarfare.Thepricesystemweakenstheprofitmo-tive by its emphasison management.Cartels and formalism n commerceparalleledecclesiasticismn religionandin both cases initiativein thoughtwas weakened.Volumesof economichistory were written about businessfirms,epitaphs n two volumes(GeorgeMoore),as partof the literatureofthe newscriptures.Ecclesiasticismand thedevastating ffectsof thedepres-sionbroughton acuteparalysisof thoughtand the rushto suchillusionsandcatchwordsas securityandfull employment.The pricesystembroughtnotonlyrationality n businessbut alsoluxuryand freedom romwork.The in-tellectualsnob who exploits by telling othershow they are exploitedandluxuriousdiscussionsof the class strugglehave been evident enough.We



16/19

94 Harold A. Innisneed an economic nterpretation f the class struggle,but, as Troeltschhaspointed out, the objectivity of the price mechanism upportsthe plausiblefinality of the Marxian nterpretation.The pricesystem with its sterilizingpowerhas destroyed deologiesand brokenup irreconcilableminoritiesbycompelling hemto nametheirprice.Unrestrained,t has destroyed ts ownideologysinceit too has its price.In a sense religion s an effort to organizeirrationalityandas such appears n all large-scaleorganizations f knowl-edge. Commerceollows the generaltrends of organized eligiousbodiesasdoes thoughtin the social sciences."Most organizationsappearas bodiesfoundedfor the painlessextinction of the ideas of their founders."'Alex-anderMurraywrote to ArchibaldConstable, he Edinburghpublisher,onJuly 7, i807:It will be no wonderful ccurrencef, in this age of constitutionmakinganduniversalmprovement,he nationswhichhave long been unscientificallyreeshall becomescientifically ervile-for it is onlywhenpeoplebeginto wantwater hattheythink of making eservoirs; ndit wasobservedhat the lawsof Romewereneverreducedntoasystem ill itsvirtueandtastehadperished.'9As in organized eligion,dissentappearson the fringesbringing he skepticand philosophersuch as might have writtenWesley Mitchell'spaper,orbringing nto beingthe EconomicHistoryAssociationwhichspringsup onthefringesof largeecclesiasticalacademicorganizations.'Theprinciple hatauthority s taken,nevergiven,beginsto emerge.Ortheremaybe a palacerevolutionsuchas that started by LordKeynes."Dost thou not know myson,with how little wisdomthe world is governed " (CountOxenstierna).

The outbreakof irrationality,which in the early part of the twentiethcenturybecameevidentin the increasing nterestin psychologyfollowingthesteadyingeffectsof commercen the nineteenthcentury, s the tragedyof ourtime.The rationalizingpotentialitiesof the price systemand its im-portance n developingpowersof calculation n the individualhavefailed topreventa majorcollapse.It has beenarguedthat manas a biologicalphe-nomenonhas been unableto sustain the excessive demandsof rationalism

18 G. P. Gooch, Life of Lord Courtney (London: Macmillan and Company, I920), p. 4i6.'9Thomas Constable, Archibald Constable and His Literary Correspondents (Edinburgh,i873), I, 26i." See Ernst Troeltsch, The Social Teaching of the Christian Churches; also S. D. Clark,"Religious Organization and the Rise of the Canadian Nation i850-85," Report of theCanadian Historical Association, I944, pp. 86-97.



17/19

On the EconomicSignificanceof Culture 95evident in the mathematics of the price system and of technology. CharlesDickens wrote to Charles Knight (January 30, i854):My satire is against those who see figuresand averages, and nothing else-therepresentativesof the wickedestand most enormousvice of this time-the menwho, through ong years to come, will do more to damage the reallyuseful truthsof political economy, than I could do (if I tried) in my whole life-the addledheads who would take the averageof cold in the Crimeaduring twelve months,as a reason for clothing a soldierin nankeenon a night whenhe wouldbe frozento death in fur-and who wouldcomfortthe labourer n travellingtwelve milesa-day to and from his work, by telling him that the average distance of oneinhabited place from another on the whole area of England, is not more thanfour miles. Bah! what have you to do with these!'How far does the spread of mathematics and the intensity of modern lifecreate demands for irrationalism and fanaticism? Is the emergence of Freudand the psychologists a result of the spread of irrationalism or an effort tomeet the problems of irrationalism? Has commercial development beeneffective in destroying religious centralization as a stabilizing influence tothe point that new sources of power such as nationalism and autarchy withsubordination to militarism have taken their place? Morley described thestubborn sentiment of race and the bitter antagonism of the church as thetwo most powerful forces affecting civilized society. In weakening thechurch, commerce has been unable to check nationalism, although religiousinstitutions can be more effective than industrialism or commercialism incrushing intelligence. The breakdown of the press shown in the sharp declinein influence of the editorial in the twentieth century points in the directionof nationalism.' The printing press and new methods of communicationhave been developed as methods of division rather than co-operation. Na-tional and linguistic differenceshave been accentuated and internationalismweakened. The mechanization of art intensified nationalism. Where thestage meant an international interest, the movies and the talkies were sub-ject to customs duties. Following its concentration on the problems of theimmediate, commerce has lost its control as a stabilizer of power.

I Charles Knight, Passages of a WorkingLife During Half a Century (London, i865), III,i88.I Oswald Garrison Villard, The Disappearing Daily: Chapters in American NewspaperEvolution (New York: Alfred A. Knopf, 1944).



18/19

96 Harold A. innisIV

The significanceof economichistory in all this is shown in its concernwith long-run rendsand its emphasison training n a search for patternsrather hanmathematicalormulae. t shouldcompel hestudy of interrela-tionshipsbetweenthe social sciencesandbetweennations.It shouldrescuethe socialsciencesfromthe chargeof producingbooks"eachwith a hundredmethodsof distributing he fruitsof productive abouramong thosewhoselabouris unproductive."'It shouldweakenthe position of the textbookwhichhas become ucha powerfulnstrument or the closingof men'smindswith its emphasison memoryand its systematic checkingof new ideas.Biasesbecomeentrenchedn textbookswhichrepresentmonopoliesof thepublishing radeandresist thepowerof thought."Learning athgainedmostby thosebookswhereby he printershavelost" (ThomasFuller). Imperfectcompetitionbetweeneconomic heorieshampers he advancesof freedomofthought.Machine ndustry hroughprintingdispenseswith thoughtor com-pels it to move in certain channels.The dispersionof thought throughtheprinting ndustrymakes attackson monopoly ncreasinglydifficult. n em-phasizinga long-rangeapproachto social phenomena,economichistoryshould contribute o stability.Not only should it supplementpoliticalandsocialhistory,it should n supplementinghem check the tendency n itselfandin themto bias and fanaticism.Withinthe narrower angeof the socialsciences t shouldprovidea checkagainstthespecialization f mathematicalsystemspeculiar o a monetaryanda machineage andshouldindicatetheextent andsignificanceof the irrationalas contrastedwith the rational.Itshouldoffsetthe superficialityn the mathematicalapproach f which Wes-ley Mitchell complains.This is to recognize hat the subject s moredifficultthan mathematicsandto insist that toolsmust beused,and notdescribed,finterpretations not to be supersededby antiquarianism.n the words ofCobden,politicaleconomy s "thehighestexerciseof the humanmind,andthe exactsciencesrequireby nomeansso hardan effort."'Economics ends to becomea branchof politicalhistory andit is neces-sary to suggestalternativeapproachesand theirlimitations,to emphasizesociologywith its concernwith institutions,geography,andtechnology.Bydrawingattentionto the limitations of the socialsciencesand of the pricesystemit can showthe importanceof religionandof factorshamperingheefficiencyof thepricesystem.Not onlydoesit introducea balance o consti-tutionaland legal history, it drawsattention to the penchantfor mathe-matics and for other scientific tools which have warpedthe humanities.

'Henry Holt, Garrulities of an Octogenarian Editor (Boston: Houghton Miffin Com-pany, 1923), P. T04.24 John Morley, The Life of Richard Cobden (London, i887), I, 323.



19/19

On theEconomicSignificanceof Culture 97Economichistorymay provide grappling rons with which to lay hold ofareas on the fringe of economics,whetherin religion or in art, and withwhich, n turn, to enrichothersubjects,as well as to rescueeconomics romthe present-mindedness hich pulverizesother subjects andmakes a broadapproach lmost impossible.2' conomichistory demands he perspective oreducejurisdictionaldisputes to an absurdity.The use of economic heoryas a devicefor economizingknowledge hould be extendedand not used todestroyother subjectsor an interest n them. GoldwinSmithwrote, "Socialscience f it is to take the place of religionas a conservative orcehas not yetdeveloped tself or got firmhold of the popularmind."' Economichistorycancontribute o the fundamentalproblemof determininghe limits of thesocial sciences.Withouta solutionto this problem herecan be no futureforthem. "There s no use in printing n italics when you haveno ink."

The circulationof printed mattercheapened houghtand destroyedtheprestige of the great works of the past which were collectedand garneredbefore the introductionof movabletype. Rational thought and art conse-quently hadmoreinfluence.Europeancivilization ived off the intellectualcapitalof Greekcivilization,the spiritualcapital providedby the Hebrewcivilization,the materialcapital acquiredby lootingthe speciereservesofCentralAmerican ivilizations,and the naturalresources f theNew World.Crozierwrotewithregard o England:It paysherbetterto buy her intellect,penetration, riginality,nventionandsoon,when hewants hemandwhere hewants hem, han obreed hem ....Germany ndFranceand othercontinental ations upplyherwithnearlyallthe newdepartureshathaveto bemade nscienceandphilosophy,nmedicine,in scholarshipndthehighercriticism,n theartof war;in new chemical ndindustrial rocesses; nd n enlargementsf the scopeof musicandof art.'He mighthaveextended heargument o Westerncivilization.The enormous apacity of WesternEuropeancivilizationto loot has leftlittle opportunityfor considerationof the problemswhich follow the ex-haustionof materialto be looted.But this civilizationhas showncontinualconcern n the commonman and in the distributionof loot. Perhapseco-nomic history can begin from this point to make its contribution n thebuildingupof spiritual, ntellectual,andmaterialcapital,since it is not con-cernedwiththe belief in the commonmanbut withthecommonmanhimself.

The University of Toronto HAROLD A. INNIS' Alec Lawrence Macfie, An Essay on Economy and Value: Being an Enquiry into the RealNature of Economy (London: Macmillan and Company, 1936).a Essays on Questions of the Day, Political and Social (New York and London: Macmillanand Company, i893), p. 39.' John Beattie Crozier, History of Intellectual Development on the Lines of ModernEvolution (London: Longmans, Green and Company, i90i), III, i66-67.

Documents

Economic Signific of Culture