Ricardo, Gold, and Rails: Discovering the Origins of Progress and Poverty

Introduction Henry George, a towering figure of the 19th century, was born in Philadelphia in 1839 and migrated to San Francisco several years after the peak of the California gold rush. His most popular publication was Progress and Poverty (P&P), an extensive treatise on economic development and social inequality that first appeared in 1879. According to Blaug (2000: 270): "[T]he most widely read book on economics in the nineteenth century was ... Progress and Poverty ... [It elicited] refutations from all the leading economists of the day, including Alfred Marshall ... [and] John Bates Clark." (1) Efforts to explain the substance of George's political economy have often focused on intellectual influences of other economists. (2) No doubt George was influenced by Smith, Ricardo, J. S. Mill, and other classical political economists. As Sandilands (1986: 4) remarks, "George ... ranged over the whole field of economics, politics and philosophy ... He corresponded with John Stuart Mill ... and immersed himself in Mill's writings and those of ... the French physiocrats, Smith, Ricardo and Malthus." The debt of George to the works of Smith, Ricardo, and Mill is obvious if one counts the number of citations to their writings in P&P. As summarized in Table 1, George cites Smith and Mill 13 times each and Ricardo a total of eight times. The Physiocrats (Quesnay, Turgot, and Mirabeau) are also acknowledged by George but far less frequently. But can one fully grasp the content of P&P by simply listing the authors whose books George read before drafting his first major work on political economy? I think not. Because George valued empirical evidence as well as theoretical principles, it is also important to consider the historical events and trends of which he was certainly aware and that probably helped to form his political economy. This is especially the case because, as Cesarano (2006: 452) has noted: "[H]istorical knowledge is most helpful in analyzing ... [complex] subjects like economic growth." Philadelphia Childhood Even before his 1858 migration to California as a young adult, George must have been influenced by contemporary events in the United States. From 1840 to 1860, for example, the nation's population grew by 84.3 percent to 31.4 million (Gibson and Jung 2002: Table 1). During those same 20 years, industrial production increased nationally by nearly 260 percent (Davis 2004: 1189). Hence, George's childhood years were ones of rapid population growth and industrialization in the United States. In his hometown, the pace of industrial and population growth was even faster. By 1850, Philadelphia had transformed itself from a colonial mercantile and financial center into a highly productive manufacturing city producing textiles, shoes, machinery, etc. By the 1850s, Philadelphia had also become an important hub in the country's expanding railroad network (Gyourko 2005: 10, 16). The city's population exploded between 1850 and 1860, increasing 366 percent to nearly 566,000 (Gibson 1998: Tables 8 and 9). This demographic growth was fueled in part by the arrival of free blacks, runaway slaves, and Irish peasants seeking employment. During the first decade of George's life, the city experienced a series of racial and religious riots as well as violent labor strikes (Feldberg 1974: 326). (3) Furthermore, the Southwark neighborhood to which the George family moved in the mid-1840s "represented the outlook and values of the original community of artisans and mechanics that had rallied to the side of Tom Paine during the Revolution with their hatred of entrenched privilege" (Thomas 1983: 7). Even if his parents tried to shelter him from these social tensions, George may have learned to associate growth and development with conflict during his formative years in Philadelphia. Gold Rush and Land Prices During George's childhood and adolescence on the East Coast, dramatic events were taking place on the Pacific Coast. …