Railroads and capital: money, credit, and the industrialization of shoemaking - Special Invited Issue: Money, Trust, Speculation and Social Justice - Part 2: Trust and Money

American Journal of Economics and Sociology, The, Oct, 1998 by Robert Enoch Buck

There were several possible responses to the problem of capital formation in such villages. First, merchants and businessmen hoarded capital by carrying out economic transactions via barter and exchanges in kind. Second, in some villages, businessmen from larger commercial and financial centers of trade brought the capital needed for industrialization to such communities (Dalzell, 1987; Wallace, 1978). Third, something could increase the value of local nonmonetary assets, for example, land and natural resources, that could be readily converted into capital. Finally, it was possible that some local entrepreneurs could gain access to external capital resources without incurring indebtedness.

III

Railroads and the Industrialization of Shoemaking in New England

In this article, the role of railroads in the process of the industrialization of shoemaking is examined in a comparative study of two New England communities. Lynn, Massachusetts became the leader in the industrialization of shoemaking, whereas Buck field, Maine experienced a development of shoemaking paralleling that of Lynn (albeit on a smaller scale) through the early stages of industrialization, but no further.

The manufacturing of shoes in New England passed through several stages at this time. The first shoemakers were cordwainers who settled as farmers. making shoes as a part of their other productive activities. They traded them along with their crops to local merchants. Merchants took the shoes in a direct exchange for goods that involved no money and saved them until they had a barrel full, which they then traded to their suppliers for other goods. The second phase developed largely as a result of increased demand stimulated by consignment merchants penetrating deeper into southern and western markets. As a result, shoemakers began to devote an increasing amount of their time to manufacturing, built small shops near their houses, and took journeymen and their families into their shops and households.

As this occurred, a division of labor developed within the artisan system, with masters specializing in cutting, women stitching the uppers, and journeymen lasting and attaching the soles. In the third stage of development, shoe bosses, who were local merchants and other individuals with ties to consignment merchants, established central shops, sometimes in their stores, through which they took control of the manufacturing process. In these shops, they hired the formerly independent craftsmen to cut uppers to their specification, put the work out to female cottagers who stitched them, then sent them out again to the shoe shops staffed by journeymen. Near the end of this phase, the size of shops and the scale of their operations grew dramatically, although the system of production did not change. The final, or industrial, stage did not occur in both communities. It involved the establishment of factories in which all of the steps in the manufacturing process were combined under one roof, resulting in a rapid increase in the level of coordination and specialization. Industrialization, in this sense, was not just an increase in the scale of operations or productivity. Neither was it simply a matter of mechanization, as the invention of the sewing machine predated the industrialized factory by more than a decade. Rather, industrialization consisted of a fundamental change in the social structure of production, a change that achieved certain possibilities, but revealed even more. Placing all stages in the production process under one roof not only sped up the production process by reducing the lag time between steps, it also showed how it could be sped up even more, leading to an increased division of labor, more efficient points of connection between the steps of the increasingly complex process, and the invention of techniques and machinery to deal with production bottlenecks.