Select text to annotate, Click play in YouTube to begin
00:00:00
hello everyone i hope you're all doing well this lecture is entitled networking nature and markets in the gilded age and the lecture will be in two parts the first part will feature
00:00:11
a discussion of weather forecasting and cotton statistics and the second part will focus on commodity futures trading now this lecture deals with the fact
00:00:23
that the late 19th century saw the creation of large-scale information networks that were devoted to new kinds of environmental knowledge that had economic value so we'll examine the intersection of
00:00:36
technology in nature in late 19th century information networks that sought to transform environmental knowledge into economic value and in some cases to transform a
00:00:47
physical agricultural commodity into capital and as i just mentioned we'll look at three examples first weather forecasts second cotton statistics and third grade futures now all of these
00:01:01
case studies pose economic problems but they're also a problem of knowledge in the late 19th century and this theme relates to rebecca solnit's book and her focus on technological ways of
00:01:16
knowing the natural world and in each of our case studies in this lecture we'll think about how nature is transformed from physical reality to abstraction and we'll ask what made
00:01:28
transforming natural observations into market information possible and what made it difficult
00:01:41
there we go now in our long history of industrialization we know that by 1880 for the first time there were more americans working off the farm in manufacturing and
00:01:53
construction and mining than on the farm and manufacturing production was greater than the volume of agricultural production for the first time in the 1880s but this doesn't mean
00:02:07
that farming declined and in fact in this period by nearly every metric agriculture essentially doubled the agricultural
00:02:20
sector of the economy doubled according to all of these different metrics the number of farms acreage total value of farm property and production of different crops
00:02:32
and also livestock farming then as now was a high risk enterprise at this point in history there was no safety net from the federal government crops could easily be destroyed by
00:02:45
storms frost drought or insects commodity prices especially in this period were very volatile land was expensive and credit was costly in a deflationary
00:02:58
economy with declining commodity prices and higher taxes so whether or not farm farmers were enthusiastic or reluctant participants in a market economy in a capitalist
00:03:12
system as the historian david danbomb has pointed out late 19th century farmers were increasingly vulnerable to forces beyond their control and farmers in this period were really
00:03:25
subject to the problems of economic action at a distance and here's what i mean by that railroad corporations
00:03:36
for far away from an individual's farm railroad corporations set the shipping rates eastern bankers often far away from a person's farm controlled the supply of credit and
00:03:49
commodity exchanges in new york chicago new orleans and liverpool set prices another way to look at it is to think about the fact that farmers in the late 19th century had three major problems
00:04:03
markets middlemen and money markets middlemen and money and farmers groups from the grange in the 1870s to the farmer's alliance in the
00:04:16
1880s to the populist party in the 1890s all three of them tried to find different solutions to these problems of a capitalist economy another
00:04:28
sort of macro level problem was the fact that economic growth was not a smooth process in the late 19th century the late 19th century was characterized by boom and bust business cycles and i think it's
00:04:40
important to note that americans in this period didn't talk about their economy in terms of business cycles they used the word panic to describe falling stock prices business and bank failures and economic
00:04:52
slowdowns and in this context market knowledge became more and more valuable another macro level trend that we need to think about here as we're setting out the broader context is that
00:05:05
between 1870 and 1920 many of the large-scale technological systems that we are embedded in today were first created the railroad system which we've already studied the telegraph system the telephone
00:05:19
system the electrical system and the petroleum system and here you see the famous cartoon critiquing the standard oil octopus
00:05:30
that controlled all aspects of industry and government and large-scale technological systems it's important to note are large complex networks that are both
00:05:43
physical and social both material they have material technical artifacts but they also have human beings creating them operating them and experiencing
00:05:56
the economy sometimes mediated by these networks the telegraph system was actually the first network that americans experience and it looked like a network
00:06:10
one historian of technology has described it as quote an elongated spider's web of electric wires that carry telegraph signals samuel morse as some of you may know
00:06:22
built the nation's first telegraph line between baltimore and washington in 1843 and by 1849 almost every state east of the mississippi had telegraph service and many other companies were using
00:06:34
morse's patents without compensating him between 1860 and 1880 the nation's political and economic life became completely dependent on the telegraph for instantaneous transmission of news
00:06:47
coverage for military strategy for transmitting prices and orders for financial markets for railroad scheduling signaling and management and international diplomatic and economic transmissions
00:07:01
after the atlantic cable was finished in 1866 by 1880 if all the batteries that generated electricity for telegraph lines had stopped working the economic life of the nation would have come to a halt trains would
00:07:14
stop running businesses with branch offices couldn't function newspapers couldn't cover events far away the president couldn't communicate with ambassadors in europe and the stock market would close
00:07:27
it's important to note here that sometimes you hear people talk about the telegraph as the victorian internet you know in the way that we use the internet for social media and social communication today that's
00:07:40
actually not accurate and so here i just want to underscore the point that the telegraph in this period was primarily used for business and for transmitting news uh it was expensive
00:07:52
and for that reason it was primarily businessmen in in cities who use the telegraph um it was not used by and large was not used by ordinary people to send messages to
00:08:06
family and friends so the telephone would be a much more social technology from the very beginning the telegraph was not and without the telegraph people
00:08:18
wouldn't be able to read the federal government's daily weather forecasts the early 1870s were the first time that the federal government published daily forecasts of the next day's weather this was the first time that
00:08:30
americans could read a government weather forecast in their daily newspaper there were supporters and skeptics of this new weather service and there was a lot of public commentary as you see here
00:08:41
in a an image of the um cover of scribner's monthly in march of 1871 which featured a story on weather telegrams and storm forecasts by the american signal service
00:08:56
now the story of the first national weather service is a story about how information networks shape the way knowledge is made it's a story about how technological and
00:09:07
social networks so these were networks of telegraph wires and weather observers how these networks brought about a new mode of environmental knowledge which was scientific weather prediction
00:09:19
in the late 19th century it's also about how networks of telegraphic communication help to change ways of knowing nature and more specifically ways of knowing the weather and here you're looking at a map
00:09:32
a daily weather map produced by the government weather service this is from 1871 and it also shows if you look at sort of the different
00:09:44
nodes on the map or the locations on the map it also shows you the distribution of weather observation stations so this was a decentralized network of observers and of course as we
00:09:57
know from our study of almanacs the late 19th century wasn't the first time that people had predicted the weather in the united states or elsewhere there was a long tradition of what we can think of oops there we go
00:10:10
sorry about that there was a long tradition of what we can think of of informal systems of weather observation and prediction based on experience and knowledge of local weather weather patterns over time
00:10:22
a long tradition of almanacs and weather folklore that americans continued to rely on right into the 20th century and i would say up until the present day so both telegraphy and weather observation
00:10:35
predate the late 19th century by quite a bit but the two were not put together until 1870 and along with the telegraph networks came standardized self-recording
00:10:46
meteorological instruments now how did this all work weather forecasts in this period were made by technology not by science and what i mean by that is that late
00:11:00
19th century weather forecasting wasn't based on theoretical models of atmospheric change it wasn't based on any major discoveries in atmospheric or meteorological science
00:11:13
it was based on the geographical projection of weather observations from west to east and it was based on the simple fact that the telegraph traveled faster than the storms
00:11:27
and what you see here is a map of the weather telegraph lines used by the federal government in 1881. the blue lines are commercialized so that's mostly western union at this point and the red lines on the
00:11:41
coast the east coast in the west are lines that were constructed by the u.s military the basics of weather forecasting stayed pretty much the same in the late 19th century the signal service had
00:11:53
observation and reporting stations throughout the country and they'd make three regular synchronous observations each day and by 1898 there were 164 observation
00:12:06
stations that were linked by nearly 500 miles of telegraph wire they observed basic surface conditions so air pressure temperature dew point relative humidity precipitation
00:12:17
wind direction the the type and the direction of clouds and all of this data was sent by telegraph to the washington dc headquarters where the chief forecaster aggregated the data and produced what was a pretty
00:12:30
accurate short-term forecast and as i mentioned before the whole system only worked because weather patterns moved from west to east and it was possible to telegraph
00:12:42
information about the weather faster than the weather itself could travel now what was the value of these forecasts and who would use them farmers would use them to protect their
00:12:57
crops in advance of a coming frost or a storm shipping companies who wanted to avoid fog snow or ice or extreme temperature or you know extreme heat as well and
00:13:10
ordinary people who wanted to know if they would get caught in a storm if they needed to bring a raincoat or something like that and the first weather forecast by the federal government was called the synopsis in
00:13:23
probabilities the synopsis was the summary of the previous day's weather and probabilities was a statement of what the weather was probably going to be for the next 24 hours the name is a little confusing it wasn't
00:13:35
actually a probabilistic forecast no one was saying 40 chance of rain or something like that people didn't think about weather in probabilistic terms and they wouldn't uh really until the the well into the 20th century close to
00:13:49
the mid-20th century now in this period there are many controversies over the production of weather knowledge largely due to the competition between the government weather service and private forecasters the
00:14:06
federal government tried to discredit these popular long-range weather profits as they were called who kept their eye on changes in plant life and animal behavior to try to predict what the weather would be like
00:14:18
in the coming season sometimes whether prophets used astronomical or astrological theories they had many different types of theories and methods and they were very popular and they
00:14:31
represented a real threat to the federal government's authority as the producer of meteorological knowledge the weather profits
00:14:42
circulated their prediction in almanacs they were quoted often in newspapers and they had a very devoted following who in the late 19th century loved to make fun of the government forecasters when they were wrong
00:14:54
and the weather profits were right and the federal government tried hard to convince the public to trust in government weather forecasting as a public good by discrediting private forecasters as amateurs or frauds
00:15:07
and in this slide you see a feature story in which the chief of the u.s weather bureau sat down for a long interview with the new york times and tried to explain
00:15:19
how important it was to trust in the federal government's forecasting and to abandon the almanacs and the time-honored ways of knowing the weather that he tried to describe you can sort
00:15:32
of see here as sort of marginal uh perhaps astrological perhaps superstitious knowledge which was different from here you can see the meteorological instruments and which was
00:15:45
different from the the well-organized scientific bureaucracy of the federal government so all of this is to say that the history of weather forecasting in the late 19th century is a story about
00:15:57
constructing an information network that systematized standardized and rationalized weather prediction it's a story about the messy process of knowledge production and real controversies over who had the
00:16:10
authority and the expertise to make weather predictions in the first place and it's a story about how to transform knowledge of nature into market knowledge and thus profit and we'll see some of these similar
00:16:22
themes in our next case study which is about cotton forecasting in the same period now the post-civil war cotton economy hinged on transformation of knowledge of
00:16:36
nature into knowledge of the market cotton exchanges in new york and new orleans were founded in 1871 and you can see a famous painting by edgar degas the new orleans cotton exchange
00:16:47
here in the slide and we can ask what is this man here in the middle reading in the newspaper he's probably reading reports on cotton prices he's reading predictions
00:17:00
of the season's cotton yields he's also reading weather forecasts so there's a lot of environmental knowledge a lot of environmental data that was really
00:17:12
fundamentally important to commodity exchange in this period now first i'd like to just step back a little bit and sketch out the broader economic context
00:17:25
for agricultural commodity product production after reconstruction in the late 19th century during reconstruction formerly enslaved people were
00:17:37
emancipated they were given political and civil rights but having rights on paper was not the same as having rights protected in everyday life and economically they did not have
00:17:51
the property or the economic stability to help ensure those rights so in an agricultural economy that was dominated by cotton share cropping and restrictive credit systems
00:18:02
land owning white southerners still had all the power there wasn't much innovation or development in an agricultural cotton economy how did sharecropping work uh basically the landowner provided the land and the
00:18:16
tools the sharecropper provided the labor they split the crop and it wasn't 50 50. uh the landowner disproportionately benefited from that arrangement still on the face of it the sharecropping system seemed like
00:18:28
a mostly beneficial bargain for both black and white people black families could stay together which they could not under slavery and they farmed small plots of land independently with no one dictating their daily
00:18:41
routine uh white land owners knew that black sharecroppers had the incentive to work hard because they had a share on the crop and by 1880 more than 50 percent of black people living in the rural south were
00:18:54
sharecroppers but there were so many disadvantages for sharecroppers one was the credit system that went along with sharecropping it was not beneficial for black sharecroppers because they were locked
00:19:07
into restrictive terms of credit that made it possible impossible for them to get out of cycles of debt as they were forced to grow cotton as a cash crop rather than food for their own consumption and then they that meant
00:19:20
they had to purchase food on credit as well there was such a high volume of cotton production in the 1870s that prices went down farmers incomes went down and for the rest of the century southern farmers fortunes were
00:19:33
really over determined by the rise and fall of prices on the cotton market so the fall of cotton prices contributed to a general depression of the southern agricultural economy after the civil war
00:19:45
as well as a falling per capita income for white farmers and little earnings for sharecroppers themselves so the sharecropping and the credit systems really undermine the project of reconstruction because they
00:20:01
severely restricted the economic options for black people and ultimately locked them into cycles of indebtedness that made them dependent on white landowners and merchants one historian describes the the plight
00:20:14
of the sharecropper by saying he tilled the ground only to repay one debt and to ensure that he would have another in the coming year cotton growers were also
00:20:25
locked into national and global economic networks through the circulation of their commodity so individual sharecroppers or tenant farmers as well as planters who had larger land holdings were all embedded in these far-flung
00:20:38
economic networks in which prices were determined by a confluence of different variables that were all far removed from the point of production and here you see an illustration of english buyers examining samples of
00:20:51
cotton in a cotton broker's office now after the so-called cotton famine during the civil war when production was vastly curtailed in
00:21:03
the american south a global network of cotton production and trade sprung up which linked cotton growers and merchants from india egypt and brazil into the new structures of global capitalism
00:21:19
in the years during and after the civil war cotton merchants and textile mill owners all over the world were looking for a secure and predictable supply of cotton so they were looking for a way to transform
00:21:32
knowledge of nature into knowledge of the market now here i want to talk about the us department of agriculture which was created in 1862 and by the early 20th century it had a number of
00:21:47
different bureaus that were engaged in scientific work from the weather bureau to the forest service to the bureau of entomology to the bureau of chemistry and also the bureau of statistics now
00:21:59
right from the start the usda wanted to gather agricultural statistics because they wanted to reduce the individual uncertainty that farmers experienced when they were trying to get fair prices
00:22:11
for their crops because speculators could take advantage of the uncertainties of supply and demand speculators could circulate rumors of crop failure if they wanted to drive prices up and
00:22:24
they could spread rumors of record-setting yields if they wanted to drive prices down so as farmers became connected to regional national international commodity markets from the
00:22:36
1840s on local knowledge of crop conditions was not very valuable the price that a farmer could expect to get in a local market was not determined by the condition of his neighbor's crop
00:22:49
but it was determined by the aggregate condition of the entire crop throughout the state the nation and even the globe excuse me so the usda's division of statistics
00:23:01
set up an information network that functioned like the weather reporting network i just described it collected local information and it assembled it into a national picture now by the end of the 19th century the
00:23:16
federal government's crop reporting network reached far into the countryside and extracted estimates of acreage and yields and all kinds of other statistics and then it transmitted the data
00:23:28
to the center of calculation in washington dc where clerks and crop statisticians were busily tabulating aggregating averaging weighting and verifying the figures
00:23:41
into county state and national totals then the crop reports were distributed to various public and private institutions by the turn of the 20th century this network of crop reporters included
00:23:56
over 50 000 um reporters and by 1913 it had 130 000 people involved in what the new york times called a big army of correspondents
00:24:10
engaged in the collection of facts that are of vital importance to the business welfare of the nation now what you're looking at here is a later image from a different period in the history of government crop reporting but i wanted to show it to you because it
00:24:22
really is a good visualization of the information network itself you can see here on the left hand side sources of data information coming in to the washington dc headquarters and then
00:24:34
crop statistics going out to various public and private institutions now by and large the price of cotton was determined on the new york and liverpool cotton exchanges
00:24:50
not in the small local markets that were across the south where prices were roughly consistent the new york cotton exchange and the new orleans cotton exchange were both founded in 1871 and they were connected
00:25:04
to each other by telegraph and then they were connected by transcontinental cable to the liverpool cotton exchange and early in the 1870s the superintendent of the new orleans cotton exchange made his
00:25:16
own local network of correspondents that gave him information on acreage weather conditions and crop conditions and that allowed him to produce monthly reports that were very well respected
00:25:30
now the rise and fall of prices on these exchanges was determined in large part by the work of speculators and forecasters who influenced prices by trading in futures
00:25:41
and by predicting a crop's future and there was one infamous cotton forecaster he was a british forecaster named henry neal and it seemed that he had almost magical control over cotton prices
00:25:54
and it wasn't magic he would just make inflated yield forecasts that would drive the price down for the benefit of the british spinners who subscribed to his newsletters so cotton planters in the american south
00:26:06
hated him and they blamed him for driving cotton prices to record lows and some people complained that cotton speculators and cotton forecasters had never even seen a bale of cotton themselves
00:26:19
so what happened southern cotton growers in the late 1890s worked together to form their own local agricultural statistics bureau to try to break the power of people like henry neal to
00:26:33
break the power that they had over prices and here you see a broadside from the cotton growers protective association advertising this message georgia cotton growers do you want good prices for your
00:26:46
cotton next fall and they're asking people to join the movement to stop false estimates gotten up by such men as neil so the british uh forecaster henry neil
00:26:58
was actually named as one of the reasons that this association was founded so cotton merchants exchanger exchanges forecasters and
00:27:09
um cotton growers like this association were all circulating their own forecasts of the cotton condition and the yield along with the federal government so there was a battle of cotton forecasts and the battle of
00:27:22
cotton forecast was a contest over who was producing the most accurate and thus the most economically valuable cotton statistics so imagine a rural black family they're
00:27:35
sharecroppers they're planting cotton and they're embedded in this larger network of social and economic relations and they're embedded in an information network that includes
00:27:47
landowners who control land and take a share of the crop merchants who provided supplies and charged exorbitant interest rates and took crop liens and mill owners and cotton exchanges who bought and traded cotton
00:28:00
speculators and forecasters like henry neil who influenced prices and the federal government in the form of the usda so these different networks all linked nature and markets they linked the
00:28:12
environment with the economy and they also linked different kinds of public and private institutions it's important to note that these networks operated on different scales the local the regional the national and
00:28:24
the global and often the experience of the late 19th century cotton economy and the agricultural economy more broadly depended on your relative position in these networks
00:28:36
british cotton forecasters like henry neil could profit while southern planters and sharecroppers were impoverished and southern planters could profit while sharecroppers on their land were trapped in cycles of debt so this is the
00:28:50
conclusion of the first part of the lecture uh networking nature and markets in the gilded age the second part of the lecture i we'll pick it up with a look at commodity futures trading
00:29:00
thanks for listening everyone take care
End of transcript