Rail Transport, Agrarian Crisis, and the Reorganization of Agriculture: and Great Britain Confront Globalization, 1860‐1900

Paper presented at the Colloque sur la genèse des marchés, Paris, Hôtel de la Monnaie, May 19, 2008

Robert M. Schwartz

In this paper I want to suggest why the British and French governments responded differently to the globalization of agriculture and the prolonged agrarian crisis from 1873 to 1896 that globalization engendered. Part of the great depression in trade, the Agrarian Crisis brought a dramatic reversal in the fortunes of French and British farmers. The arrival on European markets of a growing surplus of agrarian goods, chiefly from the and Canada, depressed prices and agricultural incomes, undermining the profitability of large farms in particular and generating political pressure on governments to help protect farm incomes. The origin, character, and geographic extent of the crisis were in many ways determined by the nineteenth‐century transport revolution. Rail transport was perhaps the most important element in that revolution, and its effects on agriculture changed over time and space. The arrival of rail transport in the countryside stimulated economic growth by opening new opportunities for British and French farmers to market their surplus production in regional and national markets. In time, however, rail freight also brought increased competition and depressed agricultural prices. Both effects fostered a spatial reorganization of agriculture and a shift from mixed farming to specialized production. The British government responded to the crisis by continuing a policy of laissez‐faire and open agricultural markets, while allowing railway freight rates to be determined mainly through the competition of private rail companies. In contrast, the French state introduced not only protective tariffs but a major program of railway expansion to modernize its vast agrarian sector.

A good way to discover specific components of the crisis is to read The Daily News of

London, a newspaper that boasted of having the largest circulation in the world. In the issue for

April 23, 1886, news of timely political issues were relegated to the back pages while announcements concerning railways, steamships, telegraphic communication, and international markets in agricultural commodities are featured in the first three pages.

Railways: For the upcoming Easter weekend special excursion trains to Brighton and back are on offer, each offer vying for a segment of the emerging market in mass tourism. For the upper classes, the South Eastern Railway proffers a luxury carriage for passengers traveling on the

10:35 express from London to , , and elsewhere on the Continent via and

Paris.

Steamships: Steamship companies are looking for customers, too. From Liverpool, Clan Line steamers advertize weekly departures for Calcutta, Madras, and Bombay via the newly opened

Suez Canal. From London, the Monarch Line announces a special price of 3 pounds 18 shillings for direct passage to New York, where travelers are guaranteed connections "for all parts of the

United States, Texas, and Canada."

Telegraphic Communications: On page two, we find a list of ships arriving in London, Liverpool, or Plymouth from all parts of the world. One just arrived from Aden in California, another from

Nagasaki in . The latest telegrams report that the steamer Peshaur, bound from to

London, left Port Said in the Persian Gulf on the evening of April 22. International Trade in Agricultural Products: News about commodity markets suggests the increasing significance in Britain of imported foodstuffs. Prices of butter imported from

Friesland, , Brittany, and feature prominently in the long list. At the Central

London fish market, American oysters are cheaper than those from the Channel Islands and

Brittany, 6 pence per dozen versus 8 to 10 pence respectively. Imports of foreign livestock and fresh meat are also reported. During the past week In Liverpool, arrivals of cattle, quarters of beef, and sheep from the United States and Canada were substantial: there was "a decrease in the importation of cattle and mutton, but an increase in the shipments of beef. “

Foreign stock and commodity markets: Page five features expanded news of the American market and some headlines from the Bourse de Paris. After a firm opening, US markets closed lower on the day before Good Friday. Trading in cotton and sugar was quiet, while petroleum held steady and wheat prices weakened, as did those for flour. Over the past three days, shares in railway stocks (the Pennsylvania Railroad, the Canadian Pacific, the Northern Pacific, and others) remain unchanged. Unchanged also were the freight rates for shipping grain and cotton from New York to Liverpool or London. On the Paris Bourse, French railway shares moved slightly upward while shares in the Suez Canal strengthened. A verdict in a law suit over imported guano (fertilizer) suggests the growing importance of fertilizer in international markets.

Economic Depression and Government Response: Finally on page six we find reports of major political issues in the . At the top of the page a leading headline reports the publication of the Second Report of the Royal Commission on the Depression in Trade. In the judgment of the Commission, the coal and iron trades, the textile industry, shipping, and agriculture were the industries most seriously affected. The depression in agriculture, we learn, adversely affected the iron industry because orders for agricultural machinery have dropped off.

Here in The Daily News is a glimpse into the conjuncture in the 1880s of the transport and communication revolutions, the globalization of agricultural commodities, and widespread agrarian distress that followed. More specifically, the issue of 1886 points to the rapid transmission of price signals among interdependent markets in various parts of the world; the use of the telegraph and newspapers to distribute market information with unprecedented speed and geographic extent; and the role of railways and steamships in providing high‐speed and less costly transportation of people, goods, and information. Less evident were the far reaching effects of this conjuncture. The swift diffusion of price information across continents affected not only commerce and trade, as in the past, but also production itself. On a broader scale than ever before, farmers had to adjust their production to the dictates of increasingly integrated world markets in agriculture, freight rates, fertilizers, and other commodities.

However accustomed to market competition in the village, the region, and the nation,

European farmers now found themselves competing with producers in the American Mid‐West and Canada. Thanks to the speed and carrying capacity of railways and steamships, the cost of shipping growing American surpluses in cereal grains, cattle, and meat to Liverpool, London,

Marseillaise, and other European port cities fell substantially, as did the rates for forwarding imported foodstuffs to urban markets within particular countries. On both sides of the Atlantic

Ocean, prices of cereals, cattle, and meat converged and dropped dramatically. The converging price of wheat fell the furthest. In this phase of globalization, expanding rail transportation fostered changing

geographic patterns of growth, decline, and regional specialization. In Britain, it was during the

1860s and 1870s that the rail network reached increasingly into the countryside. The proliferation of branch lines and stations turned fortunate small towns into thriving market centers, and farmers in the area benefited from greater opportunities to sell their produce in urban markets further and further away. By 1876 in England and Wales, there were some 3,500 rail stations in operation, and relatively few rural districts lacked a rail connection of some sort.

Built and financed by private companies, the British rail system was the leading example of private capital’s capacity to alter spatial relations of production and consumption.

Across the Channel, the different political was mirrored in the

French rail system, being a mixture of state tutelage and private enterprise, of government and private financing. From the 1840s it was the state and its engineers of the Ponts et Chaussées that designed and supervised the national system. Convinced that rail transportation should primarily serve not private interest but the public good, the central government granted concessions to private companies but held the authority to design and supervise the operation of all lines. The concessions reduced potential inefficiencies from competition for the same business by granting each company a regional monopoly in rail service. In agriculture, rail service began to reach the countryside in the late 1870s, somewhat later than in Britain .

Geographically, regional disparities in rural rail service remained more pronounced in France than in Britain until the Third Republic stepped in to reduce them, beginning in the 1880s.

In agriculture, the arrival and expansion of rail transport in Britain and in France altered the geography of market relations and accelerated regional specialization. In Britain a good example of spatial restructuring took place in cattle shipments to London. In this trade,

Middlesex farmers had long enjoyed the advantage of proximity to the capital, and up to the

1850s this advantage was reinforced by the growth of railways radiating into the Home

Counties. By the 1870s, however, the expansion of rail service into the West Country eliminated the Home County advantage, for it allowed west‐country farmers, who enjoyed lower costs in land and labor, to send large numbers of live animals to London and at lower prices than

Middlesex farmers could manage. This spatial restructuring of market hierarchy took place also in the trade in perishable produce such as fresh milk, vegetables, and fruit. As rapid rail transport became accessible in Cornwall, farmers there, who were blessed with a warmer climate, captured more of the London market by sending fresh vegetables there earlier in the season. In Worcestershire, existing fruit and vegetable gardens were much expanded and new perishables were introduced: strawberries in 1870, and tomatoes in 1884.

In France expanding rail transport prompted a shift from mixed farming and regional self‐sufficiency to regional specialization and greater participation in the national market. The shift to regional specialization was particularly pronounced in fresh produce, wine production, and cattle and dairy farming. After 1850, the growth of stock raising outpaced the growth of cereals so that more and more cropland was converted to pasture. More intense in some regions than in others, this reorganization entailed a major change in land use: by 1929, 66 percent of agricultural land was devoted to pasture and animal husbandry; 34 percent, to wheat and other crops. These figures represented a reversal of the proportions existing in 1862 and showed that the shift from arable to grassland was more extensive in France than in

England and Wales. As in Britain, rapid rail transport transformed the fresh milk trade by enabling distant producers to the meet the growing demand for milk in Paris, , and other urban markets.

Consider one example. In the Burgundian village of Montigny‐sur‐Vingeanne (population 786 in

1896), the Guillot brothers did business in regional and national markets for milk, thanks to accessible rail transport and their entrepreneurial talents. The spatial relations leading from their farm gate to distant consumers are interesting to consider. In general terms, the Guillot dairy represented the first link in the commodity chains that connected geographically dispersed dairy farmers, carters, and milk‐can makers to shippers in market towns and distribution centers such as Dijon. From the freight station in Dijon, Guillot milk next reached wholesalers and retailers in Paris. Purchased in a shop, it arrived in a Paris household and filled the glasses of consumers. There, around the family table, talk of milk from the Vingeanne, the brothers hoped, would fix in the minds of distant customers a mental association of lait pur de

Vingeanne with farm‐fresh quality and good health. To realize this hope, they commissioned an eye‐catching poster to communicate their message to prospective urban clients.

Responses to the Agrarian Crisis. To the extent that they succeeded, les frères Guillot owed much of their entrepreneurial success to the opening in 1898 of direct rail connection from neighboring Mornay to Dijon via a narrow gauge line constructed for department of Côte d’Or with substantial state subsidies. The brothers, of course, were hardly alone in depending upon cheap transport or in complaining about freight rates whenever they appeared to be too high.

Indeed, during the agrarian crisis, farmers and merchants everywhere complained and intensified their calls for lower freight rates. In France, grain merchants and other middle‐men were most likely to press the issue, both on their own and through chambres de commerce and regional conseils généraux. As for farmers themselves, large producers and stock‐raisers were more apt to catch a rail company’s ear than small farmers, though the voices of small producers began to make an impact through the agricultural societies that emerged throughout the country in the 1880s.i Meanwhile, in small communities without rail service, citizens lobbied to

get it through petitions and the ballot box. And if success seemed at hand, local authorities were willing to take on debt and raise taxes to secure a rail connection.

During the early years of the Third Republic, these demands from below converged with initiatives from above. As the early signs of economic depression appeared in the late 1870s, ministers and deputies committed the Third Republic to a major expansion of railways with the aim of modernizing the country’s vast agrarian economy. Introduced in 1878 by the Minister of

Public Works, Charles Freycinet, the program provided not only for the enlargement of the national system but also for the state‐subsidized construction of a large secondary network. In this way what were called lignes d’intérêt local would connect avec les chef lieux cantonals et départementals and thereby with the main lines of the national network. A vehicle of economic modernization, the program aimed also at consolidating the political base of the new Republic by winning the loyalties of the country’s large rural population.

Under pressure from large farmers and merchants, the government’s reluctantly imposed protective tariffs on imported livestock, meat, and wine in 1881 and on cereals in

1885. Meanwhile, the part of the Freycinet program devoted to the secondary network began to take hold in the 1890s as rural communities favored with new lines grew in number across

France and met with popular enthusiasm. Among the beneficiaries, as we saw above, were the

Guillot brothers of Montigny‐sur‐Vingeanne. From the turn of the century to the Great War, the network grew rapidly. It reached a peak of some 20,000 kilometers in 1928. (See Figure 1.) This figure represented a substantial addition to the 40,800 kilometers of the main system near its peak in 1915. As we shall see, the contribution to agrarian modernization was likely significant.

In Britain, pressures on the government to do something to relieve agrarian distress during the crisis mounted also but little was done to alter existing policies affecting agriculture and the increasing proportion of imported foodstuffs in an open market . As suggested in the

Daily News of London, Royal Commissions gathered evidence on the depression in industry and agriculture. And, in particular, two Royal Commissions on agrarian distress (those of 1882‐86 and of 1894‐97) duly reported their findings. Although much hand‐wringing took place in the

House of Commons and its committee rooms, and a revived protectionist movement arose in the 1890s, the government held the line against protection and maintained free trade. As for rail transportation, Parliament passed the Light Railway Bill in 1896 in the hope of expanding freight and passenger service to depressed localities. Nevertheless, the implementation of the plan was left to private enterprise and proved disappointing.

Closing the Gap between the North and the South in France.

One of the aims of the Freycinet program was to reduce regional disparities in rail service that were particularly pronounced in the underserved South. In 1890, when about 80 percent of the French rail system was in place, much remained to be done in this regard, as we can see in the map. Areas in read represent clusters of cantons where rail transport was unusually high; those in blue, clusters where it was unusually low. With few exceptions the

Saint‐Malo to Geneva line dividing the country into a developed North and a less developed

West and South mirrors this economic division in the domain of rail transportation. Dans le Midi the port cities of and the stand out as remarkable if understandable

exceptions. The Montpellier‐Marseille complex formed a hub for the trade in mass‐market wines, while Marseille connected world and regional markets to Lyon and Paris via the busiest railway in the whole country.

As the gap between rail service in the North and the South narrowed, so did the gap between agricultural productivity. This narrowing and the upward trajectory of southern agriculture began as early as 1861 when the Paris‐Lyon‐Mediterranean Rail Company (PLM) opened a high‐speed express service to transport fresh produce from the Perpignon and

Marseilles regions to Paris. In the plateaus of the southeast the new service prompted the creation of entirely new farming areas for perishable fruits and vegetables. Before the phylloxera epidemic of the 1870s, the expansion of rail transport in southern regions led to remarkable increases in southern wine production, especially in Langeudoc. As one Parisian observer put it: “There is perhaps no other region in Europe for which the railway had occasioned more affluence and prosperity than in the Department of the old Languedoc.”

The importance of the Freycinet project for agriculture development in the Center and the South can be seen in the Allier, a department south of the St Mâlo‐Geneva line where rail transport was quite modest up to 1880. With state subsidies, the Department constructed a network of narrow gauge lines (1 meter) in the late 1880s and 1890s that more than doubled kilometers of the main system (412 km vs. 173 km in 1912) and provided market access to many more communes than those served in 1880. Comparing figures on land use and heads of livestock in 1881 with those in 1911 demonstrates the relationship between rail transport and market adjustment by small farmers in particular. By and large, farms in communes closer to rail connections tended to be smaller than those at a greater distance, just as the shift away from grain‐growing to pasture, dairy cows, and meat cattle was greater in nearby communes than in communes at a greater distance from the sound of a whistling locomotive. The decision by the Allier’s political leaders to expand railways to address agrarian distress and modernize agriculture was bringing the desired result.

In sum, by the end 1890s, with recovery of the wine industry underway, and secondary networks like those in the Allier stimulating agrarian change and market integration, the growth in the productivity of southern agriculture for the first time surpassed the growth rate of the northern regions. Between the two regions a significant convergence in yields and total agrarian output per worker was in place.

Small Farms and the Productivity of British and French Agriculture after 1870.

Two final points are worth mentioning. The agrarian crisis arguably undermined the profitability of large farms and created conditions favorable to small and modest‐sized farming units. As prices for foodstuffs fell, landlords watched their rents decline and large farmers employing hired labor had difficulty meeting their expenses for wages. Under these circumstances, smaller farmers using family labor enjoyed a competitive advantage, while stagnant or falling land prices led to the breaking up of larger units and the creation of smaller farms in their place. Although more research needs to be done, available figures for France,

Britain, , and the eastern United States tend to substantiate this generalization. As for

British and French agriculture generally, recent studies suggest that the British policy of laissez‐ faire contributed to a decline in agricultural productivity, whereas the French state’s intervention in the 1880s helped produce an increase. As my work continues, I hope to be able to gauge the effect of the Freycinet program on productivity growth as compared to that of

protective tariffs.

What seems clear is that the contrasting responses to the globalization of agriculture and the agrarian crisis in particular resulted from differences in political, economic, and demographic characteristics of Britain and France. In heavily industrialized Britain, the government’s decision to leave domestic agricultural markets open to international competition reflected its recognition that opposing protection or other forms of farm income support carried a small political risk. By 1891, the proportion of the rural population in England and Wales had fallen from about 50 to 28 percent of the total, and the shrinking agrarian economy could no longer feed the country’s ever increasing urban and industrial population.

With colonial sources of food available and protected by the strongest navy in the world, the growing dependence on imported foodstuffs and the associated drop in food prices appeared less as a problem than as an advantage for workers, who were becoming a political force, and for the competitiveness of British industries. Britain’s farmers were thus left to adjust to unfavorable market conditions as best they could. As a consequence, likely unintended, British agricultural output stagnated and productivity fell.ii

In France state intervention was a long‐accepted feature of the nation’s political economy. With a slower rate of industrialization, a significantly large agricultural sector, and a rural population that still made up about ½ of the total in the 1890s, the leaders of the Third

Republic addressed the agrarian crisis with a sense of urgency. The defeat by Prussia in 1870 and the strength of anti‐Republican groups and sentiments fortified their desire to consolidate the new regime by winning the loyalties of the rural population. With these considerations in mind, the government introduced, somewhat reluctantly, protective tariffs, realizing that

conservative landlords and large farmers were apt to benefit more than small farmers disposed

to the Republic. With more conviction, Freycinet and his supporters launched an ambitious

program of rail construction. Unlike tariffs, state subsidies for railway expansion could directed

so as to shore up political support. More broadly, the belief that the provision of rail transportation was, first and foremost, to serve the public interest was widely shared. State funds and direction put this belief into action and served to open communication to hundreds of remote places. This was a French approach to modernization in an age of globalization.

Wheat Prices, Tariff Rates, and Wheat Production in the US Midwest

Regional Disparities in Rail Transport, 1890 Mapping LISA statistics [local indicator of spatial auto-correlation]

Marseille

red = clusters of high rail density blue = clusters of low or negligible rail density

Théophile-Alexandre Steinlen, 1894

Map 1. Twenty-four Communes in the Allier

Land Use Change 1891-1911 and Distrance from Urban Market or Railway Grain cultivation in hectare 80

60

40

20

0

-20 Percent change 1891-1911 change Percent -40

-60

-80 -5 0 5 10 15 20 25 30 35 Chamblet excluded Distance (km) Map 2. Twenty-four Communes in the Allier

Change in Dairy Cattle 1891-1911 and Distance from an Urban Market or Railway Connection 120

100

80

60

40

20

0

-20 Changein Number Cattle of Dairy

-40

-60 -5 0 5 10 15 20 25 30 35 2 communes w ith over 2 SD excluded Distance (km)

i Ruttan claims the pressure for protection came mainly from large agrarian syndicats of the Northeast. Notes that British growth rates were meager .21, compared to France .76, both well behind Denmark and Germany. Ruttan fails to mention the support for agriculture in rail development, looking only to institutions like state agricultural stations, etc. ii Koning: 76 including stagnation of productivity; cites Wade concluded near stagnation in total factor productivity.