India House Foundation



Arthur Donovan Talk

India House Foundation

10 October 2007


It is a great pleasure to be here today and especially to be in the company of so many people who not only can trace their origins back to notable New York ancestors, but who are also committed to cherishing the city’s heritage. And for an academic historian like myself, it is a special treat to be speaking to you here in this distinguished private club that houses one of the great collections of American maritime art. My wife Carolyn and I are delighted to be here.

I will be brief – not something professors are known for – for the day is but half over, and I will direct my brief comments to several subjects that I hope you will find germane to the heritage and mission of India House. I will also be emphasizing several historical links that I believe connect such diverse topics as seafaring, commerce, the pursuit of liberty and the wealth of nations.

History offers no end of awful stories of conquest, enslavement, warfare, expropriation, banishment and suffering. And yet there is an ineradicable element of struggle, aspiration and invention in the human spirit that repeatedly makes itself felt and time-and-again raises historical narratives above the grimness of mere existence. In modern times the hopefulness of the eighteenth-century enlightenment laid the groundwork for the social and economic advances of the nineteenth-century, but we also know that the rise of modern industry and the destructive use of the tools it made available prepared the way for the devastating wars of the twentieth century. Given history’s record of death and destruction, I’m often astonished by how eagerly people immerse themselves in the past both for entertainment and instruction. But of course I am also grateful there is this unquenchable appetite for history, for it reminds me that studying the past is more than just a pathology of the professoriate.

Let me then hazard a few general statements about what we see when we look back at New York’s past for both inspiration and for a sense of connection to the present. One thing we find is that the longing for freedom and what the sociologists call human agency is universal and inextinguishable. Consider, for instance, the case of John Bowne, whose story many of you know quite well from your association with Bowne House in Queens.

Bowne, an English settler, lived in Flushing, then part of the colony of the New Netherlands. When Flushing received its town charter in 1645, The Dutch West India Company granted it “liberty of conscience,” and two decades later, when John Bowne was living there, it was widely known that he allowed Quaker services to be conducted in his house. But by the 1660s the political temperament in New York had changed. After heroic service in the Dutch wars against Spain, Peter Stuyvesant was appointed by The Dutch West India Company to be Director-General of the New Netherlands. At that time this Dutch colony was in a ruinous and disorderly state and Stuyvesant brought to his new duties a vigorous law-and-order attitude. He considered dissent a form of disorder and, having declared Quakerism ‘an abomination,’ he had John Bowne arrested. When Bowne refused to pay his fine or renounce Quakerism, he was imprisoned and then deported to Amsterdam. He appealed to the Dutch authorities, citing The Flushing Remonstrance, a document they had granted in 1662 that said “love, peace and liberty” should be extended to all residents, including “Jews, Turks, and Egyptians”. Surprising as we may find it, given that age’s record of bloodshed and persecution, Bowne’s appeal was successful and he returned home victorious in 1664. The principle of religious liberty that this decision represented was later firmly established in New York and in the United States.

To my mind the central importance of the Bowne story is not just his contribution to the establishment of religious liberty, but rather the broader point that individual liberty is indivisible. Law and order are important, but if they are imposed and enforced in ways that destroy individual initiative and break spirits, they are also destructive. And of course the same thing is true of economic liberty as well. If economic activity is entirely in the hands of monopolies, such as the Dutch West India Company or the British East India Company, companies that answered only to their directors and had absolute control over their finances, resources and markets, enterprise will not flourish. Liberty is not merely a string of discrete beads that includes religious and entrepreneurial freedom; it is rather a single chain whose links are made up of the particular freedoms claimed by and granted to individuals. While liberty must be tempered by respect for established law and by fair-handed universal application, it must also be understood as an expression of human striving that should be nurtured rather than suppressed. It was this broad and abiding concept of liberty that freed merchants and entrepreneurs to innovate and build America, as they did when they inaugurated Black Ball liner service to European ports and steamboat service across the East River and between New York City and Albany. It was not only New York City’s natural endowments that turned it into a hive of commercial enterprise in the eighteenth and nineteenth centuries. The city’s rise to greatness was also a product of free and ambitious individuals who were eagerly making their way in the world in which they found themselves living.

Adam Smith understood liberty in these terms, and in The Wealth of Nations he made it a central tenet of his argument for individual enterprise. If you have ever spent time reading around in Smith’s classic, you will know that the English East India Company, a powerful closed corporation, was his bete noire. But I’d like to direct your attention to another of Smith’s arguments, one that seems to me especially relevant to our own age of containerization and globalization, and that is his analysis of the economic importance of transportation. Indeed, I’ll go so far as to say that low-cost transportation, “outsourcing” and marketing, all of which are core activities in today’s global economy, were also fundamental to Smith’s statements about the division of labor and increasing labor productivity.

As you all know, Smith famously explained how more extended markets create increased demand, how increased demand gives rise to a greater division of labor, how the division of labor leads to increased productivity and lower unit costs. His analysis describes what we might call “a virtuous circle of commerce.” But how can an economy not enjoying the benefits of this virtuous circle be structured so that it can share in the increased Wealth of Nations that is Smith’s main concern? Of course this is the very question that is being asked today by those who are seeking to help the under-developed nations of the world participate in the global economy that is enriching the developed nations to such an astonishing degree. For Smith, the answer was shipping, the movement of goods by sea. He carefully demonstrates that water-borne commerce is much less costly than overland haulage, and this is still true even after the development of railroads and motortrucks. That is why, Smith explains, “It is upon the sea-coast, and along the banks of navigable rivers, that industry of every kind naturally begins to subdivide and improve itself.”

And so we return to New York City, a port endowed with an unmatched bounty of natural bays, harbors, rivers and seaways that connect it to the oceans and protected waterways of the northeast. After it had grown into the nation’s greatest seaport and dominant commercial center, New York inevitably became a center of railroad service as well, when this new mechanical mode of transportation was developed. With its packet liners and then its steam-driven liners connecting the city to overseas ports and markets, and with the North River linking it to the Erie Canal and inland cities and the waterways that radiated from them, and with Long Island Sound providing a sheltered waterway to the towns and markets of the Northeast, New York was uniquely situated to benefit from the transportation advantages that Smith identified. And so it did, and so it still does.

Malcom McLean saw all this clearly in the 1930s when he began providing trucking services between North Carolina and the Northeast. In 1937 he spent a long, frustrating day in Hoboken, waiting for the longshoremen to unload the truck he had just driven up from the south so that he could head home. When, later in his life, he was asked when he first thought of containerization, he recalled that day, but avoided explaining in detail just what it was that inspired him. I believe he spent much of the day watching with fascination as a huge gantry on a nearby dock in Jersey City lifted railroad boxcars loaded with cargo onto a ship operated by the SeaTrain Line. SeaTrain’s ships carried boxcars of freight, not cargos handled breakbulk, and because they moved the boxcars over long distances by water, they did do so more cheaply that the railroads could move them when hauling them overland. When, two decades later, McLean was ready to do the same thing with his burgeoning trucking company, he naturally located his first terminal near New York City. McLean, Like Adam Smith, realized that water carriage is cheaper than overland carriage, and that lower freight costs would increase economic activity.

Today we live in a world of nations linked by container services and in an era of astonishing wealth creation. New York has played a central part in today’s globalization, just as it has been the leading center of wealth creation in the United States since the nation’s birth, and there is no reason to think it will not continue to play that role in the future. It is a great legacy, one we should all strive to understand better and to make better known