Keene De/Reindustrialization

Like the nation as a whole, Keene, New Hampshire went through a period of difficult industrial transformation between 1970 and 2015. Yet Keene’s story is not one of deindustrialization; though the numbers employed have declined, Keene continues to design and manufacture cutting edge products. How did the machinists, engineers, owners, managers, and financiers in the community of Keene pull together to fight to retain a vibrant industrial base in this one corner of the Connecticut River Valley?

Phil Hillker, Machinist, at Kingsbury in 1987.

Phil Hillker, Machinist, at Kingsbury in 1987.

Personal relationships and human decisions mediated larger forces of globalization, technological change, and a changing financial environment. Dr. Duggan and her upper level students in IIECON 399: Keene De/Reindustrialization aim to record oral history interviews with the people who guided each other through this challenging forty year period. We hope that the people we talk to will be willing to have the transcriptions of these interviews deposited in the Historical Society of Cheshire County so we leave a record for posterity of the efforts made during this time of great transformation. If that is too formal for some, the students will carry their ideas forward in their minds and written essays for the course. As student Mike Grazewski explained, speaking to one person for two hours is more transformative than reading many books. Indeed, the impact of speaking to experienced leaders is visible as the students begin during this semester to become dependable and knowledgeable professionals ready to engage in their own communities.

Community bankers made a big difference.  CT River Bank is now gone, but listen to Gary Gray discuss with student Sage Yudelson how he helped struggling businesses to whom CT River Bank had made a loan in Feb. 2015 (1 minute 15 seconds):

Play below to hear machinist Phil Hilliker (in the photo above) speaking to students Kyle Foote and Jon Fagan in Feb. 2015 (2 minutes 53 seconds).

Mike Ballou

Mike Ballou

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Spain’s Financing of the Conquest of California, Siglo XVIII

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At Instituto Mora in Mexico D.F., August

Why was it harder for Spain to remove the church from economic power in 18th century California than it was in 18th century Spain?  This was a question I pulled on during my sabbatical year 2013-14.  So often California has been analyzed without looking at Spain or Mexico.  A presentation at St. Augustine, Florida in March introduced me to Andy Galvan (leader of the East Bay Ohlone and Curator of Mission San Francisco) and Anthropologist Kent Lightfoot and put my head into the US concerns of indigenous culture and survival during the Spanish conquest.  The result of St. Augustine was the attached paper in the Pacific Historical Review, Vol. 85, No. 1_2: PHR8501_02_DugganFinal.  A trip to Mexico in August 2012 helped me to right that wrong by meeting Carlos Marichal at the Colegio de Mexico  and Guillermina del Valle Pavon at the Instituto Mora. A paper presented in Lisbon in December 2012 permitted me to meet Spanish historians of the economic thought of the 18th century like Luis Perdices.  Now, to put these three strands together and answer the question.

In Spain, anger was rising at property in church hands, and my guess is that it was because the church got tax reductions on agricultural produce (and in effect on land) in return for providing social services.  The social services were provided.  The problem was that the church shared its tax privileges with wealthy donors, an alliance which unbalanced the effects of market competition toward big business in agrarian Spain.  I’m guessing again that expelling the Jesuits in 1767 from the Spanish Empire was an extra-legal attempt to remove a large chunk of property from church hands in Spain for transfer to small-holders.  I submitted an article using this interpretation to make sense of the writings of 18th century Spanish economic thinkers Campomanes, Jovellanos and Sempere y Guarinos.

Moving on to Mexico, the Jesuits colonized Baja California starting in 1697.  The government refused to fund the project, but the Jesuits figured they could bring food over the Gulf of California from their missions in Sonora on the other side.  Furthermore, they got private philanthropy.  Every time a 10,000 estate was donated, the Jesuits used the 500 annual income to found a mission.  The missionaries lived frugally, expanded agriculture among Indians–basically, everything they said they would do. The problem for the emerging agrarian market was that the nobility who donated the sheep ranch estates to the Jesuits still harvested the mutton from them for sale to Mexico City’s large market–but now at a 10% discount since the Jesuits were eligible for exemption from the tithe.  The battle over this tax exemption only ended with the Jesuit expulsion in 1767.  I hope to go back to Mexico City in February 2015 to present this idea to the Asociacion Mexicana de Historia Economica, and we’ll see if it passes muster.

Enter Alta Californiain 1769. King Carlo Borbone didn’t trust an alliance between church and private sector, so he funded the conquest of California, and gave 80% of the funds to soldiers who reported to him directly, and only 20% to missions.  The soldiers were hoping there would be no missions at all, so they could take Indian land and use Indian people as laborers directly, but my guess is that missions were just too cost effective at keeping Indians quiet for Carlo Borbone to give up that age old-ally, the church.  He replaced independent Jesuits with Franciscans he thought would be pliable.  He did not count on Serra, who turned out to be very good at winning bureaucratic battles in Mexico City, so that the not-for-profit Franciscans retained control of land rather than for-profit settlers.   I’m going to sort out the mission Indian vs. settler property rights by looking at Los Angeles 1769 to 1860 in my course American Property Rights in Spring 2015.

Franciscan-Indian relations are an emotional topic for us Californians (I grew up near San Francisco in what was once the territory of the Huchiun, and was later Rancho San Antonio).  I want to make sure I understand the institutional set-up correctly before I give my answer.  So right now I’m estimating contraband trade in the Pacific–not just trade with the British after 1800, but also trade with Spanish American ships from 1769 to 1800.  It’s probably no accident that Spain’s Philippine business got reorganized in 1769 on one side of the Pacific, and California was taken over on the other.  And maybe there is a link between Pacific Rim commerce and the well-being of California peoples such as the Kumeyaay, Chumash, Esselen, and Ohlone. David Igler argued in 2013 that British ships may have brought disease, and I’m reading about all these sick sailors put ashore by Spanish ships at San Quentin, Los Cabos, Todos Santos in Baja and Monterey and San Diego much earlier than that.  If I saw a way that these commercial ties influenced mortality rates, then I might see how this economist could weigh in on the debates so central to Californians.

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With Luis Perdices and Estrella Trincado, Lisboa Diciembre

Books by the following were deeply appreciated this year: Campomanes, Jovellanos, Sempere y Guarinos, Richard Herr, Vicent Llombart, Regina Grafe, Luis Perdices, Harry Crosby, H.E. Priestley, Carlos Marichal, Guillermina del Valle, Deni Trejo, Mariano Bonialian, Carmen Yuste, and Richard Salvucci. Without moral support, no project gets anywhere, so thank you John Johnson, Gavin Wright, Bill Taylor, Luis Perdices, Richard Salvucci, Bob Senkewicz, and Richard Herr.   Thank you Linda Madden for working that ILL in overdrive!  This research is a labor of love, not money.  Even so, thank you to Keene State for financing the trip to the conference in Mexico and to Mary Kay Duggan for getting me through the rough spots.  Now may my children have patience as I revise and resubmit and keep on writing.

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Bretton Woods 1944 and Greece in 2015

On January 30, 2015, I was reading the London paper–ok, I was not in London. I was sitting in my pink bathrobe in my kitchen in New Hampshire having my morning coffee (the pause after getting two kids on the bus and before I cleaned up the kitchen).The paper is the Guardian, I was brushing up on this new Greek political party Syriza.  I’m reading and I come across my name, “Economist Marie Christine Duggan…”  I did a double take.  The author was using my article on Keynes’ 1944 proposal to reform the international financial system at Bretton Woods, NH to explain how Germany and Greece could work out their debt problem.  You can see what I was reading here: article in the Guardian.

Basically, Keynes would have said that Germany should use the money Greece pays on its debt to either import from Greece, build joint ventures in Greece, or donate to Greece. Under those conditions, Greece repaying Germany would make both debtor and creditor stronger–and force both to behave responsibly.   I figured if someone else was reprinting my ideas, I should get out there and make the case myself, so I got data from the IMF on Greek balance of payments, and put this together for Dollars & Sense in May/June 2015: Marie Duggan on Greek Debt.

Indeed, this is what we figured out in my classroom, ISECON 360: History of Economic Ideas between 2007 and 2012, which resulted in a more scholarly article in the Review of Radical Political Economy. My point was that deindustrialization of the US was by no means an automatic implication of globalization, and further that it had little to do with US wages being high (US real wages fell 1973-1993, so that’ never been a good explainatory variable for US factories closing).  Instead, the financial system that people like Keynes had worked so hard to subordinate to useful human activity had escaped the wise restrictions.

Now the courageous and dashing Dr. Ianis Varoufakis is using Keynes’ idea of a recycling mechanism to try to hold Europe together.  He is really standing up for all people who have had easy debt marketed to them by banks that did not care about anyone’s capacity to repay (such as my students).  May the force be with him and Syriza.  This is June 2015, and they have a tough week ahead.

Dr. Ianis Varoufakis, Greece

Dr. Ianis Varoufakis, Greece

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Deindustrialization/Reindustrialization, Keene 1970-2012

 

Students Greg Hall, Pat Murphy and Dan Bayrouty with Prof. Marie Duggan

The juniors and seniors of Econ 455: US Economic History were recently invited to discuss our research on Keene’s industrial history with leaders in the business community.

Mary Ann Kristiansen of the Hannah Grimes Center for Entrepreneurship faciliated the meeting of business leaders and students.

Ray Anderson (Knappe and Koester) and Don Brehm (founder of Pneumo)

Ray Anderson of Knappe and Koester had given our class a tour of his cutting-edge machine shop earlier in the semester.  He feels the pressure of international competition sharply, and maneuvers carefully to innovate and expand while cutting costs.

 

Don Brehm founded Pneumo in 1962 with his invention, the air bearing guage.  Mr. Brehm told us that passion makes the difference, and government contracts played a key role in the growth of his business.

 

 

David Schuster

David Schuster explored the industrial cluster spauned by Pneumo with metrology, diamond turning machines, and optics in Keene.

 

 

Michelle Partridge

 

Michelle Patridge described how an industrial cluster promotes innovation.

 

 

 

Greg Hall discussed the industrial history of the Connecticut River Valley, including Pratt and Whitney in Hartford, and Bryant Grinding in Springfield, VT.

 

 

Francis Bonnell (sitting with Norm Fiske of RCAM) discussed the printing business at Markem under F.A. and David Putnam.

 

 

 

We were enthused to learn that Ken Abbott’s ABTech is a family business, with three generations participating.  ABTech makes air bearing guages today.

Maureen Curtis of Timken MPB reminded us that a good financial expert can shine the light on the origina of  profits or losses.  She also echoed a sentiment we had heard from our interviews: not enough young people are attracted by manufacturing careers.  Student Chris Hinchey discussed how MPB came to Keene and founded precision grinding here, and Joe Katin discussed how Timken had invested against the cycle in a smelting plant in the early 1980s, using the latest technology from Japan.

 

Dan Bayrouty discussed that machinists like to be maanged by hands-on people, which is one reason workers on Springfield, VT were unhappy when Textron bought out Fellows Gearshaper, Bryant Grinding, and Jones and Lamson in the 1970s.  Pat Murphy explained that sales of machine tool firms are extremely cyclical, and in downturns the conglomerate may favor businesses that are less impacted.  Joe Bohenek discussed the culture of innovation promoted by social ties between technical people; for example, the Keene Astronomy Club may foster ties between people who make lenses.

Joe Bohenek

Mayor Kendall Lane and Jim Pelto of SPDI listen to Norm Fiske of RCAM

 Jim Pelto teaches the next generation of young people who will go into manufacturing at Keene State’s Sustainability and Product Design major (SPDI).  Norm Fiske brings the educational community together with business needs through the Regional Center for Advanced Manufacturing (RCAM).

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