THE ROLE OF AGRICULTURAL INSTITUTIONS IN U.S. DEVELOPMENT: TOWARD AN ECONOMICS OF THE FAMILY FARM (AGRARIAN, MECHANIZATION)

This dissertation analyzes the important role of agricultural institutions in the tremendous agricultural expansion and concurrent industrialization in the U.S. in the nineteenth century. It investigates the causes of the adoption of the reaper in the American midwest in the 1850s, attempting to explain the market responsiveness of family farm institutions and their overwhelming dependence on family labor. The view of the family farm developed in the dissertation is an alternative to the neo-classical economic theory of the profit-maximizing farm. Using logit analysis to analyze data from two subsamples from the federal census manuscripts for 1860, I develop measures of the economic, institutional, and resource characteristics of the family farm system in the Old Northwest at mid-nineteenth century, including measures of the equality of land distribution and ownership characteristics. The results of the logit analysis support the hypothesis that risk averse utility-maximizing family farms rationally adopted the reaper in the 1850s at output levels lower than profit maximizing would have dictated. Because farm ownership was a major goal, farmers sought a level of output that could be maintained by the family alone and that could be sustained with minimal cash outlays in economic downturns. The logit analysis together with statistical and institutional analysis of the agricultural system as a whole in the Old Northwest support the general conclusion that the family farm system was a favorable initial condition that was crucial for the adoption of farm machinery. It resulted in a relatively equal distribution of abundant land which generated many farmers with a sufficient surplus and incentive to purchase capital goods.