THE CONTEXT AND FUNCTIONS OF MODERN ECONOMIC LAW
Following the Civil War, the United States underwent its great transformation, from an agrarian to an industrial society. Small locally operated plants gave way to national enterprises whose managers reached for vaster and vaster scales of operation.
The reach for scale presupposed the availability of ample capital for investment, both in industrial expansion and in urban infrastructure, to support new complexes of factories and foundries. In turn, the availability of capital--combined with industrialists' willingness to maintain high levels of capital replacement and new investment--underwrote a continuation of the growth spiral.
The economy remained notoriously volatile throughout the postbellum decades, with outright depressions in 1873 and 1893. Nevertheless, over most of the period between the Civil War and the Great Depression, the wage-priceprofit relationships on which growth depended remained generally in balance. Physical output continued to trend upward.
From 1870 or so onward, industrial workers experienced dramatic improvements in their real wages. When prices increased at all, they did so at a rate significantly less than did that of the wage level.1 Per capita Gross National Product rose from $531 per year in the 1864-1878 period to almost $1300 in 1910. Meanwhile, the price index was dropping from 33 to 29.2 To similar effect were the figures on the real earnings of nonfarm workers between 1870 and 1900--up from $375 to $573 per annum.3
Thus the American labor force continued to represent a source of buoyant demand, especially for manufactured items.4 Reciprocally, the prospect of ex-