In mid-September, the original campus of Rockford’s Barber-Colman Company was named an historic district and placed on the National Register of Historic Places.  It’s a fitting end to one of Rockford’s best-known manufacturing sites.  Founded in 1900, the Barber-Colman Company gradually built the 15-building plant between Rock and River Streets, by the very ford in the Rock River that gave this city its name.

By 1989, as Jon Lundin notes in his indispensable Rockford: An Illustrated History, Barber-Colman had “six divisions, with nine facilities in four states and in England, 3,000 employees, and $250 million in annual sales.”  The Rock Street Plant remained Barber-Colman’s world headquarters until 1982; today, it sits vacant in a struggling neighborhood.  Redevelopment plans, aided by tax credits that accompany the historic designation, are under way, and, if all goes well, the campus may one day come alive again.  This time, however, the life will be commercial and retail and residential and even, perhaps, academic—but not manufacturing.  Just as Barber-Colman itself did, large manufacturing has moved away from the river, the visible heart of Rockford, and it is unlikely to return.

By 1900, Rockford was already an established industrial town.  As Lundin describes it,

Rockford had trouble keeping up with its booming industry after the Civil War, as factories seemed to sprout faster than prairie corn and new workers arrived constantly to fill the waiting jobs.  In the last quarter of the century, in fact, Rockford’s rate of growth was greater than that of any other city in Illinois, with the exception of Chicago.  Fifth in population, Rockford had become the state’s second-largest manufacturer.

The first official census, in 1850, pegged the town’s population at 2,563; the next year, the Rockford Water Power Company was formed to build the dam that would attract factories to the area along the river; and, in 1852, Rockford was officially incorporated.  One year later, the first Manny reapers were manufactured in Rockford, and Rockford’s days as a manufacturing center had arrived.

John H. Manny, a cousin of the great-grandfather of Dr. John Howard, the founder of The Rockford Institute, was a brilliant mechanical inventor, and his reaper consistently bested others’ machines in trials throughout the United States and in Europe.  Manny was eventually awarded 23 patents and attracted the wrath of the inventor of an inferior reaper, one Cyrus McCormick, who sued him for patent infringement.  Manny hired Edwin M. Stanton as his attorney.  Stanton prevailed, winning the case in 1856, no thanks to the gangly lawyer on his legal team who was so inexperienced at trial that Stanton had to order him not to speak in the courtroom.  Six years, a beard, and a top hat later, that bumbling-lawyer-turned-politician would choose Stanton as his Secretary of War.

Stanton’s victory was a Pyrrhic one for Manny, who so wore himself out fighting the lawsuit that he died of consumption two weeks after the trial ended.  He was only 30 years old.

The Manny reaper was only the first of many agricultural tools built in Rockford, and it signaled the need for local metalworks.  In 1854, Duncan Forbes, a Scottish immigrant, arrived on the scene to satisfy that need.  He and his son Alexander started an iron foundry on the south side of town, along the river.  Known now as the Gunite Corporation, Forbes’ company is Rockford’s oldest continuously operating manufacturer—a fact that’s somewhat surprising considering the lack of iron ore in the Rock River Valley.

That absence of primary resources is true of most of Rockford’s industry, however.  From the metals in our machine tools to the cotton and wool in our textiles, Rockford has always had to import the natural resources that her companies have turned into finished products.  Even during those years when Rockford was second only to Grand Rapids, Michigan, in furniture production, the wood for that furniture came from Wisconsin, despite the 122 trees per city block that prompted the New York Tribune to nickname Rockford “The Forest City” in 1853.

From these details of Rockford history, a couple broad points about manufacturing emerge.  The first is simple but often forgotten: Comparative advantage is about more than natural resources.  Does anyone really believe that the only reason the English are better at making cloth and the Portuguese are better at making wine is because of the distribution of natural resources?  Both English and American success in industry had as much to do with the character and ingenuity of the factory owners and their workers as it did with the bounty of nature.  As manufacturing shifts to China, a virtually unlimited labor supply that keeps the cost of labor low is China’s greatest comparative advantage.  Not even the most ardent advocate of outsourcing, however, would be foolish enough to argue that the roots of China’s success lie in developing new products or superior manufacturing processes.  The Chinese government itself cooperates with Chinese manufacturers in widespread industrial espionage—an implicit recognition that, in anything involving creativity, China is at a distinct disadvantage.

Second, consider the timeline of industry in Rockford.  The first settlement was in 1834; but the incorporation of the city, and the rise in population, accompanied the growth of manufacturing.  Between 1850 and the founding of Barber-Colman in 1900, Rockford’s population grew by 15 times, to 31,051.  And, as Robert Monahan writes in his chapter on “Business and Industry” in another book of local history, Sinnissippi Saga, “In mid-May 1967,” near the height of Rockford’s manufacturing prowess, “the Rockford metro area had a total civilian work force of 121,600 of which 118,100 were employed.”  Moreover, “Manufacturing employed 56,575 while 47,950 held non-manufacturing jobs, [and] 11,125 were represented as self-employed, unpaid family or domestic workers.”

This connection between manufacturing and population growth is true of similar-sized cities throughout the Midwest.  To the extent that Rockford’s experience has been different, it was, as Jon Lundin writes, because

Rockford has been anything but typical in the way it earns its money.  Economists point out that more than half of the earnings in Winnebago County [from the late 1940’s to 1989] have come from manufacturing, and that this level is far above the national average.

Today, after almost 40 years of stagnation in real wages for manufacturing employees—a period that coincides with America’s unilateral commitment to free trade as an ideology, rather than a tool—we would naturally expect that a disproportionate emphasis on manufacturing in a local economy would mean lower-than-average median wages, but that has historically not been the case.  Robert Mona-han, referring again to figures from May 1967, writes that, “Ranked 115th among cities with 133,522 inhabitants within its corporate limits of 29 square miles, Rockford is ranked 94th in the nation in effective buying power.”

In other words, throughout most of the city’s history, the preponderance of industrial employment made Rockford wealthier than otherwise comparable cities.

The September 12, 1949, issue of Life magazine acknowledged this fact in a 12-page article entitled “A sociologist looks at an American community.”  The article is based on the research of W. Lloyd Warner, a professor of sociology at the University of Chicago.  Warner was the man responsible for dividing the traditional lower-, middle-, and upper-class distinction into six subclasses—lower-lower, upper-lower, lower-middle, upper-middle, lower-upper, and upper-upper—a division that became widely accepted following the publication of his book Social Class in America.

Warner’s main concern—social mobility—seems quaint today, when the divide between the rich and the working class is growing at an astounding rate.  But 60 years ago, as Life put it, “This phenomenon of social ‘mobility’ . . . is the distinguishing characteristic of U.S. democracy and the thing for which it is famous and envied throughout the world.”

Nowhere was this ability to move between social classes more obvious in Rockford than in industry.  Of the six people that Life chose as representative members of their respective classes, four were involved in manufacturing.  Sam Sygulla, the representative of the lower-lower class, moved his family to Rockford after the war to work in a wood-products plant.  Alex Armato, the upper-lower, “For 20 years . . . has worked as a skilled odd-job man at the Gunite foundry.”  Frank Frech, the representative of the upper-middle, “moved to Rockford to be comptroller of the Weiman Co., a leading furniture maker.  Today, at 35, he has a good salary as the assistant general manager and a vice president of Weiman.”

John Holmstrom, of the lower-upper, was outside of industry, as president of the Skandia Coal and Lumber Co., but Life notes that, like Holmstrom, “About one third of the people in Rockford are Swedish.  Most of them live close to each other in East Rockford, and many are connected with the city’s big machine-tool industry.”

And of the top of the heap, the upper-upper, Life writes:

A stranger to Rockford who asks to meet its most representative people will undoubtedly be told, by almost anyone he talks to, that he should by all means meet Mrs. Walter Forbes.  “She is every bit as sweet as she looks.”  “That’s what all the elite ought to be like.”  “She is really Rockford.”

Mrs. Forbes was the widow of the grandson of Gunite founder Duncan Forbes.  Her activities went well beyond running the foundry, which “employs 550, many of them old workers like Alex Armato who are loyal to the company and respect the integrity of the Forbes family.”  She was also

a founder of the local Community Fund, a member of the board of Rockford College, president of the Boys’ Farm School, a member of the Rockford Woman’s Club and of the Monday Club, which is reserved for the daughters of Rockford’s oldest families.

Small wonder, as Life wrote, that “The town’s Old Guard respects her for her philanthropies and social work, and the younger crowd finds her a sympathetic and trusted advisor.”

Women like Mrs. Forbes did not emerge out of thin air; they weren’t simply born to their position; and their good works that built up the institutions that once made Rockford something more than it is today were inseparable from the sources of their wealth.  When Duncan Forbes started his foundry, he could not foresee the activities of Marie Forbes 100 years later.  But his industry, like many, became a force for social mobility not only for his descendants but for his workers—indeed, for an entire city.

In the September 25 issue of the American Conservative, James Kurth repeats the well-worn story that, “In 1914, Henry Ford paid his factory workers $5 a day, twice the going rate, with the aim of creating a broad middle class able to buy the cars they were building.”  Kurth was roundly criticized by libertarians for this remark—and, on one point, rightly so: Ford’s stated reason for the increase in wages (and the reduction in the work day from nine hours to eight, which he introduced at the same time) was not, as Burton Folsom, Jr., has pointed out, to create “a broad middle class” but to make the rather monotonous assembly-line work more attractive to workers and, thus, to reduce “high rates of turnover and absenteeism.”

The libertarian critique, however, went further, claiming that it is an “economic fallacy” to say that Ford’s action created “a broad middle class able to buy the cars they were building.”  And yet, economic fallacy or no, that is precisely what happened.  The higher wages increased worker satisfaction; productivity rose; Ford had more cars to sell; and, because of this higher volume, he was able both to lower the price of his cars and to raise the daily wage once again, to six dollars per day.  The process continued, and not just in Ford’s factories; across the country, other manufacturers followed Ford’s lead.  In fact, as Greg Kaza, himself a libertarian economist (albeit one with a much firmer grasp on reality), has pointed out, this became the basis for an implicit (and occasionally explicit) alliance between factory owners and workers, which lasted for the better part of the 20th century.  The creation of a “broad middle class” may not have been Ford’s intention, and modern economics may be able to “prove” that it could not have happened—and yet it did.

Which brings us to a third point: At their best, economic “laws” are just summaries of empirical observations of human behavior in the aggregate.  Change the human behavior, and the “law” begins to look less set in stone.  Because of Original Sin, of course, we have a sort of baseline of human behavior, and that’s why, for instance, the “Law of Supply and Demand” basically “works.”  But when an economist says that something that is historically true is an “economic fallacy,” the most charitable construction we can put on his statement is that, given baseline human behavior, such an event does not normally occur.

And yet, on a human level, economic “laws” are violated all the time—in families, among neighbors, in church congregations, for instance.  Ludwig von Mises, in fact, was trying to deal with this reality when he formulated his theory of human action and of subjective valuation.  When we value something in a nonmone-tary way, we may, in fact, make choices that seem irrational from the standpoint of modern economics.  Mises’ contribution was to point out that these choices actually are rational.  And they have economic consequences.

In other words, the choices we make regarding the things we value shape the economy.  “The economy” itself is an abstraction, the aggregate of those choices.  Change what people value, and you change the nature of the economy.  In fact, we’ve seen that happen over the last 40 years, as people have become convinced that they should value the ephemeral, the cheap, the convenient, the consumption item.  That, as much as—and, in fact, perhaps more than—anything else explains the rise of China as a manufacturing powerhouse for consumer goods, and it shows, once again, that Chronicles has been right to argue, for 30 years now, that there are no political solutions to cultural problems.

Knowing this, however, allows us to recognize that the fatalism that accompanies economic discussion in the United States is, at best, misplaced and, more often, is simply a way of justifying economic conditions that favor certain influential people and companies.  “Free trade is always good”—even though, as David Hartman has pointed out, every industrialized country other than the United States has replaced her tariffs with value-added taxes, putting us, who simply repealed our tariffs, at a competitive disadvantage.  “Globalization is inevitable”—even though the chief current beneficiary of globalization (China) is happy to accept the influx of financial and intellectual capital while practicing economic nationalism at home.  “The United States needs to transition to a service economy”—even though it means falling wages and standards of living here, while those countries that eagerly snap up our outsourced manufacturing jobs see precisely the opposite trend.  “Immigrants do jobs that Americans don’t want to do”—and we know that because, during the great immigration moratorium of the 1990’s, those jobs went unfilled, and the U.S. economy suffered.  Oh, wait—there was no moratorium, because Tyson and Wal-Mart and Archer Daniels Midland and the construction industry in Southern California demanded the cheap labor of immigrants, both legal and illegal, in order to trim costs and increase profits.

There’s one more trite saying that Rockford has proved wrong: “Bigger is better.”  Rockford has had her share of relatively large manufacturers, but the city’s economy has never been held hostage by one single company.  Robert Mona-han wrote in 1969 that, “Unlike Detroit, Gary or Peoria, there is no single dominant industry that rules the town.”  Strangely, he continued, “Despite these factors Rockford has grown and prospered—becoming a world-recognized manufacturing center and commercial leader of the Rock River Valley.”  Today, looking at Detroit, Gary, and Peoria, not to mention Allentown and Flint and Youngstown, we can recognize that, as bad as things have sometimes been here in Rockford, this diversity may well have been our saving grace—and it points the way toward some lessons for the future of manufacturing in America, and for the revival of the American economy in general.

The future of American manufacturing lies in its past—by which I don’t mean tariffs or other protective measures, because the economic interests that reap short-term benefits from our current system are far too politically entrenched for us to turn back that clock.  Instead, the return to the past that I’m talking about is the revival of those characteristics that made small manufacturing so successful.  The border-adjusted value-added tax that David Hartman has written about extensively in Chronicles could break the back of those political and economic interests and return control to local companies, whose concerns have always been very different from those of the Wall Street elite.  When Duncan Forbes and Howard Colman and Amos Woodward and John H. Manny and the myriad other founders of Rockford manufacturing started their companies, they weren’t thinking about the next quarterly profit-and-loss statement; they were intent on transforming their creative visions into reality—while making a living in the process.  Taking on China in labor-intensive mass production is very hard; beating China in a particular niche with a superior product is less so.  But that doesn’t mean that small manufacturers are doomed to be stuck in such a niche forever, because these small building blocks can add up to something greater, as MARRV, the Manufacturers Association of the Rock River Valley, is starting to prove (see “A Third Way,” The Rockford Files, October).  With coordination and cooperation, small manufacturers can come together in ways that combine their strengths and allow them, corporately, to be competitive in markets that they could not crack on their own.  Here, diversity is a strength; in a local economy dominated by a single industry, such cooperation isn’t possible.  And organizations such as MARRV, spread out across the country, would be poised not only to harness such diversity but to encourage it.

Anyone who spends any time reading the history of manufacturing in Rockford cannot help but be struck by the fact that this spirit of cooperation once existed here.  Companies such as National Lock trained the men who started numerous other companies; managers moved back and forth between factories, before going on to lead their own; and important investors such as P.A. Peterson helped bankroll multiple companies that today we would regard as rivals, to the benefit of all of them.  This cooperation was even reflected externally in the buildings and parks of this city, and in such institutions as Rockford College, which was the recipient of the philanthropy of numerous manufacturers.

It’s not supposed to happen that way, the economists tell us.  The free market is about competition, not cooperation; it’s about profits, not philanthropy; it’s about building up quarterly profit-and-loss statements, not about building up cities or keeping your neighbor employed.

We’re in the fourth decade of trying it their way, and we can see the results in our city and across the country.  Perhaps it’s time to turn back the clock, bend the laws of economics a little bit, and help ourselves by helping one another.