Showing papers in "The Journal of Economic History in 2013"
TL;DR: The authors examined the impact of the Great Depression on the share of votes for right wing anti-system parties in elections in the 1920s and 1930s and confirmed the existence of a link between political extremism and economic hard times as captured by growth or contraction of the economy.
Abstract: We examine the impact of the Great Depression on the share of votes for right wing anti-system parties in elections in the 1920s and 1930s. We confirm the existence of a link between political extremism and economic hard times as captured by growth or contraction of the economy. What mattered was not simply growth at the time of the election but cumulative growth performance. But the effect of the Depression on support for right wing anti system parties was not equally powerful under all economic, political and social circumstances. It was greatest in countries with relatively short histories of democracy, with existing extremist parties, and with electoral systems that created low hurdles to parliamentary representation. Above all, it was greatest where depressed economic conditions were allowed to persist.
99 citations
TL;DR: In this paper, the authors describe the ongoing construction of a historical geographic information systems (GIS) transportation database designed to provide new insights into the impact of the transportation and communications revolution in the continental United States by providing evidence on the spatial dimensions of those changes over time.
Abstract: Transportation improvements in the nineteenth century loom large in the historiography of the profession during the twentieth century. This article describes the ongoing construction of a historical geographic information systems (GIS) transportation database designed to provide new insights into the impact of the transportation and communications revolution in the continental United States by providing evidence on the spatial dimensions of those changes over time. It also reviews some preliminary findings and reinterpretations based upon these data.
72 citations
TL;DR: This paper examined the role of creditor protection in the development of the U.K. corporate bond market and found that law does not explain the variation in the size of this market over time.
Abstract: This article examines the role of creditor protection in the development of the U.K. corporate bond market. This market grew rapidly in the late nineteenth century, but in the twentieth century it experienced a reversal, albeit with a short-lived post-1945 renaissance. Such was the extent of the reversal that the market from the 1970s onwards was smaller than it had been in 1870. We find that law does not explain the variation in the size of this market over time. Alternatively, our evidence suggests that inflation and taxation policies were major drivers of this market in the post-1945 era.
52 citations
TL;DR: In this article, the authors present new evidence on inequality in Latin America for the nineteenth century and study the effects of factor endowments and trade on inequality, finding that inequality varied substantially throughout the century and across the region.
Abstract: Using a new data set, this article presents new evidence on inequality in Latin America for the nineteenth century and studies the effects of factor endowments and trade on inequality. Recent research has highlighted the link between the colonial origins of inequality and its persistence in Latin America. We find that inequality varied substantially throughout the century and across the region. We identify the impact of changing factor endowments and trade on inequality using a simple theoretical framework. This work suggests that the role of initial colonial origins has been overemphasized as important changes took place during postcolonial times.
51 citations
TL;DR: The authors report estimates of the fiscal multiplier for interwar Britain based on quarterly data, time-series econometrics, and defense news and find that the government expenditure multiplier was in the range 0.3 to 0.8, much lower than previous estimates.
Abstract: We report estimates of the fiscal multiplier for interwar Britain based on quarterly data, time-series econometrics, and ‘defense news’. We find that the government expenditure multiplier was in the range 0.3 to 0.8, much lower than previous estimates. The scope for a
Keynesian solution to recession was less than is generally supposed. We find that rearmament gave a smaller boost to real GDP than previously claimed. Rearmament may,
however, have had a larger impact than a temporary public works program of similar magnitude if private investment anticipated the need to add capacity to cope with future defense spending.
49 citations
TL;DR: This article analyzed the VOC's business operations and financial policy and showed that its novel corporate form owed less to foresight than to piecemeal engineering to remedy design flaws, and the crucial feature of managerial limited liability was not integral to that design, but emerged only after protracted experiments with various solutions to the company's financial bottlenecks.
Abstract: With their legal personhood, permanent capital, transferable shares, separation of ownership and management, and limited liability, the Dutch and English colonial trading companies VOC and EIC are considered institutional breakthroughs. We analyze the VOC's business operations and financial policy and show that its novel corporate form owed less to foresight than to piecemeal engineering to remedy design flaws. The crucial feature of managerial limited liability was not, as previously thought, integral to that design, but emerged only after protracted experiments with various solutions to the company's financial bottlenecks. Legal form followed economic function, not the other way around.
49 citations
TL;DR: The authors reviewed four recent attempts at estimating agricultural output and food availability in England and Wales at different points between the Middle Ages and the Industrial Revolution and proposed a tentative, compromise estimate of food availability.
Abstract: Carefully constructed but fallible historical estimates of GDP and agricultural output inform our understanding of the preindustrial origins of economic growth. Here we review four recent attempts at estimating agricultural output and food availability in England and Wales at different points between the Middle Ages and the Industrial Revolution. We highlight their contrasting implications for trends in well-being and nutritional status over time. Building on these estimates, we propose our own tentative, compromise estimate of food availability. The compromise estimates are more coherent with our understanding of conditions before and during the Industrial Revolution.
41 citations
TL;DR: In this paper, a county-level panel data from the Southeast United States was used to estimate the relationship between the TVA and malaria, and they found that the net effect of TVA was to increase malaria rates following its construction.
Abstract: The TVA has been applauded for its anti-malaria programs in the Southeast during the 1930s and 1940s. However, the TVA developed their anti-malaria programs because they created lakes suitable for mosquito breeding. To estimate the relationship between the TVA and malaria, I construct a county-level panel data from the Southeast United States. I find that the net effect of the TVA was to increase malaria rates following its construction. Using statistical life value estimates, I find that the hidden malaria cost of the TVA offset 24 percent of the fiscal stimulus multiplier generated by the TVA.
40 citations
TL;DR: In this article, a new series of prices and wages stretching back to 1827 for the provinces of the Habsburg Empire were analyzed and they showed that while the living standards stagnated throughout the monarchy prior to 1850s, the West (unlike the East) was able to launch onto a path of continuous growth in the second half of the century.
Abstract: This article analyses a new series of prices and wages stretching back to 1827 for the provinces of the Habsburg Empire. These real wage series are the first continuous and consistent indicator of changing living standards in this part of Europe during industrialization. They show that while the living standards stagnated throughout the monarchy prior to 1850s, the West (unlike the East) was able to launch onto a path of continuous growth in the second half of the century. The empire experienced little convergence onto the living standards of its neighbors and even internally the convergence record is mixed.
40 citations
TL;DR: De Piles as discussed by the authors decomposed 58 famous artists and decomposed their styles into the areas of composition, drawing, color, and expression, then rated each artist on a 20-point scale in each of these categories and published his findings in his 1708 work, Cours de Peinture par Principes in a table known as the "balance des Peintres."
Abstract: oger de Piles (1635-1709) was a French art critic who ventured beyond the normal realm of his profession. Specifically, De Piles chose 58 famous artists and decomposed their styles into the areas of composition, drawing, color, and expression. He then rated each artist on a 20-point scale in each of these categories and published his findings in his 1708 work, Cours de Peinture par Principes in a table known as the "Balance des Peintres." De Piles' decomposition of the overall quality of an artist into four properties was revolutionary and ambitious at the time and, 300 years later, remains a controversial but extraordinary endeavor. His ratings, combined with historical price records, allow us to confront an art critic's taste with the public judgment of the same artists. Most of the 58 artists chosen by De Piles for his rankings were famous then and have remained important to this day. Furthermore, his higher rated artists achieved higher critical acclaim, and the price of their paintings increased more over time. Our estimates indicate that even in the earliest time period for which we have prices, the artists he favored commanded higher prices. Painting it seems is a superstar market—demand for the paintings of the most popular artists is ever increasing relative to those of other artists.
37 citations
TL;DR: This article analyzed 467 British companies over the period 1895 to 1904 and found that the election of a new tech director is associated with a 2 percent to 2.5 percent increase in that firm's share price, whereas old tech firms were unaffected by the electoral fortunes of their directors.
Abstract: The late Victorian era was characterized by close links between politicians and firms in the United Kingdom, with up to half of all members of Parliament serving as company directors. We analyze 467 British companies over the period 1895 to 1904. An analysis of election results shows that the election of a new tech director is associated with a 2 percent to 2.5 percent increase in that firm's share price, whereas old tech firms were unaffected by the electoral fortunes of their directors. New technology firms with political directors were more likely to undertake seasoned issues of both equity and debt.
TL;DR: Most American financial crises of the postbellum gold standard era were caused by fluctuations in the cotton harvest due to exogenous factors such as weather as mentioned in this paper, which depressed export revenues and reduced international demand for American assets, which depressed American stock prices, drained deposits from money center banks and precipitated a business cycle downturn.
Abstract: Most American financial crises of the postbellum gold standard era were caused by fluctuations in the cotton harvest due to exogenous factors such as weather. The transmission channel ran through export revenues and financial markets under the pre-1914 monetary regime. A poor cotton harvest depressed export revenues and reduced international demand for American assets, which depressed American stock prices, drained deposits from money center banks and precipitated a business cycle downturn—conditions that bred financial crises. The crises caused by cotton harvests could have been prevented by an American central bank, even under gold standard constraints.
TL;DR: Secondary markets for public debt in Europe's most advanced pre-industrial markets, Britain and the Dutch Republic, differed markedly as discussed by the authors They were liquid in Britain, but not in the Republic This article demonstrates that economic geography determined the shape of primary markets and the secondary markets that were based on them.
Abstract: Secondary markets for public debt in Europe's most advanced preindustrial markets, Britain and the Dutch Republic, differed markedly They were liquid in Britain, but not in the Republic This article demonstrates that economic geography determined the shape of primary markets and the secondary markets that were based on them Configuring financial markets in preindustrial Europe was thus not a uniform process leading to one ideal-type market structure The development of markets with advanced financial institutions did not naturally produce liquid markets While financial markets in preindustrial Europe were rooted in local circumstances, they functioned well while adapting to them
TL;DR: The British hegemony in the Indian Ocean, which ended an eighteenth-century arms race, accounted for the rest by allowing the substitution of smaller ships which cost less to build and required fewer men per ton as discussed by the authors.
Abstract: Shipping costs between Europe and Asia were reduced by two-thirds between the 1770s and the 1820s. Copper sheathing and other technical improvements which allowed ships to make more frequent voyages over longer lifetimes accounted for part of the cost reduction. British hegemony in the Indian Ocean, which ended an eighteenth-century arms race, accounted for the rest by allowing the substitution of smaller ships which cost less to build and required fewer men per ton. These changes were at least as important as the elimination of monopoly profits in narrowing intercontinental price differentials during the early nineteenth century.
TL;DR: The authors found that free American colonists had much more equal incomes than did households in England and Wales, and the colonists had greater purchasing power than their English counterparts over all of the income ranks except in the top percent.
Abstract: Building social tables in the tradition of Gregory King, we develop new estimates suggesting that between 1774 and 1800 American incomes fell in real per capita terms. The colonial South was richer than the North at the start, but was already beginning to lose its income lead by 1800. We also find that free American colonists had much more equal incomes than did households in England and Wales. The colonists had greater purchasing power than their English counterparts over all of the income ranks except in the top percent.
TL;DR: The authors analyzes the stability of bimetallism for countries operating in integrated bullion markets that enact different legal ratios and finds that Amsterdam was effectively on the bimetallic standard, whereas London was on a de facto gold standard.
Abstract: This article analyzes the stability of bimetallism for countries operating in integrated bullion markets that enact different legal ratios. I articulate a new theoretical framework to demonstrate that two countries can both be bimetallic only if they coordinate their legal ratios. The theoretical framework is applied to the mid-eighteenth century when London's legal ratio was 3.8 percent higher than that of Amsterdam. I find that Amsterdam was effectively on the bimetallic standard, whereas London was on a de facto gold standard.
TL;DR: The authors argue that the Seven Years' War provided incentives for the Crown to centralize and elites to comply by accentuating the free rider problems inherent in the provision of military defense under fiscal fragmentation.
Abstract: The success of fiscal centralization and military buildup in colonial Mexico contrasts with failed similar attempts elsewhere. Why did powerful elites comply with fiscal-military reforms in eighteenth-century Mexico? I argue that the Seven Years' War provided incentives for the Crown to centralize and elites to comply by accentuating the free rider problems inherent in the provision of military defense under fiscal fragmentation. Fiscal data and history document that reforms were more successful in regions more militarily vulnerable and where benefits were more aligned between the elites and the Crown. Centralization served the elites to commit to collective cooperation.
TL;DR: In this paper, the authors presented new estimates of total factor productivity (TFP) for railways from 1874 to 1912, which highlight the strong performance of this key industrial sector.
Abstract: Railways were integral to the development of the Indian economy before World War I. This article presents new estimates of total factor productivity (TFP) for railways from 1874 to 1912, which highlight the strong performance of this key industrial sector. Railway-industry TFP growth was substantial averaging 2.3 percent per year and generating a 2.7 percent social savings for the Indian economy. A combination of factors contributed to TFP growth including greater capacity utilization, technological change, and improvements in organization and governance. Railways had higher TFP growth than most sectors in India and compared favorably with TFP growth in other countries.
TL;DR: In early public land privatization, governments in New South Wales and Buenos Aires provided for de jure transfer of public lands as mentioned in this paper, and the government lost control; squatters rushed out unlawfully and seized de facto frontier claims.
Abstract: In early public land privatization, governments in New South Wales and Buenos Aires provided for de jure transfer of public lands. In New South Wales the government lost control; squatters rushed out unlawfully and seized de facto frontier claims. But in Buenos Aires privatization was accomplished by de jure transfers. Why did British settlers reject de jure transfers from a government, most able to secure property rights and rule of law, while settlers of the pampa frontier, where property-rights security was doubtful, complied with de jure transfers? We find that the revenue objective and violence on the frontier explain this puzzle.
TL;DR: This paper showed that investing in the "New World" did not yield higher returns than investing in Europe and that the "European preference" of the Paris Bourse and by extension of French investors was not inefficient.
Abstract: The geographical distributions of French and British foreign investment portfolios differ markedly before World War I. Did French portfolios favor European investments just as British portfolios favored “New World” assets? Should economic rationality have encouraged investors to invest widely in the “New World” rather than in Europe? Combining Modern Portfolio Theory and a new data set comprising assets listed on the Paris and London Stock Exchanges, we show that investing in the “New World” did not yield higher returns than investing in Europe. The “European preference” of the Paris Bourse and, by extension, of French investors was not inefficient.
TL;DR: In this paper, an extension of Mancur Olson's model of stationary and roving bandits is presented to show how economic development can be affected in different ways by different types of dictators.
Abstract: The dictatorial Dominion of New England (1686–1689) saw the rise and fall of the first operational bank scheme in America. Both events resulted from the appointed rulers’ attempts to personally profit from real estate, subject to an absolutist constitution imposed by England. The first, local ruler led a nominally private land bank. The subsequent, foreign ruler invalidated all land titles and thus killed the bank. This unusual case study exemplifies an extension of Mancur Olson’s model of stationary and roving bandits, and demonstrates how economic development can be affected in different ways by different types of dictators. The relation between the form of government and economic development is a key concern for economists. Absolutism can affect the economy for better or worse through many channels. Most importantly, it can discourage private investment because of its disrespect of property rights (North and Weingast 1989), but it can encourage public investment because the dictator can expropriate the required initial funds and later the returns (Greif 1994). This potential for extreme influences is perhaps behind a new empirical conventional wisdom: dictatorships are more likely than democracies to be either economic miracles or disasters (Sah 1991; Przeworski et al. 2000; Almeida and Ferreira 2002; Haber 2006; Wintrobe 2007; Besley and Kudamatsu 2008). The puzzle is what determines the dictators’ economic policies. Why is it that some are good and some are bad? The leading theoretical idea is Olson’s (1993, 2000) model of stationary and roving bandits. The bandits solve different maximization problems due to different time horizons. A bandit who keeps roving between communities that he victimizes has an incentive to take immediately all he can, whereas a bandit who stays in one community and declares himself king has an incentive to maintain the local productive capacity and tax it on a moderate, regular basis for the long run. Olson’s idea has drawn criticism because in reality there have been many long-term predatory dictators. One reason is that some of these were ideological, totalitarian dictators who maximized power rather than income (Wintrobe 1998). Predation could also be collateral damage which is incident to the dictators’ never-ending efforts to prevent coups (Haber 2006). For example, to crush opponents, the dictator could confiscate their property, thereby incidentally diminishing private property rights in general. Econometric tests of Olson face additional problems. Comparisons between dictators are difficult because they are located on different points on the spectrum between totalitarianism and democracy. Sovereign dictators choose their locations on this spectrum. They might choose a transition to democracy and leave our sample of dictators. There is an endogeneity problem because the economic situation can be critical in making such decisions (Geddes 2007). The birth of a child can turn a roving bandit into a stationary (dynastic) one.
TL;DR: The authors examined the linkages established between the cotton industries in Egypt and Western Anatolia, and the international cotton market during the first wave of globalization, connecting changes in the nature of spatial market integration to major economic and political developments.
Abstract: The Near East underwent a process of integration with the global economy during the second half of the nineteenth century This article explores one aspect of this process, examining the linkages established between the cotton industries in Egypt and Western Anatolia, and the international cotton market during the first wave of globalization We undertake a quantitative exploration of the pattern of price transmission between the Near East and the international cotton markets over this period, connecting changes in the nature of spatial market integration to major economic and political developments
TL;DR: The authors analyzed the impact of employment institutions on Japanese-, British-, and Chinese-owned textile firms in China during the 1920s and 1930s and found that despite Britain's domestic position as a world productivity leader, Japanese firms enjoyed a 70 percent productivity advantage over both British and Chinese competitors.
Abstract: This article analyzes the impact of employment institutions on Japanese-, British-, and Chinese-owned textile firms in China during the 1920s and 1930s. Despite Britain's domestic position as a world productivity leader, Japanese firms enjoyed a 70 percent productivity advantage over both British and Chinese competitors. The divergent performance of Japanese and British investments in China is explained by differences in management practice. Japanese firms had domestic experience with employment institutions similar to China's and applied labor management strategies that functioned well under these institutions. British firms lacked the institutional experience necessary to adapt management strategies to Chinese institutions.
TL;DR: This article found that communities with high densities of public housing had lower median family income, lower median property values, lower population density, and a higher percentage of families with low income in 1970.
Abstract: Between 1933 and 1973 the federal government funded the construction of over 1 million units of low-rent housing. Using county-level data, I find that communities with high densities of public housing had lower median family income, lower median property values, lower population density, and a higher percentage of families with low income in 1970. However, I find no negative effects of public housing in 1950 or 1960, implying that long-run negative effects only became apparent in the 1960s. The effects found in 1970 are partially due to a decline in human capital.
TL;DR: In this paper, the authors construct a new data set covering delegate votes on over 600 substantive roll calls, and use the data in several ways, including estimating a single dimensional position for the delegates which reflects their overall voting patterns.
Abstract: Previous studies of the U.S. Constitutional Convention have relied on votes recorded for the state blocs or a relatively small number of delegate votes. We construct a new data set covering delegate votes on over 600 substantive roll calls, and use the data in several ways. First, we estimate a single dimensional position for the delegates which reflects their overall voting patterns. Next, we explain these positions using a variety of delegate and constituent variables. Finally, we suggest a method for identifying state and floor medians, which can be used to predict equilibrium outcomes at the Convention.
TL;DR: In this article, a theoretical model explains the need to offer positive incentives to slaves working in occupations characterized by a high degree of asymmetric information, and the results show that slaves with high asymmetric tasks had higher chances of manumission.
Abstract: This article shows how asymmetric information shaped slavery by determining the likelihood of manumission. A theoretical model explains the need to offer positive incentives to slaves working in occupations characterized by a high degree of asymmetric information. As a result, masters freed (and, more generally, rewarded) slaves who performed well. The model's implications are then tested against the available evidence: both in Rome and in the Atlantic world, slaves with high asymmetric information tasks had greater chances of manumission. The analysis also sheds light on the master's choices of carrots versus sticks and of labor versus slavery.
TL;DR: This article found no evidence to support the hypothesis that adverse selection lowered the price of resold slaves, and showed that buyers anticipated such adverse selection and reduced their bids for these slaves, thus, they should observe lower prices for re-sold slaves.
Abstract: When imported slaves were first sold in New Orleans, buyers were unaware of the slaves’ unobservable characteristics. In time, the new owners learned more about their slaves and may have resold the “lemons.” Previous research suggests that buyers anticipated such adverse selection and reduced their bids for these slaves. Consequently, we should observe lower prices for resold slaves. We test this proposition by linking the sequential sales records of 568 slaves. Through a comparison of initial and resale prices, we find little evidence to support the hypothesis that adverse selection lowered the price of resold slaves.
TL;DR: The authors used contemporary reports and a simulation model to show that investors expected the first transcontinental railroad to be profitable and that the railroad created political conflicts in Congress between the North and South.
Abstract: Construction of the first transcontinental railroad, financed with large federal subsidies, is an important event in American history. Were the subsidies necessary to induce private investment in the railroad? The ex-ante investment decision examined uses contemporary reports and a simulation model to show that investors expected the railroad to be profitable. Evidence also shows that the railroad created political conflicts in Congress between the North and South. The secession removed the South as a disputant in Congress, reducing short-term political conflict but not long-term conflict. Subsidies reduced political risk, rather than transport market failure, and encouraged private investment.
TL;DR: Bancroft et al. as mentioned in this paper analyzed all slave manifests stored at the National Archives and found that traders were responsible for approximately 55 percent of slaves who migrated from Atlantic to Gulf coast ports.
Abstract: We analyze all slave manifests housed at the National Archives—some 24,400 documents involving approximately 135,000 slaves who were transported in the coastwise trade from 1810 to 1861. The manifests list the name of the owner or shipper, which allows us to match names with traders found in other sources. We also utilize demographic characteristics of the manifests to estimate the probability that a trader organized the shipment. Commercial transactions increased over the antebellum period, and on average were responsible for approximately 55 percent of slaves who migrated from Atlantic to Gulf coast ports.
“No one has ever suggested a method for finding what proportion of the slaves transported from one state to another were taken by their original masters or their heirs for their own use.”Bancroft 1931, p. 397