nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2007‒05‒12
twelve papers chosen by
Bernardo Batiz-Lazo
University of Leicester

  1. The Continental Dollar: How Much Was Issued and What Happened to It? By Farley Grubb
  2. Quis custodiet quem? Sovereign Debt and Bondholders' Protection Before 1914 By Rui Pedro Esteves
  3. The McKenna Rule and UK World War I Finance By James M Nason; Shaun P Vahey
  4. A.-R.-J. Turgot on a General Market: Competition, Price and History By José M. Menudo
  5. ‘Turnaround’ of Indian Railways: Increasing the Axle Loading By Raghuram G.; Shukla Niraja
  6. The spread of Keynesian economics : a comparison of the Belgian and Italian experiences By Ivo Maes
  7. Green Revolution And After: The 'North Arcot Papers' And Long Term Studies Of The Political Economy Of Rural Development in South India By Barbara Harriss-White and John Harriss
  8. The Neoliberal Myth in Latin America: The Cases of Mexico and Argentina in the ‘90s By Veronica Ronchi
  9. A "Bioeconomic" View of the Neolithic and Recent Demographic Transitions By Arthur J. Robson
  10. Islamization of Knowledge in Economics: Issues and Agenda By Hasan, Zubair
  11. The Introduction of the Reserve Clause in Major League Baseball: Evidence of its Impact on Select Player Salaries During the 1880s By Jennifer K. Ashcraft; Craig A. Depken, II
  12. Populism and Neopopulism in Latin America: Clientelism, Trade Union Organisation and Electoral Support in Mexico and Argentina in the ‘90s By Veronica Ronchi

  1. By: Farley Grubb (Department of Economics,University of Delaware)
    Abstract: The U.S. Congress issued paper money called Continental Dollars to finance the American Revolution. The story of the Continental Dollar is familiar to all - excessive amounts were issued causing hyper-inflation. It became worthless and was forgotten. However, the details of this story, including its veracity, are less well known. Scholars even disagree over how much was issued. Evidence is gathered to establish the exact amount and time path of Continental Dollars emitted and then remitted to the U.S. Treasury and burned. Why some Dollars were hoarded rather than trashed between 1779 and 1790 is also documented.
    Keywords: Monetary Policy, Economic History
  2. By: Rui Pedro Esteves
    Abstract: The half-century before World War I has been characterized as the first age of financial globalization. This paper focuses on the role and significance of the bondholders` organizations for the governance of this market. I argue that the outcome of these institutions depended on two dimensions: the institutional variation that characterized these organizations and their strategic interaction. These aspects are addressed using a model of sovereign debt with constant renegotiation. An original data set with information on the settlement of defaulted debts in the period 1870-1913 is used to test the implications of the model. Empirical results support the premise that the quality of bondholders` representation matters for the terms of settlement and the costs of renegotiation. Renegotiation-friendly but not debtor-friendly organizations yielded the best ex post results for their members. The representation of bondholders` interests by the issue banks on the other hand, produced inferior outcomes.
    Keywords: Sovereign defaults, Bondholders' organizations, Pre-1913
    JEL: F34 G15 N10 N20
    Date: 2007
  3. By: James M Nason; Shaun P Vahey (Reserve Bank of New Zealand)
    Abstract: This paper argues that UK WWI fiscal policy followed the ‘English method’ identified by Sprague (1917) and his discussants, and revived by the US to finance the Korean War (see Ohanian 1997). During WWI, UK fiscal policy adopted the “McKenna rule” named for Reginald McKenna, Chancellor of the Exchequer (1915-16). McKenna presented his fiscal rule to Parliament in June 1915. The McKenna rule guided UK fiscal policy for the rest of WWI and the interwar period. We draw on narrative evidence to show that motivation for the McKenna rule came from a desire to treat labour and capital fairly and equitably, not pass WWI costs onto future generations, and commit to a debt retirement path and higher taxes. However, a permanent income model suggests the McKenna rule adversely affected the UK because a higher debt retirement rate produces a lower consumption-output ratio. Data from 1916-37 supports this prediction.
    JEL: E6 N4
    Date: 2007–04
  4. By: José M. Menudo (Department of Economics, Universidad Pablo de Olavide)
    Abstract: The purpose of this paper is to re-examine the notion of price determination in A.-R.-J. Turgot’s writings. Consideration is given to the evolution of the concept of market during the 18th century. It is argued that Turgot provided a model of multiple exchanges with merchants, called General market, in order to tackle economic problems, as is the market integration, price stability and the hoarding of capital. Further, we demonstrate how a uniform price, which is kept constantly, required that Turgot made use of theoretical tools from other disciplines.
    Keywords: Turgot, Equilibrium and Disequilibrium, price formation, Information and Knowledge.
    JEL: B1 D50 L11 B41 D83
    Date: 2007–05
  5. By: Raghuram G.; Shukla Niraja
    Abstract: Axle loading had contributed significantly to the ‘turnaround’ of the Indian Railways (IR) in the two years 2004-06. As the Minister of Railways (MR) stated, “A one ton extra loading per wagon implied additional revenue of Rs 500 crore per annum for IR.” The axle loading initiative was a significant step by IR, though sustainability was a concern. This paper focuses on the key driving events, process issues, impact and implications, and sustainability of the initiative of taking the load per wagon from its carrying capacity (CC) to CC+8. Axle loading for a wagon had traditionally been 20.32 tons, except for the mainline versions of steam locomotives. In the early 1980s, the then Chairman of the Railway Board took initiative of increasing axle loading on an experimental basis which after his tenure, could not be sustained on the grounds of safety. In the late 90s, there were initiatives of regularizing the two ton slack normally permitted for excess loading for certain commodities which were usually on a short haul. The railway minister, during inspections in 2004, noticed significant overloading of many wagons in the iron ore and coal routes. This set him thinking on the axle loading initiative. When one of the Zonal Railways (ZR) proposed an increase of up to ten tons per four axled wagon, various directorates in the Railway Board (RB) gave their views, many of which opposed the initiative. The minister, through the RB, directed a variety of processes to bring about inter-departmental alignment, and the initiative was taken forward in a step by step manner over the two years over a large part of IR. The safety and research institutions of IR also had to be taken along. The initiative is still treated as an ‘experiment,’ with many issues that need resolution and strategizing.
    Date: 2007–05–07
  6. By: Ivo Maes (National Bank of Belgium, Research Department)
    Abstract: Keynesian economics dominated economic thought and macroeconomic policy-making in the 1950s and 1960s. However, the diffusion of Keynesian economics has been uneven. In this paper, we compare the spread of Keynesian economics in two continental European countries: Belgium and Italy. We focus on the post-World War II period, taking as the main message of Keynesian economics that the market is inherently unstable and that the government has a key role in economic life in steering effective demand. We further follow Coddington's distinction between "hydraulic", "disequilibrium" and "fundamentalist" Keynesianism. The study shows that Belgium and Italy were two countries were Keynesian economics gained ground only relatively late. The breakthrough of (hydraulic) Keynesianism came in areas which were close to the policy-making process: setting up national income accounts, the construction of macroeconomic models and correcting regional imbalances. The main difference between the two countries was the strong position of fundamentalist Keynesianism in the academic world in Italy, while in Belgium, disequilibrium Keynesianism was more influential.
    Keywords: Keynesian economics, Belgium, Italy, macroeconomic policy-making
    JEL: B22 E60
    Date: 2007–05
  7. By: Barbara Harriss-White and John Harriss
    Abstract: This working paper has two objectives. The first is to summarise the results of rounds of research from 1973 onwards on the green revolution in South India. It provides background both to the research reported in Harriss-White, Janakarajan et al, 2004, 'Rural India facing the 21st century' (London, Anthem) and to several research projects currently being conducted by masters and doctoral students in QEH. The second objective is to reflect on the achievements and problems of those long term villages studies which are not based on panel data - at a time when village studies have been neglected and are being revived once more.
  8. By: Veronica Ronchi (Università degli Studi di Milano)
    Abstract: During the ‘90s most Latin American countries were submitted to neoliberal structural reform policies. Neoliberal policies imposed market supremacy, reduced the State’s role in the economy and deregulated the markets. This paper aims at describing how these policies affected the most important macroeconomic indexes, with special emphasis on Argentina and Mexico, the two countries that suffered most from the economic crises of the ‘80s and ‘90s, and where the neoliberal policies were applied with greater orthodoxy. In spite of a slight improvement in some macroeconomic indexes, in Latin America neoliberalism failed to reduce poverty and unemployment, and was unable to guarantee a fair distribution of the wealth and improve welfare.
    Keywords: Latin America, Mexico, Argentina, ’90s, Neoliberalism
    JEL: E21 E22 E24 E26 N16 N26 N36 O16
    Date: 2007–04
  9. By: Arthur J. Robson (Simon Fraser University)
    Abstract: The demographic transitions here are associated with: 1) The shift from hunting and gathering to agriculture. 2) The industrial revolution. There are puzzles associated with both of these. In the neolithic transition to agriculture, humans became less well-fed, smaller, more prone to disease and lived shorter lives. Why then was this new system chosen? During the second, or “recent,” transition, fertility fell markedly, despite an overall rise in income. Why did individuals not use the extra income to produce more offspring? The present paper develops simple models of choice of the quality and quantity of children, as would have been generated by human evolution, reproducing the key phenomena in these two transitions.
    Date: 2007
  10. By: Hasan, Zubair
    Abstract: This paper discusses three issues - worldview differences, revelation-reason relationship, and the question of methodology - important for Islamizing knowledge in the field of economics and presents also the outlines of an agenda for action. Western worldview separates the mundane from the spiritual aspect of human existence while Islam keeps the two unified. This makes the goals, scope, and principles of secular economics in many ways different from those of Islam in the area Reason alone is the basis of theoretical formulations in secular economics. Islam too encourages people to use intellect for analyzing observations and draw inferences to discover the truth but within the confines of the Sha’riah : reason is not allowed to violate revelation.Evidently, procedures priorities, and prescriptions, can rarely be the same in the Islamic as in secular economics. Methodology of secular economics essentially is a posterior development. It has invariably sought to rationalize what economists have actually been doing over the centuries so as to fortify the evolving doctrine of free enterprize.In contrast, for Islamic economics the doctrine was already contained in the revelation. To discover- not to invent-has been and remains the task of methodology in Islamic economics. Unlike the secular dispensation, the glide here is from methodology to economics, not vice versa. Agenda outlines focus on considerations in preparing reading materials , and in developing curricula
    Keywords: World view Reason versus revelation doctrine teaching economics
    JEL: A2 A20
    Date: 2007
  11. By: Jennifer K. Ashcraft (Burlington Northern-Santa Fe Railway Company); Craig A. Depken, II (Department of Economics, University of Texas at Arlington)
    Abstract: This paper investigates the introduction of the reserve clause in Major League Baseball during the 1880s. Taking advantage of a unique data set describing the salaries for twenty nine high-quality players throughout the decade of the 1880s, we investigate the impact of the reserve clause as it evolved from a "gentleman's agreement" to a formal contract stipulation. We test three specific hypotheses concerning the reserve clause: its effect on average salaries, on the remuneration to marginal product, and the premium paid to a player for changing teams. The evidence suggests that introducing the reserve clause reduced average salaries and the premium for changing teams; detectable monopsony power was transferred to team owners almost immediately. However, there was no statistically significant impact of the reserve clause on how much players were paid for their marginal product. The empirical results indicate that reserve clause shifted considerable monopsony power to team owners immediately after it was instituted.
    Keywords: Sports economics, monopsony, free agency, negotiation
    JEL: J31 J42 L83
    Date: 2007–04
  12. By: Veronica Ronchi (Università degli Studi di Milano)
    Abstract: The state of anomie that has characterised and still characterises most Latin American countries, resulting from the fragmentation of the social fabric, has encouraged the rise of successful personalist leaderships in the ‘90s. This paper aims at investigating how neopopulism developed in Latin America, considering as main actors the two Presidents who have best embodied this ideal: Carlos Salinas de Gortari, (Mexico 1988-1994) and Carlos Menem (Argentina 1989-1999). Neopopulism is based on an economic project, the neoliberal policy based on cuts in the welfare, which seems very far from the populist positions of the past. Populism revives through the charisma of these Presidents, bypassing institutional or organisational forms of mediation between the leader and the masses. The development of selected social policies has gained strong political support from the lower classes, including extensive institutional reforms.
    Keywords: Latin America, Mexico, Argentina, ’90s, Populism, Neopopulism
    JEL: I38 J88 N16 N26 N36 N46
    Date: 2007–04

This nep-his issue is ©2007 by Bernardo Batiz-Lazo. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.