New Economics Papers
on Business, Economic and Financial History
Issue of 2008‒10‒28
fourteen papers chosen by

  1. Paul Krugman: Trade and Geography - Economies of Scale, Differentiated Products and Transport Costs By Committee, Nobel Prize
  2. Shifting Patterns in Marks and Registration: France, the United States and United Kingdom, 1870-1970 By Paul Duguid; Teresa da Silva Lopes; John Mercer
  3. Poor, Hungry and Stupid: Numeracy and the Impact of High Food Prices in Industrializing Britain, 1780-1850 By Jörg Baten; Dorothee Crayen; Joachim Voth
  4. The Three Horsemen of Growth: Plague, War and Urbanization in Early Modern Europe By Nico Voigtländer; Joachim Voth
  5. Hanseatic commerce in textiles from the Low Countries and England during the Later Middle Ages: changing trends in textiles, markets, prices, and values, 1290 - 1570 By Munro, John H.
  6. Labour-Intensive Industrialisation in Indonesia, 1930-1975: Output Trends and Government Policies By Pierre van der Eng
  7. Imperialism, Colonialism and Collaboration in the Social Sciences By Ruttan, Vernon W.
  8. The Limited Partnership in New York, 1822-1853: Partnerships without Kinship By Eric Hilt; Katharine E. O'Banion
  9. The Feudal Society in Today's University By Houck, James P.
  10. Why is Nation Building So Bloody? Two Cases By Ruttan, Vernon W.
  11. Can a Lender of Last Resort Stabilize Financial Markets? Lessons from the Founding of the Fed By Asaf Bernstein; Eric Hughson; Marc D. Weidenmier
  12. Revolutionary Situation, Early Socialism and the Logic Of History in Russia By Dimitrios S. Patelis
  13. A la recherche d'une théorie de la firme pertinente historiquement - Retour sur le cas d'intégration verticale General Motors - Fisher Body (1926) By Michael Dietrich; Jackie Krafft
  14. Rural Finance and Farmers' Indebtedness: A Study of Two Punjabs By Singh, Lakhwinder

  1. By: Committee, Nobel Prize (Nobel Prize Committee)
    Abstract: Scientific Background, The Nobel Prize in Economic Sciences 2008. Over the centuries, international trade and the location of economic activity have been at the forefront of economic thought. Even today, free trade, globalization, and urbanization remain as commonplace topics in the popular debate as well as in scholarly analyses. Traditionally, trade theory and economic geography evolved as separate subfields of economics. More recently, however, they have converged become more and more united through new theoretical insights, which emphasize that the same basic forces simultaneously determine specialization across countries for a given international distribution of factors of production (trade theory) and the long-run location of those factors across countries (economic geography).
    Keywords: Trade; Geography;
    JEL: F10
    Date: 2008–10–13
  2. By: Paul Duguid; Teresa da Silva Lopes; John Mercer
    Abstract: This paper looks at trademarks and brands, beyond the conventional interests of marketing and law, as a way to explaining the evolution of international business and economies in general. It shows that the perspective defended by many scholars such as Chandler (1990), Wilkins (1991, 1994) and Koehn’ (2001), about the Anglo-Saxon countries, and in particular the United States, leading the transition to modern trade-marks is narrow in its focus. Instead of the United States standing out as historically on the leading edge of innovation in the law and practice of trade marking, it appears from several directions to have been on the trailing edge. France and Britain have a more enduring interest in trademarking. The paper also looks at one particular subset of trade mark registration data – non durable consumer goods. These, and in particular food, are the dominant sectors in the three countries in terms of trademarking, reflecting the character of the sectors where imagery associated with the products is so central in competition. The paper relies on original data from three countries, France, the United Kingdom and the United States, in particular trade mark registrations, and the analysis spans for a period of one hundred years period 1870-1970.
    Keywords: trade marks, brands, international business history, intellectual property rights, trademark law
    JEL: F14 F31
    Date: 2008–09
  3. By: Jörg Baten; Dorothee Crayen; Joachim Voth
    Abstract: This paper argues that low levels of nutrition impaired cognitive development in industrializing England, and that welfare transfers mitigated the adverse effects of high food prices. Age heaping is used as an indicator of numeracy, as derived from census data. For the cohorts from 1780-1850, we analyse the effect of high grain prices during the Napoleonic Wars. We show that numeracy declined markedly for those born during the war years, especially when wheat was dear. Crucially, where the Old Poor Law provided for generous relief payments, the adverse impact of high prices for foodstuffs was mitigated. Finally, we show some tentative evidence that Englishmen born in areas with low income support selected into occupations with lower cognitive requirements.
    Keywords: Nutrition, cognitive development, labor market outcomes, Napoleonic wars, IQ
    JEL: O12 N93 J62
    Date: 2007–10
  4. By: Nico Voigtländer; Joachim Voth
    Abstract: How did Europe overtake China? We construct a simple Malthusian model with two sectors, and use it to explain how European per capita incomes and urbanization rates could surge ahead of Chinese ones. That living standards could exceed subsistence levels at all in a Malthusian setting should be surprising. Rising fertility and falling mortality ought to have reversed any gains. We show that productivity growth in Europe can only explain a small fraction of rising living standards. Population dynamics – changes of the birth and death schedules – were far more important drivers of the longrun Malthusian equilibrium. The Black Death raised wages substantially, creating important knock-on effects. Because of Engel’s Law, demand for urban products increased, raising urban wages and attracting migrants from rural areas. European cities were unhealthy, especially compared to Far Eastern ones. Urbanization pushed up aggregate death rates. This effect was reinforced by more frequent wars (fed by city wealth) and disease spread by trade. Thus, higher wages themselves reduced population pressure. Without technological change, our model can account for the sharp rise in European urbanization as well as permanently higher per capita incomes. We complement our calibration exercise with a detailed analysis of intra-European growth in the early modern period. Using a panel of European states in the period 1300-1700, we show that war frequency can explain a good share of the divergent fortunes within Europe.
    Keywords: Malthus to Solow, Long-run Growth, Great Divergence, Epidemics, Demographic Regime
    JEL: E27 N13 N33 O14 O41
    Date: 2008–08
  5. By: Munro, John H.
    Abstract: This paper analyses the major changes in textile products, production costs, prices, and market orientations during the era when the ‘draperies’ or cloth industries of the late-medieval Low Countries and England had become increasingly dependent upon northern markets and the German Hanseatic League as the major vehicle in marketing their textiles. In several previous articles, I had examined the major factors that had led to the industrial and commercial reorientations of the these cloth industries during the 14th and 15th centuries. In brief, the spreading stain of widespread warfare, piracy, and general insecurity, especially in the Mediterranean basin, from the 1290s (to the 1460s), led to a rise in transport and transaction costs that, in turn, had three major consequences for the Low Countries’ and England’s textile-based economies: (1) to cripple the export-oriented production of the very cheap and light fabrics, most of which had been sent to Mediterranean markets and had comprised the bulk of northern textile shipments to this region; (2) to encourage most draperies in the Low Countries and England to re-orient their export-oriented cloth production more and more towards high-priced ultra-luxury quality woollens, woven almost exclusively from the finer English wools, but wools that came to be burdened with high export taxes; and (3) to force these northern cloth industries, facing increasing difficulties in Mediterranean commerce, to become far more dependent on Hanseatic merchants and German towns for their cloth sales, certainly by the mid-14th century. But in effecting these industrial and commercial orientations, the Low Countries’ draperies encountered a new and even more dangerous challenge from expanding English competition in textiles, which enjoyed the signal advantage of control over high quality wools, which, for the domestic cloth industry, were tax-free and much cheaper. Nevertheless, for reasons outlined in this and earlier papers, the English took well more than a century to achieve final victory in the woollen broadcloth trade, though one that came to be fundamentally based upon German commercial forces, along with other commercial, monetary, and industrial factors outlined in this paper. Obeying the law of comparative advantage, the textile industries of the Low Countries responded to this English victory by once more re-orienting production to cheaper cloths, especially cheap, light worsted-says; but they were able to do so only when structural changes in European markets and trading networks, with falling transaction costs, from the later 15th century, once more favoured the export-oriented production of such cheap textiles. The major contributions of this paper, however, also lie in analysing production, product, cost, and prices changes in textiles, both cheap worsted and luxury woollens, in terms of 15 tables: (1) English wool and broadcloth exports, 1281-1550; (2) Production indices for the woollen cloth industries of the southern Low Countries, 1316-1575; (3) Production indices for the Hondschoote sayetterie and Leiden woollen industry, 1376-1570; (4 - 7) Prices and relative values of Ghent woollens: in terms of values of commodity baskets and a mason’s daily wage: 1331-1570 (no. of days’ wages to buy one cloth); (8) Prices of English woollen cloths at Cambridge and Winchester: and values in terms of a mason’s daily wage; and mean values of English cloth exports in pounds sterling, groot Flemish, and florins; (9) Prices of various Flemish woollen broadcloths, compared to the Flemish composite price index: 1351-1550; (10) Prices of various Brabantine woollen cloths, compared to the Brabant composite price index; and the no. of days’ wages for a master mason to buy one Mechelen broadcloth, 1351-1520; (11) Prices of Hondschoote Says and Ghent Dickedinnen Woollens, in pounds groot Flemish, compared with the purchasing power an Antwerp master mason's daily wages; (12) Purchase prices of Ghent woollens: by rank order of values, 1360-69: in pounds groot Flemish, units of Commodity Baskets of equivalent value, and the number of a master mason’s day’s wages required to purchase each cloth (from the cheapest to highest priced); (13) Dimensions, composition, and weights of selected Flemish and English textiles, 1456-1579; (14) Prices of and taxes on exported English wools (sacks), 1211-1500: (15) Prices of English Wools (48 grades) sold at the Calais Staple, in 1475 and 1499.
    Keywords: Hanseatic League; the Baltic; Russia; the Low Countries; Flanders; England; Calais Staple; woollen cloths; worsteds; says; sayetteries; scarlets; dyestuffs; ships; transaction costs; warfare; monetary policies; inflation; deflation; real wages; export taxes
    JEL: N63 L67 L10 L20 J30 F20 N73 F10 N43
    Date: 2007–12
  6. By: Pierre van der Eng
    Abstract: Growth of industrial output for domestic consumption during 1930-75 was significant, but not continuous; growth (1932-41) was followed by decline (1942-46), recovery (1947-57), stagnation (1958-65) and acceleration (1966-75). Protective trade policies triggered growth in the 1930s, when industry policy favoured a balanced development of capital-intensive large and medium-sized ventures and labour-intensive small firms and firms in light industries. The gist of this policy continued during the late-1940s and 1950s, but industry policies increasingly favoured large, capital-intensive stateowned enterprises. By 1960, policies no longer targeted small ventures and labour-intensive industrialisation. After 1966, economic stabilisation and deregulation rekindled the momentum of industrialisation. Although policy interest in the development of small industrial ventures revived in 1975, large-scale labour-intensive industrialisation did start until the mid-1980s.
    Keywords: Manufacturing industry, Indonesia, industry policy, technological change
    JEL: L50 L60 N65
    Date: 2008
  7. By: Ruttan, Vernon W.
    Abstract: Prior to the middle of the twentieth century the margins that have demarcated the subject matter of the several social sciences had been relatively stable since the latter decades of the nineteenth century. Since mid-century, however, a number of intellectual and institutional developments have conspired to call into question traditional disciplinary boundaries. In this paper I address the role of disciplinary imperialism, colonialism and collaboration in advancing social science knowledge about development processes and in the design of development policy and institutions. I conclude the paper with several case studies of collaboration across disciplines that have advanced knowledge and practice in the field of development.
    Keywords: International Development,
    Date: 2008–02–23
  8. By: Eric Hilt; Katharine E. O'Banion
    Abstract: In 1822, New York became the first common-law state to authorize the formation of limited partnerships, and over the ensuing decades, many other states followed. Most prior research has suggested that these statutes were utilized only rarely, but little is known about their effects. Using newly collected data, this paper analyzes the use of the limited partnership in nineteenth-century New York City. We find that the limited partnership form was adopted by a surprising number of firms, and that limited partnerships had more capital, failed at lower rates, and were less likely to be formed on the basis of kinship ties, compared to ordinary partnerships. The latter differences were not simply due to selection: even though the merchants who invested in limited partnerships were a wealthy and successful elite, their own ordinary partnerships were quite different from their limited partnerships. The results suggest that the limited partnership facilitated investments outside kinship networks, and into the hands of talented young merchants.
    JEL: K2 N81
    Date: 2008–10
  9. By: Houck, James P.
    Abstract: Few institutions puzzle outsiders as much as the modern university. Even insiders may not grasp the primal essence of its life and behavior. The sheer size and diversity of many universities defeats orderly consideration. We adopt crude simplifications or, worse, numbing obfuscation. This is entirely unnecessary. The core of university life can be illuminated clearly through the prism of a rich and beguiling metaphor. This metaphor requires only that we see today's university as a thinly disguised feudal society such as existed in Europe during the 11th or 12th century A.D. In this medieval context, many otherwise baffling modern mysteries in academe become transparent.
    Keywords: Teaching/Communication/Extension/Profession,
    Date: 2007–09–17
  10. By: Ruttan, Vernon W.
    Abstract: In this paper I present case studies of the history of Nation Building in the United States and Turkey. In the United States the nation building project involved the transition of thirteen British colonies to a nation state. In the case of Turkey the nation building project involved a transition from a multinational empire to a Turkish Republic The motivation for writing the two case studies was the abrupt shift in policy by the Bush Administration following the terrorist attack on the New York World Trade Center Towers on September 1, 2001. During his presidential campaign and during his first months in office George W. Bush vigorously criticized what he interpreted as the nation building efforts of the Clinton administration. Before the end of its first year in office the Bush administration had committed American lives and resources to nation building efforts in Afghanistan and Iraq. My first effort was to write a short paper in an op-ed style. â‚̅ӗhy Is Nation Building So Bloody?â‚̂ݠThis paper serves as Chapter 1.0 of this paper. My second effort was to read widely in the classic political science nation building literature and in the more recent policy oriented literature. An example of the first is the collected works of Stein Rokkan, edited by Peter Flora, State Formation, Nation Building, And Mass Politics In Europe: The Theory Of Stein Rokkan (Oxford 1999). Rokkanâ‚̢Ģs work had been published largely between 1960 and the early 1990s. An example of the more policy oriented work was the book edited by Rancis Fukuyama, Nation Building: Beyond Afghanistan and Iraq (Johns Hopkins, 2006). I found much of the scholarly work too formal and abstract for my taste. I found the policy oriented work too close to the policy process to provide an objective perspective. My response was to step back and read in some depth the history of the United States and Turkey nation building projects. The result is this paper. In the case of both the United States and Turkey the nation building efforts were largely a response to internal political and economic forces.
    Keywords: International Development, International Relations/Trade,
    Date: 2008–02–26
  11. By: Asaf Bernstein; Eric Hughson; Marc D. Weidenmier
    Abstract: We use the founding of the Federal Reserve as a historical experiment to provide some insight into whether a lender of last resort can stabilize financial markets. Following the Panic of 1907, Congress passed two measures that established a lender of last resort in the United States: (1) the Aldrich-Vreeland Act of 1908 which authorized certain banks to issue emergency currency during a financial crisis and (2) the Federal Reserve Act of 1913 which established a central bank. We employ a new identification strategy to isolate the effects of the introduction of a lender of last resort from other macroeconomic shocks. We compare the standard deviation of stock returns and short-term interest rates over time across the months of September and October, the two months of the year when financial markets were most vulnerable to a crash because of financial stringency from the harvest season, with the rest of the year during the period 1870-1925. Stock volatility in the post-1907 period (June 1908-1925) was more than 40 percent lower in the months of September and October compared to the period (1870- May 1908). We also find that the volatility of the call loan rate declined nearly 70 percent in September and October following the monetary regime change.
    JEL: E4 G1 N11 N12
    Date: 2008–10
  12. By: Dimitrios S. Patelis (labrii, ULCO)
    Abstract: The social character of people’s attitude to each other is developing regarding the conditions, the process, and the result of labour attitude towards nature, regarding the mode of production. The movement for socialism, the revolutionary process, emerges as a necessity based on the contradictoriness development of the social character of labour. Early Socialism emerges and develops on a material and technical base, which by no means corresponds to socialism, under the conditions of the insufficiently socialised character of labour, while the capitalistic world has the supremacy in the correlation of forces. The basic contradiction of early socialism is the contradiction between the relations of production and productive forces, between social property of the means of production (formal socialization, nationalization) and insufficient growth, « immaturity » of social character of production, or, in other words, the contradiction between formal and real socialization. The theoretical and methodological approach of “The Logic of History” to the fundamental problems of social development provides a key to the comprehension of an objective reason for a number of social phenomena, thus opening a whole spectrum of research approaches.
    Keywords: Revolutionary situation, early socialism, Russia
    JEL: N00 P29 P40 B24
    Date: 2008–06
  13. By: Michael Dietrich (Université de Sheffield - University of Sheffield); Jackie Krafft (GREDEG - Groupe de recherche en Droit Economie Gestion - Université de Nice Sophia-Antipolis)
    Abstract: L’objet de cet article est, sur la base du cas General Motors Fisher Body, de discuter de la pertinence historique des théories de la firme, et de proposer des pistes permettant de construire des théories pertinentes historiquement. Nous considérons l’ouverture de toutes les archives historiques concernant cette intégration verticale comme une opportunité de redécouvrir ce cas, et de réfléchir sur ce que doit être une théorie de la firme pertinente historiquement.
    Date: 2008
  14. By: Singh, Lakhwinder
    Abstract: Economic development theory has recognized that access to finance enables economic agents of production to exploit growth opportunities. The governments of less developed countries since world war two have been striving hard to enacting suitable policies to enable rural households in accessing timely credit. This has led to a rise in the agricultural production and productivity. The pattern of economic transformation followed by less developed countries, which has squeezed agriculture sector surpluses without reducing the burden of population dependent in such economic activities. Consequently, the borrowing generally in such kind of economic transformation process becomes burden some. The modern development process in both the rural economies of Indian and Pakistani Punjab could also not able to replace the older money-lending system, which remained excessively exploitative. This process of financing rural economic activities can be called as double squeezing of agricultural households. An attempt has been made here to examine the growth, structure and deficiencies in the rural financial systems of two Punjabs during the period 1975-76 to 2003-04. Some suggestions related to public policy for providing timely and adequate credit have also been made.
    Keywords: Rural Finance; Indebtedness; Economic development; Two Punjabs
    JEL: O1 O17 O57
    Date: 2008–10–20

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