nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2009‒02‒22
ten papers chosen by
Bernardo Batiz-Lazo
University of Leicester

  1. From New Deal institutions to capital markets: commercial consumer risk scores and the making of subprime mortgage finance By Martha Poon
  2. Socioeconomic Differences in the Health of Black Union Army Soldiers By Chulhee Lee
  3. Relation of Game Theory to Economic History and Marginalism By Killion, M. Ulric
  4. Commodity Price Volatility and World Market Integration since 1700 By David S. Jacks; Kevin H. O'Rourke; Jeffrey G. Williamson
  5. The origins of American industrial success: Evidence from the US portland cement industry By Prentice, David
  6. Did British women achieve long-term economic benefits from working in essential WWII industries? By Hart, Robert A.
  7. Explorations in the economics of intertemporal asset transfer in Roman Palestine By P.V. Viswanath
  8. The sub-prime crisis, the credit squeeze, Northern Rock and beyond: The lessons to be learnt By Maximilian J. B. Hall
  9. Technological Changes and Employment of Older Manufacturing Workers in Early Twentieth Century America By Chulhee Lee
  10. Physician Sovereignty: The Dangerous Persistence of an Obsolete Idea By David Lawrence

  1. By: Martha Poon (University of California, San Diego)
    Abstract: Provides original sociological research on the development of consumer credit scoring in the United States and its links to subprime mortgage finance.
    Keywords: Science and technology studies, economic sociology, social studies of finance, subprime mortgages, consumer credit, risk
    JEL: D81 G21 L15 M30 N22 N32 O33 P16 Z13
    Date: 2009–01
  2. By: Chulhee Lee
    Abstract: This paper investigates patterns of socioeconomic difference in the wartime morbidity and mortality of black Union Army soldiers. Among the factors that contributed to a lower probability of contracting and dying from diseases were (1) lighter skin color, (2) a non-field occupation, (3) residence on a large plantation, and (4) residence in a rural area prior to enlistment. Patterns of disease-specific mortality and timing of death suggest that the differences in the development of immunity against diseases and in nutritional status prior to enlistment were responsible for the observed socioeconomic differences in wartime health. For example, the advantages of light-skinned soldiers over dark-skinned and of enlisted men formerly engaged in non-field occupations over field hands resulted from differences in nutritional status. The lower wartime mortality of ex-slaves from large plantations can be explained by their better-developed immunity as well as superior nutritional status. The results of this paper suggest that there were substantial disparities in the health of the slave population on the eve of the Civil War.
    JEL: N31 N41
    Date: 2009–02
  3. By: Killion, M. Ulric
    Abstract: The Article presents a brief survey of economic history, by emphasizing the earlier history of neo-classical economic theory and the economic theory of marginal utility. The Articles does so, by exploring the relation of game theory or the strategic game to developments in the field or science of economics, especially developments in economic thought occurring during the earlier marginal revolution or the economic history of marginalism. By doing so, the Article intends to show, though most attribute the new science of modern game theory to the field of mathematics, that the influence of corresponding or correlating developments in the field, science or discipline of economics was equally influential in the birth of game theory or the strategic game.
    Keywords: Economic history, neo-classical theory, marginalism, game theory
    JEL: B1 A1 C7
    Date: 2009–02–12
  4. By: David S. Jacks; Kevin H. O'Rourke; Jeffrey G. Williamson
    Abstract: Poor countries are more volatile than rich countries, and we know this volatility impedes their growth. We also know that commodity price volatility is a key source of those shocks. This paper explores commodity and manufactures price over the past three centuries to answer three questions: Has commodity price volatility increased over time? The answer is no: there is little evidence of trend since 1700. Have commodities always shown greater price volatility than manufactures? The answer is yes. Higher commodity price volatility is not the modern product of asymmetric industrial organizations - oligopolistic manufacturing versus competitive commodity markets - that only appeared with the industrial revolution. It was a fact of life deep into the 18th century. Does world market integration breed more or less commodity price volatility? The answer is less. Three centuries of history shows unambiguously that economic isolation caused by war or autarkic policy has been associated with much greater commodity price volatility, while world market integration associated with peace and pro-global policy has been associated with less commodity price volatility. Given specialization and comparative advantage, globalization has been good for growth in poor countries at least by diminishing price volatility. But comparative advantage has never been constant. Globalization increased poor country specialization in commodities when the world went open after the early 19th century; but it did not do so after the 1970s as the Third orld shifted to labor-intensive manufactures. Whether price volatility or specialization dominates terms of trade and thus aggregate volatility in poor countries is thus onditional on the century.
    JEL: F14 N7 O19
    Date: 2009–02
  5. By: Prentice, David
    Abstract: The contributions of innovations, factor endowments and institutions to American industrialization are examined through analysing the rise of the American portland cement industry. Minerals abundance contributed in multiple ways to the spectacular rise of the industry from the 1890s. However, the results of a structural econometric analysis of entry suggests geological surveys, institutions highlighted by David and Wright, played a contributing rather than critical role in the American portland cement industry overcoming incumbent European portland cement and American natural cement producers.
    Keywords: American Economic History; Empirical Industrial Organization; Portland Cement
    JEL: N51 L61 N0 L10 N61
    Date: 2008–06–26
  6. By: Hart, Robert A.
    Abstract: Between mid-1939 and mid-1943 almost 2.2 million additional women were recruited into Britain's essential war industries. These consisted, predominantly, of young women recruited into metal and chemical industries. Much of the increased labour supply was achieved through government directed labour initiatives. This culminated, in January 1942, with the Control of Engagement Order whereby women between the ages of 18 and 40 who either entered the labour market or who changed employment were compulsorily directed into jobs and industries that were vital to the war effort. There were also many woman volunteers for such work, partly due to the fact that extreme labour scarcity drove up relative female wage rates. At least 42% of the 18-20 age cohorts and 32% of the 21- 25 age cohorts in 1943 worked in the essential industries. Two-thirds of those involved owed their jobs to wartime industrial expansion. The majority of such women entered a world of work that had been previously dominated by men. They obtained considerable training, job experience and pay advantages compared to subsequent age cohorts who were not eligible for war work. This bestowed on them subsequent labour market advantages that would otherwise not have occurred. Using a regression discontinuity design the empirical work shows that the long term earnings benefits of those age cohorts eligible for conscription, measured 30 years after the war, were in the order of between 2% and 9% higher than the age cohorts that followed them.
    Keywords: WWII female employment; essential war industries; long-term real wages; regression discontinuity design
    Date: 2009–02
  7. By: P.V. Viswanath (Indira Gandhi Institute of Development Research)
    Abstract: Following the Jewish Revolt and the destruction of the Jewish Temple in 70 CE, there were large-scale destabilizations of the Jewish population in Palestine. Information regarding economic decisions has always been available indirectly from Jewish and Roman legalistic material, though it has been insufficiently mined for economic insights. Furthermore, over the last forty years, new documentary material has become available from the second century. This note discusses some interesting aspects of how people managed to transfer resources over time in these turbulent times. Specifically, I look at two cases of asset transfer where the primary purpose was to transfer wealth over time. I explore the role of market frictions in both cases and make comparisons to present-day circumstances.
    Keywords: Intertemporal asset transfer, market frictions, intergenerational transfer, law, religion and economics
    JEL: G11 N35 N55 K36
    Date: 2008–09
  8. By: Maximilian J. B. Hall (Dept of Economics, Loughborough University)
    Abstract: On 14 September 2007, after failing to find a 'White Knight' to take over its business, Northern Rock bank turned to the Bank of England ('the Bank') for a liquidity lifeline. This was duly provided but failed to quell the financial panic, which manifested itself in the first fully-blown nationwide deposit run on a UK bank for 140 years. Subsequent provision of a blanket deposit guarantee duly led to the (eventual) disappearance of the depositor queues from outside the bank's branches but only served to heighten the sense of panic in policymaking circles. Following the Government's failed attempt to find an appropriate private sector buyer, the bank was then nationalised in February 2008. Inevitably, post mortems ensued, the most transparent of which was that conducted by the all-party House of Commons' Treasury Select Committee. And a variety of reform proposals are currently being deliberated at fora around the globe with a view to patching up the global financial system to prevent a recurrence of the events which precipitated the bank's illiquidity and the wider financial instability which set in towards the end of 2008. This article briefly explains the background to these extraordinary events before setting out, in some detail, the tensions and flaws in UK arrangements which allowed the Northern Rock spectacle to occur. None of the interested parties – the Bank, the Financial Services Authority (FSA) and the Treasury – emerges with their reputation intact, and the policy areas requiring immediate attention, at both the domestic and international level, are highlighted. A review and assessment of both the House of Commons Treasury Committee's Report on Northern Rock and the Tripartite Authorities' proposals for reform are also provided before analysis of the subsequent measures taken to stabilise the UK financial sector – involving further nationalisation of banks, the brokering of takeover rescues of banks and building societies, a £400 billion bailout of the deposit-taking sector and a subsequent bank bailout scheme – is undertaken. Accordingly, this paper represents an update, covering developments until end-January 2009, of my earlier paper on the Northern Rock affair (Working Paper No. WP 2008-09), which was published in September 2008. Specifically, it covers the latest domestic (i.e. UK) developments on a number of fronts. The text, for example, provides updates on the reform proposals of the Tripartite Authorities, amendments to deposit protection arrangements, and the emergency funding initiatives adopted by the Bank of England. Table 2 (where, along with Table 1, most of the new material is located), meanwhile, provides updates and analysis of the following: the latest developments in the UK housing market; the latest developments in the real economy; the latest financial statements of the major banks; the latest nationalisation moves;* the latest inflation figures and interest rate decisions of the MPC; the latest government bailout plans for deposit-takers; the latest official support packages introduced for the housing market, mortgage borrowers and small businesses; the latest fiscal stimulus plans (e.g. as contained in the Pre-Budget Report of November 2008); and the latest domestic financial and regulatory developments. Meanwhile, Table 1 provides up-to-date information on: emergency funding initiatives undertaken by the Fed, the ECB and other major central banks; financial institution takeovers/bailouts in the US and Europe; interest rate developments in the major economies; financial and regulatory developments in the US and Europe; developments in the real economies of the US and Europe; the financial statements of banks in the USA and Europe; the evolution of official bailout plans in the US ('TARP') and Europe; deposit protection developments in the US and Europe; fiscal stimulus packages adopted in the US, Europe and the wider international community; G7/EU plans to tackle the worsening financial crisis; IMF 'bailouts' of beleaguered countries; and the Basel Committee's proposals for revamping Basel II in the light of the crisis. *A more detailed discussion of these developments is provided in Hall (2008).
    Keywords: Sub-prime crisis; credit crunch; banking regulation and supervision; failure resolution; central banking; deposit protection.
    JEL: E53 E58 G21 G28
    Date: 2009–01
  9. By: Chulhee Lee
    Abstract: This study explores how technological, organizational, and managerial changes affected the labor-market status of older male manufacturing workers in early twentieth century America. Industrial characteristics that were favorably related to the labor-market status of older industrial workers include: higher labor productivity, less capital- and material-intensive production, a shorter workday, lower intensity of work, greater job flexibility, and more formalized employment relationship. Technical innovations that improved productivity often negatively affected the quality of the work environment of older workers. These results suggest that the technological transformations in the Industrial Era brought mixed consequences to the labor-market status of older workers. On one hand, technical and organizational modifications improved the elderly workers’ employment prospect by raising labor productivity, diminishing hours of work, and formalizing employment relations. On the other hand, some types of technical innovations, which are characterized by additional requirements for physical strength, mental agility, and ability to acquire new skills, forced older workers out of their jobs. Since the pace and nature of technical change considerably differed across industries, and possibly across firms within the same industry, the labor-market experiences of individual older workers should have been highly heterogeneous.
    JEL: J26 J64 J81 N31
    Date: 2009–02
  10. By: David Lawrence
    Abstract: The heart of the model is this: to quote Pogo, "We have met the enemy and it is us." We doctors are the problem, not because wqe are venal or self-serving or insulated from reality. Far from it. Most of us are hard-working, dedicated professionals. We are the problem, though, because of the way our profession developed in the 20th century. This model is no longer appropriate for what lies ahead. The notion of the sovereign physician comes from Paul Starr's 1982 work, "The Social Transformation of American Medicine: The Rise of a Sovereign Profession and the Making of a Vast Industry.: Starr argues that the rise of the sovereign profession we know today was neither inevitable nor foreordained. It was instead the result of a long struggle to establish the modern medical profession in the face of other competitors and forces. Sovereignty is neither good nor bad in and of itself. It is its manifestations in medical practice, and its suitability for the future, that is of concern.
    Keywords: health care, chronic disease, medical care, medical technology, health reform, physicians
    JEL: I1 I12
    Date: 2009–02

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