New Economics Papers
on Business, Economic and Financial History
Issue of 2010‒07‒10
eighteen papers chosen by

  1. Why Did Corporations Patent in Spain? Some Historical Inquiries By Saiz, J. Patricio
  2. From Regional to Intercontinental Trade: the Successive European Trade Empires from the Sixteenth to the Eighteenth Century in Asia By Bensassi, Sami
  3. The management of agricultural estates in Catalonia in the 19th and early 20th centuries. An approach through bookkeeping By Ramón Garrabou; Jordi Planas; Enric Saguer
  4. Famines Past, Famine’s Future By Cormac Ó Gráda
  5. John Rogers Commons: Are His Insights Important in Teaching Modern Labor Economics? By Francis McLaughlin
  6. Social and environmental filters to market incentives: common land persistence in 19th century Spain By Francisco J. Beltrán Tapia
  7. America's settling down: How Better Jobs and Falling Immigration led to a Rise in Marriage, 1880 – 1930 By Tomas Cvrcek
  8. Crisis? What Crisis? Currency vs. Banking in the Financial Crisis of 1931 By Albrecht Ritschl; Samad Salferaz
  9. Is there a tendency for the rate of profit to fall? Econometric evidence for the U.S. economy, 1948-2007 By Deepankar Basu; Panayiotis T. Manolakos
  10. "The Great Crisis and the American Response" By James K. Galbraith
  11. School Attendance and Literacy before the Famine: A Simple Baronial Analysis By Cormac Ó Gráda
  12. Explicit Evidence on an Implicit Contract By Andrew T. Young; Daniel Levy
  13. Maternal Health and the Baby Boom By Stefania Albanesi; Claudia Olivetti
  14. Post-Conflict Planning and Reconstruction: Lessons From the American Experience in Korea By Marcus Noland; ;
  15. Lessons from Japan's Banking Crisis, 1991–2005 By Fujii, Mariko; Kawai, Masahiro
  16. Sufficiency and Sufficiency and Sufficiency’: Revisiting the Bengal Famine of 1943-44 By Cormac Ó Gráda
  17. L'expérience américaine de 1933-1935 et la formation des institutions : lectures keynésienne et régulationniste By Michel Rocca
  18. "Three Futures for Postcrisis Banking in the Americas: The Financial Trilemma and the Wall Street Complex" By Gary A. Dymski

  1. By: Saiz, J. Patricio (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid)
    Abstract: In this paper we will explore how international corporations used the Spanish patent system in the late nineteenth century and the first decades of the twentieth century in order to discover what the actual effects of its apparent weakness were. The origins and evolution of corporate patenting in Spain, the effects of compulsory working clauses, the management of assignments, the various strategies followed by the firms, and the effects of patents on technology transfer to the Spanish economy will be clarified. The conclusions yields understanding on real patent management in the long-term by analyzing the strategies of Brown Boveri and Babcock Wilcox corporations in Spain.
    Keywords: Patents of introduction; National innovation system; Spain; Technology transfer.
    JEL: N43 N44 N73 N74 O31 O32 O34 O52
    Date: 2010–06
  2. By: Bensassi, Sami
    Abstract: For a very long time, the areas available for continuous long-distance trade were limited to territories the size of Braudel's Mediterranée (1949). Whatever the commercial organizations (merchants in the Roman or the Fatimid Empires, the Hanseatic League, the Florentine Companies), their trade was not able to directly handle branches more than a month's sailing from their main base (in the best conditions). During the three centuries after Vasco de Gama had reached India, European trading areas dramatically expanded to the shores of Asia, and a long period of harsh competition set the East India Companies of the main European powers of the time against one another. This paper intents to provide answers to two questions: what were the elements that allowed these companies to maintain transactions over such vast areas? And why were some of these companies far more successful than the others? To answer these two questions we have available extensive literature covering the intersection of history, business and economy, generally focusing on one company or on a particular aspect of trade (Chauduri, 1978; Israel, 1989; Subrahmanyan, 1993; Ames, 1996). Our task will be to briefly review these sources, to extract information from them and to compare the economic adaptations and innovations that allowed these companies to be the greatest of their time.
    Keywords: European Trade Empires; Estado da Índia; Dutch East India Company English East India Company
    JEL: B52 F02 N70
    Date: 2010–07–03
  3. By: Ramón Garrabou (Universitat Autònoma de Barcelona); Jordi Planas (Universitat de Barcelona); Enric Saguer (Universitat de Girona)
    Abstract: The aim of this study is to analyse the management of rural estates during the 19th century and the first half of the 20th century using basically the expenditure registered in bookkeeping records. The information collected proceeds from eight private archives, and from them we have reconstructed a total of ten series of bookkeeping records which describe a group of farms spread throughout the main agricultural zones of Catalonia (Spain). The changes in the quantities provided by the landowners towards the running costs can help us to understand their role in the processes of growth and intensification of agricultural production. We show that, while the level of investment they made was modest, the landownwers did not behave like absentee landlords or idly live off their rents. The examples analysed give us some insight into the rationale behind some of the landowners' decisions and the diverse responses that they adopted according to the circumstances and the prevailing social and environmental conditions on their estates. The accounting records have proved to be a valuable source in this sense.
    Keywords: landowners, sharecropping, management of rural estates, bookkeeping records, agriculture, Catalonia
    JEL: O13 Q12 Q15 R14
    Date: 2010–06
  4. By: Cormac Ó Gráda (University College Dublin)
    Abstract: Famine, like poverty, has always been with us. No region and no century has been immune. Its scars—economic, psychological, and political—can long outlast its immediate impact on mortality and health. Famines are a hallmark of economic backwardness, yet the twentieth century suffered some of the most devastating ever recorded. That century also saw shifts in both the causes and symptoms of famine. This new century's famines have been 'small' by historical standards, and the threat of major ones seemingly confined to ever-smaller pockets of the globe. Are these shifts a sign of hope for the future?
    Keywords: Famine, Human Agency
    Date: 2010–06–24
  5. By: Francis McLaughlin (Boston College)
    Abstract: John Commons' influence in American labor economics was eclipsed after World War II by a resurgent neoclassical labor economics that gradually relegated Commons' institutional orientation to the periphery of economic discourse. A common opinion is that the work of institutional economists in the Commons tradition was largely descriptive and lacked theoretical content. Commons, however, regarded his Institutional Economics as a work of economic theory. This paper contains a description of the theoretical core of Institutional Economics and an evaluation of it from the perspective of its potential usefulness in the teaching of modern labor economics. Part I describes the theoretical perspective of neoclassical economic theory in order to clarify the institutional perspective by contrast. Part II describes Commons’ alternative perspective. Part III presents the conclusions derived from this comparison of the two alternative perspectives.
    Keywords: John R. Commons, labor economics, history of thought
    JEL: A21 B31 B41 J01
    Date: 2010–06–29
  6. By: Francisco J. Beltrán Tapia (Departamento de Estructura e Historia Económica y Economía Pública, Universidad de Zaragoza)
    Abstract: The regional diversity of communal persistence in 19th century Spain has been well documented by historiography. Although the explanation of this divergence has been attributed to the social and environmental context, together with the prevailing market incentives that characterized the different rural societies of this period, there has been no clear assessment of the role played by each. Through a comparative study of the historical data at the provincial level, this paper analyzes the relative contribution of these elements to that divergence. The results diminish the significance of market signals and show how the social and environmental conditions of these communities interacted to limit, or promote, the dismantling of the common lands.
    Keywords: Spain, 19th Century, common lands, privatization, socio-ecological context
    JEL: N43 N53 P48 P14
    Date: 2010–05
  7. By: Tomas Cvrcek
    Abstract: The growing education and employment of women are usually cited as crucial forces behind the decline of marriage since 1960. However, both trends were already present between 1900 and 1960, during which time marriage became increasingly widespread. This early period differed from the post-1960 decades due to two factors primarily affecting men, one economic and one demographic. First, men’s improving labor market prospects made them more attractive as marriage partners to women. Second, immigration had a dynamic effect on partner search costs. Its short-run effect was to fragment the marriage market, making it harder to find a partner of one’s preferred ethnic and cultural background. The high search costs led to less marriage and later marriage in the 1890s and 1900s. As immigration declined, the long-run effect was for immigrants and their descendants to gradually integrate with American society. This reduced search costs and increased the marriage rate. The immigration primarily affected the whites’ marriage market which is why the changes in marital behavior are much more pronounced among this group than among blacks.
    JEL: J12 J62 N3
    Date: 2010–07
  8. By: Albrecht Ritschl; Samad Salferaz
    Abstract: This paper examines the role of currency and banking in the German financial crisis of 1931for both Germany and the U.S. We specify a structural dynamic factor model to identifyfinancial and monetary factors separately for each of the two economies. We find thatmonetary transmission through the Gold Standard played only a minor role in causing andpropagating the crisis, while financial distress was important. We also find evidence of crisispropagation from Germany to the U.S. via the banking channel. Banking distress in botheconomies was apparently not endogenous to monetary policy. Results confirm Bernanke's(1983) conjecture that an independent, non-monetary financial channel of crisis propagationwas operative in the Great Depression.
    Keywords: Great Depression, 1931 financial crisis, international business cycle transmission,Bayesian factor analysis, currency, banking
    JEL: N12 N13 E37 E47 C53
    Date: 2010–05
  9. By: Deepankar Basu (University of Massachusetts Amherst); Panayiotis T. Manolakos
    Abstract: The law of the tendential fall in the rate of profit has been at the center of theoretical and empirical debates within Marxian political economy ever since the publication of Volume III of Capital. An important limitation of this literature is the absence of a comprehensive econometric analysis of the behaviour of the rate of profit. In this paper, we attempt to fill this lacuna in two ways. First, we investigate the time series properties of the profit rate series. The evidence suggests that the rate of profit behaves like a random walk and exhibits "long waves" interestingly correlated with major epochs of U.S. economic history. In the second part, we test Marx's law of the tendential fall in the rate of profit with a novel econometric model that explicitly accounts for the counter-tendencies. We find evidence of a long-run downward trend in the general profit rate for the US economy for the period 1948-2007. JEL Categories: B51, C22, E11
    Keywords: falling rate of profit, Marxian political economy, time series analysis, unit roots.
    Date: 2010–06
  10. By: James K. Galbraith
    Abstract: The global abatement of the inflationary climate of the past three decades, combined with continuing financial instability, helped to promote the worldwide holding of U.S. dollar reserves as a cushion against financial instability outside the United States, with the result that, for the United States itself, this was a period of remarkable price stability and reasonably stable economic expansion. For the most part, the economics profession viewed these events as a story of central bank credibility, fiscal probity, and accelerating technological change coupled with changing demands on the labor market, creating a model of self-stabilizing free markets and hands-off policy makers motivated by doing the right thing - what Senior Scholar James K. Galbraith calls "the grand illusion of the Great Moderation." A dissenting line of criticism focused on the stagnation of real wages, the growth of deficits in trade and the current account, and the search for new markets. This view implied that a crisis would occur, but that it would result from a rejection of U.S. financial hegemony and a crash of the dollar, with the euro and the European Union (EU) the ostensible beneficiaries. A third line of argument was articulated by two figures with substantially different perspectives on the Keynesian tradition: Wynne Godley and Hyman P. Minsky. Galbraith discusses the approaches of these Levy distinguished scholars, including Godley’s correlation of government surpluses and private debt accumulation and Minsky's financial stability hypothesis, as well as their influence on the responses of the larger economic community. Galbraith himself argues the fundamental illusion of viewing the U.S. economy through the free-market prism of deregulation, privatization, and a benevolent government operating mainly through monetary stabilization. The real sources of American economic power, he says, lie with those who manage and control the public-private sectors - especially the public institutions in those sectors - and who often have a political agenda in hand. Galbraith calls this the predator state: a state that is not intent upon restructuring the rules in any idealistic way but upon using the existing institutions as a device for political patronage on a grand scale. And it is closely aligned with deregulation.
    Date: 2010–06
  11. By: Cormac Ó Gráda (University College Dublin)
    Abstract: This paper complements a much larger study of school attendance in pre-famine Ireland by FitzGerald (2010). It exploits some of the data generated by that study to analyze further some of the determinants of schooling and literacy in the 1820s and 1840s.
    Keywords: Ireland, economic history, literacy, human capital
    Date: 2010–07–02
  12. By: Andrew T. Young (Department of Economics, West Virginia University); Daniel Levy (Department of Economics, Bar-Ilan University)
    Abstract: We offer the first direct evidence of an implicit contract in a goods market. The evidence we offer comes from the market for Coca-Cola. We demonstrate that the Coca-Cola Company left a substantial amount of written evidence of its implicit contract with its consumers—a very explicit form of an implicit contract. The contract represented the promise of a five cent (nominal) price and adherence to the “Secret Formula”. In general, the implicit nature of such contracts makes observation difficult. To overcome this difficulty, we adopt a narrative approach. Based on the analysis of a large number of historical documents obtained from the Coca-Cola Archives and other sources, we offer evidence of the Coca-Cola Company both acknowledging and acting on this implicit contract. We also make another unique contribution by exploring quality as a margin of adjustment available to Coca-Cola. The implicit contract included a promise not only of a constant nominal price but also a constant quality (i.e., 6.5 oz. of the Secret Formula). During a period of over 70 years, we find evidence of only a single case of true quality change. By studying the margin of adjustment the Coca-Cola Company chose in response to changes in market conditions, we demonstrate that the perceived costs of breaking the implicit contract were large. We argue that one piece of direct evidence on the magnitude of these costs is the aftermath “New Coke’s” introduction in 1985.
    Keywords: Implicit Contract, Explicit Contract, Invisible Handshake, Customer Market, Long-Term Relationship, Price Rigidity, Nickel Coke, Coca-Cola
    JEL: E12 E31 L14 L16 L66 M30 N80 A14
    Date: 2010
  13. By: Stefania Albanesi; Claudia Olivetti
    Abstract: U.S. fertility rose from a low of 2.27 children for women born in 1908 to a peak of 3.21 children for women born in 1932. It dropped to a new low of 1.74 children for women born in 1949, before stabilizing for subsequent cohorts. We propose a novel explanation for this boom-bust pattern, linking it to the huge improvements in maternal health that started in the mid 1930s. Our hypothesis is that the improvements in maternal health contributed to the mid-twentieth century baby boom and generated a rise in women's human capital, ultimately leading to a decline in desired fertility for subsequent cohorts. To examine this link empirically, we exploit the large cross-state variation in the magnitude of the decline in pregnancy-related mortality and the differential exposure by cohort. We find that the decline in maternal mortality is associated with a rise in fertility for women born between 1921 and 1940, with a rise in college and high school graduation rates for women born in 1933-1950, and with a decline in fertility for women born in 1941-1950. These findings are consistent with a theory of fertility featuring a trade-off between the quality and quantity of children. The analysis provides new insights on the determinants of fertility in the U.S. and other countries that experienced similar improvements in maternal health.
    JEL: J11 J13 J24 N12 N3 N92
    Date: 2010–07
  14. By: Marcus Noland (East-West Center & Peterson Institute for International Economics); ;
    Abstract: The American experiences in Afghanistan and Iraq have motivated a re-examination of earlier experiences with post-conflict planning and reconstruction. This paper reviews the U.S. experience in Korea following the Second World War and the Korean War; addresses the political economy of establishing institutions of governance in post-conflict situations; considers the issue of "portability": the extent to which the South Korean experience may reflect unique and irreproducible conditions; and then applies these ideas by comparing the South Korean experience to the contemporary case of Afghanistan. Some conclusions and policy recommendations are contained in the final section.
    Date: 2010–06
  15. By: Fujii, Mariko (Asian Development Bank Institute); Kawai, Masahiro (Asian Development Bank Institute)
    Abstract: The Japanese government's response to the financial crisis in the 1990s was late, unprepared and insufficient; it failed to recognize the severity of the crisis, which developed slowly; faced no major domestic or external constraints; and lacked an adequate legal framework for bank resolution. Policy measures adopted after the 1997–1998 systemic crisis, supported by a newly established comprehensive framework for bank resolution, were more decisive. Banking sector problems were eventually resolved by a series of policies implemented from that period, together with an export-led economic recovery. Japan's experience suggests that it is vital for a government not only to recapitalize the banking system but also to provide banks with adequate incentives to dispose of troubled assets from their balance sheets, even if that required the government to mobilize regulatory measures to do so, as was done in Japan in 2002. Economic stagnation can cause new nonperforming loans to emerge rapidly, and deplete bank capital. If the authorities do not address the banking sector problem promptly, then the crisis will prolong and economic recovery will be substantially delayed.
    Keywords: japan banking crisis; 1990s; bank capital; financial regulation
    JEL: G21 G28
    Date: 2010–06–29
  16. By: Cormac Ó Gráda (University College Dublin)
    Abstract: The paper builds on media reportage of rice and other prices, political controversies, and food drives, to review the historiography of the Great Bengal Famine.
    Keywords: Famine, Bengal, Entitlements, Hoarding
    Date: 2010–06–24
  17. By: Michel Rocca (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II)
    Abstract: Ce texte propose une lecture institutionnaliste de l'expérience américaine de 1929-1935 aux Etats-Unis. Le propos montre que les analyses d'inspiration libérale (Prescott) tout comme les analyses pré-keynésiennes de l'intervention publique (Kahn (1931), Mitnitzky (1934), Clark (1935), ...) minorent les effets de la relance par l'investissement autonome, du fait d'une insuffisante prise en compte du rôle des "innovations institutionnelles" installées par l'Administration Roosevelt dès mars 1933. Une lecture d'inspiration régulationniste de l'intervention publique face au moment déflationniste a l'avantage de faciliter cette analyse du rôle des institutions dans les grandes crises, même si leur théorisation reste encore embryonnaire. Le propos développe trois idées relatives à la dimension institutionnelle de l'expérience Roosevelt. Les innovations institutionnelles ont de grandes difficultés à émerger au moment où la déflation s'enclenche (I). Ces innovations sont structurelles bien que produites dans l'urgence et donc sans plan bien établi (II). Elles sont fondées dans une distance à la théorie mais n'en demeurent pas moins structurantes de la dynamique économique, compte tenu de leur caractère "disciplinaire" (III). Ce détour par l'analyse des "innovations institutionnelles" favorise une réconciliation entre la thèse keynésienne et l'approche régulationniste de l'expérience Roosevelt : la relance par la dépense publique, même modeste, est la condition de mise en oeuvre des réformes structurelles et de la capacité à imposer de nouvelles règles au régime capitaliste.
    Keywords: théorie de la régulation, crise économique, intervention de l'état ; politique publique ; Keynésianisme ; politique économique ; institution ; Etats-Unis
    Date: 2010–05–27
  18. By: Gary A. Dymski
    Abstract: This would seem an opportune moment to reshape banking systems in the Americas. But any effort to rethink and improve banking must acknowledge three major barriers. The first is a crisis of vision: there has been too little consideration of what kind of banking system would work best for national economies in the Americas. The other two constraints are structural. Banking systems in Mexico and the rest of Latin America face a financial regulation trilemma, the logic and implications of which are similar to those of smaller nations’ macroeconomic policy trilemma. The ability of these nations to impose rules that would pull banking systems in the direction of being more socially productive and economically functional is constrained both by regional economic compacts (in the case of Mexico, NAFTA) and by having a large share of the domestic banking market operated by multinational banks. For the United States, the structural problem involves the huge divide between Wall Street megabanks and the remainder of the U.S. banking system. The ambitions, modes of operation, and economic effects of these two different elements of U.S. banking are quite different. The success, if not survival, of one element depends on the creation of a regulatory atmosphere and set of enabling federal government subsidies or supports that is inconsistent with the success, or survival, of the other element.
    Keywords: Banking; Financial Crisis; Trilemma; Wall Street; Mexico; United States; Financial Regulation; Megabanks; Regional Compacts; NAFTA
    JEL: E5 F3 G1 G2 O1 P5
    Date: 2010–06

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.