New Economics Papers
on Business, Economic and Financial History
Issue of 2010‒08‒14
fourteen papers chosen by

  1. Banking and financial crises in United States history: what guidance can history offer policymakers? By Ellis W. Tallman; Elmus R. Wicker
  2. The Trend of BMI Values of US Adults by Centiles, birth cohorts 1882-1986 By John Komlos; Marek Brabec
  3. The Next Financial Crisis By Yochanan Shachmurove
  4. Spatial Transformation in Historical Perspective: Evidence from Late 19th and Early 20th Century Berlin By Wendland, Nicolai
  5. Liquidity creation without a lender of last resort: clearing house loan certificates in the Banking Panic of 1907 By Ellis W. Tallman; Jon R. Moen
  6. La influencia de la especialización productiva y regional en el comportamiento de las exportaciones colombianas del siglo XIX: Metodología Shift Share By Fernando Barrios Aguirre
  7. Federal Legislative Activism in Australia: A New Approach to Testing Wagner's Law By Stephen Kirchner
  8. Racial Inequality in the 21st Century: The Declining Significance of Discrimination By Roland G. Fryer, Jr
  9. London Mozartiana: Wolfgang’s disputed age & early performances of Allegri’s Miserere. By Chrissochoidis, I.
  10. Cartagena De Indias: Globalizada Desde Su Origen, Fragmentada En Su Presente By Fredy Goyeneche González
  11. The Magnetar Trade: How One Hedge Fund Helped Keep the Bubble Going By Eisinger, Jesse; Bernstein, Jake
  12. Nurturing the Accumulation of Innovations: Lessons from the Internet By Greenstein, Shane
  13. Immigration as a Threat: The Effect of Gender Differences Among Luxembourg Residents with and without a Migration History By VALENTOVA Marie; ALIEVA Aigul
  14. Success and Failure in Human Development, 1970-2007 By Gustav Ranis; Frances Stewart

  1. By: Ellis W. Tallman; Elmus R. Wicker
    Abstract: This paper assesses the validity of comparisons between the current financial crisis and past crises in the United States. We highlight aspects of two National Banking Era crises (the Panic of 1873 and the Panic of 1907) that are relevant for comparison with the Panic of 2008. In 1873, overinvestment in railroad debt and the default of railroad companies on that debt led to the failure of numerous brokerage houses, precursor to the modern investment bank. During the Panic of 1907, panic-related deposit withdrawals centered on the less regulated trust companies, which had only indirect access to the existing lender of last resort, similar to investment banks in 2008. The popular press has made numerous references to the banking crises of the Great Depression as relevant comparisons to the recent crisis. This paper argues that such an analogy is inaccurate. The previous banking crises in U.S. history reflected widespread depositor withdrawals whereas the recent panic arose from counterparty solvency fears and large counterparty exposures among large complex financial intermediaries. In historical incidents, monitoring counterparty exposures was standard banking practice and the exposures were smaller. From this perspective, the lessons from the past appear less directly relevant for the current crisis.
    Keywords: Financial crises - United States ; Systemic risk
    Date: 2010
  2. By: John Komlos; Marek Brabec
    Abstract: Trends in BMI values are estimated by centiles of the US adult population by birth cohorts 1886-1986 stratified by ethnicity. The highest centile increased by some 18 to 22 units in the course of the century while the lowest ones increased by merely 1 to 3 units. Hence, the BMI distribution became increasingly right skewed as the distance between the centiles became increasingly larger. The rate of change of BMI centile curves varied considerably over time. The BMI of white men and women experienced upsurges after the two World Wars and downswings during the Great Depression and again after 1970. However, among blacks the pattern is different during the first half of the century with men's rate of increase in BMI values decreasing substantially and that of females remaining unchanged at a relatively high level until the Second World War. However, after the war the rate of change of BMI values of blacks resembled that of the whites with an accelerating phase followed by a slow down around the 1970s. In sum, the creeping nature of the obesity epidemic is evident, as the technological and lifestyle changes of the 20th century affected various segments of the population quite differently.
    JEL: I10
    Date: 2010–08
  3. By: Yochanan Shachmurove (Department of Economics, the City Collge of the City University of New York)
    Abstract: The examination of U.S. crises reveals that the current financial crisis follows past patterns. An investment bubble creates excess demand for new financing instruments. During the railroad bubbles of the nineteenth century loans were issued at a pace higher than many companies could pay back. The current housing bubble originated from issuing sub-prime mortgages that assume that housing prices would only rise. The increased demand for credit induces financial innovations and instruments that circumvent existing regulations. Inevitably, the bubble bursts. The history of financial crises teaches that policy reforms and new regulations cannot prevent future financial crises.
    Keywords: Financial Crises; Financial Regulations and Reforms; Banking Panics; Banking Runs; Nineteenth and Twentieth Century Crises; Bankruptcies; Federal Reserve Bank; Subprime Mortgage; Troubled Asset Relief Program (TARP); Collateralized Debt Obligations (CDO); Mortgage Backed Securities (MBO); Glass-Steagall Act; J.P. Morgan Chase; Bear Stearns; Augustus Heinze; Timothy Geithner; Paul Volcker
    JEL: E0 E3 E44 E5 E6 N0 N1 N2 G0 G18 G38
    Date: 2010–08–06
  4. By: Wendland, Nicolai
    Abstract: This work presents a one-of-a-kind historical data set on Berlin, Germany, from 1875 to 1936, in order to empirically test theoretical implications derived from a general Urban Economics framework in a historical context. A high level of spatial disaggregation of the data allows for assessing the role of rail-based public infrastructure in the generation of effective market access, and property prices within a rapidly growing and very dynamic urban area. It furthermore analyses the transport network’s influence on urban decentralization and changing spatial patterns of economic activity. The development of a multi-level centrality indicator provides the opportunity to assess the contribution of generated market access to the emergence of gradually dispersed commercial activity and sub-centers. While working with both cross-sectional and time-difference estimates, the variation in transport technology serves to test for a gradual change in accessibility and hence the marginal effects of reduced transport costs and increased proximity to stations on historical land values, which are presented at block level. While endogenously determining the moving center of gravity (CBD) over time, it additionally features the observation of both land gradients and travel time gradients in order to test for variation in the city structure until a possible break-up of the historically evolved monocentric equilibrium. Results suggest that centrality generated by the public railway system had a major influence on (re-)location decisions for firms within a growing and decentralizing urban area, which permanently changed the urban patterns. While both a reduction in distance to a station and a reduction of transport costs to the CBD led to a significant premium paid for commercially used plots, which basically supports tendencies towards a rather polycentric structure, the evolution of land gradients in combination with travel time gradients indicates that the monocentric city model still fitted Berlin’s structure until the mid-20th century.
    Date: 2010–06–02
  5. By: Ellis W. Tallman; Jon R. Moen
    Abstract: We employ a new data set comprised of disaggregate figures on clearing house loan certificate issues in New York City to document how the dominant national banks were crucial providers of temporary liquidity during the Panic of 1907. Clearing house loan certificates were essentially “bridge loans” arranged between clearing house members. They enabled and were issued in anticipation of gold imports, which took a few weeks to arrive. The large, New York City national banks acted as private liquidity providers by requesting (and the New York Clearing House issuing) a volume of clearing house loan certificates beyond their own immediate liquidity needs, in accord with their role as central reserve city banks in the national banking system.
    Keywords: Financial crises - United States ; Lenders of last resort
    Date: 2010
  6. By: Fernando Barrios Aguirre
    Abstract: Una de las aproximaciones que nos permite entender la dinámica económica del Siglo XIX en Colombia es por medio de las Exportaciones de este período. Mediante las cifras podemos observar la dinámica de los principales rubros de producción diferentes al oro, así como su dinamismo y contribución al crecimiento de las exportaciones en el siglo XIX: el oro, el tabaco y la quina, y algunos artesanales (intensivos, también, en recursos naturales y trabajo no calificado), como los sombreros de paja, especialmente durante el período de expansión diversificada de exportaciones, 1850-1882. Los movimientos coyunturales así como la inserción de los países de Latinoamérica al proceso capitalista y a los primeros pasos de la globalización nos permiten incidir en la explicación del dinamismo, estancamiento y auge de algunos productos que fueron potencialmente exportables en el siglo XIX. Mediante el escenario de Cambio y Composición se puede observar resultados como la falta de dinamismo de la Quina y el Tabaco en el primer período o las expectativas del periodo dos con la bonanza cafetera y la Quina y la crisis tabacalera de los años 1870 y 1873 que terminó afectando al sector y generando la cifra de dinamismo más baja del periodo de análisis y preparo al café en su expansión del tercer período. De acuerdo con estos resultados, el periodo nos evidencia el camino de una crisis, que realmente se dio entre 1876 y 1877. Algunos aspectos históricos que nos permiten complementar los resultados por países. En efecto se nota el poco dinamismo con Gran Bretaña y Estados Unidos que sucedió en la primera mitad de los años sesenta, el dinamismo de las exportaciones hacia Alemania debido al impulso del mercado de tabaco y el dinamismo en Francia debido al incremento notable que se obtuvo en este periodo. El período dos muestra la recuperación que obtuvo Gran Bretaña en la bonanza quinera, el decaimiento de Alemania debido a la crisis tabacalera y la importancia que va tomando el mercado estadounidense. Muy seguido, el tercer periodo resalta la pérdida del poder comercial de Alemania, pero también un aspecto excepcional el camino de la crisis
    Date: 2009–11–26
  7. By: Stephen Kirchner (School of Finance and Economics, University of Technology, Sydney)
    Abstract: Legislation is an important output of the political process. Growth in legislation can serve as a proxy for growth in the size and role of government, side-stepping some of the endogeneity problems encountered in estimating relationships between government spending and revenue and national income. This paper considers the relationship between government growth and real GDP per capita by developing three models of federal legislative output in Australia since the country's founding in 1901. The models explain growth in (1) the number of acts of parliament; (2) the total number of pages of legislation enacted; and (3) a measure of legislative complexity based on the annual average number of pages per act. The growth in the number of acts is found to be negatively related to growth in real national income per capita in the short-run, implying that legislative output responds to temporary economic shocks, but without a robust long-run relationship with the level of income. The growth in the number of pages of legislation enacted and legislative complexity also show a negative short-run relationship with growth in real national income per capita, but a positive long-run relationship with the level of income that is consistent with Wagner's (1890) law of increasing state activity. However, both the short and long-run relationships are statistically significant only for the post-World War II period, raising questions about the general applicability of Wagner's law.
    Keywords: Wagner's law; Australia; legislation; economic growth
    JEL: D72 D78
    Date: 2010–07–01
  8. By: Roland G. Fryer, Jr
    Abstract: There are large and important differences between blacks in whites in nearly every facet of life - earnings, unemployment, incarceration, health, and so on. This chapter contains three themes. First, relative to the 20th century, the significance of discrimination as an explanation for racial inequality across economic and social indicators has declined. Racial differences in social and economic outcomes are greatly reduced when one accounts for educational achievement; therefore, the new challenge is to understand the obstacles undermining the development of skill in black and Hispanic children in primary and secondary school. Second, analyzing ten large datasets that include children ranging in age from eight months old to seventeen years old, I demonstrate that the racial achievement gap is remarkably robust across time, samples, and particular assessments used. The gap does not exist in the first year of life, but black students fall behind quickly thereafter and observables cannot explain differences between racial groups after kindergarten. Third, we provide a brief history of efforts to close the achievement gap. There are several programs -- various early childhood interventions, more flexibility and stricter accountability for schools, data-driven instruction, smaller class sizes, certain student incentives, and bonuses for effective teachers to teach in high-need schools, which have a positive return on investment, but they cannot close the achievement gap in isolation. More promising are results from a handful of high-performing charter schools, which combine many of the investments above in a comprehensive framework and provide an "existence proof" -- demonstrating that a few simple investments can dramatically increase the achievement of even the poorest minority students. The challenge for the future is to take these examples to scale.
    JEL: I20 J01 J15 J71
    Date: 2010–08
  9. By: Chrissochoidis, I.
    Date: 2010
  10. By: Fredy Goyeneche González
    Abstract: El presente es un documento que pretende realizar una transversalización de la historia social de Cartagena de Indias con la intención de mostrar como esta se fue transformando de una ciudad globalizada desde sus inicios en función no solo de la diversidad étnica y cultural connatural a las diversas nacionalidades que llegaron a ella en condiciones de conquistadores y colonizadores mixturadas con las etnias aborígenes y la de los esclavos que fueron traídos para efectos de explotación económica pero que no impidió que se construyera simultáneamente una cierta identidad de cartagenidad pero que luego, producto de esa misma globalización y diferenciación excluyente de interés, ha tomado un rumbo que la fragmentasocialmente y destruye su sentido de identidad local.
    Date: 2010–06–10
  11. By: Eisinger, Jesse; Bernstein, Jake
    Abstract: In late 2005, the booming U.S. housing market seemed to be slowing. The Federal Reserve had begun raising interest rates. Subprime mortgage company shares were falling. Investors began to balk at buying complex mortgage securities. The housing bubble, which had propelled a historic growth in home prices, seemed poised to deflate. And if it had, the great financial crisis of 2008, which produced the Great Recession of 2008-09, might have come sooner and been less severe. At just that moment, a few savvy financial engineers at a suburban Chicago hedge fund helped revive the Wall Street money machine, spawning billions of dollars of securities ultimately backed by home mortgages. When the crash came, nearly all of these securities became worthless, a loss of an estimated $40 billion paid by investors, the investment banks who helped bring them into the world, and, eventually, American taxpayers. Yet the hedge fund, named Magnetar for the super-magnetic field created by the last moments of a dying star, earned outsized returns in the year the financial crisis began. How Magnetar pulled this off is one of the untold stories of the meltdown. Only a small group of Wall Street insiders was privy to what became known as the Magnetar Trade. Nearly all of those approached by ProPublica declined to talk on the record, fearing their careers would be hurt if they spoke publicly. But interviews with participants, e-mails, thousands of pages of documents and details about the securities that until now have not been publicly disclosed shed light on an arcane, secretive corner of Wall Street.
    Keywords: Technology and Industry
    Date: 2010–04
  12. By: Greenstein, Shane
    Abstract: The innovations that became the foundation for the Internet originate from two eras that illustrate two distinct models for accumulating innovations over the long haul. The pre-commercial era illustrates the operation of several useful non-market institutional arrangements. It also illustrates a potential drawback to government sponsorship – in this instance, truncation of exploratory activity. The commercial era illustrates a rather different set of lessons. It highlights the extraordinary power of market-oriented and widely distributed investment and adoption, which illustrates the power of market experimentation to foster innovative activity. It also illustrates a few of the conditions necessary to unleash value creation from such accumulated lessons, such as standards development and competition, and nurturing legal and regulatory policies.
    Keywords: Technology and Industry
    Date: 2010–04
  13. By: VALENTOVA Marie; ALIEVA Aigul
    Abstract: Anti-immigration sentiments have been extensively studied in recent years. Empirical studies showed that the out-group size together with the general economic condition of the host country determines the extent and the intensity of the anti-immigrant perception. While nearly all studies concluded that men and women differ in their perceptions, there is no explanation for this behaviour. Gender differences were the main focus of this paper, and we looked at two related issues. First, in our analysis, we sought a more detailed explanation of the particular reasons that foster this negative perception. Secondly, while the majority of studies focused exclusively on perceptions of the native population, we included the perceptions of the non-native populations separately and looked at the differences among three groups, with gender being the primary focus both between and within groups. We found that both gender and immigration history mediates the threat perception in Luxembourg.
    Keywords: gender; threat; attitudes; immigration; EVS
    JEL: I39 J15 J16
    Date: 2010–07
  14. By: Gustav Ranis (Yale University); Frances Stewart (Centre for Research on Inequality, Human Security and Ethnicity, University of Oxford)
    Abstract: The paper reviews experience in advancing Human Development since 1970 by investigating behaviour among countries that made the largest improvements in HD, and those that made the least improvement. The three developing countries with the fastest growth in the HDI over the period are selected from initial low-HDI, middle HDI- and high HDI country groupings, and their experience compared on a range of indicators. Certain characteristics were common to all success cases: good or moderate educational enrolment ratios; good or moderate female/male enrolment ratios; and good or moderate Human Poverty Indices. The other three major inputs into success appear to be growth, social expenditure and income distribution, and the successful countries showed different combinations of performance on these. Weak performers all experienced poor or moderate economic growth. Two classes of weak performance were: low income countries with weak growth, poor distribution and high poverty; and transition countries where economic, institutional and demographic disruptions led to poor progress. We also look beyond the HDI as an indicator of HD, explore such other features as political freedoms, security and environmental sustainability, and find little correlation between achievements on these indicators (both in levels and changes) with success and failure with respect to the HDI. Finally we provide short country vignettes of some of the success and failure cases, exploring some historical and institutional features associated with their performance.
    Keywords: Human Development, growth, income distribution
    JEL: O11 O2 O20 O15
    Date: 2010–07

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.