nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2014‒01‒17
twenty-two papers chosen by
Bernardo Batiz-Lazo
Bangor University

  1. West versus East: Early globalization and thr great divergence By Rafael Dobado-González; Alfredo García-Hiernaux; David Guerrero-Burbano
  2. Episodes from the Early History of Experimentation in Economics By Andreas Ortman
  3. Economic ideas regarding the urban water supply service in The nineteenth century britain By José Luis Ramos Gorostiza; Ana Rosado Cubero
  4. Irish Land Bonds: 1891-1938 By Nathan Foley-Fisher (Research and Statistics Division, Federal Reserve Board, Washington D.C.) and Eoin McLaughlin (History, Classics & Archaeology, University of Edinburgh)
  5. Dutch Corporate Finance, 1602-1850 By de Jong, A.; Jonker, J.; Roëll, A.
  6. La imagen económica de la España del siglo XVII: La mirada extranjera frente a la visión de los arbitristas By Luis Perdices de Blas; José Luis Ramos Gorostiza
  7. One hundred years of solitude, accumulation and violence: A comparative historical analysis of the Sierra Nevada of Santa Marta Valley By Bedoya Arias, M.E.
  8. Plenty of Land, Land of Plenty. The Agrarian Output of Portugal (1311-20) By António Henriques
  9. "Colonial New Jersey's Paper Money Regime, 1709-1775: A Forensic Accounting Reconstruction of the Data" By FARLEY GRUBB
  10. Financing U.S. External Trade, 1790-1819 By Javier Cuenca-Esteban
  11. The Formative Years of the Modern Corporation: The Dutch East India Company VOC, 1602-1623 By Gelderblom, O.; de Jong, A.; Jonker, J.
  12. Bloody Foreigners! Overseas Equity on the London Stock Exchange, 1869-1928 By Richard S.Grossman
  13. Savings banks and cooperative banks in Europe By Bülbül, Dilek; Schmidt, Reinhard H.; Schüwer, Ulrich
  14. Spatial Takeoff in the First Industrial Revolution By Alex Trew
  15. Border Studies By Donzelli, S.
  16. Trade, Self-Governance,and the Provision of Law and Order, with an Application To Medieval English Chartered Towns By Angelucci, Charles; Meraglia, Simone
  17. Financial and Sovereign Debt Crises: Some Lessons Learned and Those Forgotten By Carmen Reinhart; Kenneth Rogoff
  18. Economic Prospects for the Long Run : a speech at Bard College at Simon's Rock, Great Barrington, Massachusetts, May 18, 2013 By Bernanke, Ben S.
  19. Imperfect but Hard Competition: the Portuguese Banking Sector in the Golden Age (1950-1973) By Luciano Amaral
  20. How Are You, My Dearest Mozart? Well-being and Creativity of Three Famous Composers Based on their Letters By Karol Jan BOROWIECKI
  21. The Triple Helix as a Highly Charged Intellectual Enterprise By Todeva, Emanuela; Etzkiwitz, Henry
  22. Competition/fragmentation in equities markets: A literature survey By Gomber, Peter; Sagade, Satchit; Theissen, Erik; Weber, Moritz Christian; Westheide, Christian

  1. By: Rafael Dobado-González (Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales.); Alfredo García-Hiernaux (Dpto. de Fundamentos del Análisis Económico II. Facultad CC. Económicas y Empresariales. Univ. Complutense de Madrid. Campus de Somosaguas, s/n. 28223 POZUELO DE ALARCÓN (MADRID).); David Guerrero-Burbano (Centro Universitario de Estudios Financieros, Madrid.)
    Abstract: This paper extends our previous work on grain market integration across Europe and the Americas in the eighteenth and nineteenth centuries (Dobado, García-Hiernaux and Guerrero, 2012). By using the same econometric methodology, we now present: 1) a search for statistical evidence in the East of an “Early Globalization” comparable to the one ongoing in the West by mid eighteenth century; 2) a study on the integration of grain markets in China and Japan and its functioning in comparison to Western countries; 3) a discussion of the relevance of our findings for the debate on the Great Divergence. Our main conclusions are: 1) substantial differences in the degree of integration and the functioning of grain markets are observed between East and West; 2) a certain degree of integration may be reached through different combinations of factors (agents, policies, etc.) and with dissimilar effects on long-run economic growth; 3) the absence of an “Early Globalization” in the East reveals the existence of some economic and institutional limitations in this part of the world and contributed to its “Great Divergence” with the West from at least the eighteenth century.
    Abstract: Este trabajo expande nuestra investigación previa sobre la integración del mercado de granos en Europa y América (Dobado, García-Hiernaux y Guerrero, 2012). Usando la misma metodología econométrica, presentamos ahora: 1) la búsqueda de evidencia estadística en el Este de una “Globalización temprana” semejante a la encontrada en el Oeste desde mediados del siglo XVIII; 2) un estudio de la integración de los mercados en china y Japón y su funcionamiento en comparación con los países occidentales; 3) una discusión de la relevancia de nuestros resultados respecto al debate sobre la “Gran Divergencia”. Nuestras principales conclusiones son: 1) encontramos diferencias sustanciales entre Este y Oeste en lo que al grado de integración y al funcionamiento de los mercados de grano se refiere; 2) un cierto grado de integración puede ser alcanzado mediante combinaciones diferentes de factores (agentes, políticas, etc.) y con efectos distintos sobre el crecimiento económico a largo plazo; 3) la ausencia de una “Globalización temprana” en el Este revela la existencia de limitaciones económicas e institucionales en esta parte del mundo y contribuyó a la “Gran Divergencia” con el Oeste desde al menos el siglo XVIII.
    Keywords: Economic history, Market integration, Globalization, Great divergence, Time series analysis, Historia económica, Integración de mercados, Globalización, Gran divergencia, Series temporales.
    JEL: C22 F15 N10 N70
    Date: 2013–08
  2. By: Andreas Ortman (School of Economics, Australian School of Business, the University of New South Wales)
    Keywords: Experimental methods, Early History of Experimentation in Economics
    JEL: B41 C9
    Date: 2013–12
  3. By: José Luis Ramos Gorostiza (Departamento de Historia e Instituciones Económicas I. Facultad de Ciencias Económicas y Empresariales. Universidad Complutense de Madrid, Campus de Somosaguas,s/n. 28223 Pozuelo de Alarcón (Madrid) - SPAIN); Ana Rosado Cubero (Departamento de Historia e Instituciones Económicas I. Facultad de Ciencias Económicas y Empresariales. Universidad Complutense, Campus de Somosaguas. 28223 Pozuelo de Alarcón (Madrid), Spain.)
    Abstract: By the mid-nineteenth century, along with other network infrastructurestypical of the Second Industrial Revolution, began to take shape the modern system of water supply. The purpose of this paper is to examine the major economic ideas surrounding the beginnings of this new urban service in Britain during the second half of the nineteenth century, which marked a starting point for future analytical developments. First, the socioeconomic importance of improvement of public health through an intensive use of running water. Second, the emergence of the concept of natural monopoly. And finally, the debate about the organization of service management. This interesting case gives us the opportunity to observe the interaction, in both directions, between facts and economic ideas.
    Abstract: Hacia mediados del siglo XIX, junto a otras infraestructuras en red propias de la segunda revolución industrial, empezó a configurarse el sistema moderno de abastecimiento de agua potable. El propósito de este trabajo es examinar las principales ideas económicas que rodearon los inicios de este novedoso servicio urbano en Gran Bretaña durante la segunda mitad del siglo XIX, y que marcaron un punto de arranque para futuros desarrollos analíticos. Primero, la importancia socioeconómica de la mejora de la salubridad pública a través de un uso intensivo de agua corriente. Segundo, el surgimiento de la noción de monopolio natural. Y tercero, el debate en torno a la mejor forma de organizar la gestión del servicio. Lo interesante del caso es que nos ofrece la posibilidad de observar la interacción, en ambos sentidos, entre hechos e ideas económicas.
    Keywords: Urban water supply, Great Britain, Public health, Natural monopoly, History of economic thought, Abastecimiento urbano de agua, Gran Bretaña, Salud pública, Monopolio natural, Historia del pensamiento económico.
    JEL: B00 B10
    Date: 2013
  4. By: Nathan Foley-Fisher (Research and Statistics Division, Federal Reserve Board, Washington D.C.) and Eoin McLaughlin (History, Classics & Archaeology, University of Edinburgh)
    Abstract: This paper introduces a new database on Irish land bonds listed on the Dublin Stock Exchange from 1891 to 1938: it outlines the nature of these bonds and presents data on their size, liquidity and market returns. These government-guaranteed bonds arose during a period when the possibility of Irish secession from the United Kingdom appeared ever more likely, and were used to finance the transfer of land ownership from landlords to tenants in Ireland (North & South). Movements in the prices of these bonds can help to understand how financial markets responded to events in the early economic and political history of the Irish Free State, including Irish partition, Independence, Civil War and de facto default. Understanding these issues has contemporary relevance for regions in Spain (Catalonia, Euskadi), Great Britain (Scotland) and Belgium (Flanders).
    Keywords: Irish economic history, land reform, land bonds, Dublin Stock Exchange.
    JEL: N23 N24 N53 N54 G15
    Date: 2014–01–08
  5. By: de Jong, A.; Jonker, J.; Roëll, A.
    Abstract: Early Modern Dutch corporate finance had two notable features, a remarkable ease of raising large amounts of capital and a flexible legal framework. Having pioneered new corporate forms with two intercontinental trading companies, Dutch business adopted such forms on a wider scale only during the 18th century, when economic concentration and consolidation led to the appearance of business units large enough to need them. The financial intermediation and legal institutions available also facilitated early industrialization during the 19th century, up to and including the railways. The large export of capital throughout the period under consideration failed to harm economic development at any point or in any way.
    Keywords: corporate finance
    JEL: G3 M00
    Date: 2013–06–04
  6. By: Luis Perdices de Blas (Departamento de Historia e Instituciones Económicas I. Facultad de Ciencias Económicas y Empresariales. Universidad Complutense de Madrid, Campus de Somosaguas,s/n. 28223 Pozuelo de Alarcón (Madrid) - SPAIN); José Luis Ramos Gorostiza (Departamento de Historia e Instituciones Económicas I. Facultad de Ciencias Económicas y Empresariales. Universidad Complutense de Madrid, Campus de Somosaguas,s/n. 28223 Pozuelo de Alarcón (Madrid) - SPAIN)
    Abstract: The economic image of the seventeenth century Spain: The foreign look versus the viwof the Arbitristas This paper compares the economic image of the seventeenth century Spain we received from the foreign travelers with that offered by the arbitristas, examining the main similarities and differences. Specifically, it analyses the following issues: the consideration of natural resources base, the vision of national character and its relation to productive activities, and the perception of economic situation and the causes of backwardness. The aim is to contrast the view of those who were thinking "from the inside" about the causes of the striking decline of the country, with the free and uncensored look of foreign visitors, which –despite its constraints and limitations– tended to focus on the most striking and different aspects compared to the reality of their own countries.
    Abstract: Este trabajo compara la imagen económica de la España del siglo XVII que nos transmitieron los viajeros extranjeros con la ofrecida por los arbitristas, examinando las principales similitudes y diferencias. En concreto, se detiene en las siguientes cuestiones: la consideración del medio natural, la visión del carácter nacional y de su relación con las actividades productivas, y la percepción de la situación económica y de las causas del atraso. Se trata de contrastar la opinión de aquellos que estaban reflexionando “desde dentro” sobre las causas de la llamativa decadencia del país, con la mirada libre y sin censuras del visitante extranjero, que –pese a sus condicionantes y limitaciones– tendía a fijarse en los aspectos más llamativos y diferentes respecto a la realidad de su propio país de origen.
    Keywords: Travelers, Arbitristas, Economy, Spain, Seventeenth century, History of economic thought, Viajeros, Arbitristas, Economía, España, siglo XVII, Historia del pensamiento económico.
    JEL: B00 B10
    Date: 2013–05
  7. By: Bedoya Arias, M.E.
    Abstract: This is an analysis of two moments in the Colombian history within a century of difference, where isolation, accumulation and violence interact in a region brought into the worlds’ imaginary by the Colombian novelist Gabriel García Márquez in One Hundred years of Solitude. A valley between four natural borderlines: the Sierra Nevada of Santa Marta, the Perijá hills, the Central and East ‘Cordilleras’ -mountain range- and the Magdalena River in the departments of Cesar and Magdalena (Colombia) part of what was called the department of ‘Magdalena Grande’ was blessed – or perhaps coursed – with wealth in natural resources; plenty of water streams, a unique biodiversity, cultural affluence and immense reserves of one of the purest steam coals. This paper attempts to draw a picture of the superimposed and persistent power structures that apparently facilitate the accumulative processes and imbalances within one century of difference, making use of violence as means to maintain equilibrium. Environment is changed trough politicized violent inflictions over society and nature. The resultant scars are the ones inflicted on a collective memory, as this valley is and will always be recalled by the poetic truth of the narrative of Gabriel García Marquez who recreated this mythic environment as ‘Macondo’. He remembers his own story of early childhood that here serves as an excuse to analyze a region that is again being bled by accumulation.
    Keywords: Colombia, accumulation, banana, coal, extraction enclaves, isolation, political ecology of violence, violence
    Date: 2013–03–18
  8. By: António Henriques (Faculdade de Economia, Universidade do Porto)
    Abstract: This article presents a benchmark for Portuguese agrarian output for the 1311-20 decade. This benchmark is built from the supply side, using the value of ecclesiastical tithes, and tested with macro and micro level demand-side information. Compared with existing estimates for contemporary England, real Portuguese per capita agrarian output appears high. This result challenges the received wisdom that by 1320 Portugal was hard-pressed by demographic forces. Instead, it confirms that by 1320, Portugal was a ‘frontier economy’ with a high land/labour ratio and a high per capita output level.
    Keywords: Economic History, Agriculture, Living Standards, Frontier Economy
    JEL: N53
    Date: 2014–01
  9. By: FARLEY GRUBB (Department of Economics,University of Delaware)
    Abstract: Forensic accounting techniques are used to construct new data series on emissions, redemptions, and bills outstanding for colonial New Jersey paper money. These components are further separated into the amounts initially legislated and planned, and the amounts actually executed. Not only are these data improvements over the prior data in the literature, but they provide a more complete and nuanced accounting of colonial New Jersey’s paper money regime than what has been done previously for any British North American colony. Enough detail of the forensic accounting exercise is given for scholars to reproduce the data series from the original sources.
    Keywords: bills of credit, colonial money supply, land banks, monetary redemption, paper money
    JEL: E51 N11
    Date: 2014
  10. By: Javier Cuenca-Esteban (Department of Economics, University of Waterloo)
    Abstract: In the "neutrality years" 1793-1807 and beyond, U.S. merchants drew on Spanish-American silver to finance their carrying trade and to settle deficits with Europe and the Far East. The size and direction of these payments must remain unknown, because no records of silver flows were kept until 1821. This paper infers the financial claims and liabilities involved from estimated balances of trade and services at foreign ports by geographic areas. It suggests that the seemingly central role of Spanish silver pesos in financing U.S. deficits with China is only partially explained by legal exchange between the United States and Spain, Spanish America, or Europe. The weight of evidence and argument thus points to any additional silver coin that U.S. merchants may have secured through unofficial exports directly to Spanish America.
    JEL: N71 N73 N75 N76 N77 N41 N43 N45 N46 N47
    Date: 2013–12
  11. By: Gelderblom, O.; de Jong, A.; Jonker, J.
    Abstract: With their legal personhood, permanent capital with transferable shares, separation of ownership and management, and limited liability for both shareholders and managers, the Dutch East India Company (VOC) and subsequently the English East India Company (EIC) are generally considered a major institutional breakthrough. Our analysis of the business operations and notably the financial policy of the VOC during the company’s first two decades in existence shows that its corporate form owed less to foresight than to constant piecemeal engineering to remedy original design flaws brought to light by prolonged exposure to the strains of the Asian trade. Moreover, the crucial feature of limited liability for managers was not, as previously thought, part and parcel of that design, but emerged only after a long period of experimenting with various, sometimes very ingenious, solutions to the company’s financial bottlenecks.
    Keywords: Dutch East India Company, VOC
    JEL: F1 O1 O43
    Date: 2012–06–23
  12. By: Richard S.Grossman (Department of Economics, Wesleyan University)
    Abstract: This paper presents data on quantity, capital gains, dividend, and total returns for domestic and overseas equities listed on the London Stock Exchange during 1869-1928. Indices are presented for Africa, Asia, Europe, Latin America, North America, Australia/New Zealand and for the finance, transportation, raw materials, and utilities sectors in each region. Returns and volatility were typically highest in emerging regions and the raw materials sector. Dividend yields were similar across regions and differences in total returns were due largely to disparities in capital gains. Returns of firms in more industrial markets were relatively highly correlated with each other and with developing regions with which they had substantial colonial or trade connections. Contingent liability was most extensively employed where leverage was high and the physical assets were either meager or inaccessible to creditors.
    Date: 2014–01
  13. By: Bülbül, Dilek; Schmidt, Reinhard H.; Schüwer, Ulrich
    Abstract: Until about 25 years ago, almost all European countries had a so-called three pillar banking system comprising private banks, (public) savings banks and (mutual) cooperative banks. Since that time, several European countries have implemented far-reaching changes in their banking systems, which have more than anything else affected the two pillars of the savings and cooperative banks. The article describes the most important changes in Germany, Austria, France, Italy and Spain and characterizes the former and the current roles of savings banks and cooperative banks in these countries. A particular focus is placed on the German case, which is almost unique in so far as the German savings banks and cooperative banks have maintained most of their traditional features. The article concludes with a plea for diversity of institutional forms of banks and argues that it is important to safeguard the strengths of those types of banks that do not conform to the model of a large shareholder-oriented commercial bank. --
    Date: 2013
  14. By: Alex Trew (University of St Andrews)
    Abstract: Using the framework of Desmet and Rossi-Hansberg (forthcoming), we present a model of spatial takeoff that is calibrated using spatially-disaggregated occupational data for England in c.1710. The model predicts changes in the spatial distribution of agricultural and manufacturing employment which match data for c.1817 and 1861. The model also matches a number of aggregate changes that characterise the first industrial revolution. Using counterfactual geographical distributions, we show that the initial concentration of productivity can matter for whether and when an industrial takeoff occurs. Subsidies to innovation in either sector can bring forward the date of takeoff while subsidies to the use of land by manufacturing firms can significantly delay a takeoff because it decreases spatial concentration of activity.
    Keywords: Endogenous growth, first industrial revolution, economic geography, structural change.
    JEL: O11 O18 O33 N13 N93 R12
    Date: 2014–01–01
  15. By: Donzelli, S.
    Abstract: In the last two decades, a novel interdisciplinary field of inquiry has emerged under the label of Border Studies. This area of research has mainly reflected on the nature and functionalities of borders and boundaries, bringing up discussions on space, politics, economics, and culture. In particular, Border Studies have significantly contributed to the understanding of the role of borders in shaping migratory movements. In order to map this very large field of investigation, numerous state of the art reviews have been published. However, none of the reviews encountered has addressed the following issues: first, the main assumptions informing different theoretical perspectives in Border Studies; second, the application of Border Studies to analyse human mobility in the Global South. Thus, in order to participate in producing a more complete understanding of the knowledge produced in this field, the present paper pursues a pair of objectives. One objective is to critically present the main theoretical approaches employed in the field of Border Studies, reflecting on their heuristic possibilities and limitations as well as their political implications. The other objective is to explore the intertwining of Border and Migration Studies with a specific focus on Africa, Asia and Latin America, devoting particular attention to the way this body of research has analysed the condition of migrant women workers. Overall, the essay generates suggestions for future significant investigations.
    Keywords: Borders, boundaries, migration, Global South, migrant women workers
    Date: 2013–11–30
  16. By: Angelucci, Charles; Meraglia, Simone
    Abstract: We build a model to investigate the interaction between trade, the supply of law and order, and the nature of governing political institutions. To supply law and order necessary for a representative merchant to create wealth, a ruler (i) appoints officials capable of coercion and (ii) introduces a system of taxation. When potential gains from trade are important, the demand for law and order is high but appointing numerous officials capable of coercion may pave the way to arbitrary and distortive expropriation. Delegating the task of appointing offi- cials to the better-informed merchant lowers the cost of sustaining good market institutions, but exacerbates the latter's temptation to escape taxation. When gains from trade are instead low delegation never occurs. Our theory provides a rationale for the case of post-Norman Conquest England (1066-1307) where, in parallel with the rise of trade, kings increasingly give in to the citizens' desire of self-governance by granting Charters of Liberties.
    Keywords: Institutions, Law Enforcement, Trade, Delegation, Taxation, Bureaucracy
    JEL: D02 D23 D73 P14 P16
    Date: 2013–10–23
  17. By: Carmen Reinhart; Kenneth Rogoff
    Abstract: Even after one of the most severe multi-year crises on record in the advanced economies, the received wisdom in policy circles clings to the notion that high-income countries are completely different from their emerging market counterparts. The current phase of the official policy approach is predicated on the assumption that debt sustainability can be achieved through a mix of austerity, forbearance and growth. The claim is that advanced countries do not need to resort to the standard toolkit of emerging markets, including debt restructurings and conversions, higher inflation, capital controls and other forms of financial repression. As we document, this claim is at odds with the historical track record of most advanced economies, where debt restructuring or conversions, financial Repression, and a tolerance for higher inflation, or a combination of these were an integral part of the resolution of significant past debt overhangs.
    Keywords: Financial crisis;Sovereign debt;Debt conversion;Debt restructuring;External debt;Public debt;Inflation;Economic growth;Developed countries;Emerging markets;Financial crises, sovereign debt crises, deleveraging, credit cycles, financial repression, debt restructuring
    Date: 2013–12–24
  18. By: Bernanke, Ben S. (Board of Governors of the Federal Reserve System (U.S.))
    Date: 2013–05–18
  19. By: Luciano Amaral
    Abstract: JEL codes:
    Keywords: Network competition, On/off-net pricing, Integration, Call externality
    Date: 2013
  20. By: Karol Jan BOROWIECKI (Department of Business and Economics, University of Southern Denmark; Department of Economics, Trinity College Dublin; Department of Economic History, Lund University)
    Abstract: The well-being of a person is reflected in the language used. Building on 1,400 letters written by three famous music composers, I obtain well-being indices that span their lifetime. The validity of this methodology is shown by linking the indices with biographical information and through estimation of the determinants of well-being. I find, consistent with the literature, that work-related engagements and accomplishments are positively related with well-being, while poor health or death of a relative is detrimental. I then exploit the data and provide quantitative evidence on the existence of a causal impact of negative emotions on outstanding creativity, an association hypothesized across several disciplines since the Antiquity; however, not yet convincingly established for the case of extraordinary achievers.
    Keywords: Well-being, happiness, positive emotions, negative emotions, creativity, health, labor, composer, letters, methodology, music history.
    JEL: D60 I31 J24 N33 Z11
    Date: 2014–01
  21. By: Todeva, Emanuela; Etzkiwitz, Henry
    Abstract: Reflections on the evolution of the Triple Helix movement and the discussions at its latest conference in 2014.
    Keywords: Triple Helix, Intermediation, Governance, Theory and Practice
    JEL: H10 H42 L5 L51 O32 O38
    Date: 2013–09
  22. By: Gomber, Peter; Sagade, Satchit; Theissen, Erik; Weber, Moritz Christian; Westheide, Christian
    Abstract: Advances in technology and several regulatory initiatives have led to the emergence of a competitive but fragmented equity trading landscape in the US and Europe. While these changes have brought about several benefits like reduced transaction costs, regulators and market participants have also raised concerns about the potential adverse effects associated with increased execution complexity and the impact on market quality of new types of venues like dark pools. In this article we review the theoretical and empirical literature examining the economic arguments and motivations underlying market fragmentation, as well as the resulting implications for investors' welfare. We start with the literature that views exchanges as natural monopolies due to presence of network externalities, and then examine studies which challenge this view by focusing on trader heterogeneity and other aspects of the microstructure of equity markets. --
    Keywords: Market Structure,Competition,Fragmentation,Liquidity,Market Quality
    JEL: G10
    Date: 2013

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