Bagehot for beginners: the making of lender‐of‐last‐resort operations in the mid‐nineteenth century1

In this article we develop new tools to survey the development of lending‐of‐last‐resort operations in the mid‐nineteenth century. One finding is that free lending and extensive liquidity support against good collateral developed gradually after 1847, and was already a fact of life before Bagehot published Lombard Street. Another is that the extension of the Bank of England's lender‐of‐last‐resort function went along with a reduction of its exposure to default risks, in contrast with accounts that have associated lending of last resort with moral hazard. Finally, we provide a new interpretation of the ‘high rates’ advocated by Bagehot. We suggest they were meant to prevent banks from free‐riding on the safety offered by the central bank, and were aimed at forcing them to keep lending during crises so as to maintain a critical degree of liquidity in the money market.     

Information asymmetry and the speed of adjustment: debasements in the mid‐sixteenth century

This article examines the impact of information asymmetry on the movement of London–Antwerp exchange rates against the backdrop of the Great Debasement of 1544–51. The case of the revaluation of gold coins in the Habsburg Netherlands in 1539, about which the sovereign and the public possessed similar information, is used as the benchmark to judge how far the speed of adjustment was affected by information asymmetry. This article is also part of the recent literature that estimates the degree of financial market integration in late medieval and early modern Europe. In the framework of the threshold autoregressive model, the speed of adjustment and the transaction costs associated with arbitrage are estimated, and the results are judged using the speed of communication as a benchmark since the flow of information played a critical role in financial arbitrage. The results reveal that the sixteenth‐century London–Antwerp exchange markets were already as integrated as that during the late nineteenth century, but information asymmetry severely disturbed the effectiveness of exchange arbitrage.     

Economic nationalism and economic integration: the Austro‐Hungarian Empire in the late nineteenth century 1

This article seeks to square two seemingly contradictory strands in the literature on economic development in the late nineteenth‐century Habsburg Empire. On the one hand, there is an extensive historiography stressing the rise of nationalism and its close correlate of growing efforts to organize economic life along ethno‐linguistic lines. On the other, there is a substantial body of research that emphasizes significant improvements in market integration across the empire as an outcome of the diffusion of industrialization and an expanding railway network, among other factors. In this article, it is argued that the process of market integration was systematically asymmetric, shaped by intensifying intra‐empire nationality conflicts. While grain markets in Austria‐Hungary became overall more integrated over time, they also became systematically biased: regions with a similar ethno‐linguistic composition of their population came to display significantly smaller price gaps between each other than regions with different compositions. The emergence and persistence of this differential integration cannot be explained by changes in infrastructure and transport costs, simple geographical features, asymmetric integration with neighbouring regions abroad, or communication problems. Instead, differential market integration along ethno‐linguistic lines was driven by the formation of ethno‐linguistic networks due to intensifying conflict between groups—economic nationalism mattered.     

The historiography of French economic growth in the nineteenth century

There has been a long-standing debate about French nineteenth-century economic growth. After 1945 the ‘retardation—stagnation’ thesis dominated. From the 1960s ‘revisionists’ painted a more optimistic view. Recently, ‘anti-revisionism’ has revived gloomy ideas. New research has been primarily responsible for changes of view. National income estimates, and later cliometric studies, bolstered the revisionist argument. Work on the ‘great depression’ stimulated anti-revisionism. Scholars have also been influenced by the economic and political state of France at the time they were writing and the debate has been somewhat politicized. The article ends by surveying the ‘moderate revisionism’ which now prevails.     

Incentives,technology and the shift to year‐round dairying in late nineteenth‐century Denmark1

This article uses monthly trade data to document the decline in the seasonality in Danish butter exports that occurred from the 1880s onwards. This decline contrasted with steady or increasing seasonality elsewhere. Monthly butter prices in Britain, Denmark, and Ireland show that the incentives to shift into winter dairying were particularly high in the 1880s and 1890s; however, this cannot on its own explain the Danish shift, since our price data show that farmers elsewhere faced winter premia that were every bit as high as the Danish premia. The crucial factor in Denmark was the generation of empirical knowledge by the private and public sectors systematically analysing empirical evidence; the rapid diffusion of this knowledge in a highly educated society via lectures, exhibitions, written materials, and by institutions such as the new cooperative sector; and a willingness to absorb this knowledge by profit‐maximizing farmers.     

Modern theories of regulation: An old story. Danish gasworks in the nineteenth century

Abstract

The Great Northern Telegraph Company was established in 1869 and enjoyed a very successful era thanks to a de-facto monopoly on the telegraph lines from Northern Europe to the Far East. After 1945 the Company changed its focus from telegraphy to wireless communication and electronic equipment. This article presents an analysis of the dramatic developments in the decades following the Second World War.

The relationship between the changing strategies and the established structure is analysed using Alfred D.Chandler Jr's well-known Strategy and Structure concept. After 40 years this concept still seems relevant to the understanding of the peculiar capacity for survival and growth demonstrated by old, well-established firms. In the conclusion it is argued that the post-war growth of the Great Northern Telegraph Company was based on several factors. These were the fortune originating from the Company's golden age in the 1910s and the 1920s, the industry investment strategy during and after the Second World War and finally, the changes of the organisational structure in the 1970s, which created the vital correspondence between strategy and structure.     

African agricultural productivity and the transatlantic slave trade: evidence from Senegambia in the nineteenth century

Agriculture has played a central role in Africa's long‐term economic development. Previous research has argued that the low productivity of African economies has posed significant challenges to African efforts to produce an agricultural surplus or to develop commercial agriculture. Low agricultural productivity has also served as a key explanation for the transatlantic slave trade, on the basis that it was more profitable to export humans overseas than to grow and export produce. However, the field has suffered from a lack of comparable empirical evidence. This article contributes to this field by presenting quantitative data on historical land and labour productivity in Africa, from a case study of the agricultural productivity of Senegambia in the early nineteenth century. Focusing on five key crops, our results suggest that both land and labour productivity was lower in Senegambia than it was in all other parts of the world for which we have found comparable data. This article thus lends support to claims that stress ecological factors as one of the main determinants of Africa's historical development.     

International shipping and national economic growth: shipping earnings and the Greek economy in the nineteenth century 1

In Greece, a small peripheral European economy, the service sector and shipping in particular played a highly important role in nineteenth‐century economic development. Despite its importance, however, the difficulty of calculating the ‘invisible earnings’ from the shipping industry's engagement in international activities has led to its underestimation in most analyses of the country's economic growth. This article presents the first estimation of Greek shipping income in the nineteenth century. In addition, it examines the shipping industry within the context of Greek development as a whole, highlighting its significant role in the fully marketized and integrated area of the country's economy in the context of a wider world economy.     

The Paris financial market in the nineteenth century: complementarities and competition in microstructures1

This article sets out to explain why the Paris Bourse was highly successful in the nineteenth century in spite of the supposedly inefficient monopoly of the official market, the Parquet. The literature argues that the official monopoly was sidelined by a free, innovative market known as the Coulisse, but it fails to explain how the Coulisse emerged despite the monopoly and how the two markets persisted alongside each other during the entire century. We provide a detailed history of how these two markets emerged and interacted. The Parquet increasingly developed as a high‐end market, providing security, transparency, and effective settlement‐delivery to unsophisticated investors trading on the spot market. The Coulisse provided liquidity, immediacy, and opacity to professional investors trading mostly forward. In line with recent theoretical developments, we argue that the juxtaposition of heterogeneous organizations had important virtues for market participants, since it allowed the exchanges to specialize in different investors and services and made the exchanges complementary to each other. We demonstrate our claim by looking at both the formal rules and the actual functioning of the Parquet, drawing on its archives which we have recently classified.     

Identifying the woes of the cotton textile industry in Bengal: tales of the nineteenth century

This article seeks to answer three basic questions about the nineteenth‐century cotton textile industry in Bengal that still remain unresolved in the literature; namely, when did the industry begin to decay, what was the extent of its decay during the early nineteenth century, and what were the factors that led to this? In the absence of data on production, this article seeks to settle the debate on the basis of the industry's market performance and its consumption of raw materials. It contests the prevailing hypothesis that the industry's perpetual decline started in the late eighteenth or the early nineteenth century. Instead, it is argued that the decline started around the mid‐1820s. The pace of its decline was, however, slow though steady at the beginning, but reached crisis point by 1860, when around 563,000 workers lost their jobs. Regarding the extent of its decay, this article concludes that the industry was diminished by about 28 per cent by the mid‐1800s. However, it survived in the high‐end and low‐end domestic markets. Evidence is also gathered in favour of the hypothesis that, although British discriminatory policies undoubtedly depressed the industry's export outlet, its decay is better explained by technological innovations in Great Britain.     

The choice of fuel in the eighteenth‐century iron industry: the Coalbrookdale accounts reconsidered

Disquiet has remained over Hyde's conclusions as to the costs of coke‐ironmaking in the early eighteenth century. A detailed re‐examination of the production costs at Coalbrookdale has confirmed his conclusions for pig iron, but not for bar iron. Coalbrookdale Forge was merely small and inefficient. Any technological difficulties in the use of coke pig iron in finery forges were overcome before 1728. However, the iron industry was depressed in the 1730s due to Russian bar iron imports. After the Swedes increased their prices from 1747, new Shropshire furnaces began making pig coke iron for forges in 1754.     

Just add milk: a productivity analysis of the revolutionary changes in nineteenth‐century Danish dairying

The late nineteenth‐century Danish agricultural revolution saw the modernization and growth of the dairy industry. Denmark rapidly caught up with the leading economies, and Danish dairying led the world in terms of productivity. Uniquely in a world perspective, high quality micro‐level data exist documenting this episode. These allow the use of the tool of modern agricultural economists, stochastic frontier analysis, to estimate production functions for milk and thus find the determinants of these productivity and efficiency advances. This article identifies the contribution of modernization through specific new technologies and practices.