The political economy of post-war Finland, 1945–19521

Abstract

The paper is primarily concerned with the Finnish government's management of the Finnish economic situation after the Second World War. Overall, post-war policies were dominated by three main goals, first, how to deal with the war reparation payments required under the harsh political terms of the 1944 Armistice Treaty; secondly, to ensure the settlement of the Karelian refugees and demobilised veterans; and thirdly, the raising of production and the standard of living, including the easing of the rationing system. The focus is especially in analysing how this was financed externally and by the state economy without hyperinflation and considerable indebtedness of the state. From the point of view of the government finances, the financing of the war was transformed to the financing of the war reparations, the compensations due to the war and the settlement of the homeless people. The paper has drawn on the findings of the Studies of the Economic Growth of Finland and other sources and can be seen as a sequel to a previous article on the Finnish war economy between 1939-1945.²     

The note issues of the bank of Sweden, 1668–1968

Abstract

Bank notes have a long history in Sweden. The first to have all the main characteristics of a bank note were issued in 1661 by Stockholms Banco. After the liquidation of that bank, caused by the over-issue of notes, the Riksbank in 1668 founded a new bank, Riksens Standers Bank (the Bank of the Estates of the Realm), now known as Sveriges Riksbank (the Bank of Sweden). This bank was initially prohibited by its statutes from issuing notes, but from the very year of its inception the public, against the will of the Bank, used certain papers intended for the internal operation of the Bank as substitute bank notes, and in 1701 the Bank introduced instruments of payment out of which bank notes proper subsequently developed.     

The bank of France and the sterilization of gold, 1926–1932

The malfunctioning of the interwar gold standard is frequently ascribed to sterilization of gold flows by central banks, particularly the Bank of France. This paper analyzes the actions of the Bank of France and the issue of sterilization. New estimates of the impact of policy on the Bank of France's gold reserves indicate that, of the policies which ostensibly influenced gold flows, only the absence of expansionary open market operations, which were precluded by statute, significantly affected French reserves. Those statutes and the sentiment which led to their adoption are in turn ascribed to France's experience with inflation earlier in the decade. Thus, the gold standard's collapse in the 1930s is linked to the circumstances under which it was reconstructed in the 1920s.     

Investment in Finland, 1860–1979

Abstract

Before the First World War, Finland was clearly an agrarian developing country. Following international models, the beginnings of new manufacturing based on machine technology had been introduced to complement traditional iron manufacturing, miscelleaneous handicraft production of consumer goods and sawmills driven by water-power. Between the two world wars the newly independent country developed its wood and paper manufacturing energetically, thus attempting to secure a foothold in western markets. Owing to favourable development in agriculture and forestry, home-market industry gained considerable strength. Agriculture still accounted for over a third of total production and employed approximately one half of the labour force.     

Finland and the question of West European economic integration, 1947–1961

Abstract

The study deals, on one hand, with the international politics connections, and, on the other, the endogenous economic policy implications of Finland's relationship with West European economic arrangements from the Marshal! Plan up to the FINN-EFTA Agreement. In the 1950s, the Finnish economy was, in fact, a closed economy, albeit highly dependent on foreign trade. Finland's international position in the Soviet sphere of influence imposed restraints with regard to participation in international economic integration. Finland, for example, remained outside the Marshal! Plan and the Organization for European Economic Cooperation (OEEC), and even Nordic cooperation was a delicate matter from the point of view of relations with the Soviets. However, the protectionist foreign trade policies, consisting of both tariffs and quantitative restrictions, explain at least as much of the relative isolation of the Finnish economy. In these circumstances, Finland's participation in EFTA cooperation, within the framework of the FINN-EFTA agreement, from 1961 onwards was the decisive turning point towards an opening economy.     

Stock returns under hyperinflation: Evidence from China 1945–48

This paper presents new evidence for the Fisher hypothesis, which states a positive relationship between nominal stock returns and inflation. We introduce a new data set from the episode of hyperinflation that occurred in China after World War II. To establish the reliability of our estimates we consider different frequencies, and time horizons and econometric models. The results reveal that stocks were a complete hedge against expected inflation and a partial hedge against unexpected inflation. In contrast to the empirical literature on the ‘stock return-inflation puzzle’, we find that the Fisher hypothesis is applicable to common stocks even with a short-horizon in the Chinese hyperinflation context.     

The geography of urbanization — Sweden and Finland,c. 1570–1770

Abstract

In this article Swedish urbanization is considered as a long term growth cycle. The urban system expanded both geographically and demographically during the seventeenth century. Many new towns were founded, and urban growth rates were generally high. Swedish urban geography was characterized by peripheral expansion mainly towards northern Sweden. At the same time there was a strong tendency towards the centralization of urban resources. The capital city, Stockholm, evolved from being a medium-sized town to becoming a city worthy of Sweden s great power status. During the eighteenth century several of the seventeenth century trends were reversed: the centralising tendency ended and indeed regressed, while general urban growth slowed down, turning into an ‘urban growth from below’. Stockholm became a stagnation metropolis' and the eastern-central part of Sweden experienced an urban setback relative to western Sweden, where several towns, including Gothenburg, profited from their close connections with the expansive markets of northern and western Europe.     

Internal migration and industrialization in Finland, 1878–1939

Abstract

For the economic historian the statistics of population are quite as important as those of trade. To understand the economic development of a country it is necessary to have some knowledge I: 0 of the distribution of population at different periods, 2:0 of what changes have been effected by migration, and also 3 : 0 of the forces influencing migration. The analysis of these forces helps, moreover, to illuminate the nature of man's economic behaviour.     

‘Cooperation on a purely matter-of-fact basis’: the Norwegian central bank and its relationship to the German supervisory authority during the occupation, 1940–1945

Recent publications have addressed the issue of the financial contribution of occupied countries to the German war economy from 1939 until 1945. Occupied countries contributed between 25 and 30% of the total German war costs. According to recent calculations, the Norwegian contribution has been between 6 and 7% of the occupied countries' total contribution; per capita the Norwegian war tribute was twice the average of the occupied West-European countries. The main aim of the paper is to explain how the relatively large Norwegian contribution came about by focusing on the institutional arrangements of financial transfers. The role of the central bank, Norges Bank, and its relationship with its German supervisory authority during the occupation is particularly important. The accommodating behaviour of Norges Bank (NB) and the shrewd institutional set-up and actual operandi of the monetary and financial occupation regime in Norway, based on indirect governance, served German interests better than the more frequent use of direct rule and open inference in the equivalent domestic institutions in Belgium, France and The Netherlands.     

Value creating mergers: British bank consolidation, 1885–1925

The British banking sector had many small banks in the mid-nineteenth century. From around 1885 until the end of World War One there was a process of increasingly larger mergers between banks. By the end of the merger wave the English and Welsh market was highly concentrated, with only five major banks. News of a merger brought a persistent rise in the share prices of both the acquiring and the target bank (roughly 1% and 7%, respectively). Non-merging banks, especially those whose local market concentration rose because of the merger, saw their stock prices rise. Our findings suggest that the process of bank consolidation increased collusive behavior among merged banks, to the likely detriment of the consumer.     

Iron ores and iron works in Finland, 1809–1884

Abstract

After more than forty years work, Prof. Laine has finally completed his study of the Finnish Iron and Copper Industries 1809–1884. His 2000-page account is extremely detailed. Vol. I aims at providing a synthesis of all the separate aspects of development. Vol. II contains monographs on all the iron and copper works, Vol. III on all the mines, bloomeries and metal factories. Thus, these. two volumes, apart from their independent value for local historical research, provide the main, though not the only, source material for Vol. I. This being so, it is understandable that Vol. I was not the first to be published; the printing of the third volume was delayed, however, for technical reasons, and it was, in fact, not published until after the synthesis.     

The Norwegian market for British Shipbuilding, 1945–1967

Abstract

The British Shipbuilding industry experienced a process of both competitive and comparative decline during the period 1945 to 1967 — when the world market for ships was at its most vibrant. The present article seeks to analyse this decline through an examination of the loss of the industry's most important export market — Norway. It is argued that issues such as price, failure to meet delivery dates and to offer competitive credit terms, were all factors in British shipbuilding's loss of market share in Norway. Ultimately British shipbuilders retained a production oriented strategy in a market which was being revolutionised in both structural and technological terms. The failure to adopt a marketing oriented strategy, therefore, underpinned the failure of the British shipbuilding industry in the Norwegian market and would also account for its failure in the domestic market.     

Big business in Sweden: The golden age of the great Swedish shipyards, 1945–1974

Abstract

This article examines the great Swedish shipyards during the long period of expansion and transformation which lasted from the end of the Second World War to the beginning of the shipping crisis in 1974. It aims to try to explain the successes achieved during this period of growth. Swedish shipbuilding's character as an export industry was linked to the rapidly growing international oil economy and the building of tankers which created enormous opportunities for development. The tanker vessel's simple hull, along with the requirement of tightness, brought an early orientation towards welding and sectional building. The demand for ever-larger vessels resulted in the alignment of production systems towards such construction. The consequences of this are studied in terms of markets, financing problems, investment. production technology and the role ofthe state.     

Academic Anti-Semitism and the Austrian School: Vienna, 1918–1945

The theme of academic anti-Semitism has been widely discussed recently in histories of the interwar period of the University of Vienna, in particular its Faculty of Law and Policy Sciences. This paper complements these studies by focusing on the economics chairs of this faculty and, more generally, on the fate of the younger generation of the Austrian School of Economics. After some introductory remarks the paper concentrates on three case studies: the neglect of Mises in all three appointments of economics chairs in the 1920s; the anti-Semitic overtones in the conflict between Hans Mayer and Othmar Spann, both professors of economics in the faculty; and on anti-Semitism as a determinant of success or failure in academia, and consequently of the emigration of Austrian economists. Finally, we have a short look at the development of economics at the University of Vienna during and after the Nazi regime.     

Not an ordinary bank but a great engine of state: The Bank of England and the British economy, 1694–1844

From its foundation as a private corporation in 1694, the Bank of England extended large amounts of credit to support the British private economy and to support an increasingly centralised British state. The Bank helped the British state reach a position of geopolitical and economic hegemony in the international economic order. In this paper, we deploy recalibrated financial data to analyse an evolving trajectory of connections between the British economy, the state, and the Bank of England. We show how these connections contributed to form an effective and efficient fiscal–naval state and promote the development of a system of financial intermediation for the economy. This symbiotic relationship became stronger after 1793. The evidence that we consider here shows that although the Bank was nominally a private institution and profits were paid to its shareholders, it was playing a public role well before Bagehot's doctrine.     

Trade between Finland and Russia in 1860–1917

Abstract

In his thesis, published in September 1970, Dr. Erkki Pihkala traces the trade relations between Finland and Russia in 1860–1917 against the background of the development of trade and industry in the two countries and their political relations with one another. In addition to this main study he has published complementary minor papers on certain special aspects, all of which we review here.     

A Norwegian fixation: explaining cheap money in Norway, 1945–1986

In a number of European countries, credit markets were characterised by heavy regulations of quantities and prices, in terms of interest rates, in the post war years. In Norway, the regulations became more vigorous and lasted much longer, than most other countries. This article seeks to explain the extent and persistence of the policy by tracing the role of leading economists, of financial sector, and political considerations in relation to growths policies and the housing markets. Whereas a number of factors are highlighted in the emergence of the system, the role of political considerations in relation to cheap funding for the housing sector appears as a fundamental cause and condition in explaining the persistence of the cheap money policies into the mid-1980s.     

The Danish Agro Machinery Industry in a Global Perspective, 1945–2005

Abstract

Since the mid-nineteenth century, agriculture and the agro machinery industry has formed an integral part of the developed world, dominated by North America and Western Europe. After the Second World War, agricultural industrialization speeded up. Millions of small and mixed farms in the West disappeared to be replaced by large-scale and specialized farming. The technology needed to transform agriculture was supplied by an expanding agro machinery industry. As in other fields of industry, the agro machinery industry turned into an international business. By the turn of the twentieth century, farming and industry took an even bigger step as business and technology were being globalized. The agro machinery industry that served these global markets remained in the West, however. Eventually, transatlantic mergers consolidated firms into industries for plant, dairy and pig and poultry farming equipment. This article discusses how the Danish agro machinery increasingly became an integrated part of international and global developments.     

Politics and economic theory in allied planning for peace, 1944–1945

Abstract

At the beginning of June 1919, a member of the British Delegation at the Paris Peace Conference, the young John Maynard Keynes, gave up hope of anyone listening to his views which were based on economic theory, or to his call for a sensible revision of the peace terms.