Welcome to The Long Run

On behalf of the Economic History Society (EHS), it is a pleasure to welcome you to The Long Run, the EHS blog.

This blog aims to encourage discussion of economic and social history, broadly defined. We live in a time of major social and economic change, and recent research in social science is showing more and more how much a historical and long-term approach to current issues can be the key to understanding our times. The importance of bringing together the disciplines that compose what we call social sciences and have them interact in a historical perspective is absolutely fundamental not only for the future directions of economic history, but also to be able to reflect on the mechanisms that regulate our world through data and knowledge.

The Long Run aims to host senior scholars as well as young researchers, and anyone who has interesting and scientifically sound contributions to make to Economic and Social History. The blog will also be a way for EHS members and anyone interested in the activities of the Society to keep updated on its activities, from our Review to CFPs and other activities that you can find on our website

We welcome any contribution or suggestion – please contact us at ehs.thelongrun@gmail.com

or take a look at our CFP here

It is appropriate to record my appreciation for Professor Peter Fearon, outgoing Chair of the EHS Public Engagement committee, who originally conceived the idea for the blog. A special thanks also to our editorial team: Marta Musso, Bernardo Bátiz-Lazo, Amy Ridgway, Judy Stephenson and Romesh Vaitilingam, without whom this blog would not exist. Special thanks are due to Marta who did much of the ‘heavy lifting’.

We look forward to seeing you here regularly, always standing on the shoulders of giants.

Professor David Higgins (EHS Public Engagement Committee)

13 June 2016

Inching Towards the Meter: Britain, Europe and the Politics of Economic Integration

by Aashish Velkar (University of Manchester)

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On Brexit day (23 June 2016), The Guardian reminded its readers about the ‘Euro myth’ of how European metrication laws had criminalised the use of the Imperial inch such that even the Queen was forced to ‘obey Europe’.[1] Since then, there have been several reports in the popular media about the need for Britain to abandon the ‘European’ metric system and return to its ‘traditional’ imperial measurement system.[2] These reports are yet another reflection of the festering anti-Europe sentiments and the perception that joining the EU led to the ‘loss’ of British sovereignty. Such popular sentiments may be traced to the EEC Directives aimed at harmonisation of ‘technical’ standards such as measurement units (e.g. 71/354/EEC). Harmonisation was one of the key principles of economic integration established by the Rome Treaty in 1957, primarily aimed at eliminating trade restrictions within the European communities. The case of the metrication policy in the 1970s clearly demonstrates how conflicting ‘framing’ of the pro- and anti-metrication arguments in popular politics led to the abandonment of the metrication policy, exacerbated the uncompetitiveness of British industry, and crystallised the popular perception that Brussels was imposing European laws that the British parliament had no choice but to implement.

The metric system was not imposed on Britain upon joining the European Communities between 1973 and 1975. This decision was made almost a decade earlier by Wilson’s government in 1965, when he promised at an EFTA meeting that the UK will adopt the metric system as its primary system of weights and measures. No doubt Wilson’s commitment to inch closer to Europe by giving up the imperial inch was made in anticipation of Britain’s application to join the EEC. The British industry had lobbied fervently between 1955 and 1965 for the adoption of international measurement standards. Most major associations such as the Confederation of British Industries, British Association for Advancement of Science, and the Trade Unions Congress (TUC) supported the policy of complete metrication.

In the early 1970s, even as political opposition to creeping metrication was crystallising, much of the popular literature on the subject conveyed a sense of inevitability concerning metrication in everyday lives. People did not like the change to metric measures – just as they had not liked currency decimalisation in 1971. However, most were prepared to go along with it. Popular opinion against the metric system really hardened following the high inflation in the mid-1970s. Opinion polls between 1972 and 1975 suggest that between a third and a quarter of those surveyed blamed currency decimalisation for high inflation (almost as high as those who blamed inflation on the decision to join the EEC). This view was exploited by several politicians who claimed that metric change was not in the interests of the consumers. In this period of ‘collective puzzlement’, when even experts were divided about the causes of inflation and how to tackle it, the linking of price increases to change of measurement units provided yet another reason to attack metric change. Media reports that EEC directives were compelling the British government to effect this change by 1978-79 added to the popular view that Europe was imposing its laws on Britain. The fact that Brussels had threatened to take the British government to court if it did not complete the metrication programme added fuel to this fire. The British government negotiated with EEC and secured a way of retaining the most popular Imperial units such as the pint and the mile in an amendment to the original EEC directive. The anti-metric lobby claimed this as a victory of how the principle of ‘free choice’ had triumphed over the ‘compulsory metrication’ that was being imposed upon Britain.

Meanwhile, British industry found themselves in an intractable position. Many firms had voluntarily converted to metric units anticipating economic gains in the long term. However, the political resistance to metrication of retail sectors meant that most industrial sectors could not entirely switch to metric units. This was a worst-of-both-worlds scenario. Using the imperial units for some operations in addition to using metric measurements meant firms had to carry extra inventory, incurred higher design costs, and added to the general confusion by operating on multiple standards.

The historical research shows that popular opinion was shaped by little factual information or over-simplification of quite complex economic issues. Framing of opposing arguments involved selecting particular bits of information to highlight, to the exclusion of other (often contradictory) information. The more that one group framed an issue in a particular way – such as EEC directives meant a loss of sovereign law-making powers for Britain – the more that particular bit of information gained salience over other information. Such historical analysis is useful in demonstrating how certain arguments dominated over others. The arguments that metrication of retail sectors was harmful for the consumer and that industry was exaggerating the consequences of dual measurement standards is an example of this. The argument that limiting metric conversion to industry was worse for Britain in economic terms received almost no traction. Analysing how people frame arguments potentially helps unpack why public opinion is shaped in ways that is contrary to ‘expert’ opinion. Certain frames, loaded with political rhetoric – such as metrication means giving up British tradition and heritage – can trump economic logic, as the Brexit debate has clearly demonstrated.

[1] The 10 Best Euro Myths’, The Guardian, 23 June 2016, https://www.theguardian.com (accessed online on 6 July 2016)

[2] http://www.telegraph.co.uk/news/2017/04/01/now-sovereign-nation-must-bring-back-imperial-units/ (accessed online on 2 April 2017)

Do the rules of the game matter? Monetary regimes and financial stability since 1920

by German Forero-Laverde (Universidad Externado de Colombia / Universitat de Barcelona)

Financial crises come in many shapes and forms. They can occur in stock markets, private or public debt markets, housing markets or any asset class you may think of (yes, even tulips). Attempts to predict the timing and asset class where the next crisis will show its ugly head have been unsuccessful in part due to the amount and diversity of forces at play. The veil of uncertainty that surrounds them and the negative effect they have on long-run economic growth makes the study of crises both pertinent and challenging.

The research, presented at the 2017 EHS annual conference, studies one possible factor that may be related to the frequency and intensity of booms and busts in stock and credit markets: the rules of the game. It studies the possibility that the monetary regime, competing decisions on monetary policy, exchange rates and capital flows, is related to the evolution of financial aggregates to different time horizons. The underlying idea, following the Bank for International Settlements, is that different regimes endow the financial system with varying levels of elasticity, allowing for imbalances to accumulate in the form of booms and unwind in the form of crises at different rates and intensity.

This is a stepping stone in the road to answer a question that has troubled policy makers for over a century: Should authorities and regulators intervene in the market trying to anticipate crisis, or is the best course of action to react once crises ensue? If regimes do play a role, and the channels of accumulation of imbalances are contingent on the institutions at play, it is possible that authorities may have a wider array of tools at their disposal to avoid the accumulation of financial stability.

In order to do it, the research proposes three new measures for the evolution of the stock market and credit aggregates since 1922 until today for France, Germany, Italy, the Netherlands, Sweden and the UK. The new measures, the Boom Bust Indicators – BBIs, result from a variation on our earlier work, and allow us to characterize booms and busts depending on their effects to different horizons: explosive ones affect the short-run (up to one year); expansive ones have an effect up to the third year; and pervasive ones show effects after 5 years.

BBIs complement what has been traditionally done in the financial crisis literature. They depart from decomposition techniques such as spectral analysis in that they use all the information in the original series instead of extracting a part of the data. They depart from turning point analysis and other crises dating techniques since the outcome is a triplet of continuous series instead of a summary sequence of dates for booms and crashes. They complement measures like the severity index which pays unduly little attention to explosive booms and busts to the benefit of lengthier events. Finally, the measures allows for comparisons across countries and time. A sample of the three measures for the UK stock market is presented in Figure 1.

Figure 1: Boom Bust Indicator for the UK stock market 1922-2015

Forero-Laverde - Figure 1

The research studies the evolution of BBIs for credit and stock markets under five different regimes: the gold exchange standard (GES), the fixed peg rate of Bretton Woods (PEG), the managed float of the Exchange Rate Mechanism (MF), the periods of free floatation (FF) and the European Monetary Union (EMU). To characterize the differences in behavior under each regime we pool all countries together and measure the statistically significant differences in means and volatility for BBIs under each regime. They were graphed in a scatter plot, where the X axis represents volatility and the Y axis represents the mean. Results for the long-run measure are presented in Figure 2. The farther a regime appears from the origin, the more elastic it is as it coincides with stronger variability in the indicator.

Figure 2: Regimes according to mean value and volatility of long-run BBIs

Forero-Laverde - Figure 2

Although the mechanisms through which the regime impinges on the boom-bust cycle of credit and stocks still remains unclear, it is possible to highlight several findings. First, there is a role for the monetary regime on the evolution of asset prices and credit. Second, some sort of currency peg, with commitments to exchange rate stability and capital controls, favors financial stability both in the short and long run. However, stricter pegs are favorable for controlling stock market booms but increase both short run and medium run volatility of credit growth. Finally, a nominal anchor of the currency, through the gold exchange standard or the European Monetary Union, appears to be insufficient in generating financial stability as they coincide with booms and heightened volatility in stock and credit markets.

Contacts
german.forero@gmail.com
@GermanForeroL

From losing an empire to leaving Europe: Brexit and the British public relations with the EEC (1961-75)

by David Thackeray (University of Exeter)

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On referendum day in June last year, the 52-year old Nigel Farage expressed his satisfaction with being able to vote on the matter of Britain’s membership of the European Union (EU) for the first time. Brexiters like Farage have long claimed that membership of the EU/EEC (European Economic Community) lacked a democratic mandate.

This research argues that this notion is based on a ‘myth of 1975’. In fact, British public opinion was largely sympathetic towards EEC membership for much of the 1960s. During the first EEC application, Gallup polls demonstrate that approval of the idea of Britain joining the Community outstripped disapproval by a clear margin throughout the lifetime of the application, although there was an overall increase in disapproval rates too.

Gallup polls suggest enthusiasm for EEC membership grew in 1967 when Britain was dealing with the fall-out of a devaluation crisis. While there was some scepticism towards the original terms of entry in 1973 (a scepticism shared with the other new entrants, Denmark and Ireland), attitudes towards the EEC warmed thereafter and the renegotiation process was broadly popular.

Referendum claims that Britain’s first renegotiation relied purely on economic concerns are another example of the myth of 1975 (although the Common Market issue was undoubtedly prominent), which ignores the wider political and social appeals of EEC membership at the time.

Opinion polls produced in early 1975 suggested that the electorate was lukewarm in its support for the EEC. But the idea of renegotiating was popular, especially among Labour voters. The renegotiation process, however flimsy it may seem in hindsight, appeared to demonstrate that the EEC was willing to listen to Britain’s concerns and that Britain could lever authority within the Community.

The triumph of the Leave campaign in 2016 resulted from their ability to overhaul earlier perceptions that EU membership was vital to Britain’s economic future. Crucially, it was able to popularise a plausible rhetoric of EU failure.

Indeed, the Leave campaign’s ability to present Europe as a region of economic stagnation and a security threat on account of its porous borders would have seemed remarkable to audiences in 1975 (when the issue of free movement of labour barely featured and Britain was far from the healthiest of the EEC’s economies).

The Brexit vote requires us to produce new histories of Britain’s relations with Europe. Indeed, we should ask why references to this history in the public debate often turned to counterfactual discussions about what Winston Churchill or Margaret Thatcher would have done if they were alive in 2016, and why expert opinion was given short shrift in some quarters.

In much of the research literature on European integration, there seems to be an assumption that closer co-operation with Europe was the best course for post-war Britain and that in ‘missing the boat’ on several occasions, the country exacerbated its decline in world status.

Such an approach now seems problematic in light of the Brexit vote. As such, we need new histories of Euro-scepticism, but also of Euro-enthusiasm, aware of the differing experiences of the ‘four nations’, which can connect with a broad audience.

Of course, the EEC of 1975, which Britons voted two to one to remain a part of, was highly different in character to the EU of 2016 that the electorate narrowly voted to leave. In the post-Brexit world we need to develop a clearer understanding of how Euroscepticism has developed as a popular culture – its myths, conventional wisdoms, selective reading of history and, most importantly, how it has developed a plausible rhetoric of EU ‘failure’.

While a great deal of attention has been paid to Britain’s applications to join the EEC it is imperative that we get a clearer understanding of how Europe’s influence was understood in everyday popular culture and business life in the years after 1973, and in particular how this relationship (and its earlier history) has been reconceptualised through processes of globalisation, the eastern enlargement of the EU and experiences of mass immigration.

Finally, the result of the referendum is a useful reminder that we need to pay attention to the ‘cultural throw’ of economic theories, how they were articulated in everyday debate and received by the public.

We are now faced with a curious situation where Theresa May’s government appears likely to encourage aspects of globalisation through an economically liberal agenda (revivifying links with established and emerging markets through trade treaties and encouraging investment through a low corporation tax) while also promoting a populist agenda, which may be associated with anti-globalisation (curbing free movement of labour and presumably leaving the Single Market).

Britain now faces a period of profound uncertainty as we wait to see whether the (often conflicting) promises of Brexit campaigners can be made real.

Brexit, Globalisation and De-Industrialisation

by Jim Tomlinson (Glasgow University)

brexit downloadIn seeking to understand the economic basis of the Brexit vote, we should concentrate not on globalisation but on the long-term impact of de-industrialisation.

The evidence is certainly strong that economic disadvantage played a significant part in the patterns of voting in the referendum (though age and educational qualifications seem to have played a large, independent role). But this disadvantage seems best linked to de-industrialisation, which has left a legacy of a much more polarised service sector labour market, with large numbers of people condemned to poorly paid and insecure jobs.

Globalisation has contributed to de-industrialisation, but it is only one contributor, and historically not the most important. De-industrialisation began in Britain in the 1950s. It was driven by shifts in patterns of demand and technological change, most strikingly in increasing the growth of productivity (and lowering the relative price) of manufactured goods. (Total industrial output has not fallen, but grown slowly on trend.)

These broad trends have affected all industrial countries, so that industrial employment has fallen substantially even in successful industrial countries with a manufacturing trade surplus, such as Germany. Industrial employment as a share of the total has more than halved in that country since its peak in 1970.

The long-run nature of these trends is illustrated by the fact that many more coal-mining jobs were lost in Britain under Harold Wilson’s government of the 1960s than under Margaret Thatcher’s government of the 1980s.

Similarly, the big collapse of industrial jobs in Lancashire began in the 1950s and accelerated in the 1960s; across the country, textiles and clothing lost 123,000 jobs between 1964 and 1969.

Proportion of workers in industrial employment in the UK

1957               48%

1979               38%

1998               27%

2016               15%

Serious errors of policy have undoubtedly accelerated this process, and compressed it into short time periods (most obviously, the extraordinary appreciation of the pound in 1979-81 as a result of the Thatcher government’s policies). But overall the process has not mainly been policy-driven.

In responding to the economic problems that underpinned the Brexit vote, it is important to be clear that globalisation is only one part of the story. To put it crudely, if globalisation were somehow reversed, it would not return Britain to having anything like the number of industrial jobs that existed in the 1950s.

While there are certainly powerful arguments for seeking to offset the impact that globalisation has had on particular groups of workers, the biggest challenge is how to make a service-dominated economy deliver much better outcomes for those who currently occupy the lousy jobs in the service sector.

Religion and economics: early Methodism was underpinned by sophisticated financial management

by Clive Norris (Oxford Centre for Methodism and Church History, Oxford Brookes University)

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John Wesley’s efforts to spread the Gospel throughout the British Isles and beyond in the later eighteenth century relied on resources generated and managed using a wide range of techniques. This study of contemporary financial records shows that the evangelistic energy and fervour of Methodist preachers and members was supported – but also frequently constrained – by the movement’s approach to financial management.

The central priority of Wesley’s movement or ‘Connexion’ was to supply enough preachers to meet the needs of the membership and attract new converts. Members’ dues provided the core financing for the growing cadre of travelling preachers, while tools such as central grants channelled resources from richer to poorer areas.

Although the increasing number of married preachers with children raised per capita costs, the annual preachers’ conference tried to keep the deployment of preachers within the envelope of the resources available. By 1800, preaching costs probably exceeded £40,000 a year, met by around 110,000 members.

A second preoccupation was the capital and revenue funding of the expanding network of Wesleyan chapels, which numbered almost one thousand by 1800, costing perhaps £9,000 in annual debt interest alone.

From the 1760s, increasing use was made of an essentially commercial model, overseen by a central committee of business advisers. The opportunity to provide loans at attractive interest rates was offered to wealthier members and supporters, and these both financed chapel construction and offered a good home for their surplus funds. Interest costs were met by renting out seats in chapel, though some seats were always made available free to the poor.

Proposals for new chapels were reviewed annually by the Wesleyan conference, and although many were built without its approval, the resulting pressure on the movement’s finances became marked only after 1800. Chapels also enabled the Connexion to draw income from non-members, who typically outnumbered members by three to one in congregations.

Third, Wesleyan Methodists sought to spread the Gospel through the publication and distribution of cheap and readable publications, including Charles Wesley’s hymnals.

From the 1750s, the so-called Book Room became increasingly profitable, largely because by 1780, almost every aspect of production and distribution had been brought in-house. In particular, Wesleyan preachers were exhorted to market the publications to their members and congregations, and received 10% commission on sales. By 1800, the Book Room’s profits – typically £2,000 annually – were making a significant contribution to overall Connexional finances.

Fourth, the Connexion developed a portfolio of other activities, including educational services such as Sunday schools, poor relief programmes and overseas missions, especially in the West Indies. Most of these activities were not financed directly by the membership.

A key approach was to appeal for public subscriptions, which were widely used outside Methodism to fund public buildings and services such as hospitals, but there were many variations. In the West Indies, for example, some Wesleyan missionaries supplied spiritual services to slave-owners under contract.

One major result of these developments was that the Wesleyan Methodist movement became increasingly dependent on its richer members and supporters. For example, though its areas of greatest membership strength were Yorkshire and the South West of England, subscription income came disproportionately from wealthy London.

But until well into the nineteenth century, this seems not to have blunted its expansion: membership almost doubled between 1800 and 1820. Indeed, the complex and flexible financial policies and practices that underpinned the movement were crucially important in enabling it to respond to the spiritual and (to an extent) material needs of Britain’s growing and geographically shifting population.

How to achieve a more compassionate capitalism: look back to medieval Cambridge

by Catherine Casson (University of Manchester), Mark Casson (University of Reading), John Lee (University of York), Katie Phillips (University of Reading)

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How can modern economies reconcile the pursuit of international competitiveness with promotion of the common good? They could learn from the medieval period!

Contrary to popular belief, England in the late thirteenth century had a dynamic economy. Legal advances created a lively property market; cutting-edge technologies improved water management and bridge-building; commodity trade expanded; and towns grew dramatically, both in number and size.

But this was not an early form of individualistic capitalism. Family bonds were strong and community loyalty was intense. Economic ‘winners’ showed compassion for losers, rather than contempt.

Thirteenth-century expansion was not based on a consumer-driven boom. Its focus was on local infrastructure and local wellbeing. City churches were financed by local people to meet the needs of local people. Hospitals cared for the old, the poor and the needy, including special facilities for those affected by disease. Their legacy remains with us today: the most valuable real estate in a modern city is often occupied by medieval churches and hospitals.

Using recently discovered documents and novel statistical techniques, we have analysed the histories of over one thousand properties in medieval Cambridge over this period. Using evidence from the so-called ‘Second Domesday’ – the Hundred Rolls of 1279 – we show how wealth accumulated by successful businesses was recycled back into the community through support for local churches and hospitals and for itinerant preachers based in the town.

Town government was devolved by the king and queen to the mayor and bailiffs, and they encouraged the development of guilds, which promoted cooperation. New professions emerged in response to the growing demand for legal and administrative services.

The business centre of Cambridge shifted south as the town expanded. ‘New wealth’ replaced ‘old wealth’ as a local commercial class replaced Norman aristocrats. But local pride and religious devotion – expressed through high levels of charitable giving – helped spread the economic benefits throughout the town community.

This self-sustaining system was, however, broken in the 1340s by the Black Death, the outbreak of the Hundred Years War and the punitive levels of taxation imposed on towns thereafter. When prosperity returned in the Tudor period, a more ruthless form of capitalism took root, and it is this ruthless form of capitalism whose legacy remains with us today.

How new technology affects educational choices: lessons from English apprenticeships after the arrival of steam power

by Alexandra de Pleijt (Utrecht University), Chris Minns and Patrick Wallis (London School of Economics)

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Many workers today worry whether robots will do away with their jobs. Most economists argue that the effect of automation is likely to depend on what workers do. Robots may replace some types of manual work, but new jobs will also be created to design, maintain and manage automated production.

A shift towards ‘new jobs’ would mean that different skills will be valued in the future, and many policy experts have argued that secondary and post-secondary education will have to change in response. But if young people and their parents anticipate how automation will affect their job prospects, the choices made among current educational opportunities could shift ahead of any changes in what is offered.

The effects of automation on educational choice will be seen in the future. But past experience can offer some ideas as to whether the arrival of new technology affects these choices, even before the technology is widespread.

This research examines how the arrival of a new production technology affected educational choices in late eighteenth century England. The period between 1760 and 1810 is at the beginning of the largest shift in history from hand- to machine-powered production, through the invention and spread of the steam engine that powered the British Industrial Revolution.

Our research combines detailed evidence on the location and timing of the adoption of steam engines with the records of over 300,000 English apprenticeships from the rolls of the Commissioner of Stamps.

The main finding is that the arrival of steam power changed the willingness of young people to pursue apprenticeships, which for centuries had been the main route to acquiring the skills required for the production of manufactured goods. Counties saw a fall of 40-50% in the share of population entering into textile apprenticeships once a steam engine was present.

Despite the possible association with machine design and maintenance, mechanical apprenticeships also saw a decline of just under 20% following the arrival of steam. Merchant and professional apprentices, who were trading the goods produced by craft or industry, were mostly unaffected.

These findings show that the workforce responded to the emergence of technology that would dramatically change the nature of production and work in the future, but that much of the response was local. Apprenticeships fell first in northern counties where industrial towns and cities with factory-based production had emerged earlier. A similar decline in how workers were trained was not seen in southern and eastern England in the early part of the Industrial Revolution.

 

How accounting made financial markets in the Early Modern age

by Nadia Matringe, London School of Economics

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In the early modern age, accounting was the site of finance.

From the sixteenth century onwards, the unprecedented growth of international trade and banking gave rise to the great exchange fairs (Lyon, Bisenzone, Castile, Frankfurt, etc.), with international clearing and banking functions. To exploit these new opportunities while limiting risks, a growing number of banks at the fair locations specialised in the commission business, which required a high demand for goods and capital to yield substantial profits.

Both these transformations deeply affected the international payments system. In particular, they gave rise to new uses of accounting as a payment and credit instrument.

The research, to be presented at the Economic History Society’s 2017 annual conference, analyses this transformation and highlights the role of accounting in shaping early modern financial markets. It shows that at that time, accounting tables were not only used as local means of payment through book transfers initiated by oral order: they also became the sole material support for a growing number of international fund transfers and credit operations.

Indeed, as chains of commission increased in length and density, both the exchange and the deposit business changed in form and started to be increasingly operated through the accounting medium.

The classical exchange operations, which usually involved four parties (a drawer, a remitter, a payer and a payee) and the circulation of a bill of exchange between two markets, could now be conducted by two parties through their corresponding accounting systems, on behalf of several clients.

In these transactions, bank A would draw on and remit monies to bank B on behalf of clients who appeared as drawers and remitters by proxy. Payments on both markets took the form of book transfers, and no bill of exchange was issued: banker A simply informed banker B in his usual correspondence to credit and debit the pertinent accounts according to agreed exchange rates.

Such transactions performed multilateral clearance between distant regions of the world, where the bankers’ clients had business.

Two-party exchange transactions reduced to accounting entries also served banking activity at the local level. In this case, at least one side of the exchange transaction (the remittance or the draft) was meant to lend or to borrow money in one of the two markets. The exchange was followed by a rechange in the opposite direction, and at a different rate, and interest was charged according to the differences in exchange rates.

Finally, the taxation of overdrafts on current accounts at the fair location enabled clients to buy bills of exchange on foreign markets without provision, and to postpone payment of those drawn on them. Consequently, deposits in Lyon, Antwerp or Castile could create credit in Florence, Paris, London, etc.

Furthermore, this old fair custom of deferments gave rise in the sixteenth century to autonomous deposit markets whose rate circulated publicly, enabling ‘outsiders’ who otherwise had no business in the fairs, to invest their savings there.

The research thus shows that in the context of the rapid development of international banking centres and the correlated rise of commission trading, accounting made financial markets.

Its function was similar to that of modern algorithms used to match orders and perform financial transactions. Accounting tables were used to make payments, transfer funds, operate clearance and grant interest-bearing loans – all of which could be combined in a single game of book entries in the accounts of corresponding partners.

International trade and banking were supported by a network of interconnected accounting systems. This accounting network appears as a major infrastructure of early modern trade, without which the whole European payment system would have collapsed.

The impact of new universities on regional growth: evidence from the United States 1930-80

by Alexandra López Cermeño, Lund University / Universidad Carlos III de Madrid

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From ODU  Twitter account

Universities generate growth spillovers beyond simply the local market. Analysing data on the universities founded in the United States between 1930 and 1980, my research shows that these drove growth of GDP and population not only in the counties that hosted them, but also in their neighbouring regions. But analysis of their longer-term impact suggests that although there are growth spillovers, the positive effect wears out if it is not periodically renewed.

The role of universities in generating growth is rarely contested. But most research tend to associate the presence of a university with long-term path dependency. In the era of knowledge and information, the role of universities as producers of new ideas and technologies is crucial to productivity. New light on this subject is required not only to understand the role of cultural amenities but also to explore the spatial dynamics around them.

Long-term analysis that compares recipient counties of their first universities between 1930 and 1980 with statistically similar counties that never got an institution shows that the effect of these new universities implies 20% more growth in terms of GDP. Moreover, the analysis shows that the new amenities eventually had an impact neighbouring counties. These dynamics seem to be related to population migration.

This sizeable increase of GDP in these counties is corresponded by a similar size increase in population: new universities generate migratory movements of workers, which eventually lead to higher housing prices and costs to use other infrastructures. Higher costs motivate many workers to relocate to nearby areas where housing and infrastructures are less expensive and access to the amenity is still feasible.

The positive effect of new universities is therefore neutralised in the longer term unless further investments reduce congestion costs. Indeed, the role of infrastructures such as roads seems to explain a large share of the effect of universities.

But the interaction of universities and infrastructure seems to be defined by the decreasing importance of the latter: whereas physical access to infrastructure seemed to constrain the impact of new amenities before the 1950s, more recently established institutions seem no longer dependent on face-to-face contact.

There is further evidence on the role of knowledge dynamics in my study: in the earlier half of the period 1930-80, all that mattered was getting a new university in the county, whereas in the latter half of the period, the quality of the institution seems to have become much more relevant. Counties where research-intensive institutions were established during the period 1950-80 grew almost 40% more.

My analysis shows that the effect of new academic institutions during the twentieth century induced regional spatial dynamics in terms of migration and GDP. But it indicates that the impact of these new amenities was seriously constrained by the congestion of utilities, which limited the extent of growth to the short run.

Thus, it questions the extent of the impact generated by these institutions that is so praised in recent literature since it suggests that their growth dynamics are not self-sustaining: further investments are needed to keep up with the agglomeration forces that attract population and firms to these counties.

THE HEALTH AND HUMAN CAPITAL OF WAR REFUGEES: Evidence from Jewish migrants escaping the Nazis 1940-42

by Matthias Blum (Queen’s University Belfast ) and Claudia Rei (Vanderbilt University)

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At Europe’s doorstep, the current refugee crisis poses considerable challenges to world leaders. Whether refugees are believed beneficial or detrimental to future economic prospects, decisions about them are often based on unverified priors and uninformed opinions.

There is a vast body of scholarly work on the economics of international migration. But when it comes to the sensitive topic of war refugees, we usually learn about the overall numbers of the displaced while knowing next to nothing about the human capital of the displaced populations.

Our study, to be presented at the Economic History Society’s 2017 annual conference in London, contributes to this under-researched, and often hard to document, area of international migration based on a newly constructed dataset of war refugees from Europe to the United States after the outbreak of the Second World War.

We analyse holocaust refugees travelling from Lisbon to New York on steam vessels between 1940 and 1942. Temporarily, the war made Lisbon the last major port of departure when all other options had shut down.

Escaping Europe before 1940 was difficult, but there were still several European ports providing regular passenger traffic to the Americas. The expansion of Nazi Germany in 1940 made emigration increasingly difficult and by 1942, it was nearly impossible for Jews to leave Europe due to mass deportations to concentration camps in the east.

The Lisbon migrants were wartime refugees and offer a valuable insight into the larger body of Jewish migrants who left Europe between the Nazi seizure of power in Germany in January 1933 and the invasion of Poland in September 1939.

The majority of migrants in our dataset were Jews from Germany and Poland, but we identify migrants from 17 countries in Europe. We define as refugees all Jewish passengers as well as their non-Jewish family members travelling with them.

Using individual micro-level evidence, we find that regardless of refugee status all migrants were positively selected – that is, they carried a higher level of health and human capital when compared with the populations in their countries of origin. This pattern is stronger for women than men.

Furthermore, refugees and non-refugees in our sample were no different in terms of skills and income level, but they did differ with respect to the timing of the migration decision. Male refugees were more positively selected if they migrated earlier, whereas women migrating earlier were more positively selected regardless of refugee status.

These findings suggest large losses of human capital in Europe, especially from women, since the Nazi arrival in power seven years before the period we analyse in our data.

The civil war in Syria broke out six years ago in March 2011, making the analysis of the late holocaust refugees all the more relevant. Syrian refugees fleeing war today are not just lucky to escape, they are probably also healthier and coming from a higher social background than average in their home country.