from VOXEU: “Urban planning and town foundations”


The founding of new towns has been at the core of urban planning since the onset of civilisation. In recent times, policymakers have shown renewed interested in the creation of towns to channel regional economic growth. A prominent example is China, where a large-scale urban planning programme began in the 1980s to cope with the pressure of a growing urban population. The idea was to relocate hundreds of millions of rural inhabitants to live in purpose-built towns. Western media has branded these new towns as ‘ghost towns’, as ‘bridges to nowhere’, or as towns in search of populations.


Read the full post here


Child workers and industrial health in Britain 1780-1850

Peter Kirby, Child workers and industrial health in Britain 1780-1850 (Woodbridge: Boydell Press, 2013. Pp. xi + 212. 8 tabs. 6 figs. ISBN 9781843838845 Pbk. £19.99)

Review by Alysa Levene (Oxford Brookes University)

Book by Peter Kirby

‘Child workers and industrial health in Britain 1780-1850’ is published by Boydell and Brewer. SAVE  25% when you order direct from the publisher – offer ends on the 18th July 2019. See below for details.


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The physical horrors endured by child workers in the early industrial workplace are well known to historians – or at least, we think they are. The regulations of the various Factory Acts and the testaments of sub-commissioners, doctors and factory workers to the parliamentary enquiries of the 1830s and 1840s are common reference points for those of us working or teaching in this area. However, over the last few years, several in-depth studies of child labour in industrial England have appeared which have started to challenge and nuance what we think we know. First, Katrina Honeyman, Child Workers in England, 1780-1820 (2007) suggested that apprentices to cotton mills were often better looked after than we have thought. Then, Jane Humphries, Childhood and Child Labour in the British Industrial Revolution (2010) set industrial work in a wider context of schooling and family life, as evidenced in over 600 working-class autobiographies. And now, Peter Kirby has added the first monograph study of occupational health among child workers in the first half of the nineteenth century¸ and has again, knocked down many of the key points we have been telling students for years.

The book is organised thematically, starting with an Introduction which sets out in detail the historical background to child labour in industry, and the sources we have for studying it. Here, Kirby points out the problems with the medical evidence collected for the parliamentary enquiries in the 1830s and 1840s; namely that many of the doctors concerned did not have first-hand experience of occupational health and so tended to attribute any health issues to working conditions rather than environmental ones. This leads him to place more emphasis on the writings of non-medical men, shifting the perspective away from doctors and children and towards health and conditions of work in the round. The main chapters consider child health in industrial cities generally; the key issues affecting the health of child industrial worker (deformities; ‘materials’ – see more below; and injuries); heights and ages, and how these were measured; and finally, corporal punishment and murder.

One of Kirby’s key conclusions is that it was environmental rather than working conditions which were responsible for most of the health problems experienced by child workers. He states that many began work in factories and mines already compromised by poor nutrition, environmental pollution and the impact of parental loss (which led to work at a young age), and that in fact, stunted and disabled children may have been preferentially admitted to the factory workforce because they were suited to the lighter tasks found there. To a certain degree this is convincing, and it is certainly instructive and worthwhile to draw attention to the relationship between the conditions of home life and working life so clearly. The discussion of environmental pollution and its impact on health is particularly detailed. However, it seems hard to believe either that so many children would have suffered from conditions like byssinosis, scoliosis or poliomyelitis as Kirby suggests, or that pre-existing disability could have been so widespread among child workers given the need to stand upright and bear a load in so many areas of work.

The discussion of ‘materials’ is another area where Kirby provides an impressive level of detail, and which advances our understanding of the realities of working life in mills. In particular, he draws attention to the pollutants which can be carried in raw cotton, and ties this to changes in supply during this period, for example, away from imports from the West Indies, and towards those from North America, which were less likely to be contaminated (this coincided with a fall in ‘mill fevers’). This is something which has not been much considered in previous work (although it was noted by contemporaries) and which has a bearing on both adult and child workers.

Kirby attempts to bring a similarly new perspective to the discussion of workplace violence, suggesting that corporal punishment was common only in specific circumstances (such as where safety or productivity demanded it, or where child workers were particularly vulnerable, like parish apprentices), and that it was in any case a more accepted part of daily life than it is now. These two points do not necessarily sit easily together; certainly the evidence of violence in the commissioners’ reports suggests that it was not condoned. He is more confident on the system of medical inspection, and provides a detailed discussion of its scale and potential pitfalls, particularly the difficulty of assessing children’s ages (vital for ensuring that factories and mines adhered to the changing laws on age at starting work). Ultimately this led to the development of standard charts for growth and dentition.

Overall, this is an excellent and comprehensive study of the occupational health of child workers in the most high-profile areas of the industrial sector. It makes a significant contribution to debates on child labour, and the impact of industry on health and daily life. Kirby paints a notably more optimistic picture of the industrial workplace than we are used to, certainly in times of the impact on health and stature of its youngest workers. He ends by calling for more work on other areas of the industrial workforce, and this would certainly be welcome. The book is an excellent introduction to the topic for students and researchers alike; it remains to be seen whether it sparks a new wave of debate over the ‘optimistic’ versus the ‘pessimistic’ schools of thought on the industrial revolution.


SAVE 25% when you order direct from the publisher using the offer code B125 online hereOffer ends 18th July 2019. Alternatively call Boydell’s distributor, Wiley, on 01243 843 291, and quote the same code. Any queries please email


Global trade imbalances in the classical and post-classical world

by Jamus Jerome Lim (ESSEC Business School and Center for Analytical Finance)


A Global trade visualization map, with data is derived from Trade Map database of International Trade Center. Available on Wikipedia.

In 2017, the bilateral trade deficit between China and the United States amounted to $375 billion, a staggering amount just shy of what the latter incurred against the rest of the world combined. And not only is this deficit large, it has been remarkably persistent: the chronic imbalance emerged in earnest in 1989, and has persisted for the better part of three decades. Some have even pointed to such imbalances as a contributing factor to the global financial crisis of 2008.

While such massive, chronic imbalances may strike one as artefacts of a modern, hyperglobalised world economy, nothing could be further from the truth. For example, recent economic history records large, persistent imbalances between the United States and Britain during the former’s earlier stages of development. Such imbalances also characterised the rise of Japan following the Second World War.

In recent research, we show that external imbalances between two major economic powers – an established leader, and a rising follower – were also observed over three earlier periods in economic history. These were the deficits borne by the Roman empire vis-à-vis pre-Gupta India circa 1CE; the borrowing by the Abbasid caliphate from Carolingian Frankia in the early ninth century; and the imbalances between West European kingdoms and the Byzantine empire that emerged around the 1300s.

Although data paucity implies that definitive claims on current account deficits are all but impossible, it is possible to rely on indirect sources of evidence to infer the likely presence of imbalances. One such source consists of trade-related documents from the time as well as pottery finds, which ascertain not just the existence but also the size of exchange relationships.

For example, using such records, we demonstrate that Baghdad – the capital of the Abbasid Caliphate – received furs and slaves from the comparative economic backwater that was the Carolingian empire, in exchange for goods such as spices, dates and olive oil. This imbalance may have lasted as long as several centuries.

A second source of evidence comes from numismatic records, especially coin hoards. Hoards of Roman gold aurei and silver dinarii have been discovered, for example, in India, with coinage dating from as early as the reign of Augustus through until at least that of Marcus Aurelius, well over half a century. Rome relied on such specie exports to fund, among other expenditures, continued military adventurism during the second century.

Our final source of evidence relies on fiscal records. Given the close relationship between external and fiscal balances – all else equal, greater government borrowing gives rise to a larger external deficit – chronic budgetary shortfalls generally give rise to rising imbalances.

This was very much the case in Byzantium prior to its decline: around the turn of the previous millennium, the Empire’s saving and reserves were in significant surplus, lending credence to the notion that the flow of products went from East to West. The recipients of such goods? The kingdoms of Western Europe, paid for with silver.

Nineteenth century savings banks, their ledgers and depositors

by Linda Perriton (University of Stirling)


If you look up as you walk along the streets of British towns and cities, you will see the proud and sometimes colourful traces of nineteenth century savings banks. But evidence of the importance of savings banks to working- and middle-class savers is harder to locate in economic history research.

English and Welsh savings banks operated on a ‘savings only’ model that funded interest payments to savers by purchasing government bonds and, in doing so, placed themselves outside the history of productive financialisation (Horne, 1947). This is a matter of regret, because whatever minor role trustee savings banks played in the productive economy, there is little doubt that they helped to financialise segments of society previously detached from such activities.

Image: Author’s own. A mosaic over the door of the former Fountainbridge branch of the Edinburgh Savings Bank.


The research that Stuart Henderson (Ulster University) and I presented at the EHS 2019 annual conference looks in detail at the financial activity of depositors in one savings bank – the Limehouse Savings Bank, situated in the East End of London.

Savings bank ledgers are a rich source of social history data in addition to the financial, especially in socially diverse larger cities. The apostils of clerks reveal amusement at the names chosen for local clubs (for example, the Royal Order of the Jolly Cocks merits an exclamation mark) or a note as to love gone wrong (for example, a woman who returns the passbook of a lover from whom she has not heard for two years).

We also want to look beyond the aggregate deposit figures for Limehouse recorded in the government reports to discover how individuals used the bank over the period 1830-76.

As a start, we have recorded the account transactions for each of the 195 new accounts opened in 1830, from the first deposit to the last withdrawal – a total of 3,598 transactions. Using the account header information, we have also compiled the personal details of the account holder – such as gender, occupation and place of residence. We use the header profile to trace individual savers in the historical record in order to establish their age and any notable life events, such as marriage and the birth of children.

Apart from 12 accounts, which were registered to individuals who gave addresses other than East End parishes, all the 1830 savers were registered at addresses within a four miles by one mile strip of urban development, which also enabled us to record the residential clustering of savers.

Summary statistics enable us to establish the differences between the categories of savers across several different indicators of transaction activity.

Perhaps unsurprisingly, the men in our 1830 sample tended to make larger deposits and larger withdrawals than the women, with the difference in magnitude masked somewhat by large transactions undertaken by widows. Widows in our sample tended to have a relatively large opening balance and a higher number of withdrawals, suggesting that their accounts functioned more as a ‘draw down’ fund (Perriton and Maltby, 2015).Men also tended to make more transactions than women.

We also see a significant portion of accounts where activity was very limited. The median number of deposits across our 195 accounts was just two, suggesting that a large proportion of accounts acted as something of a (very) temporary financial warehouse. Minors and servants tended to have smaller transactions, but appear to have accumulated more – relatively speaking – than others.

But our interest in the savers goes beyond summary statistics. We know that very few accounts were managed in the way that the sponsors of savings bank legislation intended; the low median of deposits is testament to that.

The basic information in the ledger headers for each account provides a starting point for thinking about when in the life-cycle savings was more successful. Even with the compulsory registration of births, deaths and marriages after 1837 and census data after 1841, the ability to trace an individual saver is not guaranteed.

With so few data points, it is easy to lose individuals at the periphery of the professional and skilled working classes, even in a relatively well documented city like London. Yet the ability to build individual case studies of savers is important to our understanding of savings banks in terms of establishing who were the ‘successful’ savers, and also when – relative to the overall life-cycle of the saver – accounts were held.

Our research presents ten case study accounts from our larger sample to challenge the proposition in social history research on household finances that savings increased when teenage and young adult children were contributing wages to the household. We also look at the evidence for any savings in anticipation of significant life events such as marriage or childbirth. The evidence is weak on both counts.

The distribution of age at account opening among the ten case studies is varied: under 20 years old (3), 21-29 (2), 30-39 (2), 40-49 (0) and 50-59 (3). The three cases of accounts opened after the age of 50 relate to a widow and two married couples, who all had children aged 10-25. But the majority of the accounts we examined were opened by younger adults with young children and growing families.

There is no obvious case for suggesting that savings were possible because expenses could be offset against the wages of teenage or young adult children. Nor can we see any obvious anticipatory or responsive saving for life events in the case studies.

One of our sample account holders did open her account soon after being widowed, but another widow opened her account seven years after the death of her husband. Two men opened accounts when their children were very young, but not in anticipation of their arrival. The only evidence we have in the case studies for changed behaviour as a result of a life event is in the case of marriage – where all account activity ceased for one of our men in the first years of his union.

The mixed quantitative and biographical approach that we use in our study of the Limehouse Savings Bank point to a promising alternative direction for historical savings bank research – one that reconnects savings bank history with the wider history of retail banking and allows for a much richer interplay between social history and financial history.

By looking at the patterns of use by the Limehouse account holders, it is possible to see the ways in which working families and individuals interacted with a standard product and standard service offering, sometimes adding layers of complexity in order to create a different banking product, or using the accounts to budget within a short-term cycle rather than saving for a significant purchase or event.


Further reading:

Horne, HO (1947) A History of Savings Banks, Oxford University Press.

Perriton, L, and J Maltby (2015) ‘Working-class Households and Savings in England, 1850-1880’, Enterprise and Society 16(2): 413-45.


To contact the author:

#EHS2020 University of Oxford – Call For Papers open

The 2020 Annual Conference will be held at St Catherine’s College, Oxford, Friday 17 – Sunday 19 April.  Registration, sessions, delegate accommodation, dining, and meetings will all be located in the College.

  • A link to the call for papers can be found here.  Deadline: 2 September 2019
  • A link to the call for posters can be found here.  Deadline: 18 November 2019

More information here

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EHS 2019 Conference dinner

Women’s work and structural change: occupational structure in eighteenth-century Spain

by Carmen Sarasua (Universitat Autonoma de Barcelona)

The full paper was published on The Economic History Review, and is available here


Screen Shot 2019-06-10 at 19.14.12This research uses householders’ declarations in the Cadaster of Ensenada to calculate labour participation rates for women and men in inland Spain. Conducted between 1750 and 1755, the Cadaster was a general property survey carried out with the aim of modernizing and unifying the fiscal system of the Kingdom of Castile (about three-quarters of modern Spain). Most householders did not declare the occupations of wives or children because their wages were not taxed. In some towns, householders did declare the occupations of their wives and children:

I belong to the General estate, my trade fuller, married, my family is formed by myself, 46 years old, Ynés López Zamorano, 40 years old. I have four daughters, Agustina, 20, her occupation weaver, Isabel, 13, her occupation spinning, María, 11, her occupation going to sewing school, María Teresa, 2 months.

Based on a database currently comprising 44,484 individuals (the population of 22 localities in five provinces of southern Castile), this article shows that men’s participation rates ranged from 78.2 to 92.5 percent. Generally, men’s participation rates were lower in large towns and cities because these localities were home to nonworking members of the nobility, beggars, and monks.

The article also establishes that the actual levels of women’s market activity were much higher than is commonly assumed. For the entire region, women’s participation rate was 32.3 percent. Differences in participation rates among localities were much larger for women than for men, ranging from 12.4 percent in Pedro Muñoz to 82.7 per cent in Villamanrique. Such large differences are explained by the failure to record women’s work. Ajofrín, in Toledo, was a prosperous production centre for woolen fabrics, with a population of 3,308 in 1753. According to householders’ declarations, 82.4 percent of men and 25.3 percent of women were gainfully employed. However, in response to a Cadaster question about the number of poor people living there, the town council responded, ‘Only eight, as everybody is devoted to the work of wool, particularly women, even the oldest ones.’

The Cadaster permits analysis of the region’s deeply gendered occupational structure. The primary sector occupied 60.0 percent and 2.9 percent, respectively, of working-age men and women. Men’s primary-sector employment was lower in towns, while women’s presence in the primary sector ranged from zero in some localities to 35.3 percent in regions where flax cultivation was important.

The service sector occupied 16.4 percent and 34.4 percent, respectively, of working men and women. Domestic service was especially important accounting for 84.4 per cent of women and 17.8 percent of men. For women, domestic service correlated with the size of town and the number of households headed by priests. For men, service occupations were more diversified, and included transportation and retailing.

The most important results from my research involve the industrial sector. The labour-intensity of manufacturing together with the abundant supply of cheap labour, the diffusion of cottage industries, and the demand for commodities (particularly textiles) from internal and colonial markets, meant a large portion of the region’s population worked in manufactures in the eighteenth century. This sector occupied 23.6 percent of working men and 62.8 percent of working women.

Table 1. Occupational distribution of women and men, 18th century inland Spain. For sources, access full article here

The unusually high share of men in industry is explained by the recruiting practices of royal factories. Women’s stronger presence in manufacturing was explained by contemporary observers as follows:

The trade that people from La Mancha carry out, within the court, of stockings, bonnets, knitted socks, girdles and garters is from their mills. The merchant associations do not agree with this freedom.

The importance of these products is largely unnoticed in the academic literature which suggests they were consumed by families. But a range of finished products made by women — stockings, lace, scarfs, bonnets, knitted socks, girdles, garters, bedspreads, ribbons, and edging – were destined for the market. Householders’ declarations indicate that women’s textile work was motivated by the need to obtain food and to support the family.

According to the 1877 census, 66.1 percent of the Spanish labour force was engaged in agriculture compared to 14.4 percent in industry. Agriculture was the principal employer until 1930. Standard interpretations of economic growth view a large share of agricultural employment as an indicator of economic backwardness. But such analyses tend to focus only on the structural decomposition of the male labour force. By incorporating women’s work my research develops historical analyses of structural change. My findings are consistent with recent literature that in many European regions non-agricultural employment followed a U-shaped curve.

La Mancha failed to industrialize in the nineteenth century. The invasion of the Napoleonic army in 1808 and the subsequent war led to widespread destruction of sheep flocks and infrastructure, abandonment of agricultural lands, inflation, and severe demographic crisis. National and international commercial networks were disrupted generating a substantial increase in the price of imports. Subsequently, the share of the labour force in agriculture grew. Following the mechanization of textile production thousands of women and girls lost their jobs. Manufacturing employment fell across the country, even in the regions that industrialized. Women found fewer employment opportunities in the countryside, and many eventually moved to the cities to work in domestic service. Only by considering women workers is it possible to understand when, where, why, and how this structural change happened.


To contact the author:

Squeezing blood from a stone: eighteenth century debtors’ prisons worked

by Alex Wakelam (University of Cambridge)


Woodstreet Compter.jpg
Wood Street Compter, 1793. Image extracted from page 384 of volume 1 of Old and New London, Illustrated, by Walter Thornbury. Available at Wikimedia Commons. 

While it is often assumed that debtors’ prisons were illogical and ineffective, my research demonstrates that they were extremely economically effective for creditors though they could ruin the lives of debtors.

The debtors’ prison is a frequent historical bogeyman, a Dickensian symptom of the illogical cruelty of the past that disappeared with enlightened capitalism. As imprisoning someone who could not afford to pay their debts, keeping them away from work and family, seems futile it is assumed creditors were doing so to satisfy petty revenge.

But they were a feature of most of English history from 1283, and though their power was curbed in 1869, there were still debtors imprisoned in the 1920s. The reason they persisted, as my research shows, is because, for creditors, they worked well.

The majority of imprisoned debtors in the eighteenth century were released relatively quickly having paid their creditors. This revelation is timely when events in America demonstrate how easily these prisons can return.

As today, most eighteenth century purchases were done on credit due to the delay in wages, limited supply of coinage, and cultural preferences for buying goods on credit. But credit was based on a range of factors including personal reputation, social rank and moral status. Informal oral contracts could frequently be made with little sense of an individual’s actual financial status, particularly if they were a gentleman or aristocrat. As contracts were not based on goods and court processes were slow, it was difficult to seize property to recover debts when creditors required money.

Creditors were able to imprison debtors without trial in this period until they paid what they owed or died. The registers of a London Debtors’ Prison, the Woodstreet Compter (1741-1815), reveal that creditors had good reasons to do so. Most of the 10,156 debtors contained in the registers left prison relatively quickly – 91% were released in under a year while almost a third were released in less than 100 days.

In addition, 84% were ‘discharged’ by their creditors, indicating that either the prisoner had paid their debts or a new contract had been agreed. Imprisonment forced debtors to find a way to pay or at least to renegotiate with creditors.

Prisoners were not the poor, but usually middle class people in small amounts of debt. One of the largest groups was made up of shopkeepers (about 20% of prisoners) though male and female prisoners came from across society with gentlemen, cheesemongers, lawyers, wigmakers and professors rubbing shoulders.

Most used their time to coordinate the selling of goods to raise money, or borrowed yet more from family and friends. Many others called in their own debts by having their debtors imprisoned as well.

As prisons were relatively open, some debtors worked off their debts. John Grano, a trumpeter who worked for Handel, imprisoned in the 1720s, taught music lessons from his cell. Others sold liquor or food to fellow prisoners or continued as best they could at their trade in the prison yard. Those with a literary mind, such as Daniel Defoe, wrote their way out.

Though credit works on different terms today, that coercive imprisonment is effective at securing repayment remains true. There have been a number of US states operating what amount to debtors’ prisons in recent years where the poor, fined by the state usually for traffic violations, are held until they pay what they owe.

Attorney General Jeff Sessions even retracted an Obama era memo in December aimed at abolishing the practice. While eighteenth century prisons worked effectively for creditors, they could ruin the lives of debtors who were forced to sell anything they could to pay their dues and escape the unsanitary hole in which they were being kept without trial. Assuming that they did not work and therefore won’t return is shown by my research to be false.


Is committing to a free trade policy enough? Evidence from colonial Africa

by Federico Tadei (Department of Economic History, University of Barcelona)


French map of Africa from 1898, showing colonial claims. Originally published as “Carte Generale de l’Afrique’. Available at Wikimedia Commons.

Recent Brexit negotiations have led to intense debate on the type of trade agreements that should be put in place between the UK and the European Union. According to Policy Exchange’s February 2018 report, the UK should unilaterally commit to free trade. The assumption underlying this argument is that the removal of tariffs has the potential to reduce consumer prices due to greater competition and lower protection of domestic industries, which would promote innovation and increase productivity.

But the removal of tariffs and protectionist policies might not be sufficient to implement free trade fully. My research on trade from colonial Africa suggests that a legal commitment to free trade is not nearly enough.

Specifically, it appears that during the colonial period the British formally relied on free trade encouraging competition between trading firms, while the French made use of their political power to establish trade monopsonies and acquire African goods at prices lower than in the world markets.

Yet the situation on the ground might have been quite different than what formal policies envisaged. Did the British colonies actually enjoy free trade? Did producers in Africa who lived under British rule receive higher prices than those living under the French?

To answer these questions, I measure the degree of competitiveness of trade under the two colonial powers by computing profit margins for trading companies that bought goods from the African coast and resold them in Europe.

To do so, I use data on African export prices and European import prices for a variety of agricultural commodities exported from British and French colonies between 1898 and 1939 and estimated trade costs from Africa to Europe. The rationale behind this methodology is simple: if the colonisers relied on free trade, profit margins of trading companies should be close to zero.

Tadei Figures

On average, profit margins in the British colonies were lower than in the French colonies, suggesting a higher reliance on free trade in the British Empire (see Figure 1). But if we compare the two colonial powers within one same region (West or East Africa) (Figures 2 and 3), it appears that the actual extent of free trade depended more on the conditions in the colonies than on formal policies of the colonial power.

Profit margins were statistically indistinguishable from zero in British East Africa, suggesting free trade, but they were large (10-15%) in West African colonies under both the French and the British, suggesting the presence of monopsony power.

These results suggest that, in spite of formal policies, other factors were at play in determining the actual implementation of free trade in Africa. In the Western colonies, the longer history of trade and higher level of commercialisation reduced the operational costs of trading companies. At the same time, most of agricultural production was based on small African farmers, with little political power and ability to oppose de facto trade monopsonies.

Conversely, in East Africa, production was often controlled by European settlers who had a much larger political influence over the metropolitan government, increasing the cost of establishing trade monopsonies and allowing better implementation of colonial free trade policy.

Overall, despite formal policies, the ability of trading firms in West Africa to eliminate competition was costly in terms of economic growth. African producers received lower prices than they would have in a competitive market and consumers paid more for imported goods. Formal commitment to free trade policies might not be sufficient to reap the full benefits of free trade.

How the Bank of England managed the financial crisis of 1847

by Kilian Rieder (University of Oxford)

New Branch Bank of England, Manchester, antique print, 1847. Available at <;

What drives a central bank’s decision to grant or refuse liquidity provision during a financial crisis? How does the central bank manage counterparty risk during such periods of high demand for liquidity, when time constraints make it hard to process all relevant information? How does a central bank juggle the provision of large amounts of liquidity with its monetary policy obligations?

All of these questions were live issues for the Bank of England during the financial crisis of 1847 just as they would be in 2007. My research uses archival data to shed light on these questions by looking at the Bank’s discount window policies in the crisis year of 1847.

The Bank had to manage the 1847 financial crisis despite being limited by a legal monetary policy provision in the Act to back any expansion of its note issue with gold. It is often cited as the last episode of financial distress during which the Bank rationed central bank liquidity before fully assuming its role as a lender of last resort (Bignon et al, 2012).

We find that the Bank did not engage in any kind of simple threshold rationing but rather monitored and managed its private sector asset holdings in similar ways to central banks have developed since the financial crisis of 2007. In another echo of the recent crisis, the Bank of England also required an indemnity from the UK government in 1847 allowing the Bank to supply more liquidity than it was legally allowed. This indemnity became part of the ‘reaction function’ in future financial crises.

Most importantly, the year 1847 witnessed the introduction of a sophisticated discount ledger system at the Bank. The Bank used the ledger system to record systematically its day-to-day transactions with key counterparties. Discount loan applicants submitted bills in parcels, sometimes containing a hundred or more, which the Bank would have to analyse collectively ‘on the fly’.

The Bank would reject those it didn’t like and then discount the remainder, typically charging a single interest rate. Subsequently, the parcels were ‘unpacked’ into individual bills in the separate customer ‘with and upon ledgers’ where they were classified under the name of their discounter and acceptor alongside several other characteristics at the bill level (drawer, place of origin, maturity, amount, etc.). By analysing these bills and their characteristics we are better able to understanding the Bank’s discount window policies.

We first find evidence that during crisis weeks the Bank was more likely to reject demands for credit from bill brokers – the money market mutual funds of their time – while favouring a small group of regular large discounters. Equally, firms associated with the commercial crisis and the corn price speculation in 1847 (many of which subsequently failed) were less likely to obtain central bank credit. The Bank was discerning about whom it lent to and the discount window was not entirely ‘frosted’ as suggested by Capie (2001).

But our findings support Capie’s main hypothesis that the decision whether to accept or reject a bill depended largely on individual bill characteristics. The Bank appeared to use a set of rules to decide on this, which it applied consistently in both crisis weeks and non-crisis weeks. Most ‘collateral characteristics’ – inter alia, the quality of the names endorsing a bill – were highly significant factors driving the Bank’s decision to reject.

This finding supports the idea that the Bank needed to be active in monitoring key counterparties in the financial system well before formal methods of supervision in the twentieth century, echoing results obtained by Flandreau and Ugolini (2011) for the later 1866 crisis.


Convict labour in modern American history

by Michael Poyker (UCLA)


Prison Gang in Birmingham, ca. 1870. Available at <;

The United States has the largest prison population in the world. More than half of the convicts are engaged in some form of convict labour, and inmates employed in prison industries convicts constituted 4.5% of total US manufacturing employment in 2005. They earn substantially below minimum wage, ranging from nothing to $4.90 per hour in state prisons. Such low labour costs may have effects on free labour.

Despite numerous examples of malevolent competition, no research has been done on the possible effects of how convict labour affects free labour. In addition, contemporary public policy research typically considers convict labour as purely beneficial for society (through rehabilitation of prisoners and alleviating budgetary expenses on corrections). Finally, US prisons are built in economically depressed counties under the assumption that they will provide jobs (such as guards or janitors) in the local labour market.

My research addresses the previously unstudied question of how convict labour affects local labour markets and firms that employ free labour by studying convict labour in the United States in the nineteenth and twentieth centuries.

Data on contemporary convict labour output is not available, and as prisons are strategically located in economically depressed areas, it could confound the results. I use the historical context of when convict labour first appeared in 1870s.

First, very detailed data are available. Second, the rule of prison location was different – prisons were located in large urban areas (with higher wages) to save money on transport of prisoners. Third, the introduction of convict labour system was a nation-wide movement uncorrelated with the local economic conditions.

I have collected and digitalised archival data on US prisons and convict labour camps to construct county-level exposure to convict labour for the period 1886-1940. I find a significant negative effect of convict labour on wage growth and manufacturing employment, and a positive effect on patenting.

The magnitude of convict labour output was enormous: for each manufacturing worker with an average annual wage of $242, there were at least $18 per worker of prison-made goods. Regarding convict labour exposure comparing counties at the 25th and 75th percentile, the one more exposed to convict labour experienced 12.6% slower wage growth. In terms of counterfactuals, the introduction of convict labour in the 1870s accounts for 16% slower wage growth in the period 1880-1900 (when wage growth was 7.2%).

Competition with convict labour affected firms. Firms in affected industries couldn’t compete with prison-made goods in terms of labour costs. (The unit labour cost of prison labour was 4-50% of that of free labourers) Thus, they had to innovate-away in product-space or upgrade their technology to decrease costs or substitute labour with capital. I find that the introduction of convict labour accounts for 6% of the growth in patenting in affected industries.

I also shows the effects of convict labour on other economic outcomes. Convict labour gave police the incentives to arrest more people. Counties more exposed to convict labour had higher incarceration rates. There is also suggestive evidence that convict labour adversely affected intergenerational mobility in the long run.

Nowadays, as transport costs have decreased over time, competition with prison-made goods may spread farther from the prison. Thus, the overall effect of convict labour on contemporary manufacturing wages could be smaller around the prison but more substantial overall. Moreover, the number of convicts has soared from approximately 80, 000in 1920 to more than 2.5 million today.

Overall, these findings may be important for public policy research on convict labour since it may worsen local labour market outcomes, thus overshadowing any possible positive effects from rehabilitation or jobs provided by prisons. Finally, as the state is a beneficiary of the convict labour, welfare redistribution may be necessary to offset adverse effects on those affected by competition.