by Max Hao (Peking University), Kevin Liu (The Hong Kong University of Science and Technology), and Liu Zhengcheng (Peking University)
In premodern Europe, famine relief was inadequately provided until the late 19th century. In contrast, in late imperial China, preventing starvation helped legitimate the state and played a key role in reducing internal conflicts. The Qing state operated a network of granaries and developed sophisticated procedures to report famines and supply relief. However, as shown in Figure 1, the frequency of famine relief recorded in the Qingshilu (veritable records of Qing) was much lower than the frequency of disasters under the reigns of Shunzhi (1644-1661) and Kangxi (1661-1722). In contrast, in the reign of Yongzheng (1723-1735) and in the early years of Qianlong (1736-1760), famine relief became more responsive to disasters. Why did the Qing state take on the responsibility for “nourishing the people” only after 1723?
To solve this puzzle, we explore the effect of a reform that formalized and centralized part of the fiscal system in premodern China: the ‘huohao turned to public’ reform instituted in Emperor Yongzheng’s reign (1723-1735). ‘Huohao’ denotes all the informal surtaxes collected by county governments. Because the bulk of formal tax revenue was remitted directly to the central government, provincial and county governments retained only a limited share of this income with limited discretion over its expenditure. Consequently, they imposed huohao or surtaxes to finance their own expenses. However, because these informal revenues were unsanctioned and unmonitored by the central government, they were largely pocketed by officials.
The ‘huohao turned to public’ reform was an endeavor to formalize huohao in order to achieve two interconnected policy goals: to reduce corruption and enhance provincial fiscal capacity by centralizing control. First, huohao was collected at rates designated by the provincial governor and delivered to the provincial treasury. Second, 60% of the remitted funds were allocated to county magistrates and provincial governors as ‘anticorruption salaries’ to finance their regular expenses, reducing their incentive to collect informal surtaxes and seize public revenues. More importantly, 40% of the formalized houhao was assigned as public funds to finance irregular expenses at the governors’ discretion. The total annual revenue from the formalized huohao amounted to 4.5 million taels of silver, of which 1.8 million were reserved as public funds. In sum, by formalizing and centralizing informal surtaxes, the reform enhanced provincial fiscal capacity by giving provincial governors more resources and a greater incentive to spend them on public goods. The design of the reform is illustrated in Figure 2.
Because corruption is extremely difficult to explore empirically, we mainly focus on whether the second goal was achieved. The timing of when the reform was initiated and completed differed between provinces, but the reasons behind these variations were largely exogenous to provincial characteristics, enabling us to use them to test the effects of reform. We test whether the huohao reform raised the frequency of famine relief in periods of disastrous weather by exploiting the different timing of the reform process across provinces. We restrict our dataset to 1710-1760, when the bulk of famine relief was financed by the provinces.
Using a prefecture-level panel dataset, we find that in times of extreme drought and floods, the frequency of famine relief increased after the reform by 1.05 times per prefecture, which was more than 100% of the standard deviation of the dependent variable relative to that under non-disastrous weather. By exploring the dynamics of the reform’s impact, we find no pre-trend, which supports the exogeneity of the reform’s timing. Our results are robust to controlling for other initiatives by the central government, such as tax exemptions, the allocation of tribute grain and central fiscal revenues, the enforcement of bureaucratic monitoring, and other concurrent fiscal reforms. We also find that famine relief effectively reduced grain prices when disasters occurred, indicating that public funds were spent on famine relief which had a beneficial impact on the population. Further, we find that the reform’s impact was greater when areas faced exceptional flooding compared to exceptional droughts, and greater in prefectures which had difficulties collecting taxes, suggesting that the reform facilitated the intertemporal and spatial redistribution of financial resources.
For this tax reform to have a sustained effect on provincial government capacity, central government would need to resist the expropriation of these new revenues for its own use. However, in premodern China, there were no institutional constraints on this dispossession. After emperor Qianlong (1736-1796) succeeded to the throne, the central government began to make regular checks on the expenditure of provincial public funds, forced the inter-provincial transfers of funds, and expended them on projects previously financed by central revenues. These actions forced provincial governments to reduce their expenditure on famine relief and withhold anticorruption salaries meant for county administrators. This finding highlights that it was the lack of credible commitment that accounted for the short-lived success of this fiscal reform. Viewed from this perspective, the reform provides a valuable lesson about the role of political institutions in the Great Divergence.
My Tawney lecture reassessed the relationship between slavery and industrial capitalism in both Britain and the United States. The thesis expounded by Eric Williams held that slavery and the slave trade were vital for the expansion of British industry and commerce during the 18th century but were no longer needed by the 19th. My lecture confirmed both parts of the Williams thesis: the 18th-century Atlantic economy was dominated by sugar, which required slave labor; but after 1815, British manufactured goods found diverse new international markets that did not need captive colonial buyers, naval protection, or slavery. Long-distance trade became safer and cheaper, as freight rates fell, and international financial infrastructure developed. Figure 1 (below) shows that the slave economies absorbed the majority of British cotton goods during the 18th century, but lost their centrality during the 19th, supplanted by a diverse array of global destinations.
I argued that this formulation applies with equal force to the upstart economy across the Atlantic. The mainland North American colonies were intimately connected to the larger slave-based imperial economy. The northern colonies, holding relatively few slaves themselves, were nonetheless beneficiaries of the trading regime, protected against outsiders by British naval superiority. Between 1768 and 1772, the British West Indies were the largest single market for commodity exports from New England and the Middle Atlantic, dominating sales of wood products, fish and meat, and accounting for significant shares of whale products, grains and grain products. The prominence of slave-based commerce explains the arresting connections reported by C. S. Wilder, associating early American universities with slavery. Thus, part one of the Williams thesis also holds for 18th-century colonial America.
Insurgent scholars known as New Historians of Capitalism argue that slavery, specifically slave-grown cotton, was critical for the rise of the U.S. economy in the 19th century. In contrast, I argued that although industrial capitalism needed cheap cotton, cheap cotton did not need slavery. Unlike sugar, cotton required no large investments of fixed capital and could be cultivated efficiently at any scale, in locations that would have been settled by free farmers in the absence of slavery. Early mainland cotton growers deployed slave labour not because of its productivity or aptness for the new crop, but because they were already slave owners, searching for profitable alternatives to tobacco, indigo, and other declining crops. Slavery was, in effect, a ‘pre-existing condition’ for the 19th-century American South.
To be sure, U.S. cotton did indeed rise ‘on the backs of slaves’, and no cliometric counterfactual can gainsay this brute fact of history. But it is doubtful that this brutal system served the long-run interests of textile producers in Lancashire and New England, as many of them recognized at the time. As argued here, the slave South underperformed as a world cotton supplier, for three distinct though related reasons: in 1807 the region closed the African slave trade, yet failed to recruit free migrants, making labour supply inelastic; slave owners neglected transportation infrastructure, leaving large sections of potential cotton land on the margins of commercial agriculture; and because of the fixed-cost character of slavery, even large plantations aimed at self-sufficiency in foodstuffs, limiting the region’s overall degree of market specialization. The best evidence that slavery was not essential for cotton supply is demonstrated by what happened when slavery ended. After war and emancipation, merchants and railroads flooded into the southeast, enticing previously isolated farm areas into the cotton economy. Production in plantation areas gradually recovered, but the biggest source of new cotton came from white farmers in the Piedmont. When the dust settled in the 1880s, India, Egypt, and slave-using Brazil had retreated from world markets, and the price of cotton in Liverpool returned to its antebellum level. See Figure 2.
The New Historians of Capitalism also exaggerate the importance of the slave South for accelerated U.S. growth. The Cotton Staple Growth hypothesis advanced by Douglass North was decisively refuted by economic historians a generation ago. The South was not a major market for western foodstuffs and consumed only a small and declining share of northern manufactures. International and interregional financial connections were undeniably important, but thriving capital markets in northeastern cities clearly predated the rise of cotton, and connections to slavery were remote at best. Investments in western canals and railroads were in fact larger, accentuating the expansion of commerce along East-West lines.
It would be excessive to claim that Anglo-American industrial and financial interests recognized the growing dysfunction of the slave South, and in response fostered or encouraged the antislavery campaigns that culminated in the Civil War. A more appropriate conclusion is that because of profound changes in technologies and global economic structures, slavery — though still highly profitable to its practitioners — no longer seemed essential for the capitalist economies of the 19th-century world.
by Daniel Gallardo Albarrán (Wageningen University)
Lack of access to clean water and sanitation facilities are still common across the globe. Simultaneously, infectious, water-transmitted illnesses are an important cause of death in these regions. Similarly, industrializing economies during the late 19th century exhibited extraordinarily high death rates from waterborne diseases. However, unlike contemporary developing countries, the former experienced a large decrease in mortality in subsequent decades which meant that deaths from waterborne diseases were totally eradicated.
What explains this unprecedented improvement? The provision of safe drinking water is often considered a key factor. However, the prevalence of waterborne ailments transmitted through faecal-oral mechanisms is also determined by water contamination and/or the inadequate storage and disposal of human waste. Consequently, doubts remain about efficacy of clean water per se to reduce mortality; this necessitates an integrative analysis considering both waterworks and sewerage systems.
My research adopts this approach by considering the case of Germany between 1877 and 1913 when both utilities were adopted nationally and crude death rates (CDR) and infant mortality rates (IMR) declined by almost 50 per cent. A quick glance at trends in mortality and the timing of sanitary infrastructures in Figure 1 suggests that improvements in water supply and sewage disposal are associated with better health outcomes. However, this evidence is only suggestive: Figure 1 only presents the experience of two cities and, importantly, factors outside public health investments — for example, better nutrition, improved infant care — may account for changes in mortality To study the link between sanitary improvements and mortality more systematically, I examine two new datasets containing information on various measures of mortality at city level (overall deaths, infant mortality and cause-specific deaths) and the timing when municipalities began improving water supply and sewage disposal.
The first set of results show that piped water reduced mortality, although its effects were limited given the absence of efficient systems of waste removal. Both sanitary interventions account for (at least) a fifth of the decrease in crude death rates between 1877 and 1913. If we consider the fall in infant deaths instead, I find that sewers were equally important in providing effective protection against waterborne illnesses, since improvements in water supply and sewage disposal explain a quarter of the fall in infant mortality rates.
I interpret these findings causally because both interventions had a persistent short-term impact on mortality instantaneously following their implementation, not before. As Figure 2 shows, CDR and IMR immediately decline following the construction of both waterworks and sewerage, and mortality exhibits no statistically significant trends in the years preceding the sanitary interventions (the reference point for these comparisons is one year prior to their construction). Furthermore, using cause-specific deaths I find that sanitary infrastructures are strongly associated with enteric-related illnesses, and deaths from a very different set of causes — homicides, suicides or accidents — are not.
The second set of results relates to the heterogeneous effects of sanitary interventions along different dimensions. I find that their impact on mortality are less universal than hitherto thought, since their effectiveness largely depended on local characteristics such as income inequality or the availability of female employment.
In sum, my research shows that the mere provision of safe water, is not sufficient to explain a significant fraction of the mortality decline in Germany at the turn of the 20th century. Investments in proper waste removal were needed to realize the full potential of piped water. Most importantly, the unequal mortality-reducing effect of sanitation calls for a deeper understanding of how local factors interact with public health policies. This is especially relevant today, as international initiatives, for example, the Water, Sanitation and Hygiene programmes led by UNICEF, aims to of promote universal access to sanitary services in markedly different local contexts.
by Jane Humphries (All Souls College, Oxford, and London School of Economics)
Sexual harassment was probably as common and as debilitating for past generations of women as for us in the world of #MeToo. The threat of sexual predation has long limited women and girls’ capabilities in the sense of what they could do or could be. It has constrained choice of jobs and security at work as well as threatened wellbeing more generally. Here evidence of sexual harassment and the anxiety it created are extracted from working women’s life accounts and shown to have entrenched economic discrimination and gender subordination.
Mary Saxby’s peripatetic life was punctuated by a series of encounters ranging from harassment to rape. While her vagrancy left her particularly exposed to predation, she was clearly vulnerable even when in prison. Other women were similarly at risk when going about their legitimate business. Christian Watt reported that ‘[F]ishwives were often attacked both for money and carnal knowledge’ and armed herself with a gutting knife for self-defence. Both working and getting to work created anxieties: girls in the Hodgson family faced a long walk to the mill where they worked. ‘It was dark when we went and dark going home … we three girls didn’t like it, and Mother didn’t like us having to do it either’.
Ironically, given its status as a proper employment for women and girls, domestic service entailed particular vulnerability. Christian Watt related a common type of encounter: ‘One morning while giving a hand to make the beds … a Captain Leslie Melville put his arms around me and embraced me. I dug my claws into his face and with all the force I could I tore for all I was worth; his journey into flirtation land cost him the skin of his nose’. For less forceful characters it was better not to run into such dangerous situations.
As today, girls without parental protection were particularly vulnerable. Ellen Johnston the ‘factory poetess’, who had an illegitimate child while in her teens hints several times at abuse by her stepfather. Sally Marcroft was impregnated by the son of a weaver with whom she was boarded as an orphaned pauper. Lucy Luck, on graduating from the workhouse, was found a job where she was constantly preyed upon: ‘Well, we reached St Albans at last, and the place of service [the poor law officer] had found for me was a public house … The mistress was very good to me but the master was one of the worst who walked God’s earth. Always fighting with his wife … and he would beat that woman shamefully … But that was not the worst of him. That man … did all he could, time after time, to try and ruin me, a poor orphan only fifteen years old. Even more appalling, Emma Smith, a Cornish waif who grew up partly in the workhouse and partly in her maternal grandparents’ home, was given by her mother to a hurdy- gurdy man who abused her continuously for years: “This beast — old enough to be my grandfather — grabbed hold of me, a child of about six years of age, if I was that. He undid some of my clothing and behaved in a disgusting way”. Few suffered such horrendous, and in Emma’s case life-impacting, abuse but fear of assault was common and had significant effects on what girls were able to do and to be.
Workplaces where the sexes mixed were widely regarded as promoting immorality and prudent girls shunned such exposure. Similarly, agricultural fieldwork was judged damaging once girls reached puberty whereupon it became more respectable to withdraw to indoor activities. Thus Jane Bowden was a boarded and then bound out apprentice aged 9 and ‘…[A]t the beginning part of my time I was employed in out-door work…..when I was about 16 I was kept entirely to the house, except at harvest time’. Service in public houses could also bring girls into bad company and threaten reputations. Hannah Cullwick obtained a place at the Lion Hotel but her father ‘thought it was not good for me at a public house and I was to give warning’.  Remember, Lucy Luck was consigned to this disreputable work: ‘What did it matter? I was only a drunkard’s child. But if they had found me a good place for a start, things might have been better for me’.
As these cases make clear, the need for circumspection in the face of potential predation and threats to reputation, made negotiating the world of work especially difficult. Not surprisingly, girls retreated into the ghetto of jobs where respectability was easier to retain and virtue to defend. Girls found it difficult to support themselves on the incomes they could earn and frequently remained partially dependent on fathers or the state, a foretaste of their situation as married women where the meta division of labour enforced women’s unpaid work in the home and men’s breadwinning. Dependent on men, women and girls’ lost self-esteem and lacked voice even within the household. A vicious circle eroding female capabilities was completed.
 The ‘capabilities approach’ to wellbeing originated in the work of Amartya Sen, see ‘Gender and Cooperative Conflicts’, in Irene Tinker(ed.) Persistent inequalities: Women and world development (New York, Oxford University Press, 1990). For further discussion see B. Agarwal, et al, Amartya Sen’s work and ideas. A gender perspective (London, Routledge, 2005).
 M. Saxby, Memoirs of a female vagrant written by herself (London, J. Burditt, 1806).
 C. Watt, The Christian Watt papers (Edinburgh, Birlinn, 1988), 36.
 A. Hughes, nee Hodgson,‘Unpublished autobiography’, Brunel, 5.
 E. Johnston, Autobiography of Ellen Johnston, ‘The Factory Girl’, in Four nineteenth-century working-class autobiographies, edited by James R. Simmons Jr., and introduced by Janice Carlisle (Toronto, Broadview Press, 2007).
 W. Marcroft, The Marcroft family (London, John Heywood, 1886) 21.
 L. Luck, ‘A little of my life’, The London Mercury, 76 (1926) 354-373.
 [E. Smith], A Cornish waif’s story (London, Odham’s Press, 1954) 31.
 J. Humphries, ‘Protective Legislation, the Capitalist State and Working-Class Men: The Case of the 1842 Mines Regulation Act’, Feminist Review, No. 7, Spring 1981, 1–35; J. Humphries, ‘“The Most Free from Objection…”, The Sexual Division of Labour and Women’s Work in Nineteenth Century England’, Journal of Economic History, Vol. XLVII, No. 4, December 1987, 929–950.
 J. Bowden, Employment of Women and Children in Agriculture, Parliamentary Papers, Vol. XII, 1843, 113.
 H. Cullwick, The diaries of Hannah Cullwick (London, Virago, 1984), 36.
Despite the political turmoil, the early 20th century witnessed fundamental economic and industrial transformations in China. Our research documents the most important but neglected aspect of this development: China remained on the silver standard until 1936 while many countries remained on gold. Nonetheless, the Chinese silver regime defies easy classification because its silver basis was traditionally not in coinage, but in the form of privately minted ingots called sycee, denoted by a unit of account called tael. During our study period, sycee circulated alongside standardized silver coins such as Mexican and later Chinese silver dollars. We know relatively little about the operation of the silver exchange and monetary regime within China, in contrast to the large literature on the gold standard during the same era.
We present an in-depth analysis of China’s unique silver regime by offering a systematic econometric assessment of Chinese silver market integration between 1898 and 1933. As a result of this integration, the dollar-tael exchange rate, the yangli, became the most important indicator of the Chinese currency market. We compile a large data set culled from contemporary publications on the yangli across nineteen cities in Northern and Central China, and offer a threshold time series methodology for measuring silver integration comparable to that of gold points.
We find that the silver points between Shanghai and Tianjin, the two most important financial centers in Central and Northern China, declined steadily from the 1910s for the rest of the period (Figure 1). Our estimates of silver points from the daily rates of nineteen cities during the 1920s and 1930s also reveal that there was no substantial difference in the level of monetary integration between the Warlord Era of the 1920s and the Nanjing decade of the 1930s. Figure 2 provides a simple linear plot of the distance between Shanghai and the estimated silver points of those cities paired with Shanghai during the 1920s and 1930s. This Figure shows a positive relationship between silver points and the distance from Shanghai, indicating the rise of a monetary system centered on Shanghai.
Our silver point estimates are closely aligned with the actual costs of the silver trade derived from contemporary accounts. Moreover, the silver points help predict corresponding transaction volumes: the majority of large silver exports from Shanghai occurred when the yangli spread was above the silver export points; only limited flows occurred when it fell within the bounds of the silver points. The econometric results reveal that monetary integration between Shanghai and Tianjin improved in the 1910s—precisely during the Warlord Era of national disintegration and civil strife—and these improvements spread to other cities in Central and Northern China in the 1920s and 1930s.
Our research provides a historical analysis of the causes of monetary integration, attributing a central role to China’s infrastructure and financial improvements during this period. One plausible driving force was the rise of new transport and information infrastructure, for example, the completion of the Tianjin-Nanjing Railway, and the Shanghai-Nanjing and Shanghai-Hangzhou Railways constructed between 1908 and 1916, which linked the Northern and Southern China. Compared with road or water transport, railroads offered much faster, cheaper and safer delivery, an advantage far more significant for high-value silver shipments than low-value high-bulk commodities.
Another, more important factor was monetary and financial transformation indicated by the rise of a modern banking system from the end of the 19th century. Although it was the government that issued national dollars, banking communities played a key role in defending its reputation and purity. Overtime, the ‘countable’ dollar outperformed the ‘weighable’ sycee as a medium of exchange, gaining an increasing share in China’s monetary system. This eventually paved the way for the currency reform of 1933, which abolished the sycee and the tael, establishing the dollar as the sole standard. A notable monetary transformation was the increasing popularity of banknotes. The system of Chinese bank note issuance was largely run on a model of free banking with multiple public and private banks, Chinese or foreign, issuing silver-convertible banknotes based on reputation mechanism. Thus, the increasing note issue from the 1910s provided a much more elastic currency to smooth seasonality in the money markets and enhance financial integration.
A podcast of Sevket’s Tawney lecture can be found here.
New Map of Turkey in Europe, Divided into its Provinces, 1801. Available at Wikimedia Commons.
The Tawney lecture, based on my recent book – Uneven centuries:economic development of Turkey since 1820, Princeton University Press, 2018 – examined the economic development of Turkey from a comparative global perspective. Using GDP per capita and other data, the book showed that Turkey’s record in economic growth and human development since 1820 has been close to the world average and a little above the average for developing countries. The early focus of the lecture was on the proximate causes — average rates of investment, below average rates of schooling, low rates of total productivity growth, and low technology content of production —which provide important insights into why improvements in GDP per capita were not higher. For more fundamental explanations I emphasized the role of institutions and institutional change. Since the nineteenth century Turkey’s formal economic institutions were influenced by international rules which did not always support economic development. Turkey’s elites also made extensive changes in formal political and economic institutions. However, these institutions provide only part of the story: the direction of institutional change also depended on the political order and the degree of understanding between different groups and their elites. When political institutions could not manage the recurring tensions and cleavages between the different elites, economic outcomes suffered.
There are a number of ways in which my study reflects some of the key trends in the historiography in recent decades. For example, until fairly recently, economic historians focused almost exclusively on the developed economies of western Europe, North America, and Japan. Lately, however, economic historians have been changing their focus to developing economies. Moreover, as part of this reorientation, considerable effort has been expended on constructing long-run economic series, especially GDP and GDP per capita, as well as series on health and education. In this context, I have constructed long-run series for the area within the present-day borders of Turkey. These series rely mostly on official estimates for the period after 1923 and make use of a variety of evidence for the Ottoman era, including wages, tax revenues and foreign trade series. In common with the series for other developing countries, many of my calculations involving Turkey are subject to larger margins of error than similar series for developed countries. Nonetheless, they provide insights into the developmental experience of Turkey and other developing countries that would not have been possible two or three decades ago. Finally, in recent years, economists and economic historians have made an important distinction between the proximate causes and the deeper determinants of economic development. While literature on the proximate causes of development focuses on investment, accumulation of inputs, technology, and productivity, discussions of the deeper causes consider the broader social, political, and institutional environment. Both sets of arguments are utilized in my book.
I argue that an interest-based explanation can address both the causes of long-run economic growth and its limits. Turkey’s formal economic institutions and economic policies underwent extensive change during the last two centuries. In each of the four historical periods I define, Turkey’s economic institutions and policies were influenced by international or global rules which were enforced either by the leading global powers or, more recently, by international agencies. Additionally, since the nineteenth century, elites in Turkey made extensive changes to formal political institutions. In response to European military and economic advances, the Ottoman elites adopted a programme of institutional changes that mirrored European developments; this programme continued during the twentieth century. Such fundamental changes helped foster significant increases in per capita income as well as major improvements in health and education.
But it is also necessary to examine how these new formal institutions interacted with the process of economic change – for example, changing social structure and variations in the distribution of power and expectations — to understand the scale and characteristics of growth that the new institutional configurations generated.
These interactions were complex. It is not easy to ascribe the outcomes created in Turkey during these two centuries to a single cause. Nonetheless, it is safe to state that in each of the four periods, the successful development of new institutions depended on the state making use of the different powers and capacities of the various elites. More generally, economic outcomes depended closely on the nature of the political order and the degree of understanding between different groups in society and the elites that led them. However, one of the more important characteristics of Turkey’s social structure has been the recurrence of tensions and cleavages between its elites. While they often appeared to be based on culture, these tensions overlapped with competing economic interests which were, in turn, shaped by the economic institutions and policies generated by the global economic system. When political institutions could not manage these tensions well, Turkey’s economic outcomes remained close to the world average.
by Anna Missiaia and Kersten Enflo (Lund University)
This research is due to be published in the Economic History Review and is currently available on Early View.
For a long time, scholars have thought about regional inequality merely as a by-product of modern economic growth: following a Kuznets-style interpretation, the front-running regions increase their income levels and regional inequality during industrialization; and it is only when the other regions catch-up that overall regional inequality decreases and completes the inverted-U shaped pattern. But early empirical research on this theme was largely focused on the the 20th century, ignoring industrial take-off of many countries (Williamson, 1965). More recent empirical studies have pushed the temporal boundary back to the mid-19th century, finding that inequality in regional GDP was already high at the outset of modern industrialization (see for instance Rosés et al., 2010 on Spain and Felice, 2018 on Italy).
The main constraint for taking the estimations well into the pre-industrial period is the availability of suitable regional sources. The exceptional quality of Swedish sources allowed us for the first time to estimate a dataset of regional GDP for a European economy going back to the 16th century (Enflo and Missiaia, 2018). The estimates used here for 1571 are largely based on a one-off tax proportional to the yearly production: the Swedish Crown imposed this tax on all Swedish citizens in order to pay a ransom for the strategic Älvsborg castle that had just been conquered by Denmark. For the period 1750-1850, the estimates rely on standard population censuses. By connecting the new series to the existing ones from 1860 onwards by Enflo et al. (2014), we obtain the longest regional GDP series for any given country.
We find that inequality increased dramatically between 1571 and 1750 and remained high until the mid-19th century. Thereafter, it declined during the modern industrialization of the country (Figure 1). Our results discard the traditional view that regional divergence can only originate during an industrial take-off.
Figure 1. Coefficient of variation of GDP per capita across Swedish counties, 1571-2010.
Figure 2 shows the relative disparities in four benchmark years. If the country appeared relatively equal in 1571, between 1750 and 1850 both the mining districts in central and northern Sweden and the port cities of Stockholm and Gothenburg emerged.
Figure 2. The relative evolution of GDP per capita, 1571-1850 (Sweden=100).
The second part of the paper is devoted to the study of the drivers of pre-industrial regional inequality. Decomposing the Theil index for GDP per worker, we show that regional inequality was driven by structural change, meaning that regions diverged because they specialized in different sectors. A handful of regions specialized in either early manufacturing or in mining, both with a much higher productivity per worker compared to agriculture.
To explain this different trajectory, we use a theoretical framework introduced by Strulik and Weisdorf (2008) in the context of the British Industrial Revolution: in regions with a higher share of GDP in agriculture, technological advancements lead to productivity improvements but also to a proportional increase in population, impeding the growth in GDP per capita as in a classic Malthusian framework. Regions with a higher share of GDP in industry, on the other hand, experienced limited population growth due to the increasing relative price of children, leading to a higher level of GDP per capita. Regional inequality in this framework arises from a different role of the Malthusian mechanism in the two sectors.
Our work speaks to a growing literature on the origin of regional divergence and represents the first effort to perform this type of analysis before the 19th century.
by Federico Tadei (Department of Economic History, University of Barcelona)
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.
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.
by Stuart Henderson (Ulster University) The full paper has been published on The Economic History Review and is available here
The role of religion in economic development has attracted increasing debate among scholars in economics, and especially economic history. This is at least partially attributable to the normalization in recent times of conversations relating to the effect of religion on social progress. This paper adds a new perspective to that debate by exploring the relationship between religion and development in Ireland between 1861 and 1911. The paper highlights a religious reversal of fortunes—a Catholic embourgeoisement—in the years following the Great Irish Famine.
Ireland is a rather curious case. Here the effect of the Protestant Reformation manifested, not through a conversionary zeal spreading the land, but rather by the movement of people across the Irish Sea. In the centuries that followed, the Protestant minority, and particularly adherents of the Anglican Church, gained economic and social supremacy. By contrast, the Roman Catholic majority were socioeconomically disadvantaged, and denied the societal privileges offered to their Protestant counterparts.
Slowly, however, the balance of power began to shift. Penal laws, which discriminated particularly against Roman Catholics, were overturned, and eventually The Roman Catholic Relief Act of 1829 marked the culmination of Catholic Emancipation.
However, the legal watershed of Catholic Emancipation did not resolve the uneven balance of economic power between Protestants and Catholics. The arrival of a National System of Education in 1834, was a marker of the amelioration of religious inequality, but arguably it was the Great Famine in the mid-nineteenth century that truly transformed the prevailing social paradigm.
The Great Famine had a disproportionate impact on Roman Catholics given their lower social status and geographic situation. While devastating, the Famine catalysed a new sense of purpose in Catholic society—peasant religion and superstition were suppressed as the Roman Catholic Church benefitted from a new religious fervour, religious personnel bolstered the provision of education, and a rationalisation of the farming family meant a population more receptive to the social control provided by the Church.
However, the effects of the Famine were hardly a mere religious awakening. With Catholic education in Catholic hands, the Catholic population became increasing literate. Literacy aided in occupational advancement and the diffusion of political consciousness. Moreover, with the entrenchment of barriers to Catholic progression—for example the predominance of Protestants in banking—rising literacy likely fuelled discontent and thus nationalist sentiment.
The economic progress of Roman Catholics in the post-Famine decades is statistically examined in the paper. Put simply, the results suggest a Catholic–Protestant convergence over the decades following the Famine. Roman Catholics were rapidly closing the literacy gap and rising in occupational status as Protestant dominance receded. There is also evidence provided which suggests that commercial activities in more Catholic-concentrated areas were catching up with less Catholic-concentrated areas. Indeed, the general trajectory observed is referred to as a Catholic embourgeoisement as Catholics were becoming a more middle-class people—increasingly “alike” their Protestant counterparts.
For Protestants, the prevailing cultural dichotomy—which had long been to their advantage—was perhaps relevant in the economic convergence of the denominations after the Famine, and indeed in ultimate independence. Societal separation meant that the Catholic majority had a religious identity around which to coalesce. Therefore, as legal barriers receded and human capital increased, Catholics began to create an institutional alternative to that provided by the “Protestant” state, with their own network of schools, banks and professionals. Moreover, such movements were likely self-reinforcing, as Catholic professionals aided a new generation to follow their ascent.
The significance of this development is considered further towards the end of the paper. Ireland’s obvious majority–minority structure is contrasted with the Netherlands where no religious majority prevailed. In the latter, this led to a society organised into distinct segments (or pillars), which coexisted in relative harmony. By contrast, in the Irish case, despite the economic convergence of the denominations, independence resulted. The movement towards independence was arguably aided by the mutually beneficial relationship between the Roman Catholic Church and nationalism—the Church, with its body of adherents, provided legitimising capital for nationalism, while nationalism espoused a vision of Ireland that was consistent with the teaching of the Church. Moreover, for individual Roman Catholics, such nationalist vision was likely attractive since it offered the opportunity for societal equality beyond simply materialistic gains—opportunity which the existing state apparatus was slow to provide.
Hence, in understanding the development of Ireland in the post-Famine era, this paper provides not only an important quantification of Catholic progress, but also widens the debate to what Amartya Sen eloquently calls ‘development as freedom’. In doing so, it emphasises the short-sightedness of a narrow materialistic view of societal development, and instead offers a more nuanced perspective on the Irish case.