The Diaspora of a Diaspora: The Cassana and Rivarolo family network in the Atlantic, 1450-1530

By Andres Mesa (Università degli Studi di Teramo)

This research is due to be presented in the sixth New Researcher Online Session: ‘Spending & Networks’.

The Coast of Genoa, by Jasper Francis Cropsey, 1854. Available at Wikimedia Commons.

My project re-assesses the nature of Genoese family networks in the Atlantic, at the end of the fifteenth and early sixteenth centuries. The canonical understanding of these networks is based on three observations: family networks were highly co-dependent, centralized, and that Genoa was the centre of operations for all the Genoese. My research shows a multitude of scenarios and provides new explanations for these observations. Using a case study of the Rivarolo-Cassana family network, I show that this particular network functioned more in terms of cooperation, using a pluricentric language. As the title suggests, the economic endeavours of these merchants involved  a complex migration process. Consequently, their trading activities coincided with the interests of those in permanent settlements.

Genoese merchants chose cities in the Iberian peninsula for their homes and as a base for their  business activities. For example, Lisbon, Seville, and Valencia had a significant permanent Genoese population who were in the process of becoming naturalized Spanish and Portuguese citizens. In turn, some of the families that dominated the economic landscape of the 15th and 16th centuries disappeared in Genoa. Yet, their descendants still appear in Portugal and Spain with their original Ligurian surnames altered into Castilian or Portuguese.

The findings from my study indicate the need for a major reassessment of our understanding of Genoese family networks. The data I have collected shows that most of the day-to-day trade happened outside the family network, and the contractual relationships that emerged between partners  extended well beyond familial ties. Because the structure of private property ownership was connected to new interests and new markets, it was inevitable that these, in turn, were linked to the discovery of new lands. Consequently, The Genoese adopted a new business model based on owning the means of production for the goods they traded, particularly soap, wheat, and sugar.

Finally, I argue that the economic ties between families and family members, did not always translate into a share of business responsibility or welfare. The relationships and partnerships functioned in terms of very particular historical and geographical contexts. The contracts were between ‘individuals (Societas) to share losses and gains.’ Thus, liability was an individual matter despite the frequent use of jurists.

Andrés Mesa

Twitter: @mesaandres

Corporate Social Responsibility for workers: Pirelli (1950-1980)

by Ilaria Suffia (Università Cattolica, Milan)

This blog is part of our EHS Annual Conference 2020 Blog Series.



Pirelli headquarters in Milan’s Bicocca district. Available at Wikimedia Commons.

Corporate social responsibility (CSR) in relation to the workforce has generated extensive academic and public debate. In this paper I evaluate Pirelli’s approach to CSR, by exploring its archives over the period 1950 to 1967.

Pirelli, founded in Milan by Giovanni Battista Pirelli in 1872, introduced industrial welfare for its employees and their family from its inception. In 1950, it deepened its relationship with them by publishing ‘Fatti e Notizie’ [Events and News], the company’s in-house newspaper. The journal was intended to share information with workers, at any level and, above all, it was meant to strengthen relationships within the ‘Pirelli family’.

Pirelli industrial welfare began in the 1870s and, by the end of the decade, a mutual aid fund and some institutions for its employees families (kindergarten and school), were established. Over the next 20 years, the company set the basis of its welfare policy which encompassed three main features: a series of ‘workplace’ protections, including accident and maternity assistance;  ‘family assistance’, including (in addition to kindergarten and school), seasonal care for children and, finally,  commitment to the professional training of its workers.

In the 1920s, the company’s welfare enlarged. In 1926, Pirelli created a health care service for the whole family and, in the same period, sport, culture and ‘free time’ activities became the main pillars of its CSR. Pirelli also provided houses for its workers, best exemplified in 1921, with the ‘Pirelli Village’. After 1945, Pirelli continued its welfare policy. The Company started a new programme of construction of workers’ houses (based on national provision), expanding its Village, and founding a professional training institute, dedicated to Piero Pirelli. The establishment in 1950 of the company journal, ‘Fatti e Notizie’, can be considered part of Pirelli’s welfare activities.

‘Fatti e Notizie’ was designed to improve internal communication about the company, especially Pirelli’s workers.  Subsequently, Pirelli also introduced in-house articles on current news or special pieces on economics, law and politics. My analysis of ‘Fatti e Notizie’ demonstrates that welfare news initially occupied about 80 per cent of coverage, but after the mid-1950s it decreased to 50 per cent in the late 1960s.

The welfare articles indicate that the type of communication depended on subject matter. Thus, health care, news on colleagues, sport and culture were mainly ‘instructive’, reporting information and keeping up to date with events. ‘Official’ communications on subjects such as CEO reports and financial statements, utilised ‘top to bottom’ articles. Cooperation, often reinforced with propaganda language, was promoted for accident prevention and workplace safety. Moreover, this kind of communication was applied to ‘bottom to top’ messages, such as an ‘ideas box’ in which workers presented their suggestions to improve production processes or safety.

My analysis shows that the communication model implemented by Pirelli in the 1950s and 1960s, navigated models of capitulation, (where the managerial view prevails) in the 1950s, to trivialisation (dealing only with ‘neutral’ topics, from the 1960s.



Ilaria Suffia:

Female petitioners to the English East India Company, 1600-1753

by Aske Laursen Brock (Aalborg University)


Shah 'Alam conveying the grant of the Diwani to Lord Clive, August 1765 (oil on canvas)
Benjamin West (1818) Shah ‘Alam conveying the grant of the Diwani to Lord Clive. Available on Wikimedia Commons

Today petitioning still gives us an opportunity to exert agency and, in theory, influence the institutions that shape our lives. Lately, petitions about Brexit, saving the climate or holding internet trolls accountable for their online actions have gathered thousands of signatures. The British government has set up a website to collect petitions in one place and make it accessible for a larger populace.

Petitions from the seventeenth and eighteenth century similarly shed light on how popular involvement in state formation, overseas expansion and the commercial revolution was integral in shaping society. Petitioning was ubiquitous in early modern Britain; the king, parliament and local magistrates among other institutions received petitions from all tiers of society. Each petition underlines groups’ as well as individuals’ agendas and links macro-levels developments to the smallest actors in society.

For example, women’s petitions to the English East India Company influenced the company’s policies and governance. Though rarely formal members of trading companies, women were among the many who took advantage of new opportunities afforded by global trade to make a living; either by their own means or through their extended network.

Simultaneously, the global nature of trade presented new challenges, as personal wealth and connections were more far-flung than before. For example, obtaining the wages or goods of a relative who passed away in Indonesia demanded insight into the inner workings of a company and a diverse network. These developments forced women to interact more frequently with trading companies such as the East India Company in order to secure or improve their fortunes.

The state was more decentralised than today and delegated important tasks such as charity, education and healthcare to various institutions and organisations, such as the church, guilds and trading companies. This made people constituents of a wide variety of institutions and meant that institutions consisted of various constituents, who used petitions as a tool to influence them.

But until now, petitions to trading companies have been overlooked. During a period in which the East India Company was one of the biggest employers in Britain, the company faced new challenges on a global scale and came to include a higher number of constituents that were more diverse than before. Though not formally employed by the company, families in England relied on receiving the wages of relations working on ships or overseas.

As the East India Company was dependent on a functioning relationship with employees, it could not afford to ignore wholly its female constituents. But to make certain the company made good on its contracts and agreements, women had to petition to ensure wages, goods, inheritance and, in some cases, their own employment.

These petitions present an interesting subset of the petitioning culture and shed light on the social composition of companies. They represent varied interactions between constituents and company, and introduce a unique opportunity for understanding how women navigated the company boardroom in London and, in some cases, the market overseas.

This in turn makes it possible to appreciate how corporations and early global capitalism were shaped not only by directors, goods and markets, but also by the contribution of otherwise largely disenfranchised agents, in this case women, operating formally and informally under the company umbrella.

Business bankruptcies: learning from historical failures

by Philip Fliers (Queen’s University Belfast), Chris Colvin (Queen’s University Belfast), and Abe de Jong (Monash University).

This blog is part of our EHS 2020 Annual Conference Blog Series.



The door of a bankrupt business locked with a chain and padlock. Available at Flickr.


Business bankruptcies are rare events. But when they occur, they can prove catastrophic. Employees lose their jobs, shareholders lose their savings and loyal customers lose their trusted suppliers.

Essentially, bankruptcies are ‘black swan’ events in that they come as a surprise, have a major impact and are often inappropriately rationalised after the fact with the benefit of hindsight. While they may be extreme outliers, they are also extremely costly for those affected.

Because bankruptcies are so rare, they are very hard to study. This makes it difficult to understand the causes of bankruptcies, and to develop useful early warning systems.

What are the risk factors for which shareholders should watch out when evaluating their investments, or when pension regulators audit the future sustainability of workplace pension schemes?

Our solution is to exploit the historical record. We collect a dataset of all bankruptcies of publicly listed corporations that occurred in the Netherlands over the past 100 years. And we look to see what we can learn from taking this long-run perspective.

In particular, we are interested in seeing whether these bankruptcies had common features. Are firms that are about to go out of business systematically different in terms of their financial performance, corporate financing or governance structures than those that are healthy and successful?

Our surprising result is that the features of bankrupt corporations vary considerably across the twentieth century.

During the 1920s and 1930s, small and risky firms were more likely to go bankrupt. In the wake of the Second World War, firms that did not pay dividends to their shareholders were more likely to fail. And since the 1980s, failure probabilities have been highest for over-leveraged firms.

Why does all this matter? What can we learn from our historical approach?

On first glance, it looks like we can’t learn anything; the drivers of corporate bankruptcies appear to change quite significantly across our economic past.

But we argue that this finding is itself a lesson from history.

The development of early warning failure systems needs to take account of context and allow for a healthy degree of flexibility.

What does this mean in practice?

Well, regulators and other policy-makers should not solely rely on ad hoc statistical models using recent data. Rather, they should combine these statistical approaches with common sense narrative analytics that incorporate the possibility of compensating mechanisms.

There are clearly different ways in which businesses can go bankrupt. Taking a very recent perspective ignores many alternative routes to business failure. Broadening our scope has permitted us to identify factors that can lead to business instability, but also how these factors can be mitigated.

Book Review – ‘Money and Markets: Essays in Honour of Martin Daunton’

review by Duncan Needham (University of Cambridge)

book edited by Julian Hoppit, Duncan Needham & Adrian Leonard

‘Money and Markets: Essays in Honour of Martin Daunton’ is published by Boydell and Brewer. SAVE  35% when you order direct from the publisher – offer ends on the 23rd April 2020. See below for details.


Daunton 1

Money and Markets was commissioned by Boydell and Brewer following a conference to celebrate the distinguished career of Cambridge historian Martin Daunton.  The volume follows the themes of that conference, bringing together essays from former colleagues and students that reflect Martin’s broad-ranging interests in the economic, social and cultural history of the United Kingdom and beyond.  As one of those colleagues Frank Trentmann points out, students could be forgiven for thinking there are four Martin Dauntons:

There is the Daunton of urban history and housing, then Daunton the author of books on state and taxation, and a third, younger Daunton, who writes about Britain and globalisation. Finally, there is the academic governor Daunton, Master of Trinity Hall, Cambridge, President of the Royal Historical Society, and chair of numerous boards and committees.


Martin Daunton was the sixth holder of the Cambridge chair in Economic History.  The first, Sir John Clapham, tasked economic historians with filling the ‘empty boxes’ of theory with historical facts.  This task was taken up with enthusiasm by his successor, Michael Postan, who insisted that theory, essential for establishing historical causation, be firmly grounded in social and institutional settings.  Martin has taken a similar approach throughout his career by focusing on the relationship between structure and agency, how institutional structures create capacities and path dependencies, and how institutions are themselves shaped by agency and contingency – what Fernand Braudel referred to as ‘turning the hour glass twice’.

The introduction to Money and Markets provides biographical detail to illustrate how Martin’s research has been influenced by the places in which he has lived – from growing up in South Wales, to university at Nottingham and Kent, then teaching at Durham, London and finally Cambridge.  The chapters then follow Trentmann’s taxonomy with new research on the financing of the British fiscal-military state before and during the Napoleonic wars, its property institutions, and the longer-term economic consequences of Sir Robert Peel.  There are also chapters on the birth of the Eurodollar market, Conservative fiscal policy from the 1960s to the 1980s, the impact of neoliberalism on welfare policy (and more broadly), the failed attempt to build an airport in the Thames Estuary in the 1970s, and the political economy of time in Britain since 1945.  While much of the focus is on Britain, and British finance in a global economy, the volume also reflects Daunton’s more recent work on international political economy with essays on the French contribution to nineteenth-century globalization, Prussian state finances at the time of the 1848 revolution, Imperial German monetary policy, the role of international charity in the mixed economy of welfare and neoliberal governance, and the material politics of energy consumption from the 1930s to the 1960s.



SAVE 35% when you order direct from the publisher using the offer code BB135 online here. Offer ends 23rd April 2020. Discount applies to print and eBook editions. Alternatively call Boydell’s distributor, Wiley, on 01243 843 291 and quote the same code. Offer ends one month after the date of upload. Any queries please email

Tawney Lecture 2019: Slavery and Anglo-American Capitalism Revisited

by Gavin Wright (Stanford University)

This research was presented as the Tawney Lecture at the EHS Annual Conference in 2019.

It will also appear in the Economic History Review later this year.


Coloured lithograph of slaves picking cotton. Fort Sumter Museum Charleston. Available at Flickr.

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.

Figure 1.

Source: see article published in the Review.


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.

Figure 2.

Source: see article published in the Review.

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.

All quiet before the take-off? Pre-industrial regional inequality in Sweden (1571-1850)

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.


Missiaia Main.jpg
Södra Bancohuset (The Southern National Bank Building), Stockholm. Available here at Wikimedia Commons.

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.

Missiaia 1
Sources: 1571-1850: Enflo and. Missiaia, ‘Regional GDP estimates for Sweden, 1571-1850’; 1860-2010: Enflo et al, ‘Swedish regional GDP 1855-2000 and Rosés and Wolf, ‘The Economic Development of Europe’s Regions’.


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).

Missiaia 2
Sources: 1571-1850: Enflo and. Missiaia, ‘Regional GDP estimates for Sweden, 1571-1850’; 2010: Rosés and Wolf, ‘The Economic Development of Europe’s Regions’.

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.


To contact the authors:



Enflo, K. and Missiaia, A., ‘Regional GDP estimates for Sweden, 1571-1850’, Historical Methods, 51(2018), 115-137.

Enflo, K., Henning, M. and Schön, L., ‘Swedish regional GDP 1855-2000 Estimations and general trends in the Swedish regional system’, Research in Economic History, 30(2014), pp. 47-89.

Felice, E., ‘The roots of a dual equilibrium: GDP, productivity, and structural change in the Italian regions in the long run (1871-2011)’, European Review of Economic History, (2018), forthcoming.

Rosés, J., Martínez-Galarraga, J. and Tirado, D., ‘The upswing of regional income inequality in Spain (1860–1930)’,  Explorations in Economic History, 47(2010), pp. 244-257.

Strulik, H., and J. Weisdorf. ‘Population, food, and knowledge: a simple unified growth theory.’ Journal of Economic Growth 13.3 (2008): 195.

Williamson, J., ‘Regional Inequality and the Process of National Development: A Description of the Patterns’, Economic Development and Cultural Change 13(1965), pp. 1-84.


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.

Is bad news ever good for stocks? The importance of time-varying war risk and stock returns

by Gertjan Verdickt (University of Antwerp)

This paper was presented at the EHS Annual Conference 2019 in Belfast.


Brussels Stock Exchange Building (Bourse or Beurs). Available at Wikimedia Commons.

One of the most severe events that affect stock markets is arguably a war. Because wars rarely occur, it is difficult to document what the effect of an increase in the threat and act of war is. Going back to history can go a long way to fill this gap.

In my research, I start by collecting a large sample of articles from the archives of The Economist to create the metrics, Threat and Act. This sample contains 79,568 articles from the period January 1885 to December 1913. To mimic investors and understand the content of news items, I rely on a textual analysis with a thorough human reading.

First, I document that Threat is a good predictor for actual events. If The Economist writes more about a potential military conflict, the probability of that conflict actually happening in the future is higher.

The other metric, Act, only captures conflicts that are happening right now. This suggests that, in contrast to what other historians find, The Economist did not write about war excessively but chose their war news coverage appropriately.

Verdickt Graph

Second, I focus on seven countries with stock listings on the Brussels Stock Exchange: Belgium, France, Germany, Italy, Russia, Spain and the Netherlands. These countries are important for Belgium, either through import and export or with a large number of stock listings in Brussels.

Additionally, I use information on other European and non-European countries with stock listings in Brussels to test whether war risk could be considered a European or global form of risk.

For the seven countries, I document that firms do not adjust dividend policies when there is an increase in the threat of war, but only when there is an outbreak of war.

Investors, on the other hand, sell their stocks when there is an increase in the potential and outbreak of a military conflict. When the threat is not followed by an act, stock prices adjust increase to the similar levels as before.

But when there is an outbreak of war, stock returns are negative up to 12 months after the initial increase. This shows that war risk is priced appropriately in stock markets, but that the outbreak of war is associated with higher uncertainty and welfare costs.

More interestingly, I show that there is a decrease in stock prices for other European countries, but no effect for non-European countries. This suggests that investors value the importance of proximity to a war. But firms from these countries do not adjust their dividend policy when threat and act increase.

Unions and American Income Inequality at Mid-Century

by William J. Collins (Vanderbilt University) and Gregory T. Niemesh (Miami University)

This article is published by The Economic History Review, and it is available on the EHS website.


EHS Great Depression
Crowd of depositors gather in the rain outside the Bank of United States after its failure. Available at Wikimedia Commons

Rising income inequality in the United States has attracted scholars’ attention for decades, resulting in an extensive and detailed literature on the trend’s causes and consequences.  An equally large but much less studied decline in income inequality occurred in the US during the 1940s.  This led to an era of relatively compressed income inequality that lasted into the 1970s. Goldin and Margo (1992) called this ‘The Great Compression.’

Our recent research has explored the role of changing labour market institutions in contributing to the Great Compression, with a focus on the role of labour unions.  In the US, labour unions rose to prominence starting in the late 1930s, following the Wagner Act of 1935 and a Supreme Court decision in 1937 upholding the Act.  This recast the legal framework under which unions formed and collectively bargained by creating the National Labor Relations Board to oversee representation elections and enforce the Act’s provisions, including prohibitions of various ‘unfair practices’ which employers had used to discourage unions.  Unions continued to grow through the 1940s, especially during the Second World War, and they peaked as a share of employment in the early 1950s.

Time series graphs of union density and income inequality over the full twentieth century in the US are nearly mirror images of each other (Figure 1).  But it is difficult to evaluate the role of unions in influencing this period’s inequality due to limitations of standard data sources.  The US census, for instance, has never inquired about union membership, which makes it impossible to link individual-level wages to individual-level union status in nationally representative samples for this period (see Callaway and Collins 2018 and Farber et al. 2017 for efforts to develop data from other sources).  Research on US unions later in twentieth century, when data are more plentiful, highlight their wage compressing character, as does some of the historical literature on wage setting during the Second World War, but there is much left to learn.


Figure 1: Unions and income inequality trends in the 20th-century United States

Great Depression Table

Sources: See Collins and Niemesh (forthcoming).


In a paper titled ‘Unions and the Great Compression of wage inequality in the United States at mid-century: evidence from labour markets,’ we provide a novel perspective on changes in inequality at the local level during the 1940s (Collins and Niemesh, forthcoming).  The building blocks for the empirical work are as follows: the “complete count” census microdata for 1940 provide information on wages and industry of employment (Ruggles et al. 2015); Troy’s (1957) work on mid-century unionization provides information on changes in unionization at the industry level over the 1940s; and subsequent censuses provide sufficient information to form comparable local-level measures of wage inequality.  We use a combination of local employment data circa 1940 and changes in unionization by industry after 1939 to create a variable for local ‘exposure’ to changes in unionization.

We ask whether places with more exposure to unionization due to their pre-existing industrial structure experienced more compression of wages during the 1940s and beyond, conditional on many other features of the local economy including wartime production contracts and allowing for differences in regional trends. The answer is yes: a one standard-deviation increase in the exposure to unionization variable is associated with a 0.072 log point decline in inequality between the 90th and 10th wage percentile in the 1940s (equivalent to 32 percent of the mean decline).  The association between local union exposure and wage compression is concentrated in the lower part of wage distribution.  That is, the change in inequality between the 50th and 10th percentile is more strongly associated with exposure to unionization than the change between 90th and 50th percentile.  As far as we can tell, this mid-century pattern was not driven by the re-sorting of workers (e.g., high skilled workers sorting out of unionizing locations) or by firms exiting places that were highly exposed to unionization.

We also explore whether the impression unions likely made on local wage structures persisted, even as private sector unions declined through the last decades of the twentieth century. In fact, the pattern fades a bit with time, but it remains visible to the end of the twentieth century. We leave for future research important questions about the mechanisms of persistence in local wage structures, non-wage aspects of unionization (e.g., implications for benefits or safety), implications for firm behaviour in the long run, and international comparisons.


To contact William J. Collins: william.collins@Vanderbilt.Edu

To contact Gregory T. Niemesh:



Callaway, B. and W.J. Collins. ‘Unions, workers, and wages at the peak of the American labor movement.’ Explorations in Economic History 68 (2018), pp. 95-118.

Collins, W.J. and G.T. Niemesh. ‘Unions and the Great Compression of wage inequality in the US at mid-century: evidence from local labour markets.’ Economic History Review (forthcoming).

Farber, H.S., Herbst D., Kuziemko I., and Naidu, S. ‘Unions and inequality over the twentieth century: new evidence from survey data.” NBER Working Paper 24587 (Cambridge MA, 2018).

Goldin, C. and R.A. Margo, ‘The Great Compression: the wage structure in the United States at midcentury.’ Quarterly Journal of Economics 107 (1992), pp. 1-34.

Ruggles, S., K. Genadek, R. Goeken, J. Grover, and M. Sobek. Integrated public use microdataseries: version 6.0 [Machine-readable database]. (Minneapolis: University of Minnesota, 2015).

Troy, L., The distribution of union membership among the states, 1939 and 1953. (New York: National Bureau of Economic Research, 1957).