Food Security, Trade and Violence: From the First to the Second Globalization in Colombia 1916-2016 (NR Online Session 2)

By Alexander Urrego-Mesa (Universitat de Barcelona)

This research is due to be presented in the second New Researcher Online Session: ‘Industry, Trade & Technology’


 

 

With world population forecasted at 9 billion by 2050, and climate change hazards, maintaining the capacity to provide food becomes paramount for national governments, especially in developing countries. After the Second War World and the Oil Crises, food aid and trade liberalisation helped to distribute food from surplus countries to those in deficit. (Dithmer, J., & Abdulai, A. 2017).

Nonetheless, some scholars suggest that trade liberalization and agro-export specialization threaten domestic food security in developing countries (Kumar Sharma, 2016), for the following reasons: it promotes increasing dependence on food exporters, increases vulnerability when confronting volatile agrarian prices, and jeopardizes domestic production by promoting agro-exports. Moreover, the rise of agrarian trade contributes to rising consumption of fossil-fuel-based inputs like nutrients, fuel, machinery, and intensifies the use of natural resources, thereby contributing to soil erosion, greenhouse gas emissions and the loss of biodiversity. (D’Odorico et al., 2014).

Nonetheless, little is known about how the relationship between trade, food availability, and food production has evolved. This research contributes to the food security debate at the national level by introducing a historic long-rung approach and comparing the two main periods of food trade, the First and the Second Globalization in a developing context.

 

Figure 1. Food trade balance (1916-2016)

Urrego-Mesa1
Note: Positive values indicate imports, negative values refer to exports, and the solid black line indicates net imports.

 

I analyse the long-run trend of food security in Colombia, a relevant developing country and one of the most biodiverse countries on the planet. I build on data from the early 20th century to the present, on agrarian trade, food availability, and self-sufficiency (SS) -understood as the capacity of the agrarian system to meet domestic demand.

I find that the country shifted from tropical exporter to food-dependent importer between the First and Second Globalisations. However, this change has not led to setting tropical exports aside, but to an increase in the amount of food imported from abroad. New cash crops like tropical fruits and sugar cane took the role of coffee under the FMI’s structural reforms (Figure 1). In ecological terms, this meant a change towards more intensive farming in water, land, fuel, and the use of fertilisers.

Although the import of wheat and rice served to face food shortages at the end of the 1920s and in the early 1950s, importing maize has become the rule to guarantee the availability of food during the Second Globalization. This increase in imports allowed the gains in per capita consumption but eroded the SS capacity of the domestic agrarian system to provide food. On the other side, the long-rung agro-export specialisation led to increasing the capacity to supply international markets with tropical products (Figure 2).

 

Figure 2. Self-sufficiency index by groups of products

Urrego-Mesa2
Note: A result greater than one indicates the agrarian system is a domestic and international supplier of food, whereas a value less than one means the domestic consumption relies on imports.

 

Finally, I explore the role of international agrarian prices and political violence in shaping tropical specialisation and food dependence in the 1980s.  I find a negative relationship (-0.75) between the prices of cereals relative to tropical products (coffee, banana, sugarcane, and oil palm), and the trade balance. Regarding internal factors,  the self-sufficiency index and political violence are negatively correlated for cereals and pulses, and positively correlated for sugar cane.

Violence in Colombia contributes to land grabbing to develop agribusiness projects. It leads to the displacement of the labour force in the countryside. Thus, political violence is responsible for growing demand for food in cities and, at the same time, for the lack of capacity to provide it from the agrarian sector. If the evolution of relative prices is the incentive to deepen food dependence and tropical specialisation, violence is the means to achieve this.

 

 

References

Dithmer, J., & Abdulai, A. (2017). Does trade openness contribute to food security? A dynamic panel analysis. Food Policy, 69, 218-230.

D’Odorico, P., Carr, J. A., Laio, F., Ridolfi, L., & Vandoni, S. (2014). Feeding humanity through global food trade. Earth’s Future, 2(9), 458-469.

Kumar Sharma, Sachin (2016). The WTO and Food Security. Implications for Developing Countries. Singapore. Springer.

 


Alexander Urrego-Mesa

alex.urrego.mesa@ub.edu

@AlexUrrego3

 

Why is Switzerland so rich? The role of early electricity adoption (NR Online Session 2)

by Björn Brey (University of Nottingham)

This research is due to be presented in the second New Researcher Online Session: ‘Industry, Trade & Technology’


 

After its first commercial usage in 1879, Switzerland experienced a drastic increase in electricity production reflected in it having the highest per capita production in the world by 1900. During the same time period, Swiss GDP growth accelerated considerably compared with other industrialising countries (see Figure 1).

 

Figure 1: Real GDP per capita in 1990US$ across leading industrial countries from 1850-1970. 1879 reflects the first commercial usage of electricity in Switzerland.

Bjoern1
Source: Maddison Project Database, version 2018

 

In line with this observation, the diffusion of general-purpose technologies (such as the steam engine, electricity and information technologies) is seen as a main driver of economic growth at the global level. But much less is known about the local effect of adopting these technologies. This raises the question to which extend the early adoption of electricity contributed to industrialisation and economic development in the short and long run?

My research, to be presented at the annual conference of the Economic History Society in Oxford in April 2020, answers these questions by analysing the impact of the early adoption of electricity across Switzerland on economic development through exploiting the quasi-random potential to generate electricity from waterpower.

My study finds that the adoption of electricity between 1880 and 1900 considerably increased the contemporaneous manufacturing employment share. This initial effect persists up to today with the average district observing a 1.5% higher manufacturing employment share in 2011 due to the adoption of electricity up to 1900.

This effect of early electricity adoption on employment shares in agriculture, manufacturing and services in the long run is depicted in Figure 2. Notably, the growth in manufacturing employment observed can be attributed in particular to chemical industries, which relied on access to electricity for newly developed production processes.

This effect on economic development is also observable in incomes across districts with a one standard deviation higher exposure to electricity between 1880 and 1900 leading to a 1949 Swiss Francs ($2004) higher yearly median income in 2010.

 

Figure 2: Estimated IV-coefficients on the effect of a one horsepower increase in electricity production 1880-1900 on the change in the employment share across sectors from 1880 to the respective year as well as the pre-trend period 1860-1880.

Bjoern2

 

For the analysis, I newly digitised historic information on electricity production by waterpower plants across the whole of Switzerland and construct geocoded data on all potential waterpower plants that could be built as estimated by a plan of Swiss government engineers at the time.

These data are illustrated in Figure 3. Combining this information allows me to use the potential to produce electricity across districts to infer the causal impact of electricity adoption on economic development across Switzerland.

 

Figure 3: The map shows the exploited and potential waterpower in Switzerland in 1914. Blue-dots represent exploited waterpower, red-dots represent potential waterpower, both of existing natural sources and grey-dots represent existing and potential water-power plants that requires the building of an embankment dam. The sites are coded into 5 categories: 20-99HP, 100-999HP, 1000-4999HP, 5000-9999HP and above 10000HP.

Bjoern3

 

These results provide new insight into how early access to electricity at the end of the nineteenth century helps to explain differences in economic development today. Interestingly, the long-run effect of electricity appears not to be explained by persistent differences in electricity consumption across Switzerland after the roll-out of the electricity grid in the 1920s, but rather due to increased investment into education that was complementary to the newly industries that had newly developed.

 


 

 

 

 

The Impact of the Central African Federation on Industrial Development in Northern Rhodesia, 1953-1963 (NR Online Session 2)

By Mostafa Abdelaal (University of Cambridge)

This research is due to be presented in the second New Researcher Online Session: ‘Industry, Trade & Technology’


 

Northern Rhodesia joined Southern Rhodesia and Nyasaland to form the Central African Federation (CAF), which lasted from 1953 to 1963 (Figure 1). During this period, two contrasting images were formed about the Federation’s economic prospects.   The first depicts the exploitation of the revenue surpluses of Northern Rhodesia in favour of Southern Rhodesia, (Figure 2). The second typifies Kitwe, one of the main mining-town in the Copperbelt in Northern Rhodesia, as the most rapidly developed town in terms of industrial and commercial sectors (Figure 3). My research examines whether the Federation stimulated or undermined manufacturing growth.

 

Figure 1: Map of the Central African Federation, 1953-1963

Mostafa1
Source:  Papers relating to Central African Federation [1952-1958], British Library, EAP121/1/3/16, https://eap.bl.uk/archive-file/EAP121-1-3-16

This paper argues that, despite protests to the contrary, manufacturing in Northern Rhodesia grew rapidly under the Federal tariff and might be attributed to the natural protection for some industries against the high costs of transport goods from remote suppliers and to the Federal tariff against South Africa imports.

 

Figure 2.  Cartoon published by Central African Post mirroring one of the readers’ views on the Federation

Mostafa2
Source: Papers relating to Central African Federation [1952-1958], British Library, EAP121/1/3/16, https://eap.bl.uk/archive-file/EAP121-1-3-16

Figure 3: Kitwe: A model of a mining town in the Copperbelt

Mostafa3
Source: NZA, ZIMCO,  1/1/3/ 10, From Mr Gresh the Managing Director of the Northern Rhodesia Industrial Development Corporation Ltd., to the Managing Director of Marcheurop, Brussels, 5th July 1962.

 

My research offers new insights into the rapid growth of the market in Northern Rhodesia. Specifically, to what extent did local industry respond to the mining-led economic expansion in Northern Rhodesia.  The first census of industrial production occurred in 1947, which provides a benchmark against which to measure growth rates before and during the Federal tariff system. Industrial production in Northern and Southern Rhodesia grew from 3.3 percent to 6 percent, and from 12 percent to 16.3 percent, respectively, between 1954 and 1963.  The net value added of manufacturing in Northern Rhodesia grew from less than £1 million in 1947 to £6.40 million in 1955, then it reached £12.68 million in 1963. Southern Rhodesia witnessed a significant increase in the net value added of manufacturing, from £20 million in 1953 to £50.2 million in 1963.

The composition of manufacturing output before and during the Federation reveals that rapid growth in Northern Rhodesia’s production of food, drinks, textiles, and chemicals — which constituted the majority of domestically manufactured goods (Table 2).

Table 2

Net value added of manufacturing output in Northern Rhodesia (£ million, nominal)

Sector/Year 1947 1955 1963
Food, drink and tobacco 0.20 1.56 5.13
Textiles, clothing, footwear 0.019 0.14 0.43
Metal engineering and repairs 0.082 a 1.58
Non-metallic minerals a a 1.83
Wood industries 0.21 0.46b 0.85
Building materials 0.010 c c
Transport equipment a 1.36 1.43
Printing and publishing 0.11 0.36 0.64
Others d 0.071 2.53 0.80
Total 0.710 6.40 12.68
a) Included in ‘others’

b) excluding furniture

c) building materials excluded from manufacturing sector since 1953.

d) includes manufacture of tobacco, made-up textiles other than apparel, furniture, retreading of tyres, chemicals, non-metallic minerals, metal industries other than transport equipment and other, not elsewhere specified (n.e.s.) in 1955, leather and rubber products, chemicals, pottery and other (n.e.s.) in 1963.

Sources: TNA CO 798/24, Blue Books of Statistics, 1947; NAZ, Monthly Digest of Statistics, Central Statistics Office, Lusaka, December 1955, 1964; Young (1973).

 

My research suggests a more nuanced interpretation is required of the importance of Northern Rhodesia to the South. The Federation curbed Northern Rhodesia’s development of specific industries that existed in Southern Rhodesia, especially steel and textiles, thereby disrupting the optimum allocation resources to industrial production in the South.

However, Northern Rhodesia’s net value added of manufacturing output benefited from the application of Federal tariffs in certain consumer industries that grew rapidly, such as processed foods and drinks. Consequently, the Federation was beneficial to the growth of manufacturing in Northern Rhodesia (Zambia).

 


 

Mostafa Abdelaal

ma710@cam.ac.uk

How to solve the eternal credit problem? (NR Online Session 1)

By Ruben Peeters (Utrecht University)

This research is due to be presented in the first New Researcher Online Session: ‘Finance, Currency & Crisis’.


 

The decreasing numbers of new covid-19 cases in the EU has allowed governments to plan for restarting public and economic life. The plans often place a lot of emphasis on ensuring funding for SMEs. This is important because, while SMEs make up the majority of firms and are drivers of innovation and growth, they often have insufficient access to credit and are the first to suffer during crises. How can we solve this problem and what can leaders learn from history?

When studying the history of SMEs, we find recurrent complaints about insufficient access to credit. The contemporary literature on SME financing does not pay a lot of attention to the continuous resurfacing of problems. But why do these problems keep recurring? Why can financial systems not simply solve them?

I argue that while these complaints are all seen as indicating “SME funding problems”, they in fact often signal different problems, each of which requires a specific solution. To prove this point I study the history of Dutch SMEs between 1900 and 1940. During this period small firms associated in lobby-groups and attempted to identify and remedy small firms funding problems.

Picture 1
Interior of perfumery “Maison Rimmel” with sales woman behind the counter, Amsterdam 1913.  Source: Spaarnestad Foto, SFA002000477.

Looking at the financial landscape in the Netherlands at the turn of the twentieth century, small firms had several options to obtain debt funding, depending on the size of the loan and the type of collateral that firms could offer. Credit was not provided by joint stock banks as is usually the case today, but rather specialized local institutions, each having a different target audience or segment. A small firm with collateral needing a medium-size short term loan could go to a credit union. A small firm in need of a small short-term loan but lacking collateral could consult a Help Bank which accepted guarantors to secure the loan. And most firms made do with private savings, retained earnings, and trade credit.

The first thing that associations did was to improve the available information about small firms and small firms’ bookkeeping capabilities. This made it easier for firms to give an overview of their financial situation and reduce screening costs for financial institutions. Secondly, associations set up banks geared towards SMEs (middenstandsbanks), who provided small to medium size, short term loans. These banks received government subsidies to serve as wide a group as possible.

 

Picture 2
Branch of the Middenstandsbank of Limburg
Source: Yearly Report of the Middenstandsbank of Limburg, 1920
(Dutch National Archive: 2.25.68/9184)

Despite these initiatives, crisis situations created new problems that the middenstandsbanks were incapable of solving. During the First World War, suppliers suddenly wanted to be paid cash. Many small firms got into trouble and needed credit to pay suppliers and the middenstandsbanks demanded collateral, which many small firms did not have. The government stepped in and guaranteed the losses on these loans.

A similar situation occurred during the Great Depression when firms needed credit to survive the crisis, but financial institutions did not provide this. By then the Dutch government had control over the middenstandsbanking-system and they set up a patchwork of credit guarantees, each with its own target segment in terms of size, sector, or use. This ensured that viable firms, no matter how small or informationally opaque, had access to credit and that in case those firms grew, they could easily graduate into a higher segment. This system remained in place until the early 1970s and contributed to the post-war economic boom by ensuring credit to small firms, even when monetary policy was restrictive.

The elephant in the room was the position of the government. I found that in every example, the Dutch government was instrumental in getting the initiative off the ground and running through subsidies. The costs of providing affordable credit to informationally small firms are simply too high. Unfortunately, subsidies without oversight created multiple problems and situations of abuse and excessive risk-taking. These negative experiences made the Dutch government increasingly opt for more direct intervention in credit markets, with the guarantee system as the pinnacle.

This historical case study provides some ideas on what governments can do to help SMEs weather the Great Lockdown:

  1. Take action
  2. Design specific programs with the situation of the target group in mind
  3. Mentor small firms and help them prosper
  4. Provide government guarantees on loans funded with private money (This keeps down strains on government budgets)
  5. Align interests between the government and lenders, to prevent excessive risk-taking

Italy seems to be leading the way.[1]

 

Notes

[1] https://som.yale.edu/blog/italy-expands-and-updates-its-credit-guarantee-programs


Ruben Peeters

Twitter: @RLMPeeters

r.l.m.peeters@uu.nl

The international role of sterling before the EU: Britain operated a captive market for sterling (NR Online Session 1)

By Maylis Avaro (Graduate Institute, Geneva & University Libre de Bruxelles)

This research is due to be presented in the first New Researcher Online Session: ‘Finance, Currency & Crisis’.


 

Pre-EU sterling was of a zombie international currency, maintained by British authorities through threats and controls on the Commonwealth countries.

Avaro1
Queen Elizabeth II and the Prime Ministers of the Commonwealth Nations, at Windsor Castle (1960 Commonwealth Prime Minister’s Conference) @wikicommons.

Post-Brexit Britain is looking for new partners to build new special relationships and replace EU single market. Eurosceptics from the Conservative party have urged the UK government to focus on the British Commonwealth[1]. But my research shows that pre-EU monetary relations between the UK and Commonwealth countries were built at the advantage of the British economy and investment in sterling assets inflict losses to Commonwealth central banks. Post-WWII international role  of sterling in the sterling area was artificially maintained by British authorities through capital controls, commercial threats and economic sanctions. Commonwealth countries fought to disentangle themselves from the UK economy and sterling. At the light of these new results, it seems difficult to make the sterling area rise from the ashes.

 

A zombie international currency

Sterling was the dominant international currency in the 19th century but lost it to the dollar over the course of the 20th century. Post-WWII, Western economies lost interest in sterling which remained mostly a regional currency, used in the sterling area – a network of countries tying their currencies to sterling, including most of Commonwealth, British Empire, and newly independent colonies.

The regionalization of sterling was immediate after the war, as reflected in its presence within central banks’ reserves portfolios displayed in Fig.1. In Western European central banks, sterling represented less than 20% of their reserves while sterling area countries kept more than 50% of their reserves in sterling throughout the fifties and sixties.

Avaro2
Figure 1: Shares of sterling in central banks’ reserves (gold + foreign exchange)
Reading: In 1955, sterling represented 89% of the official reserves of Overseas Sterling Area and 6% of the official reserves of Western Europe countries.
Source: see author’s working paper.

 

Countries who could access alternative foreign exchange reserves, such as Western Europe held only very limited amounts of sterling because the UK didn’t have the economic fundamentals of an issuer of international currency: its GDP per capita was growing slower than the rest of Europe, its share in world trade was going down, its central bank ran low reserves and it faced military defeats in its collapsing Empire.

 

The sterling area as a captive market

If sterling was a bad investment, why would Commonwealth and Middle East countries central banks keep most of their reserves in sterling? I argue that British authorities operated the sterling area countries as captive market for sterling. They artificially maintained holdings of sterling through capital controls, commercial threats and economic sanctions. Exiters of the sterling area, such as Egypt in 1947 or Iraq in 1959 faced a full freeze of their assets held in London, imposition of new tariffs or a limitation of access to the London capital market. Large sterling holders, such as Australia or Ireland tried to decrease their exposure to sterling by secretly converting some of their sterling reserves.

By preventing free convertibility out of sterling, British authorities could maintain an over-evaluation of sterling as the Bank of England ran very low reserves after the war. British policymakers described the sterling area as a bank with insufficient assets to meet its deposit liabilities. The area eventually collapsed after the 1967 sterling devaluation and Britain adhesion to EEC.

My study on the decline of sterling suggests that, at the time of Britain accession to the EEC, economic links with its former colonies had decreased dramatically, in spite of British efforts. Britain’s next ‘special relationship’ partners may not lie among them.

 

Notes

[1] “Theresa May to offer Commonwealth post-Brexit bonus” https://www.ft.com/content/2fbb7964-3e3c-11e8-b9f9-de94fa33a81e


 

Maylis Avaro

maylis.avaro@graduateinstitute.ch

Twitter: @M_Avaro

Website: maylisavaro.info

 

New Researcher Online Sessions

EHS

A number of New Researchers who had been due to present their work at the 2020 EHS Annual Conference will soon be discussing their research in a series of online sessions.

Some of these New Researchers have also agreed to share some of their research in the form of blog posts and videos, which will be made available prior to each online session. All available materials will be linked below.

Please note that these online sessions are not a replacement for the EHS Annual Conference, and new researchers are made up of postgraduates and early career researchers.

Sessions will be held every Wednesday, between 15th July and 19th August.

These sessions will last no longer than 1 hour and 15 minutes, with time for questions and discussion at the end. Presenters are appearing from across the world, and times have been chosen to best accommodate this.

We welcome and encourage attendance from anyone interested in economic and social history. All sessions are available for members and non-members of the EHS.

The following sessions are available, all GMT+1 (current London time):

  • Finance, Currency & Crisis – 15th July @ 4:30pm
    • Ruben Peeters (Utrecht University) – ‘Solving the perennial small firm credit problem: The case of the Netherlands, 1900-1940’
    • Maylis Avaro (Graduate Institute, Geneva & University Libre de Bruxelles) – ‘Zombie International Currency: The Pound Sterling 1945-1973’
    • Ryan Smith (University of Glasgow) – ‘The Middle East and the 1982 debt crisis’
  • Industry, Trade & Technology – 22nd July @ 10am
    • Mostafa Abdelaal (University of Cambridge) – ‘Elusive promises: The impacts of the Central African Federation on industrial development in Northern Rhodesia, 1953-63’
    • Björn Brey (University of Nottingham) – ‘The long-run gains from the early adoption of electricity’
    • Alexander Urrego-Mesa (Universitat de Barcelona) – ‘Food Security, Trade and Violence: From the First to the Second Globalization in Colombia 1916-2016’
  • Human Capital & Development – 29th July @ 5pm
    • Kathryne Crossley (University of Oxford) – ‘Honest, sober and willing: Oxford college servants, 1850-1939’
    • Matthew Curtis (University of California, Davis) – ‘The quantity and quality of pre-industrial children: Evidence from Québécois twins’
  • Equality & Wages – 5th August @ 9am
    • Tamer Güven (Istanbul University) – ‘Wages in the Ottoman textile factories, 1848-99’
    • Theresa Neef (Freie Universität Berlin) – ‘The Long Way to Gender Equality: Gender Differences in Pay in Germany, 1913-2016’
    • Yuzuru Kumon (Bocconi University) – ‘The deep roots of inequality’
  • Government & Colonization – 12th August @ 3pm
    • Matthew Birchall (University of Cambridge) – ‘Settler capitalism: Company colonisation and the rage for speculation’
    • Luise Elsaesser (European University Institute) – ‘Coordinating decline: Governmental regulation of disappearing horse markets in Britain, 1873-1957’
  • Spending & Networks – 19th August @ 12pm
    • Xabier García Fuente (Universitat de Barcelona) – ‘The paradox of redistribution in time: Social spending in 54 countries, 1967-2018’
    • Andres Mesa (Università degli Studi di Teramo) – ‘The Diaspora of a Diaspora: The Cassana and Rivarolo family network in the Atlantic, 1450-1530’

Taxation and Wealth Inequality in the German Territories of the Holy Roman Empire 1350-1800

by Victoria Gierok (Nuffield College, Oxford)

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

 

OLYMPUS DIGITAL CAMERA
Nuremberg chronicles – Kingdoms of the Holy Roman Empire of the German Nation. Available at Wikimedia Commons.

Since the French economist, Thomas Piketty, published Capital in the 21st Century in 2014, it has become clear that we need to understand the development of wealth and income inequality in the long run. While Piketty traces inequality over the last 200 years, other economic historians have recently begun to explore inequality in the more distant past,[1] and they report striking similarities of increasing economic inequality from as early as 1450.

However, one major European region has been largely absent from the debate: Central Europe — the German cities and territories of the Holy Roman Empire. How did wealth inequality develop there? And what role did taxation play?

The Holy Roman Empire was vast, but its borders fluctuated greatly over time. As a first step to facilitating analysis, I  focus on cities in the German-speaking regions.  Urban wealth taxation developed early in many of the great cities, such as Cologne and Lübeck. By the fourteenth century, wealth taxes were common in many cities. They are an excellent source for getting a glimpse at wealth inequality (Caption 1).

 

Caption 1. Excerpt from the wealth tax registers of Lübeck (1774-84).

Gierok1
Source: Archiv der Hansestadt Lübeck. Archival reference number: 03.04-05 01.02 Johannis-Quartier: 035 Schoßbuch Johannis-Quartier 1774-1784

 

Three questions need to be clarified when using wealth tax registers as sources:

  • Who was being taxed?
  • What was being taxed?
  • How were they taxed?

 

The first question was also crucial to contemporaries because the nobility and clergy adamantly defended their privileges which excluded them from taxation. It was Citizens and city-dwellers without citizenship who mainly bore the brunt of wealth taxation.

 

Figure 1. Taxpayers in a sample of 17 cities in the German Territories of the Holy Roman Empire.

Gierok2
Note: In all cities, citizens were subject to wealth taxation, whereas city-dwellers were fully taxed in only about half of them.
Source: Data derived from multiple sources. For further information, please contact the author.

 

The cities’ tax codes reveal a level of sophistication that might be surprising. Not only did they tax real estate, cash and inventories, but many of them also taxed financial assets such as loans and perpetuities (Figure 2).

 

Figure 2. Taxable wealth in 19 cities in the German Territories of the Holy Roman Empire.

Gierok3
Note: In all cities, real estate was taxed, whereas financial assets were taxed only in 13 of them.
Source: Data derived from multiple sources. For further information, please contact the author.

 

Wealth taxation was always proportional. Many cities established wealth thresholds below which citizens were exempt from taxation, and basic provisions such as grain, clothing and armour were also often exempt. Taxpayers were asked to estimate their own wealth and to pay the correct amount of taxes to the city’s tax collectors. To prevent fraud, taxpayers had to swear under oath (Caption 2).

 

Caption 2. Scene from the Volkacher Salbuch (1500-1504) shows the mayor on the left, two tax collectors at a table and a taxpayer delivering his tax payment while swearing his oath.

Gierok4
Source: Image: Pausch, Alfons & Jutta Pausch, Kleine Weltgeschichte der Steuerobrigkeit, 1989, Köln: Otto Schmidt KG, p.75

 

Taking the above limitations seriously, one can use tax registers to trace long-run wealth inequality in cities across the Holy Roman Empire (Figure 3).

 

Figure 3. Gini Coefficients showing Wealth Inequality in the Urban Middle Ages.

Gierok5
Source: Guido Alfani, G.,  Gierok, V., and Schaff, F.,  “Economic Inequality in Preindustrial Germany, ca. 1300 – 1850”.  Stone Center Working Paper Series, February 2020, no. 03.

 

Two main trends emerge: First, most cities experienced declining wealth inequality in the aftermath of the Black Death around 1350. The only exception was Rostock, an active trading city in the North. Second, from around 1500, inequality was rising in most cities until the onset of the Thirty Years War (1618-1648). This war, in which large armies marauded through German lands bringing along plague and other diseases, as well as the shift in trade from the Mediterranean to the Atlantic, might be the reason for the decline seen in this period. This sets the German lands apart from the development of inequality in other European regions, such as Italy and the Netherlands, in which inequality continued to rise throughout the early modern period.

 

Notes

[1] Milanovic, B., Lindert, P.H., and  Williamson, J.,  ‘Pre-Industrial Inequality’, Economic Journal 121, no. 551 (2011): 255-272;  Guido, A. ‘Economic Inequality in Northwestern Italy: A Long-Term View’, Journal of Economic History 75, no. 4 (2015): 1058-1096; Guido, A.,  and Ammannati, F.,  ‘Long-term trends in economic inequality: the case of the Florentine state, c.1300-1800’, Economic History Review 70, 4 (2017): 1072-1102; Wouter, R.,  ‘Economic Inequality and Growth before the Industrial Revolution: The Case of the Low Countries’,  European Review of Economic History 20, no. 1 (2016): 1-22;  Reis, J.,  ‘Deviant Behavior? Inequality in Portugal 1565-1770’,  Cliometrica 11, no. 3  (2017): 297-319; Malinowski, M.,  and  van Zanden J.L., ‘Income and Its Distribution in Preindustrial Poland’, Cliometrica 11, no. 3 (2017): 375-404.

 


 

Victoria Gierok: victoria.gierok@nuffield.ox.ac.uk

 

 

 

 

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.

 

 

Suffia1
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: ilaria.suffia@unicatt.it

The Great Indian Earthquake: colonialism, politics and nationalism in 1934

by Tirthankar Ghosh (Department of History, Kazi Nazrul University, Asansol, India)

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

 

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Gandhi in Bihar after the 1934 Nepal–Bihar earthquake. Available at Wikipedia.

The Great Indian earthquake of 1934 gave new life to nationalist politics in India. The colonial state too had to devise a new tool to deal with the devastation caused by the disaster. But the post-disaster settlements became a site of contestation between government and non-governmental agencies.

In this earthquake, thousands of lives were lost, houses were destroyed, crops and agricultural fields were devastated, towns and villages were ruined, bridges and railway tracks were warped, and drainage and water-sources had been distorted for a vast area of Bihar.

The multi-layered relief works, which included official and governmental measures, involvement of the organised party leadership and political workers, and voluntary private donations and contributions from several non-political and charitable organisations had to accommodate with several contradictory forces and elements.

Although it is sometime argued that the main objective of these relief works was to gain ‘political capital’ and ‘goodwill’; the mobilisation of fund, sympathy and fellow feelings should not be underestimated. Thus, a whole range of new nationalist politics emerged from the ruins of the disaster, which mobilised a great amount of popular engagement, political energy, and public subscriptions. The colonial state had to release prominent political leaders who could massively contribute to the relief operations.

Now the question is: was there any contestation or competition between the government and non-governmental agencies in the sphere of relief and reconstruction? Or did the disaster temporarily redefine the relationship between the state and subjects during the period of anti-colonial movement?

While the government had to embark on relief operations without having a proper idea about the depth of sufferings of the people, the political organisations, charged with sympathy and nationalism, performed the great task with more efficient organisational skills and dedication.

This time, India had witnessed what was the largest political involvement in a non-political agenda to date, where public involvement and support had not only compensated the administrative deficit, but shared an equal sense of victimhood. The non-political or non-governmental organisations, like Ramakrishna Mission, Marwari Relief Society etc. had also played a leading role in the relief operations.

The 1934 earthquake drew on massive popular sentiment, which was similar to the Bhuj earthquake of 2001 in India. In the long run, the disaster prompted the state to introduce the concept of public safety, hitherto unknown in India, and a whole new set of earthquake resistant building codes and modern urban planning using the latest technologies.

How JP Morgan Picked Winners and Losers in the Panic of 1907: The Importance of Individuals over Institutions

by Jon Moen (University of Mississippi) & Mary Rodgers (SUNY, Oswego).

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

 

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A cartoon on the cover of Puck Magazine, from 1910, titled: ‘The Central Bank – Why should Uncle Sam establish one, when Uncle Pierpont is already on the job?’. Available at Wikimedia Commons.

 

We study J. P. Morgan’s decision making during the Panic of 1907 and find insights for understanding the outcomes of current financial crises.  Morgan relied as much on his personal experience as on formal institutions like the New York Clearing House, when deciding how to combat the Panic. Our main conclusion is that lenders may rely on their past experience during a crisis rather than on institutional and legal arrangements in formulating a response to a financial crisis. The existence of sophisticated and powerful institutions like the Bank of England or the Federal Reserve System may not guarantee optimal policy responses if leaders make their decisions on the basis of personal experience rather than well-established guidelines.  This will result in decisions yielding sub-par outcomes for society compared to those made if formal procedures and data-based decisions had been proffered.

Morgan’s influence in arresting the Panic of 1907 is widely acknowledged. In the absence of a formal lender of last resort in the United States, he personally determined which financial institutions to save and which to let fail in New York. Morgan had two sources of information about the distressed firms: (1) analysis done by six committees of financial experts he assigned to estimate firms’ solvency and (2) decades of personal experience working with those same institutions and their leaders in his investment banking underwriting syndicates. Morgan’s decisions to provide or withhold aid to the teetering institutions appears to track more closely with his prior syndicate experience with each banker, rather than with the recommendations made by committees’ analysis of available data. Crucially, he chose to let the Knickerbocker Trust fail despite one committee’s estimate it was solvent and another’s that it had too little time to make a strong recommendation. Morgan had had a very bad business experience with the Knickerbocker and its president,  Charles Barney, but he had had positive experiences with all the other firms requesting aid. Had the Knickerbocker been aided, the panic might have been avoided all together.

The lesson we draw for present day policy is that the individuals responsible for crisis resolution will bring to the table policies based on personal experience that will influence the crisis resolution in ways that may not have been expected a priori. Their policies might not be consistent with the general well-being of the financial markets involved, as may have been the case with Morgan letting Knickerbocker fail.  A recent example that echoes the experience of Morgan in 1907 can be seen in the leadership of Ben Bernanke, Timothy Geithner and Henry Paulson during the financial crisis in 2008.  They had a formal lender of last resort, the Federal Reserve System, to guide them in responding to the crisis in 2008.  While they may have had the well-being of financial markets more in the forefront of their decision making from the start, controversy still surrounds the failure of Lehman Brothers and the lack of support to provide them with a lifeline from the Federal Reserve.  The latter could have provided aid, and this reveals that the individuals making the decisions, and not the mere existence of a lender of last resort institution and the analysis such an institution will muster, can greatly affect the course of a financial crisis.  Reliance on personal experience at the expense of institutional arrangements is clearly not limited only to the responses made to financial crises.  The coronavirus epidemic is one such example worth examining with this framework.

 


Jon Moen – jmoen@olemiss.edu