The flexibility of the gold standard – any lessons for the Eurozone?

by Guillaume Bazot (University Paris 8), Eric Monnet (Banque de France, Paris School of Economics & CEPR) and Matthias Morys (University of York)

This research will be presented during the EHS Annual Conference in Belfast, April 5th – 7th 2019. Conference registration can be found on the EHS website.


Cover image of Puck Magazine, v. 47, no. 1201 (1900 March 14). Available at Wikimedia Commons.

A great deal of research has drawn on the classical gold standard (1870s-1914) – an earlier and highly successful system of fixed exchange rates – to provide guidance for Europe’s monetary union (EMU). Such historical inspiration initially informed the design of the euro and then, since the outbreak of the Eurozone crisis in 2010, how to fix the flaws of the common currency.

Researchers have offered very different lessons from the past, yet they all share one key feature: the gold standard as a highly rigid system, robbing countries of their monetary policy and leaving them potentially unable to respond to major shocks.

Our research, to be presented at the Economic History Society’s 2019 annual conference, takes the opposite perspective: the extraordinary stability of the gold standard stems from the fact that it was precisely not a rigid framework. Central banks retained far more room for manoeuvre than is conventionally acknowledged, and they knew how to use this policy space for their own purposes.

Drawing on a unique high-frequency data set for all 21 central banks of the gold standard period (arduously collected by Bank of France statisticians at the time but then shelved in the bank’s archives, where we found them), we estimate how other central banks reacted when ‘the conductor of the international orchestra’ (as Keynes named the Bank of England) raised interest rates.

Our results show that there was no ‘rule of the game’ that countries automatically followed after a rate rise. Instead, we document that central banks followed a variety of – economically well-defined and econometrically clearly identifiable – strategies with the aim of mitigating the impact of a foreign central bank decision on the domestic economy.

Intriguingly, two important strategies pursued at the time – sterilisation and capital controls – have clear parallels with key policies implemented in the Eurozone since 2010.

This is especially the case with the (highly) asymmetric distribution of loans for the ‘long-term refinancing operations’ (LTROs) across countries (in order to improve the convergence of credit conditions), macroprudential policies (to tame asymmetric credit booms), the use of ‘emergency liquidity assistance’ (ELA) by national central banks and the use of capital controls as a last resort in Cyprus and Greece.

It is often said that the euro started out as a modern-day gold standard (clear rules, common monetary policy, separate fiscal policies) but has developed into something else in recent years. By contrast, our research shows that the gold standard always possessed certain features of flexibility – characteristics that the euro area had to introduce in response to the Eurozone crisis. In its move away from one-size-fits-all monetary policy, today’s EMU arguably resembles the classical gold standard more than it did before 2010.

Urbanisation and regional GDP growth in Europe over the twentieth century

by Kerstin Enflo (Lund University), Anna Missiaia (Lund University) and Joan Rosés (LSE)

This research will be presented during the EHS Annual Conference in Belfast, April 5th – 7th 2019. Conference registration can be found on the EHS website.



‘Palace of the People’ in Amsterdam. Photo dates back to about 1890. Available at Wikimedia Commons.

Fast urbanisation is a phenomenon often associated with the image of African or Asian mega-cities, but migrations from rural to urban areas are also a European phenomenon (see the growth experienced by large capitals such as London and Paris, but also smaller ones such as Stockholm and Copenhagen). And according to United Nations forecasts, the urbanisation trend will continue, with an estimated 2.5 billion people added to the world’s urban population by 2050.

The first question that comes to mind is whether urbanisation triggers economic growth, and therefore should be favoured by policy-makers, as suggested by eminent scholars such as Ed Glaeser (The Triumph of the City: How Our Best Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier, 2011) or Richard Florida (The Rise of the Creative Class, 2002).

Although this relationship is overall positive, the paradigm has been challenged with respect to African mega-cities: their urbanisation rate takes off in periods of growth but it does not immediately decrease in periods of recession. As cities continue to grow in size, but fail to grow in GDP per capita, their inhabitants experience falling income levels, ultimately leading to falling living standards (Fay and Opal, 2000).

If we look at Europe, urbanisation without growth does not appear to be an issue when countries are the units of analysis. But the national dimension could be concealed by the success stories of the large capitals, with less clear success stories for middle-sized declining cities. Net of the big successful capitals, many cities that thrived during the post-war period are now struggling, with clear economic, social and political consequences.

Our work, to be presented at the Economic History Society’s 2019 annual conference, contributes to the debate by looking at this relationship for the first time at the regional, rather than national level, using urbanisation rates and GDP per capita in EU regions in the twentieth century. The regional dimension makes it possible to disentangle the effects of urbanisation from the effects of being the capital’s region.

Our main findings are that the relationship between urbanisation and growth is positive and significant until the middle of the twentieth century, while it is not significant in recent years. We therefore observe a progressive decoupling of regional urbanisation and economic growth. The effect on growth of the presence of the capital in the region is very large: between 60% and 70% of that of urbanisation until the mid-twentieth century.

When looking at macro areas, both Southern Europe and Northern Europe show no statistically significant relationship between urbanisation and economic growth, suggesting that regions containing urban areas without the status of capital do not necessarily grow more than regions without such urban areas.

This is consistent with the idea of a ‘winner-take-all urbanism’ presented by Florida (The New Urban Crisis, 2017) in which there is a growing divide between the winner cities (London, New York, Paris, San Francisco) and the rest.

In the winner cities, the middle class, the service class and the working class are priced out by highly paid creative workers. In the rest of the cities, where creative workers are not based, the middle class declines without being replaced by the new rich.

Our results are relevant for policy-makers as they challenge the view that urbanisation per se is a strong channel for economic growth regardless of the period and geographical area considered.

The age of entrepreneurship: new insights into female business proprietors in Victorian Britain

by Carry van Lieshout (University of Cambridge, The Cambridge Group for the History of Population and Social Structure)

This research will be presented during the EHS Annual Conference in Belfast, April 5th – 7th 2019. Conference registration can be found on the EHS website.


Snow Hill, Holburn, London 19th century. Available on Wikimedia Commons.










Close to 30% of businesses in Victorian Britain were owned by women, according to our research, which I will be presenting at the Economic History Society’s 2019 annual conference.

Our analysis of UK census data between 1851 and 1911 shows that the population of female business proprietors was much larger than hitherto estimated, and challenges popular notions of what a Victorian entrepreneur looked like. The research is based on the new British Business Census of entrepreneurs, created at the University of Cambridge as part of the project Drivers of Entrepreneurship under Professor Robert Bennett.

This database contains an extraction and reconstruction of the whole business population of England, Wales and Scotland, and will be made available through the UK Data Archive in 2019. A forthcoming book by the project team – The Age of Entrepreneurship – shows how the Victorian period was a golden age for smaller and medium-sized business.

Women formed a sizable part of this business population, owning 27-30% of all businesses between 1851 and 1911. This is considerably higher than current figures: statistics from the Department for Business, Energy and Industrial Strategy shows that 21% of businesses were female-led in 2017.

While nowadays the sectors with the highest proportions of female involvement include education and the health services, where women constitute 50% of proprietors, in Victorian Britain the most female-dominated sectors were clothing manufacturing and personal services.

In 2017, manufacturing was one of the lowest sectors for female business participation at 12%, the same proportion as it was in 1901. While many Victorian manufacturing businesses ran by women were related to the textile industry, there were also many women running more traditionally masculine trades, such as Eliza Tinsley, who in 1871 owned a nail and chain manufacturing firm in Dudley, Staffordshire, employing 4,000 people.

‘Co-preneurship’ and ‘mumpreneurs’ played a similarly important role in Victorian Britain as they do today. While many women dropped out of the formal labour force after marriage and childbirth, for those who remained economically active entrepreneurship was an attractive option.

While roughly similar proportions of economically active single men and women ran their own businesses, after marriage, women were more likely than men to be business proprietors. In some cases, married women ran a business in partnership with their spouse, a common dynamic for grocers, for example. But in the majority of married female entrepreneurs’ households, the wife ran a business while her husband was a wage labourer.

Having young children increased the likelihood of running a business as well: mothers’ entrepreneurship rates increased with the arrival of one child and continued to increase the more children under 5 years old were added to a household.

The underlying drivers of entrepreneurship in such cases were a combination of social and legal restrictions on female wage labour participation, the increased flexibility in terms of working hours, and being able to work from home (which over 70% of female business owners, but only 7% of workers was able to do). Neither marriage nor motherhood, therefore, prohibited women’s entrepreneurial prowess.

People, Places and Business Cultures: Essays in Honour of Francesca Carnevali

review by Jim Tomlinson (University of Glasgow)

book edited by Paolo Di Martino, Andrew Popp and Peter Scott.

People, Places and Business Cultures: Essays in Honour of Francesca Carnevali’ is published by Boydell and Brewer. SAVE  25% when you order direct from the publisher – offer ends on the 2nd April 2019. See below for details.




Festschriften are usually produced at or around retirement, and to celebrate long academic careers. This collection, tragically, marks the end of a foreshortened career, that of Francesca Carnevali, who died in 2013 at the age of 48.

The chapters of the book have all been written by historian colleagues and friends of Francesca. The authors come from a diverse set of academic backgrounds, including the prominent medievalist Chris Wickham and the social and cultural historian Matthew Hilton. But most of the contributors come, as did Francesca, from the broadly-defined subject of business history.

Francesca’s own work provided a broad and variegated set of concerns and approaches that enables the contributors to link her work to their own diverse areas of expertise. Thus, for example, Leslie Hannah (who supervised Francesca’s PhD, and co-authored an article on banking with her), provides a new approach to the old question of the comparative performance of British banking before 1914. He stresses the paradox (at least for those who think competition is always the key to efficiency), that by any standards Britain at that time had a highly competitive banking system, yet suffered a growth ‘climacteric’. More broadly, Hannah, like Francesca herself, adheres to a broadly declinist view of British economic history, whilst clearly identifying the unsatisfactory nature of many declinist stories.

Francesca’s own work on banking contrasted Italy and Britain, and the financing of Italian small business is the concern of Alberto Rinaldi and Anna Spadavecchia’s chapter. The conclusion of this analysis emphasizes the embeddedness of financial institutions in legal, social and political conditions as well as economic circumstances, a conclusion that links to Francesca’s broadening concerns after her early work on banking. Key to this broadening was an examination of social capital and trust, as key, if problematic, concepts for understanding business behaviour.

This behaviour is examined in a variety of contexts in this book, ranging from Andrew Popp’s study of Liverpool cotton brokers and their ‘public staging of business life’ to Lucy Newton’s study(jointly authored with Francesca) of making and selling pianos in Victorian and Edwardian England. This concern with consumer goods is linked by Peter Scott and James Walker to an innovative study of how mass consumption and mass marketing, to some degree at least, blurred class demarcations on interwar Britain.

These empirical studies are complemented by more conceptually focussed chapter, by Chris Wickham on the genealogy of ‘micro-history’, by Kenneth Lipartito on the concept of social capital and its limits, and by Andrea Colli on the problems of doing comparative European history.  Last, but very far from least, there is a characteristically wide-ranging and insightful chapter by Mathew Hilton on the problems of writing the economic and social history of twentieth-century Britain in the light of the recent ‘turns’ in how that history is being written.

The diversity of this book’s contents is a strength not a weakness. Business historians of almost any bent will find something interesting and important to engage with. The breadth of analytical and empirical concerns, allied with the close attention to important conceptual puzzles, makes this book a fitting reflection of, and tribute to, Francesca’s productive and well-lived life.


SAVE 25% when you order direct from the publisher using the offer code BB500 online hereOffer ends 2nd April 2019. Discount applies to print and eBook editions. Alternatively call Boydell’s distributor, Wiley, on 01243 843 291, and quote the same code. Any queries please email


To contact Jim Tomlinson:


Note: this review was originally published on-line in Business History, 2019.  It is reproduced by kind permission of  Lee-Ann Anderson (Permissions and Licensing, Taylor and Francis).

‘Money talks – give yours an Empire accent’: the economic failure of Britain’s Empire Marketing Board

by David M. Higgins (Newcastle University) and Brian Varian (Swansea University)

This research will be presented during the EHS Annual Conference in Belfast, April 5th – 7th 2019. Conference registration can be found on the EHS website.


The formation of the Empire Marketing Board (EMB) in 1926 was a unique experiment in interwar Britain: it was the first, publicly funded marketing board in the UK that sought to encourage domestic consumption of empire foodstuffs and raw materials. Using a diverse range of marketing methods – including films, cinema broadcasts, newspaper advertisements and especially posters – the Board aimed to increase public awareness of the strong economic interdependence between Britain and its Empire.

This relationship was longstanding. Britain was unquestionably the ‘vent for surplus’ for many empire products such as New Zealand butter, cheese and lamb, Indian tea and Australian frozen beef. Yet by the 1920s, the Dominions and other primary-producing countries were increasingly competing in the British market, necessitating a reassessment of Britain’s relationship with the Dominions. Importantly, it was recognised that the purchase of empire produce provided the means for the Dominions to increase their consumption of British manufactures.

Unlike most countries, Britain pursued an essentially free-trade policy in the 1920s. There was simply no scope for Britain to favour empire produce through the extension of preferential tariff rates, a policy known as ‘imperial preference’. Yet the Dominions had applied preferential tariff rates to their imports of manufactures from Britain.

Consequently, Britain attempted to correct this imbalance through the creation of the EMB, which would favour Dominion produce not through tariffs, but rather through publicity. This approach was a stop-gap that was superseded by the Ottawa agreements of 1932, when Britain’s abandonment of free trade finally allowed the country to implement preferential tariff rates.

To date, much of the research on the EMB has claimed that it served an important function by fostering imperial ideology within the empire. But while the cultural impact of the EMB has been studied, its economic impact has not. Our study, to be presented at the Economic History Society’s 2019 annual conference, is the first to evaluate the economic impact of the EMB.

We begin by describing the scale of the problem confronting the Board: by 1924, for example, almost 80% of Britain’s beef imports originated from ‘foreign’ countries, principally Latin America while over 55% of butter imports originated from outside the Empire. In fact, cheese was the only major food product in which the empire dominated Britain’s imports.

In our study, we focus on a sample of the iconic posters that were issued by the EMB and displayed in cities throughout Britain. Using a series of regression analyses, we test whether these posters – the EMB’s most prominent form of advertising – raised the empire’s share of Britain’s imports of key foodstuffs, including butter, cheese, wheat, tea, rice, sugar and beef. Our econometric results indicate that the EMB did not exert a statistically significant effect on the empire’s share of these imports. In economic terms, Britain’s short-lived EMB was a failure.


Higgins and Varian
Figure 1: Stylised grocer’s window exhibiting domestic and empire produce caption


From one perspective, our results suggest that appeals to patriotism and imperial ‘self-help’ were fundamentally misguided. Empire suppliers had to compete with well-established foreign producers whose products were held in high-esteem by UK consumers: chilled Argentine beef was a far superior product to the frozen product from the Antipodes; while Danish butter predominated in much of northern England.

There were other key problems that the EMB ignored. Possibly the greatest shortcoming of the EMB was its failure to differentiate sufficiently the products of individual dominions from those of the empire.

In this regard, the Merchandise Marks Act 1926 was unhelpful: vendors were at liberty to sell butter and beef either with a definite indication of origin or the term ‘empire’;  for other produce, such as cheese, retailers were not required to indicate origin. While the EMB was advertising ‘Empire’ to little effect, the marketing campaigns of Dominion control boards, such as the New Zealand Dairy Produce Control Board, were winning the British consumer through more differentiated advertising.

Moreover, we argue that the EMB was underfunded. From 1928 to 1931, the EMB’s publicity expenditure averaged 0.07% of the value of Britain’s imports from the empire. In contrast, the New Zealand Dairy and Produce Control Board’s expenditure on its well-defined marketing campaign was 0.13% of the value of Britain’s imports of dairy products from New Zealand.

Our study of the EMB has contemporary relevance to debates on ‘trade blocs’. The EMB represented an attempt to forge a trade bloc through the non-conventional approach of advertising – extending preference within the constraint of free trade. While this innovative experiment of the interwar era failed (economically), it is nevertheless indicative of Britain’s desire to reorient its trade toward the Empire. In this respect, the EMB was a precursor to the ultimately ‘successful’ formation of trade blocs and, indeed, disintegration of the world economy in the 1930s.


The gender division of labour in early modern England: why study women’s work?

by Jane Whittle (University of Exeter) and Mark Hailwood (University of Bristol)

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


Interior with an Old Woman at the Spinning Wheel. Available at Wikimedia Commons.

Here are ten reasons to know more about women’s work and read our article on ‘The gender division of labour in early modern England’. We have collected evidence about work tasks in order to quantify the differences between women’s and men’s work in the period from 1500-1700. This research allows us to dispel some common misconceptions.


  1. Men did most of the work didn’t they? This is unlikely, when both paid and unpaid work are counted, modern time-use studies show that women do the majority of work – 55% of rural areas of developing countries and 51% in modern industrial countries (UN Human Development report 1995). There is no reason why the pattern would have been markedly different in preindustrial England.
  2. But we know about occupational structure in the past don’t we? Documents from the medieval period onwards describe men by their occupations, but women by their marital status. As a result we know quite a lot about male occupations but very little about women’s.
  3. But women worked in households headed by their father, husband or employer. Surely, if we know what these men did, then we know what women were doing too? Recent research undertaken by Amy Erickson, Alex Shepard and Jane Whittle shows that married women often had different occupations from their husbands. If we do not know what women did, we are missing an important part of the economy.
  4. But we have evidence of women working for wages. It shows that around 20% of agricultural workers were women, surely this demonstrates that women’s work wasn’t as important as men’s in the wider economy? This evidence only relates to labourers paid by the day, and before 1700 most agricultural labour was not carried out by day labourers, so this isn’t a very good measure. Our article shows that women carried out a third of agricultural work tasks, not 20%.
  5. But women mostly did domestic stuff – cooking, housework and childcare – didn’t they, and that type of work doesn’t change much across history? Women did do most cooking, housework and childcare, but our research suggests it did not take up the majority of their working time. These forms of work did change markedly over time. A third of early modern housework took place outside, and our data suggests the majority was done for other households, not as unpaid work for one’s own family.
  6. But women only worked in a narrow range occupations, didn’t they? Our research shows that women worked in all the major sectors of the economy, but often doing slightly different tasks from men. They undertook a third of work tasks in agriculture, around half of the work in everyday commerce and almost two thirds of work tasks in textile production. But women also did forms of work we might not expect, such as shearing sheep, dealing in second-hand iron, and droving cattle.
  7. Women’s work was all low skilled wasn’t it? Women very rarely benefitted from formal apprenticeship in the way that men did, but that does not mean the tasks they undertook were unskilled. Women undertook many tasks, such as making lace and providing medical care, which required a great deal of skill.
  8. But this was all in the past, what relevance does it have now? Many gendered patterns of work are remarkably persistent over time. Analysis by the Office of National Statistics states that one third of the gender pay gap in modern Britain can be explained by men and women working in different occupations, and by the lower rates of pay for part-time work, which is more commonly undertaken by women than men.
  9. So nothing ever changes …? Well, not necessarily. In fact looking carefully at patterns of women’s work in the past shows some noticeably shifts over time. For instance, women worked as tailors and weavers in the medieval period and in the eighteenth century, but not in the sixteenth century.
  10. But we know why women work differently from men, particularly in preindustrial societies – isn’t it because they are less physically strong and all the child-bearing stuff? Physical strength does not explain why women did some physically taxing forms of work and not others (why they walked for miles carrying heavy loads on their heads rather than driving carts). And not all women were married or had children. Neither physical strength nor child-bearing can explain why women were excluded from tailoring between 1500 and 1650, but worked successfully and skilfully in this and other closely related crafts in other periods.

We now have data which allows us to look more carefully at these issues, but there is still much more to uncover.


To contact Jane Whittle:, Twitter: @jcwhittle1

To contact Mark Hailwood:, Twitter: @mark_hailwood

from Microeconomic Insights: ‘When Britain turned inward: lessons from the impact of 1930s protectionism’

by Alan de Bromhead (Queens University Belfast), Alan Fernihough (Queens University Belfast), Markus Lampe (Vienna University of Economics and Business) and Kevin Hjortshøj O’Rourke (All Souls College, Oxford)

The full post and online access to the full article is available on the Microeconomic Insights website


With a protectionist president in the White House, the future of the multilateral, rules-based international trading system seems much less certain. So it is not surprising that politicians and commentators are turning to the 1930s for examples of what protectionism can imply for international trade flows.

World trade not only collapsed during the early 1930s: it also became much less multilateral. Countries like Britain and France, which already had empires, traded more with those empires. And countries like Germany and Japan, which were looking to acquire empires of their own, similarly traded more intensively with their respective spheres of influence.

This research focuses on the experience of Britain, which in 1931 broke decisively with a longstanding tradition of free trade. From November that year, substantial tariffs could be imposed on manufactured goods from outside the Empire. Similar duties on non-Empire fruit, flowers, and vegetables were possible soon after. And following the Ottawa conference of 1932, Britain’s trade policy explicitly served the interests of ‘the home producer first, Empire producers second, and foreign producers last’.

What was the impact of this dramatic policy shift? This study analyzes detailed data on British imports of 258 consistently defined commodities from 42 countries over the period 1924-38, as well as information on tariffs, quotas, voluntary export restraints, and other variables potentially influencing trade flows. To quantify the impact of the switch to protection, the authors compare actual trade flows from 1931 with counterfactual flows that would have taken place had tariffs and quotas remained unchanged.

The shift towards protection reduced the value of British imports by 9-10% on average, with the biggest impact being felt in 1933. Protection accounted for about a quarter of the total decline in British imports, which is consistent with results for the United States.

But in contrast with the findings of previous studies (which analyze aggregate data on trade and trade policies), the new research finds that the shift towards protection had a big effect on the geographical composition of British imports. For example, the Empire’s share of British imports rose from 27% to 39.2% between 1930 and 1935, while in the absence of protection it would only have increased to 31.4%.

Overall, the research shows that using disaggregated data does not significantly change the estimated impact of protection on the total value of trade. But it matters a great deal for the estimated impact of protection on the geographical composition of trade. Studies using aggregate data find that imperial trade blocs did not have a big influence on trade patterns during the 1930s. In contrast, this research finds that trade policy was crucial in increasing the share of the British Empire in British imports.

The clear ‘Balkanization’ of world trade shown in these results had wider effects, as several contemporary observers recognized. It reflected and probably also exacerbated the international tensions of the times, the later outcomes of which are well known.

An Efficient Market? Going Public in London, 1891-1911

by Sturla Fjesme (Oslo Metropolitan University), Neal Galpin (Monash University Melbourne), Lyndon Moore (University of Melbourne)

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


Antique print of the London Stock Exchange. Available at <>

The British at a disadvantage?
It has been claimed that British capital markets were unwelcoming to new and technologically advanced companies in the late 1800s and early 1900s. Allegedly, markets in the U.S. and Germany were far more developed in providing capital for growing research and development (R&D) companies whereas British capital markets favored older companies in more mature industries, leaving new technology companies at a great disadvantage.
In the article An Efficient Market? Going Public in London, 1891-1911 we investigate this claim by obtaining detailed investment data on all the companies that listed publicly in the U.K. over the period 1891 to 1911. By combining company prospectuses, which provide issuer information such as industry, patenting activity, and company age with those company’s investors we investigate if certain company types were left at a disadvantage. For a total of 339 companies (out of 611 new listings) we obtain share prices, prospectuses, and detailed investor information on name and occupation.

A welcoming exchange
Contrary to prior expectations we find that the London Stock Exchange (LSE) was very welcoming to young, technologically advanced, and foreign companies from a great variety of industries. Table 1 shows that new companies were from a great variety of industries, were often categorized as new-technology, and almost half of the companies listed were foreign. We find that 81% and 84% of the new and old technology firms that applied for an official quotation of their shares were accepted by the LSE listing committee, respectively. Therefore, there is no evidence that the LSE treated new or foreign companies differently.

Table 1. IPOs by Industry

  IPOs Old-Tech New-Tech Domestic Foreign
Banks and Discount Companies 4 4 0 0 4
Breweries and Distilleries 13 13 0 12 1
Commercial, Industrial, &c. 155 137 18 125 30
Electric Lighting & Power 11 0 11 9 2
Financial Land and Investment 23 23 0 2 21
Financial Trusts 12 12 0 8 4
Insurance 7 7 0 7 0
Iron, Coal and Steel 20 20 0 20 0
Mines 8 8 0 0 8
Nitrate 3 3 0 0 3
Oil 11 11 0 0 11
Railways 10 9 1 5 5
Shipping 3 3 0 3 0
Tea, Coffee and Rubber 48 48 0 0 48
Telegraphs and Telephones 3 1 2 1 2
Tramways and Omnibus 6 0 6 5 1
Water Works 2 2 0 1 1
Total 339 301 38 198 141

Note: We group firms by industry, according to their classification by the Stock Exchange Daily Official List.

We also find that investors treated disparate companies similarly. We find British investors were willing to place their money in young and old, high and low technology, and domestic and foreign firms without charging large price discounts to do so. We do, however, find that investors who worked in the same industry or lived close to where the companies operated were able to use their superior information to obtain larger investments in well performing companies. Together our findings suggest that the market for newly listed companies in late Victorian Britain was efficient and welcoming to new companies. We find no evidence indicating that the LSE (or its investors) withheld support for foreign, young, or new-technology companies.


To contact Lyndon Moore:

Voting rights and financial systems: Evidence from two centuries of suffrage reforms

by Thomas Lambert (Erasmus University Rotterdam)

Extending voting rights to broader segments of the population considerably affects the way countries finance their economies. This is the key finding of our new research recently published in the Economic Journal, available here

Suffragette Mrs Banks and banker Mr Banks in a scene from the classic Disney movie Mary Poppins (1964), directed by Robert Stevenson

Financial systems fulfil a number of key functions in the economy, thereby contributing to its growth. By transferring funds from savers/investors to borrowers such as households and firms, financial systems are the oil for the wheels that keep the economy turning.

Therefore, it is vital to have a clear understanding of the fundamental factors that support the development of financial systems. The research shows that suffrage institutions – that is, the institutions defining who holds the right to vote in the population – play a critical role.

Financial systems encompass financial institutions (such as banks) and financial markets (such as stock markets). However, the population is composed of corporate stakeholders (workers, investors, managers) and thus is not indifferent about whether governments should promote – through their policy choices – the development of stock markets or the banking sector. Indeed, both fulfil similar functions in the economy, but have a different impact on corporate stakeholders as they affect differently the degree to which each corporate stakeholder bears corporate risk. Stock markets lead to riskier but more profitable investments, at the cost of potentially higher labor-risk bearing. In contrast, banks have a tendency to limit risk-taking behavior of corporate managers because, as debtholders, they do not benefit from the upside potential of riskier investments.

The voting population will prefer politically to support bank finance if it relies more, in the aggregate, on labor income. However, the voting population will prefer relying on stock market finance if it has a sufficient amount of capital income relative labor income. By defining who has the right to vote in the population, suffrage institutions thus play a pivotal role in the way countries finance their economies.

Our research analyzes the gradual extensions of suffrage to various segments of the population over the nineteenth and twentieth centuries in 18 countries. It demonstrates that suffrage extensions change the political preferences of the voting population and, thereby, policy choices supporting either stock market finance or bank finance. Specifically, it provides empirical evidence that extending suffrage to broader segments of the population hampers the development of stock markets. In contrast, broadening suffrage is conducive to banking sector development.

Further evidence reveals longer-term effects produced by the extension of suffrage: A 25-year delay in the introduction of women universal suffrage increase today’s importance of stock markets relative to the banking sector by 17.5%.

Overall, these findings are consistent with the insight that small elites pursue economic opportunities by promoting capital raised on stock markets. In contrast, a broader political participation empowers a middle class which prefers bank finance as it is composed of voters with proportionally more exposure to labor income relative to capital income.

The research has broader implications. The scope of voting rights may drive the adoption and content of financial regulation shaping the way that financial intermediation takes place. This ultimately determines the long-term performance of economies.


To contact the author:

Lessons for the euro from Italian and German monetary unification in the nineteenth century

by Roger Vicquéry (London School of Economics)

Special euro-coin issued in 2012 to celebrate the 150th anniversary of the monetary unification of Italy. From Numismatica Pacchiega, available at <;

Is the euro area sustainable in its current membership form? My research provides new lessons from past examples of monetary integration, looking at the monetary unification of Italy and Germany in the second half of the nineteenth century.


Currency areas’ optimal membership has recently been at the forefront of the policy debate, as the original choice of letting peripheral countries join the euro was widely blamed for the common currency existential crisis. Academic work on ‘optimum currency areas’ (OCA) traditionally warned against the risk of adopting a ‘one size fits all’ monetary policy for regions with differing business cycles.

Krugman (1993) even argued that monetary unification in itself might increase its own costs over time, as regions are encouraged to specialise and thus become more different to one another. But those concerns were dismissed by Frankel and Rose’s (1998) influential ‘OCA endogeneity’ theory: once regions with ex-ante diverging paths join a common currency, they will see their business cycle synchronise progressively ex-post.

My findings question the consensus view in favour of ‘OCA endogeneity’ and raise the issue of the adverse effects of monetary integration on regional inequality. I argue that the Italian monetary unification played a role in the emergence of the regional divide between Italy’s Northern and Southern regions by the turn of the twentieth century.

I find that pre-unification Italian regions experienced largely asymmetric shocks, pointing to high economic costs stemming from the 1862 Italian monetary unification. While money markets in Northern Italy were synchronised with the core of the European monetary system, Southern Italian regions tended to move together with the European periphery.

The Italian unification is an exception in this respect, as I show that other major monetary arrangements in this period, particularly the German monetary union but also the Latin Monetary Convention and the Gold Standard, occurred among regions experiencing high shock synchronisation.

Contrary to what ‘OCA endogeneity’ would imply, shock asymmetry among Italian regions actually increased following monetary unification. I estimate that pairs of Italian provinces that came to be integrated following unification became, over four decades, up to 15% more dissimilar to one another in their economic structure compared to pairs of provinces that already belonged to the same monetary union. This means that, in line with Krugman’s pessimistic take on currency areas, economic integration in itself increased the likelihood of asymmetric shocks.

In this respect, the global grain crisis of the 1880s, disproportionally affecting the agricultural South while Italy pursued a restrictive monetary policy, might have laid the foundations for the Italian ‘Southern Question’. As pointed out by Krugman, asymmetric shocks in a currency area with low transaction costs can lead to permanent loss in regional income, as prices are unable to adjust fast enough to prevent factors of production to permanently leave the affected region.

The policy implications of this research are twofold.

First, the results caution against the prevalent view that cyclical symmetry within a currency area is bound to improve by itself over time. In particular, the role of specialisation and factor mobility in driving cyclical divergence needs to be reassessed. As the euro area moves towards more integration, additional specialisation of its regions could further magnify – by increasing the likelihood of asymmetric shocks – the challenges posed by the ‘one size fits all’ policy of the European Central Bank on the periphery.

Second, the Italian experience of monetary unification underlines how the sustainability of currency areas is chiefly related to political will rather than economic costs. Despite the fact that the Italian monetary union has been sub-optimal from the start and to a large extent remained so, it has managed to survive unscathed for the last century and a half. While the OCA framework is a good predictor of currency areas’ membership and economic performance, their sustainability is likely to be a matter of political integration.