The trafficking of children: exploitation, sexual slavery and the League of Nations

by Elizabeth A. Faulkner (University of Hull) and Cathal Rogers (Staffordshire University)

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


Child trafficking graffiti on brick. Available at Pexels.

The trafficking of children receives extensive media coverage today, with endless tales of exploited and enslaved children. But these reports are not isolated.

For example in 1923, the League of Nations Advisory Committee on the Traffic in Women and Children heard that ‘The White slave traffic assumed large proportions; young girls – and even young boys – swelled the personnel of the over-numerous houses of ill-fame’.[1] The purpose of our study is to identify whether fears of the sexual enslavement of children during the era were legitimate or the product of a ‘moral panic’.

The issue of human trafficking is a relatively new area of international law, but the issue has appeared on numerous occasions as an issue of grave moral concern at the international level for over a century. In 1921, the League of Nations passed the International Convention for the Suppression of the Traffic in Women and Children.

This Convention marked a notable departure from the overtly racialised focus of previous attempts to address this issue of human trafficking namely, the 1904 and 1910 White Slave Traffic Conventions.[2]

Our study investigates the trafficking and exploitation of children between 1922 and 1929 through an examination of the archives of the League of Nations, Geneva. The inquiry sought to uncover recorded cases of child trafficking through focusing on the Summary of Annual Reports submitted to the Traffic in Women and Children Committee.

In terms of references to ‘trafficking’, from the 324 responses (1922-1929) considered by this inquiry, only 11 references to trafficking were identified. As a percentage, that is just 3.3% of responses.

Our research seeks to understand the exploitation of children during the 1920s, beyond ‘trafficking for immoral purposes’. Identifying the types of exploitation that children experienced globally, whether for commercial or economic gain, sexual gratification or adoption.

The aim of the research is to challenge and enrich our understanding of morals, race and the exploitation of children in the nineteenth and early twentieth century, through deconstructing fears of the sexual enslavement of children.

The inquiry seeks to readdress the racial bias of previous examinations of the human trafficking of the era and to expand our knowledge of trafficked and or exploited children in the legacy of the ‘White Slavery Conventions’.



[1] De Reding De Bibberegg, Delegate of the International Red Cross Committee and the International Red Cross Committee and the International ‘Save the Children’ Fund in Greece. League of Nations, Advisory Committee on the Traffic in Women and Children, Minutes if the Second Session, Geneva March 22nd – 27th 1923 at 65

[2] The ‘White Slavery Conventions’ namely the International Agreement for the Suppression of White Slave Traffic 1904, the International Convention for the Suppression of the White Slave Traffic 1910, the International Convention for the Suppression of Traffic in Women and Children 1921 and the International Convention for the Suppression of the Traffic in Women of Full Age 1933

Initial determinants of Mexican mass migration

by David Escamilla-Guerrero (London School of Economics)

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


John Tallis and John Rapkin’s 1851 Map of Mexico, Texas, and Upper California. Available at Wikimedia Commons.

We are living in a time of globalisation backlash characterised by a reduction of economic and political cooperation across borders. The renaissance of economic protectionism has manifested in increasing barriers against immigration in both the United States and Europe. Furthermore, the public perception of why people migrate seems to be increasingly influenced by nationalist prejudices rather than empirical evidence.

Using novel historical micro data, my research addresses the initial determinants of the Mexico-US migration, the most intense and persistent of the twentieth century. The main lessons to take are two-fold:

  • First, the push and pull factors influencing migration vary across regions of sending countries.
  • Second, we have focused our attention on wage differentials between countries as main determinant, overlooking the role of structural differences within sending countries.

The core data of the research come from manifests that recorded individual border crossings. These documents are known as Mexican Border Crossing Records and were used by American authorities to collect information about immigrants. The sample used in this research consists of 10,895 immigrants that crossed the border through eight ports of entrance from July 1906 to December 1908.

The results reveal that differences in the Mexico-US relative wage did not explain the migration flow. But differences in living standards and population size across Mexican municipalities mattered. On average, locations with low living standards and large populations represented a source of frictions in the Mexican labour market, pushing labourers to migrate.

In addition, the estimates show that the flow was consistently driven by the social capital formation in the destination – that is, immigrant networks. Just as found for recent periods, migrating to a county with a large Mexican community increased the net benefits of migration.

Therefore, for more than one hundred years, immigrant networks have represented a self-perpetuating social asset that provides information and assistance, which reduces the costs and risks of migrating.

The regional results reveal that there were two migration models at the time:

  • In the border region, distance costs and labour market potentials in the United States influenced the decision to migrate.
  • In contrast, migration from the Mexican central plateau was completely determined by immigrant networks and labour market pressures in Mexico.

Since 2010, Mexican migration to the United States has come to a standstill, although the salary gap remains at levels like those of the early twentieth century. Hence, the persistence of immigrant networks as the main driver of the Mexico-US migration raises the question of whether the convergence of real wages between home and host countries would be an effective mechanism to reduce or control migration.

An integral migration policy must consider the different incentives behind the decision to migrate as well as their evolution through time and across space. Only then, will we maximise the benefits of labour migration and minimise the problems derived from it.

Deindustrialisation in ‘troubled’ Belfast: evidence of the links between factory closures and sectarianism – and lessons from the community response

by Christopher Lawson (University of California, Berkeley)

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


The Shankill road, Belfast during the troubles. Available at Wikimedia Commons. 

My new research provides fresh insights into the relationship between industrial decline and sectarian conflict in late twentieth century Belfast, and increases our understanding of how communities respond to the loss of their economic base.

The poverty and deprivation that continues to afflict much of West Belfast is usually understood as a direct result of the sectarian ‘Troubles’ of the 1960s to 1990s, when ‘ancient’ ethnic and religious hatreds erupted and brought economic misery as investment fled.

But industrial decline actually predated the ‘Troubles’, and was a cause rather than an effect of sectarian tension. The linen industry, on which West Belfast had been built, shed tens of thousands of jobs in the 20 years following the Second World War, leading to some of the highest unemployment rates in the entire UK by the mid-1960s.

I argue that it was the social consequences of the collapse of the linen industry that made West Belfast neighbourhoods like the Shankill and the Falls such centres of conflict in the following decades. West Belfast communities were caught in a downward spiral, where unemployment and urban decay was exploited by those seeking to promote sectarian resentment, leading to violence, which in turn made the economic conditions even worse.

In addition to showing how deindustrialisation helped spur the ‘Troubles’ in West Belfast, my research also shows how new community organisations sprang up to fill the gap left by government and lead the effort to adapt to post-industrial world.

I focus particularly on the creation of the Shankill Community Council and Ardoyne People’s Assembly, on either side of the sectarian divide in West Belfast. These organisations are usually seen as outgrowths of the Troubles, focused on defending their communities from sectarian violence, but my research shows that their primary focus was actually on re-development and reversing economic decline.

These organisations recognised that the linen industry would not be returning, and instead focused on education, daycare, skills retraining and transport linkages. In communities where more than 70% of adolescents left school without any qualifications whatsoever, improved education was essential if young people were to build meaningful lives and resist the temptation to join sectarian paramilitaries.

The emphasis on quality daycare was part of a larger effort to reduce the barriers preventing women from entering the workforce as equals to men, as community leaders recognised that the idea of the ‘male breadwinner’ was a thing of the past.

Although the progress of these organisations was slow, their efforts helped to begin the process of economic and social recovery, and they set the agenda for government support in the post-Good Friday Agreement era. The Shankill Women’s Centre, an outgrowth of the Shankill Community Council, would receive significant government support from New Labour and from the new Northern Ireland Assembly, and it continues to provide subsidised daycare in the neighbourhood.

With deindustrialisation widely recognised as a contributing factor in the UK’s 2016 vote to leave the European Union and the election of Donald Trump, it is important that we understand the serious social and cultural consequences that such dramatic economic dislocation can have.

My research helps to provide a better understanding of the role of deindustrialisation in the outbreak of sectarian violence in Northern Ireland, but also shows how bottom-up social action can make a genuine difference in the process of recovery. In this way, it provides lessons that can be applied to struggling post-industrial communities across the Western world.

Unequal pay in Victorian Britain

by Chris Minns (LSE) and Emma Griffin (UEA)


Thames embankment, London, England. Available at Wikimedia Commons.

Women made a vital contribution to the labour force in Victorian Britain. Census evidence suggests that close to 40% of women in Britain were employed in the second half of the nineteenth century, which is roughly twice the rate found for the United States at the same time. This implies that the labour market earnings of women made a substantial contribution to the fortunes of many working-class households. 

But how did the industrial economy of mid-Victorian Britain treat women who sought work? It is well-known that women experienced large-scale occupational segregation with women excluded entirely from many professions and industries. Less well known, however, is how the pay of women evolved after 1850, particularly in relation to their male counterparts.  

In a new study, to be presented at the Economic History Society’s 2019 annual conference, we draw on the reports of wages and salaries paid between the 1850 and 1890 prepared by the Board of Trade. In total these sources contain over 9,000 wage quotations for male workers in industry, and well over 1,000 similar quotations for female workers. 

We use this information to compute the gender pay gap in Britain between 1850 and 1800, and to examine the structure of the disadvantages experienced by women at this time.  

Overall, we find that between 1850 and 1890, women in British industry had earnings a little more that 40% of male earnings in industry. The gender pay gap closes by only a few percentage points over the period we study, and it would appear that it is at least as large in the second half of the nineteenth century as what others have found for the first part of the Industrial Revolution between 1780 and 1850. 

While part of the explanation for the large pay gap is the exclusion of women from the best paid industries and trades, our preliminary work suggests that differences in the composition of employment between men and women can only account for a small fraction of the gender gap. 

When comparing matched wage quotations for men and women in the same location, industry, occupation and year, the gender pay gap is only modestly smaller, at 51%. Consistent with this finding, we do not find evidence of substantial gender pay gap differences between regions or industries that were major employers of women. 

What are the main implications of these findings? 

First, it appears that the dynamics of gender pay in late nineteenth century Britain were strikingly different than in the United States. The gender pay gap in UK industry at the end of the nineteenth century was about 15 percentage points larger than in American manufacturing, which saw a more noticeable narrowing over the century. These transatlantic differences in the relative price of women’s labour may have implications for the patterns of industrial development seen in Britain versus the United States. 

Second, the fairly uniform gender pay gap across British industry, despite notable differences in skill and strength requirements between occupations speaks to a pattern of broad-based labour market segmentation that worked to suppress women’s wages well before the spread of internal labour markets that and long-term contracts thought to formalise different pay structures for men and women.

Social mobility and inequality in the Republic of Venice, 1400-1700

by Guido Alfani (Bocconi University, Milan, Dondena Centre and IGIER)



The Wharf, Looking toward the Doge’s Palace, 1700s, by Luca Carlevaris. Available at Wikimedia Commons.

Recent research in economic history has unearthed previously unknown facts about the long-term trends in inequality. We now have, for at least some areas of Europe, continuous time series of key inequality indicators from around 1300.

These new data are changing the way in which we perceive economic inequality not only in the past, but even today – as a key lesson from history is that economic inequality (especially but not only of wealth) has a marked tendency for increasing over time, and only catastrophes on the scale of the Black Death or the World Wars managed to bring it down, albeit temporarily (see Figure 1).

The new historical evidence is also relevant to the debate about the long-term determinants of inequality growth. This seems to be independent, to a large degree at least, from economic growth. Other factors seem to have played a crucial role, including institutional factors and in particular (in the early modern period) the rise of the fiscal-military state.

These recent acquisitions, however, raise many questions about the actual impact on society of distributive dynamics. My current project funded by the European Research Council – SMITE: Social Mobility and Inequality across Italy and Europe 1300-1800 – is exploring at least some key aspects of the social impact and significance of inequality change.

In this context, particular attention is being paid to the case of the Republic of Venice, which is the object of the study to be presented at the Economic History Society’s 2019  annual conference. In the Republic of Venice, as seemingly was common throughout Europe, economic inequality tended to grow monotonically from the fifteenth century until the end of the early modern period (which is also the end of the Republic of Venice as a specific political entity).

Generally speaking, this inequality growth could not simply be considered the consequence of economic growth, as it also covered phases of economic stagnation. Indeed, the Italian domains of the Republic of Venice transitioned, over the period 1500-1900, from being one of the richest and most advanced areas of Western Europe, to being one of the poorest. Partly as a consequence of this, it is very unlikely that during the period, and especially from 1600 on, inequality growth could have taken place in a context of easy upward social mobility.

Our research aims to measure rates of socio-economic mobility in different periods, based on a range of case studies, including the large and very important city of Verona. Our results so far confirm that during the early modern period inequality growth came to be increasingly associated with more difficult upward socio-economic mobility.

This provides useful hints about the nature and the causes of inequality growth in pre-industrial Europe. We pay particular attention to the role played by state taxation in consolidating the relative position of the richest, while compromising the ambitions of upward mobility of other socio-economic groups. Our study is also one of the very first attempts at reconstructing household-level measures of social mobility for the pre-industrial period by means of extensive record linkage of the available sources and by using the standard methods of mobility studies.

The picture that we reconstruct suggests that from around 1600 or 1650, the Italian domains of the Republic of Venice were characterised at the same time by economic stagnation, growth in economic inequality, and low (and worsening) rates of social-economic mobility. This picture corresponds quite closely to the situation being faced by Italy and by other parts of southern Europe since the onset of the Great Recession in 2008 – which is definitely not a very encouraging scenario.


Alfani Chart 2

Source: Alfani, The top rich in Europe in the long run of history, Vox 15 January 2017

Income inequality in times of war and revolution: the city of Moscow in 1916

by Elizaveta Blagodeteleva (National Research University Higher School of Economics)

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.


Voznesenskaya Square, 1900s. Available at Wikimedia Commons.

In autumn of 1916, a big scandal roiled the Moscow public: local landlords petitioned the municipal government for the permission to raise rents, which was prohibited by the military administration a year before amid the escalating refugee crisis. Newspapers fumed at the selfishness of the rich, who not only avoided serving their country at the battlefield but exploited wartime hardships to get even richer. Health inspectors, lessees and workers of the largest industrial plants publicly raised their objections to the proposal.

Although the concerted effort of the city landlords to increase revenue eventually failed, the public outrage persisted. The occasional evidence of huge war profits and rumours about the luxurious life of industrialists and rentiers stoked anger among the urbanites, who struggled to make ends meet under the increasing pressure of galloping inflation and food shortages. The rent scandal highlighted the growing animosity towards the rich that the Bolsheviks would later channel into fully-fledged class warfare.

In 1916, Moscow residents sincerely believed that the gap between the wealthy and the rest of the population was enormous and it kept widening at an alarming pace. But did their beliefs match reality? In other words, how unequal was urban society in Russia in the last year of the old regime? To answer this question, a student of social and economic inequality would usually refer to income tax records. Unfortunately, there are very few of them in case of imperial Russia.

The Russian authorities had been extremely wary of income taxation up until the beginning of the Great War, when the national political mobilisation elevated the issue of the personal responsibility of each and every subject of the tsar. As a result, the state legislature passed an income tax in the spring of 1916. Its political objectives overwhelmed fiscal practicalities as lawmakers wanted it to bring the state closer to the ‘pockets’ and ‘hearts’ of the people. The progressivity of the new tax was supposed to ensure the levelling of the great fortunes and make the body politic more cohesive.

Since tax collection began in March 1917 and continued through the period of an intense power struggle and regime change, surviving records are patchy. Neither the tsar’s local treasures nor early Soviet fiscal authorities left comprehensive accounts of the sums collected in 1917. Nevertheless, Moscow archives have preserved some tax rolls that document the personal incomes for the year 1916, reported by taxpayers and then ascertained by tax collectors in the first half of 1917.

The records allow a tentative reconstruction of the level of income inequality in the city. Given that the adult population of Moscow amounted to 1.1 million in the spring of 1917, the estimates show that the wealthiest 1% and 5% must have received and then reported about 45.9% and 58.8% of their total income. With the Gini coefficient standing at 0.75, those shares display an extremely high level of income inequality among the city residents in 1916. A huge gap between the rich and the others not only felt real but was real.

Stealing for the market: the illegitimacy of enslavement in the early modern Atlantic world

by Judith Spicksley (Wilberforce Institute, University of Hull)

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.



Slaves on the West Coast of Africa, c.1833 (oil on canvas)
The Slave Trade (Slaves on the West Coast of Africa), by Auguste-François Biard, 1840. Available at Wikimedia Commons. 

Slavery was understood to be illegitimate long before anti-slavery activists called for the abolition of the slave trade in the eighteenth century. Slavery is now prohibited in international law, but it was a legal institution in the vast bulk of societies at some point in the past.

A range of legal methods were used to enslave people, of which the most common were birth, capture in war, judicial punishment, debt, and poverty. But there was another method of enslavement that historians include in their list: the kidnap and theft of persons for sale on the market.

These practices were never considered acceptable forms of enslavement. In among the earliest law codes that survive from Old Babylonia in the second millennium BCE, to Israel in the first, are punishments for the theft of a person, which attracted the death penalty.

But demand for slaves created opportunities for traders to sell those they had stolen as if they were slaves proper, and increase their wealth in the process. These cases of illegal enslavement ran alongside bona fide sales throughout the period in which slavery was legitimate.

Examples include the activities of Cilician-based pirates in the eastern Mediterranean in the late Roman Republic and early Empire, and the violent sourcing of labour in Africa for the American plantations in the early modern Atlantic world. But it was the raiding bands that scoured the Slav lands of Eastern Europe for captives in the high medieval period that encouraged an understanding of the meaning of slavery as illegal in the west.

The term ‘slave’ appeared in English, and in the languages of Western Europe more generally, from the late medieval period via the ethonym Slav. This was the name given to members of the Slavic peoples living in Eastern Europe whose communities were frequently raided for persons who could be sold as slaves.

But the term ‘slavery’ does not enter the English language until the mid-sixteenth century. At that point, it was applied as a metaphor for the tyranny of Catholicism, as the development of Protestantism created a major religious schism.

The term ‘slavery’ was also applied to the activities of the earliest English slave traders. During his first voyage in 1562, John Hawkins is reputed to have violently captured around 400 Africans in Guinea, whom he later sold in the West Indies. He repeated these activities over the next five years with the support of Queen Elizabeth.

Hawkins was following in the footsteps of other Europeans, most notably Lançarote de Freitas, the Portuguese explorer, who is recognised as having set the transatlantic slave trade in motion. De Freitas returned from North Africa to Lagos in 1444 with a cargo of 235 Berber captives seized in a series of raids, who were subsequently sold into slavery.

From the mid-seventeenth century, with the challenge to the divine right of kings, ‘slavery’ became a metaphor for, and a weapon of, political tyranny in England. It also became a reality for travellers.

The seventeenth century saw an increased level of activity by the so-called Barbary pirates, operating out of North Africa, who seized European sailors and travellers and held them as ‘slaves’ for ransom. Englishmen and women were captured and enslaved in the Americas too, as the Atlantic economy underwent expansion.

As a result, the meaning of ‘slavery’ as a system of illegal subjection, linked to tyranny, violence and theft, had become deeply embedded in English thought before the abolitionists were established as an organised force from the late eighteenth century.

Family standards of living in England over the very long run

by Sara Horrell (University of Cambridge), Jane Humphries (University of Oxford), and Jacob Weisdorf (University of Southern Denmark and Centre for Economic Policy Research)

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.


Over London–by Rail from London: A Pilgrimage (1872). Available at Wikimedia Commons.

The secular evolution in human wellbeing, measured by unskilled workers’ real wages, has long been the subject of scholarly debate. Attention is focused on whether modern economic growth is a relatively recent phenomenon in human history, prompted by the Industrial Revolution, or if workers in England experienced economic progress well before the Industrial Revolution, even if on a more modest scale. The answer will help inform third-world policy-makers about alternative routes to economic growth.

Thanks to recent archival work, we now have information on payments made to working-class men, women and children across 600 years of English history – from before the Black Death through to the classic years of the Industrial Revolution. In a study to be presented at the Economic History Society’s 2019 annual conference, we bring all of these payments together to provide a first-ever account of the earning possibilities of working-class families in historical England.

By asking how much a typical lower-class family consumed, in terms of basic consumption goods, such as calories, clothes, heating and housing, we are able to ask how much work was needed by the husband, as well as his wife and children, in order to achieve this. Also, because historical families were rather large (four to five children were not uncommon), we pay particular attention to the ‘family squeeze’ – that is, stages during the family lifecycle when the ratio of dependants to earners peaked.

Despite the post-Black Death period being regarded as a ‘golden age of labour’ and on assumptions of plentiful work, the husband’s earnings were not enough in the fourteenth century to satisfy a typical family’s basic consumption needs during the family squeeze. Women and children’s work was regularly needed in order to make ends meet and, even then, this was not enough to avoid insolvency problems during a couple’s old age.

But as we move forward through the medieval and early-modern periods, progressively less women and children’s work was required to ensure a stable standard of living, and old age poverty became less severe. In this sense, we conclude that the quality of life of an average lower-class family gradually improved in the centuries leading up to the Industrial Revolution.

We also conclude by arguing that a surplus in the family budget after necessities had been bought in the run-up to the Industrial Revolution enabled families to allocate a growing fraction of their income to market goods rather than homemade products.

This served as a stimulus to the Industrial Revolution because it motivated producers to innovate and profit from satisfying this increased demand. A widening market seemed important in combination (or competition) with the hypotheses that industrialisation sprung from entrepreneurial efforts to save labour.

Slavery and Anglo-American capitalism revisited

by Gavin Wright (Stanford University)

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


Slaves cutting sugar cane, taken from ‘Ten Views in the Island of Antigua’ by William Clark. Available at Wikimedia Commons.

For decades, scholars have debated the role of slavery in the rise of industrial capitalism, from the British Industrial Revolution of the eighteenth century to the acceleration of the American economy in the nineteenth century.

Most recent studies find an important element of truth in the thesis associated with Eric Williams that links the slave trade and slave-based commerce with early British industrial development. Long-distance markets were crucial supports for technological progress and for the infrastructure of financial markets and the shipping sector.

But the eighteenth century Atlantic economy was dominated by sugar, and sugar was dominated by slavery. The role of the slave trade was central to the process, because it would have been all but impossible to attract a free labour force to the brutal and deadly conditions that prevailed in sugar cultivation. As the mercantilist, Sir James Steuart asked in 1767: ‘Could the sugar islands be cultivated to any advantage by hired labour?’

Adherents of an insurgency known as the New History of Capitalism have extended this line of analysis to nineteenth century America, maintaining that: ‘During the eighty years between the American Revolution and the Civil War, slavery was indispensable to the economic development of the United States.’ A crucial linkage in this perspective is between slave-grown cotton and the cotton textile industries of both Britain and the United States, as asserted by Marx: ‘Without slavery you have no cotton; without cotton you have no modern industry.’

My research, to be presented in this year’s Tawney Lecture to the Economic History Society’s annual conference, argues to the contrary, that such analyses overlook the second part of the Williams thesis, which held that industrial capitalism abandoned slavery because it was no longer needed for continued economic expansion. We need not ascribe cynical or self-interested motives to the abolitionists to assert that these forces were able to succeed because the political-economic consensus that supported slavery in the eighteenth century no longer prevailed in the nineteenth.

Between the American Revolution in 1776 and the end of the Napoleonic Wars in 1815, the demands of industrial capitalism changed in fundamental ways: expansion of new export markets in non-slave areas; streamlined channels for migration of free labour; the shift of the primary raw material from sugar to cotton. Unlike sugar, cotton was not confined to unhealthy locations, did not require large fixed capital investment, and would have spread rapidly through the American South, with or without slavery.

These historic shifts were recognised in the United States as in Britain, as indicated by the post-Revolutionary abolitions in the northern states and territories. To be sure, southern slavery was highly profitable to the owners, and the slave economy experienced considerable growth in the antebellum period. But the southern regional economy seemed increasingly out of step with the US mainstream, its centrality for national prosperity diminishing over time.

Indeed, my study asserts that on balance the persistence of slavery actually reduced the growth of cotton supply compared with a free-labour alternative. The truth of this proposition is most clearly demonstrated by the expansion of production after the Civil War and emancipation, and the return of world cotton prices to their pre-war levels.

The comfortable, the rich and the super-rich: what really happened to top British incomes during the first half of the twentieth century?

by Peter Scott and James T Walker (Henley Business School, University of Reading)

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.



Across road junction at Clapham Common, London, England. Available at Wikimedia Commons.

Long-run analysis of British income inequality has been severely hampered by poor historical income distribution data relative to other western countries. Until 1937, there were no official peacetime income distribution estimates for Britain, despite considerable contemporary interest in how much of the national income was taken by the rich.

In research to be presented at the Economic History Society’s 2019 annual conference, we address this question, focusing on changes in the incomes of the top 0.001-5% of the income distribution. This group is important for two reasons. First, because top incomes accounted for a substantial slice of total personal incomes, with the top 1% and top 5% taking around 30% and 45% of total income in 1911, according to our estimates.

Second, income redistribution in western countries is typically dominated by changes in the shares of the top 5% and, especially, within the top percentile. Thus examining higher incomes is crucial to explaining the apparent paradox between a relatively stagnant income distribution among the bulk of the British population and the generally assumed trend towards a more equal pre-tax income distribution.

Using a newly rediscovered Inland Revenue survey of personal incomes for taxpayers in 1911, we show that Britain had particularly high-income inequality compared with other Western countries. Top British income shares fell considerably over the following decades, though British incomes remained more unequal than in the United States or France in 1949.

Inequality reduction was driven principally by a collapse in unearned incomes, reflecting economic shocks and government policy responses. Over the period from 1911 to 1949, there was a general downward trend in rent, dividend and interest income, with particularly sharp falls during the two world wars and the recessions of 1920-21 and 1929-32.

War-time inflation eroded the real income received from fixed interest securities; new London Stock Exchange issues of overseas securities were restricted by the Treasury (to protect Britain’s foreign exchange position), reducing rentiers’ ability to invest their income overseas; and the agricultural depression lowered real (inflation-adjusted) land rents.

These trends reflected a progressive collapse of the globalised world economy from 1914 to 1950, which both reduced the incomes of the rich and redistributed income to the bottom 95% of the income spectrum.

For example, rent control (introduced in 1915 and continuing throughout the period of our study), depressed the incomes of landlords, but substantially reduced the real cost of a major household expenditure burden, in a country where around 90% of households were private tenants. Rent control also led to extensive house sales by landlords, mainly to sitting tenants, at prices reflecting their low, controlled, rents.

Meanwhile the scarcity of low-risk, high yielding assets during the interwar years led to substantial deposits in building societies by high-income individuals, funding the house-building boom of the 1930s. Restrictions on overseas new issues also led the City of London to become increasingly involved in British industrial finance – expanding industrial growth and employment.

Conversely, the policy liberalisations of the 1980s that heralded the start of the new globalisation (and the resumption of growing income inequality in western nations) have made it far easier for the rich to offshore their assets, or themselves, either in search of better investments opportunities or jurisdictions more suited to protecting their wealth. This has produced a strong international trend towards rising income inequality, with Britain returning to its position as one of the most unequal western nations.