Workshop – Bullets and Banknotes: War Financing through the 20th Century

By David Foulk (University of Oxford)

This workshop intends to bring together military historians, international relations researchers, and economic historians, and aims to explore the financing of conventional and irregular warfare.

Martial funds originated from a variety of legitimate and illegitimate sources. The former includes direct provision by government or central banking activity. Private donations also need to be considered, as they have also proven a viable means of financing paramilitary activity.  Illegitimate sources in the context of war refer to the ability of an occupying force to extract economic and monetary resources and include, for example, ‘patriotic hold-ups’ of financial institutions, and spoliation.

This workshop seeks to provide answers to three central questions. First, who paid for war? Second, how did belligerents finance war – by borrowing, or printing money?  Finally, was there a juncture between resistance financing and the funding of conventional forces?

In the twentieth century, the global nature of conflict drastically altered existing power blocs and fostered ideologically motivated regimes. These changes were aided by improvements in mass communication technology, and a nascent corporatism that replaced the empire-building of the long nineteenth century. 

What remained unchanged, however, was the need for money in the waging of war. Throughout history, success in war depended on financial support. With it, armies can be paid and fed; research can be encouraged; weapons can be bought, and ordnance shipped. Without it, troops, arms, and supplies become scarcer and more difficult to acquire. Many of these considerations are just as applicable to clandestine forces. Nonetheless, there is an obvious constraint for the latter: their activity takes place in secret. This engenders important operational differences compared to state-sanctioned warfare and generates its own specific problems.

Traditionally, banking operations are predicated on an absence of confidence between parties to a transaction. Banks are institutional participants who act as trusted intermediaries, but what substitute intermediaries exist if the banking system has failed?  This was the quandary faced by members of the internal French resistance during the Second World War. Who could they trust to supply them regularly with funds? Where could they safely store their money, and who would change foreign currency into francs on their behalf?

Members of resistance groups could not acquire funds from the remnants of the French government while Marshal Pétain’s regime retained nominal control over the Non-Occupied Zone, nor could they obtain credit from the banking system.  Instead, resistance forces came to depend on external donations which were either airdropped or handed over by agents working on behalf of the British, American and Free French secret services. The traditional role of the banking sector was supplanted by military agents; the few bankers involved in resistance activities acted more as moneychangers, rather than as issuers of credit.

Without funding, clandestine operatives were unable to purchase food from the black market, or to rent rooms. Wages were indeed paid to resistance members, but there were disparities between the different groups and no official pay-scale existed.  Instead, leaders of the various groups decided on the salary range of their subordinates, which varied during the Second World War.

As liberation approached, a fifty-franc note, was produced on the orders of the Supreme Headquarters Allied Expeditionary Force (S.H.A.E.F.) in anticipation of being used within the Allied Military Government for Occupied Territories, in 1944, once the invasion of France was underway (Figure 1).

Figure 1. Allied Military Government for Occupied Territories (A.M.G.O.T.) fifty-
franc note (1944). Source: author’s collection

Clearly, there are many aspects of resistance financing, and the funding of conventional forces, that remain to be investigated. This workshop intends to facilitate ongoing discussions.

Due to the pandemic, this workshop will take place online on 6th November 2020. The keynote speech will be given via webinar and participants’ contributions will be uploaded before the event.

The workshop is financed by the ‘Initiatives & Conference Fund’ from the Economic History Society, a ‘Conference Organisation’ bursary from Royal Historical Society, and Oriel College, Oxford. 

More information about the Economic History Society’s grants opportunities can be found here

For more information:                          


Overcoming the Egyptian cotton crisis in the interwar period: the role of irrigation, drainage, new seeds, and access to credit

By Ulas Karakoc (Tobb Etü and Humboldt University) and Laura Panza (University of Melbourne)

The full paper from this blog post was published on The Economic History Review and is currently available on Early View at this link

By 1914, the Egyptian economy confronted a unique conundrum: its large agricultural sector was negatively hit by declining yields in cotton production, the main driver of the economy. Egypt was a textbook case of export-led development, because  cotton production and exports had dominated the country’s economy.  The decline in cotton yields, which came to be regarded as a “cotton crisis”, was coupled with two other constraints: land scarcity and high population density. Nonetheless, despite unfavourable price shocks, Egyptian agriculture was able to overcome this crisis in the interwar period.  The output stagnation between  1900 and the 1920s contrasts with the following recovery (Figure 1).

Figure 1. Egyptian raw cotton output, acreage under raw cotton and raw cotton yield, c.1890s-1940. Source: Annuaire Statistique (various issues)

Previous research documented that during the crisis the decline in yields was caused by expanded irrigation without sufficient drainage, which led to a higher water table and made cotton more prone to pest attacks (Radwan, 1974; Owen, 1968; Richards, 1982).  This problem was addressed when the government  introduced an extensive public works programme directed to drainage and irrigation.   Simultaneously, Egypt’s farmers changed their cotton cultivation from the long staple and low- yielding Sakellaridis to the medium-short staple and high yielding Achmouni.  This change reflected income maximizing preferences (Goldberg 2004 and 2006). Another important feature of the Egyptian economy between the 1920s and 1940s was the expansion of credit facilities to farmers. Cooperatives, and the Crèdit Agricole (1931) were established  to facilitate small landowners’ access to inputs and  small loans (Issawi, 1954, Eshag and Kamal, 1967). These credit institutions coexisted with a number of mortgage banks, among which the Credit Foncièr was the largest, servicing predominantly large owners. Figure 2 illustrates the average annual real value of Credit Foncièr land mortgages in 1,000 Egyptian pounds (1926-1939).

Figure 2.  Average annual real value of Credit Foncièr land mortgages in 1,000 Egyptian pounds (1926-1939). Source: Annuaire Statistique (various issues)

Our work investigates the extent to which these factors contributed to the recovery of the cotton sector. Specifically: to what extent can intra-cotton shifts explain changes in total output? How did the increase in public works boost production? And, what role did differential access to credit play? To answer these questions, we construct a new dataset by exploiting official statistics (Annuaire Statistique de l’Egypte) covering 11 provinces and 17 years between 1923 and 1939.

We find  that access to both finance and improved seeds significantly increased cotton output,  and the declining price premium of Sakellaridis led to a large scale switch to Achmouni.  By putting farmers’ choices and agency centre stage in our analysis, our study shows that cultivators’ response to market changes was fundamental to the recovery of the cotton sector. Access to credit was also a strong determinant of cotton output, and productivity-enhancing innovations in agriculture (Glaeser, 2010).

Surprisingly, perhaps,  our results show that the expansion of irrigation and drainage did not have a direct effect on output (in the same or following year). However, we cannot completely rule out the role played by improved irrigation infrastructure for two reasons: first, we do not observe investments in private drains, and thus we cannot empirically assess the potential complementarities between private and public drainage. Second, we find some evidence pointing to the cumulative effect of drainage pipes, two and three years after installation.

We also find that the structure of land ownership, specifically the presence of large landowners, contributed to output recovery. Thus, despite the attempted institutional innovations aimed at giving small farmers better access to credit, large landowners benefitted disproportionally from credit availability. This observation accords  with Egypt’s extreme inequality of land holdings.

To contact the authors:

Ulas Karakoc,

Laura Panza,


Eshag, E., and Kamal, M.A.,  “A Note on the Reform of the Rural Credit System in U.A.R (Egypt).” Bulletin of the Oxford University Institute of Economics & Statistics 29, no. 2 (1967): 95–107.

Glaeser, B. The Green Revolution Revisited: Critique and Alternatives. Taylor & Francis, 2010.

Goldberg, E. “Historiography of Crisis in the Egyptian Political Economy.” In Middle Eastern Historiographies: Narrating the Twentieth Century, edited by I. Gershoni, Amy Singer, and Hakan Erdem, 183–207. University of Washington Press, 2006.

———. Trade, Reputation and Child Labour in the Twentieth-Century Egypt. Palgrave Macmillan, 2004.

Issawi, C. Egypt at Mid-Century. Oxford University Press, 1954.

Owen, R. “Agricultural Production in Historical Perspective: A Case Study of the Period 1890-1939.” In Egypt Since the Revolution, edited by P. Vatikiotis, 40–65, 1968.

Radwan, S. Capital Formation in Egyptian Industry and Agriculture, 1882-1967. Ithaca Press, 1974.

Richards, A. Egypt’s Agricultural Development, 1800-1980: Technical and Social Change. Westview Press, 1982.

The Long View on Epidemics, Disease and Public Health: Research from Economic History Part B*

This piece is the result of a collaboration between the Economic History Review, the Journal of Economic History, Explorations in Economic History and the European Review of Economic History. More details and special thanks below. Part A is available at this link 

Bubonic plague cases are on the rise in the US. Yes, really. - Vox
Man and women with the bubonic plague with its characteristic buboes on their bodies — a medieval painting from 1411.
 Everett Historical/Shutterstock

As the world grapples with a pandemic, informed views based on facts and evidence have become all the more important. Economic history is a uniquely well-suited discipline to provide insights into the costs and consequences of rare events, such as pandemics, as it combines the tools of an economist with the long perspective and attention to context of historians. The editors of the main journals in economic history have thus gathered a selection of the recently-published articles on epidemics, disease and public health, generously made available by publishers to the public, free of access, so that we may continue to learn from the decisions of humans and policy makers confronting earlier episodes of widespread disease and pandemics.

Generations of economic historians have studied disease and its impact on societies across history. However, as the discipline has continued to evolve with improvements in both data and methods, researchers have uncovered new evidence about episodes from the distant past, such as the Black Death, as well as more recent global pandemics, such as the Spanish Influenza of 1918. In this second instalment of The Long View on Epidemics, Disease and Public Health: Research from Economic History, the editors present a review of two major themes that have featured in the analysis of disease. The first  includes articles that discuss the economic impacts of historical epidemics and the official responses they prompted.  The second  turns to the more optimistic story of the impact of public health regulation and interventions, and the benefits thereby generated.


Pieter Bruegel the Elder, The Triumph of Death (1562 ca.)

Epidemics and the Economy

 The ways in which societies  and economies are affected by repeated epidemics is a question that historians have struggled to understand. Paolo Malanima provides a detailed analysis of how Renaissance Italy was shaped by the impact of plague: ‘Italy in the Renaissance: A Leading Economy in the European Context, 1350–1550’. Economic History Review 71, no. 1 (2018): 3-30. The consequences of plague for Italy are explored in even more detail by Guido Alfani who demonstrates that the peninsula struggled to recover after experiencing pervasive mortality during the seventeenth century: ‘Plague in Seventeenth-century Europe and the Decline of Italy: An Epidemiological Hypothesis’. European Review of Economic History 17, no. 4 (2013): 408-30.  Epidemics cause multiple changes to the economic environment which necessitates a multifaceted response by government.  Samuel Cohn examines the  oppressive nature of these  reactions in his luminous study of the way European governments sought to prevent workers benefiting from the increased demand for their labour following the Black Death: ‘After the Black Death: Labour Legislation and Attitudes Towards Labour in Late-Medieval Western Europe’. The Economic History Review, 60, no. 3 (2007): 457-85.  


The Black Death Actually Improved Public Health | Smart News ...
Josse Lieferinxe, Saint Sebastian Interceding for the Plague Stricken (1497 ca)


Public Health

Richard Easterlin’s  panoramic overview of mortality  shows that government policy was critical  in reducing levels of mortality from the early nineteenth century. Economic growth by itself did not lift life expectancy. This major  paper illuminates the essential contribution of public intervention to health in modern societies:  “How Beneficent Is the Market? A Look at the Modern History of Mortality.” European Review of Economic History 3, no. 3 (1999): 257-94. .  Does strict health regulation save lives?  Alan Olmstead and Paul Rhode respond to this question in the affirmative by explaining how the US federal government succeeded in lowering the spread of tuberculosis by establishing controls on cattle in the early part of the twentieth century. Their analysis has considerable contemporary relevance:  only robust and universal controls saved lives: ‘The ‘Tuberculous Cattle Trust’: Disease Contagion in an Era of Regulatory Uncertainty’.  The Journal of Economic History 64, no. 4 (2004): 929–63.

Human society has achieved enormous gains in life expectancy over the last two centuries. Part of the explanation for this improvement  was improvements in key infrastructure.  However, as Daniel Gallardo‐Albarrán demonstrates, this was not simply a  question of ‘dig and save lives’, because  it was the combination  of types of structure  — water and sewers – that mattered: ‘Sanitary infrastructures and the decline of mortality in Germany, 1877–1913’, The Economic History Review (2020). One of the big goals of economic historians has been to measure the multiple benefits of public health interventions. Brian Beach,  Joseph Ferrie, Martin Saavedra, and Werner Troesken,  provide a  brilliant example of how novel statistical techniques  allow us to determine the gains from one such intervention – water purification. They demonstrate that the long-term impacts of reducing levels of disease by improving water quality were large when measured in education and income, and not just lives saved: ‘Typhoid Fever, Water Quality, and Human Capital Formation’.  The Journal of Economic History 76, no. 1 (2016): 41–75. What was it that allowed European societies to largely defeat tuberculosis (TB) in the second half of the twentieth century? In an ambitious  paper, Sue Bowden, João Tovar Jalles, Álvaro Santos Pereira, and Alex Sadler, show that a mix of factors explains the decline in TB: nutrition, living conditions, and the supply of healthcare: ‘Respiratory Tuberculosis and Standards of Living in Postwar Europe’.  European Review of Economic History 18, no. 1 (2014): 57-81.

What We Can Learn (and Should Unlearn) From Albert Camus's The ...
Thomas Rowlandson, The English Dance of Death (1815 ca)

This article was compiled by: 


If you wish to read further, other papers on this topic are available on the journal websites:


*  Special thanks to Leigh Shaw-Taylor, Cambridge University Press, Elsevier, Oxford University Press, and Wiley for their advice and support.

Integration in European coal markets, 1833-1913

by John E. Murray (Rhodes College) and Javier Silvestre (University of Zaragoza, Instituto Agroalimentario de Aragón, and Grupo de Estudios ‘Población y Sociedad’)

The full article from this blog was published on The Economic History Review and it is available here


The availability of coal is central to debates about the causes of the Industrial Revolution and modern economic growth in Europe.  To overcome regional limitations in supply,  it has been argued that coal could have been transported. However, despite references to the import option and transport costs, the evolution of coal markets in nineteenth-century Europe has received limited attention.  Interest in the extent of markets is motivated  by their effects on economic growth and welfare ( Federico 2019;  Lampe and Sharp 2019).

The literature on market integration in nineteenth-century Europe mostly refers to grain prices, usually wheat. Our paper extends the research to coal, a key commodity. The historical literature of coal market integration is scant—in contrast to the literature for more recent times (Wårell 2006; Li et al. 2010; Papież and Śmiech 2015). Previous historical studies usually report some price differences between- and within countries, while a  few provide statistical analyses, often  applied to a narrow geographical scope.

We examine intra- and international market integration in the principal coal producing countries, Britain, Germany, France and Belgium.  Our analysis includes three, largely  non-producing, Southern European countries, Italy, Spain and Portugal—for which necessary data are available. (Other countries were considered but ultimately not included). We have created a database of (annual) European coal prices at different spatial levels.

Based on our price data,  we consider prices in the main consumer cities and producing regions and estimate specific price differentials between areas in which the coal trade was well established. As a robustness check, we estimate trends in the coefficient of variation for a large number of markets. For the international market, we estimate price differentials between proven trading markets. Given available data,  focus on Europe’ main exporter, Britain, and the main import countries –  France, Germany, and Southern Europe. To confirm findings, we estimate the coefficient of variation of prices throughout coal producing Europe.

Picture 1
Figure 1. Coalmine in the Borinage, 1879, by Vincent van Gogh.Available at <;

To estimate market integration within coal producing countries, we utilise Federico’s (2012) proposal for testing both price convergence and efficiency—the latter referring to a quick return to equilibrium after a shock. For the international market, we again estimate convergence equations. For selected international routes, and according to the available information, we complete the analysis with an econometric model on the determinants of integration—which includes the ‘second wave’ of research in market integration (Federico 2019). Finally, to verify our findings, we apply a variance analysis to prices for the producing countries.
Our results, based on quantitative and qualitative evidence, may be summarized as follows. First, within coal-producing countries, we find evidence of price convergence. Second, markets became more ‘efficient’ over time – suggesting reductions in information costs. Nevertheless, coal prices were subject to strong fluctuations and shocks, in relation to ‘coal famines’. Compared to agricultural produce, the process of integration in coal appears to have taken longer. However, price convergence in coal tended to stabilize at the end of our period, suggesting insignificant further reduction in transports costs and the existence of product heterogeneity. Finally, our evidence indicates that cartelization in Continental Europe from the late nineteenth century had limited impact on price convergence.

Turning to the international coal market, our econometric results confirm price convergence between Britain and importing countries. Like domestic markets, the speed with which price differentials between Britain and Continental Europe were eroded declined from the 1900s. Further, market integration between Britain and Continental Europe appears to have been largely influenced by changes in transportation costs, information costs and protectionism. Extending our analysis to other countries, (with, admittedly, limited data) suggests that price convergence started later in our period. Finally, our results indicate the limited ability of cartels to restrict competition beyond their most immediate area of influence.
Overall, we observe integration in both the domestic and international coal market. Future research might consider expanding the focus to other cross-country, Continental, markets to acquire a deeper comprehension of the causes and effects of market integration.

To contact the authors:

Javier Silvestre,


Federico, G., ‘How much do we know about market integration in Europe?’, Economic History Review, 65 (2012), pp. 470-97.

Federico, G., ‘Market integration’, in C. Diebolt, and M. Haupert, editors, Handbook of Cliometrics (Berlin, 2019).

Lampe, M. and Sharp, P., ‘Cliometric approaches to international trade’, in C. Diebolt, and M. Haupert, editors, Handbook of Cliometrics (Berlin, 2019).

Li, R., Joyeux, R., and Ripple, R. D., ‘International steam coal market integration’, The Energy Journal 31 (2010), pp. 181-202.

Papież, M. and Śmiech, S., ‘Dynamic steam coal market integration: Evidence from rolling cointegration analysis’, Energy Economics 51 (2015), pp. 510-20.

Wårell, L., ‘Market integration in the international coal industry: A cointegration approach’, The Energy Journal 27 (2006), pp. 99-118.

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.

Cash Converter: The Liquidity of the Victorian Capital Market

by John Turner (Queen’s University Centre for Economic History)

Liquidity is the ease with which an asset such as a share or a bond can be converted into cash. It is important for financial systems because it enables investors to liquidate and diversify their assets at a low cost. Without liquid markets, portfolio diversification becomes very costly for the investor. As a result, firms and governments must pay a premium to induce investors to buy their bonds and shares. Liquid capital markets also spur firms and entrepreneurs to invest in long-run projects, which increases productivity and economic growth.

From an historical perspective, share liquidity in the UK played a major role in the widespread adoption of the company form in the second half of the nineteenth century. Famously, as I discuss in a recent book chapter published in the Research Handbook on the History of Corporate and Company Law, political and legal opposition to share liquidity held up the development of the company form in the UK.

However, given the economic and historical importance of liquidity, very little has been written on the liquidity of UK capital markets before 1913. Ron Alquist (2010) and Matthieu Chavaz and Marc Flandreau (2017) examine the liquidity risk and premia of various sovereign bonds which were traded on the London Stock Exchange during the late Victorian and early Edwardian eras. Along with Graeme Acheson (2008), I document the thinness of the market for bank shares in the nineteenth century, using the share trading records of a small number of banks.

In a major study, Gareth Campbell (Queen’s University Belfast), Qing Ye (Xi’an Jiaotong-Liverpool University) and I have recently attempted to understand more about the liquidity of the Victorian capital market. To this end, we have just published a paper in the Economic History Review which looks at the liquidity of the London share and bond markets from 1825 to 1870. The London capital market experienced considerable growth in this era. The liberalisation of incorporation law and Parliament’s liberalism in granting company status to railways and other public-good providers, resulted in the growth of the number of business enterprises having their shares and bonds traded on stock exchanges. In addition, from the 1850s onwards, there was an increase in the number of foreign countries and companies raising bond finance on the London market.

How do we measure the liquidity of the market for bonds and stocks in the 1825-70 era? Using end-of-month stock price data from a stockbroker list called the Course of the Exchange and end-of-month bond prices from newspaper sources, we calculate for each security, the number of months in the year where it had a zero return and divide that by the number of months it was listed in the year. Because zero returns are indicative of illiquidity (i.e., that a security has not been traded), one minus our illiquidity ratio gives us a liquidity measure for each security in our sample. We calculate the overall market liquidity for shares and bonds by taking averages. Figure 1 displays market liquidity for bonds and stocks for the period 1825-70.

Figure 01. Stock and bond liquidity on London Stock Exchange, 1825-1870. Source: Campbell, Turner and Ye (2018, p.829)

Figure 1 reveals that bond market liquidity was relatively high throughout this period but shows no strong trend over time. By way of contrast, there was a strong secular increase in stock liquidity from 1830 to 1870. This increase may have stimulated greater participation in the stock market by ordinary citizens. It may also have affected the growth and deepening of the overall stock market and resulted in higher economic growth.

We examine the cross-sectional differences in liquidity between stocks in order to understand the main determinants of stock liquidity in this era. Our main finding in this regard is that firm size and the number of issued shares were major correlates of liquidity, which suggests that larger firms and firms with a greater number of shares were more frequently traded. Our study also reveals that unusual features which were believed to impede liquidity, such as extended liability, uncalled capital or high share denominations, had little effect on stock liquidity.

We also examine whether asset illiquidity was priced by investors, resulting in higher costs of capital for firms and governments. We find little evidence that the illiquidity of stock or bonds was priced, suggesting that investors at the time did not put much emphasis on liquidity in their valuations. Indeed, this is consistent with J. B. Jefferys (1938), who argued that what mattered to investors during this era was not share liquidity, but the dividend or coupon they received.

In conclusion, the vast majority of stocks and bonds in this early capital market were illiquid. It is remarkable, however, that despite this illiquidity, the UK capital market grew substantially between 1825 and 1870. There was also an increase in investor participation, with investing becoming progressively democratised in this era.


To contact the author:
Twitter: @profjohnturner



Acheson, G.G., and Turner, J.D. “The Secondary Market for Bank Shares in Nineteenth-Century Britain.” Financial History Review 15, no. 2 (October 2008): 123–51. doi:10.1017/S0968565008000139.

Alquist, R. “How Important Is Liquidity Risk for Sovereign Bond Risk Premia? Evidence from the London Stock Exchange.” Journal of International Economics 82, no. 2 (November 1, 2010): 219–29. doi:10.1016/j.jinteco.2010.07.007.

Campbell, G., Turner, J.D., and Ye, Q. “The Liquidity of the London Capital Markets, 1825–70†.” The Economic History Review 71, no. 3 (August 1, 2018): 823–52. doi:10.1111/ehr.12530.

Chavaz, M., and Flandreau, M. “‘High & Dry’: The Liquidity and Credit of Colonial and Foreign Government Debt and the London Stock Exchange (1880–1910).” The Journal of Economic History 77, no. 3 (September 2017): 653–91. doi:10.1017/S0022050717000730.

Jefferys, J.B. Trends in Business Organisation in Great Britain Since 1856: With Special Reference to the Financial Structure of Companies, the Mechanism of Investment and the Relations Between the Shareholder and the Company. University of London, 1938.

Decimalising the pound: a victory for the gentlemanly City against the forces of modernity?

by Andy Cook (University of Huddersfield)


1813 guinea

Some media commentators have identified the decimalisation of the UK’s currency in 1971 as the start of a submerging of British identity. For example, writing in the Daily Mail, Dominic Sandbrook characterises it as ‘marking the end of a proud history of defiant insularity and the beginning of the creeping ­Europeanisation of ­Britain’s institutions.’

This research, based on Cabinet papers, Bank of England archives, Parliamentary records and other sources, reveals that this interpretation is spurious and reflects more modern preoccupations with the arguments that dominated much of the Brexit debate, rather than the actual motivation of key players at the time.

The research examines arguments made by the proponents of alternative systems based on either decimalising the pound, or creating a new unit worth the equivalent of 10 shillings. South Africa, Australia and New Zealand had all recently adopted a 10-shilling unit, and this system was favoured by a wide range of interest groups in the UK, representing consumers, retailers, small and large businesses, and media commentators.

Virtually a lone voice in lobbying for retention of the pound was the City of London, and its arguments, articulated by the Bank of England, were based on a traditional attachment to the international status of sterling. These arguments were accepted, both by the Committee of Enquiry on Decimal currency, which reported in 1963, and, in 1966, by a Labour government headed by Harold Wilson, who shared the City’s emotional attachment to the pound.

Yet by 1960, the UK had faced the imminent prospect of being virtually the only country retaining non-decimal coinage. Most key economic players agreed that decimalisation was necessary and the only significant bone of contention was the choice of system.

Most informed opinion favoured a new major unit equivalent to 10 shillings, as reflected in evidence given by retailers and other businesses to the Committee of Enquiry on Decimal Coinage, and the formation of a Decimal Action Committee by the Consumers Association to press for such a system.

The City, represented by the Bank of England, was implacably opposed to such a system, arguing that the pound’s international prestige was crucial to underpinning the position of the City as a leading financial centre. This assertion was not evidence-based, and internal Bank documents acknowledge that their argument was ‘to some extent based on sentiment’.

This sentiment was shared by Harold Wilson, whose government announced the decision to introduce decimal currency based on the pound in 1966. Five years earlier, he had made an emotional plea to keep the pound arguing that ‘the world will lose something if the pound disappears from the markets of the world’.

Far from being the end of ‘defiant insularity’, the decision to retain a higher-value basic currency unit of any major economy, rather than adopting one closer in value either to the US dollar or the even lower-value European currencies, reflected the desire of the City and government to maintain a distinctive symbol of Britishness, the pound, overcoming opposition from interests with more practical concerns.

EHS 2018 special: Wine prices in Anglo-Gascon trade, c.1337-c.1460

Robert Blackmore (University of Southampton)

Tacuina sanitatis (XIV century)
9-autunno,Taccuino Sanitatis, Casanatense 4182. Available at <,Taccuino_Sanitatis,_Casanatense_4182..jpg>

Episodes of major market volatility are rarely out of the headlines today. Their ramifications, though considerable, are discussed as if these were somehow new, and that they are the result of how economies are structured in our globalised world. Yet prices in international markets in the late middle ages could be just as volatile and have just as far-reaching consequences.

The wine trade between Gascony and England is one key example. Gascony, in modern southwestern France, was part of the medieval duchy of Aquitaine: a territory ruled by the English crown almost without interruption from 1154 to 1453.

Geography and geology permitted the production of just one commodity, wine, and as a result the region was dependent, like so many modern states specialised in fossil fuels or mining, on export earnings to pay for the purchase and import of food and all other goods from distant markets.

My research provides a better understanding of the possible factors that influenced fluctuations in prices, and their knock-on effects. To achieve this, I use wholesale prices in Bordeaux and Libourne from between 1337 and 1466, largely sourced from surviving original documents stored both in the Archives départementales de la Gironde in Bordeaux and the National Archives in London.

As today, extreme climactic events, as well as disruption by war, or demographic catastrophes such as disease or famines, can be understood to cause sudden shifts in supply. Likewise there were abrupt changes in local demand, for example, in 1356 the arrival of a victorious Edward, the Black Prince, with his army laden with ransoms and plunder after the battle of Poitiers, can be observed in the data.

Volatility was exacerbated by government intervention: particularly a 1353 English law that had constrained certain merchants from buying up stock in advance at pre-agreed prices, as would be done in modern markets. Likewise, ill-considered price controls at retail in England probably caused suppressed trade.

Critically, wine was a luxury in northern European ale-drinking societies, where only the rich would tolerate high prices, so any brief disruptions in supply or local demand disproportionately affected the level of exports.

Such characteristics also meant that wine prices were responsive to wider economic shocks in ways that would be well understood today. Monetary policy mattered. England and Gascony used different currencies with a changing exchange rate. As the Gascon livre appreciated against sterling in the two decades after the Black Death (1348-9), prices rose for foreign buyers, then later devaluations, such as in c.1370, 1413-4 and c.1440, made purchases suddenly cheaper, and triggered noticeable increases in English wine imports.

Yet, for Gascony, as in Venezuela today, an over-dependence on foreign imports meant such surges or falls in the value of one single exported commodity resulted in sudden strong trade surpluses or deficits. Foreign currency, then in the form of precious metals, poured in and out of the economy with fluctuations in the wine trade.

This made prices, and by extension, the duchy of Aquitaine’s whole economy, even more unstable. In the end inflation set in as production declined and later years of English Gascony were mired in an economic depression that contributed to the region’s loss to the French crown in 1453 at the end of the Hundred Years’ War.

PRE-REFORMATION ROOTS OF THE PROTESTANT ETHIC: Evidence of a nine centuries old belief in the virtues of hard work stimulating economic growth

Cistercians at work in a detail from the Life of St. Bernard of Clairvaux, illustrated by Jörg Breu the Elder (1500). From Wikimedia Commons <;

Max Weber’s well-known conception of the ‘Protestant ethic’ was not uniquely Protestant: according to this research published in the September 2017 issue of the Economic Journal, Protestant beliefs in the virtues of hard work and thrift have pre-Reformation roots.

The Order of Cistercians – a Catholic order that spread across Europe 900 years ago – did exactly what the Protestant Reformation is supposed to have done four centuries later: the Order stimulated economic growth by instigating an improved work ethic in local populations.

What’s more, the impact of this work ethic survives today: people living in parts of Europe that were home to Cistercian monasteries more than 500 years ago tend to regard hard work and thrift as more important compared with people living in regions that were not home to Cistercians in the past.

The researchers begin their analysis with an event that has recently been commemorated in several countries across Europe. Exactly 500 years ago, Martin Luther allegedly nailed 95 theses to the door of the Castle Church in Wittenberg, and thereby established Protestantism.

Whether the emergence of Protestantism had enduring consequences has long been debated by social scientists. One of the most influential sociologists, Max Weber, famously argued that the Protestant Reformation was instrumental in facilitating the rise of capitalism in Western Europe.

In contrast to Catholicism, Weber said, Protestantism commends the virtues of hard work and thrift. These values, which he referred to as the Protestant ethic, laid the foundation for the eventual rise of modern capitalism.

But was Weber right? The new study suggests that Weber was right in stressing the importance of a cultural appreciation of hard work and thrift, but quite likely wrong in tracing the origins of these values to the Protestant Reformation.

The researchers use a theoretical model to demonstrate how a small group of people with a relatively strong work ethic – the Cistercians – could plausibly have improved the average work ethic of an entire population within the span of 500 years.

The researchers then test the theory statistically using historical county data from England, where the Cistercians arrived in the twelfth century. England is of particular interest as it has high quality historical data and because, centuries later, it became the epicentre of the Industrial Revolution.

The researchers document that English counties with more Cistercian monasteries experienced faster population growth – a leading measure of economic growth in pre-modern times. The data reveal that this is not simply because the monks were good at choosing locations that would have prospered regardless.

The researchers even detect an impact on economic growth centuries after the king closed down all the monasteries and seized their wealth on the eve of the Protestant Reformation. Thus, the legacy of the monks cannot simply be the wealth that they left behind.

Instead, the monks seem to have left an imprint on the cultural values of the population. To document this, the researchers combine historical data on the location of Cistercian monasteries with a contemporary dataset on the cultural values of individuals across Europe.

They find that people living in regions in Europe that were home to Cistercian monasteries more than 500 years ago reveal different cultural values than those living in other regions. In particular, these individuals tend to regard hard work and thrift as more important compared with people living in regions that were not home to Cistercians in the past.

This study is not the first to question Max Weber’s influential hypothesis. While the majority of statistical analyses show that Protestant regions are more prosperous than others, the reason for this may not be the Protestant ethic as emphasised by Weber.

For example, a study by the economists Sascha Becker and Ludger Woessman demonstrates that Protestant regions of Prussia prospered more than others because of the improved schooling that followed from the instructions of Martin Luther, who encouraged Christians to learn to read so that they could study the Bible.


‘Pre-Reformation Roots of the Protestant Ethic’ by Thomas Barnebeck Andersen, Jeanet Bentzen, Carl-Johan Dalgaard and Paul Sharp is published in the September 2017 issue of the Economic Journal.

Thomas Barnebeck Andersen and Paul Richard Sharp are at the University of Southern Denmark. Jeanet Sinding Bentzen and Carl-Johan Dalgaard are at the University of Copenhagen.