EHS 2018 special: Long-term effects of financial crises

by Chenzi Xu (Harvard University)

 

The global financial crisis of 2008 was not unique. It had a precedent in the London banking crisis of 1866. Just as in 2008, the crisis began in the core financial market and spread to the periphery, the same happened in 1866.

The 1866 crisis has only been studied as a purely British event, but my research presents new evidence that it was a global financial crisis on the scale of 2008’s. The cities around the world that depended on British banks that happened to fail in London suffered immediate losses in exports activity. These losses took decades to recover, with the hysteresis persisting until the twentieth century.

In May 1866, Overend and Gurney, a bank’s bank and one of the most prestigious financial entities in London, declared bankruptcy. A panic erupted and almost 20% of banks headquartered in London failed. Crucially, these banks had been established in the mid-nineteenth century to globalise financial markets and trade, and they operated in cities around the world.

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Figure 1. Map of British credits and failures around the world

 

Figure 1 shows the concentration of British banking, and the degree to which the banking crisis in London affected them. Red denotes greater losses in British financing, and the size of the circles denotes the amount of lending before the crisis.

I study the impacts of the failures of British banks in London on trade activity around the world, outside of the UK, at hundreds of ports. At the extreme, losing access to all British credit caused exports to drop 80% in the year following the crisis. The aggregate global loss in trade was 17%, which is comparable to the levels seen in the latest crisis. Given that the mid-late 19th century was otherwise a period of great expansion and growth, the counterfactual without this crisis would have been even more spectacular.

The historical context also makes it possible to study the long-run effects, and I find that countries suffering the largest drops in the supply of British credit did not recover their exports to previous partners for several decades. These persistent effects suggest that losing access to financial markets can cause substantial hysteresis.

These long-term consequences of financial market instability have yet to be established for recent crises simply because not enough time has passed. But early evidence suggests that international trade has not rebounded, even ten years after the financial crisis.

EHS 2018 special: How the Second World War promoted racial integration in the American South

by Andreas Ferrara (University of Warwick)

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African American and White Employees Working Together during WWII. Available at <https://www.pinterest.com.au/pin/396950154628232921/&gt;

European politicians face the challenge of integrating the 1.26 million refugees who arrived in 2015. Integration into the labour market is often discussed as key to social integration but empirical evidence for this claim is sparse.

My research contributes to the debate with a historical example from the American South where the Second World War increased the share of black workers in semi-skilled jobs such as factory work, jobs previously dominated by white workers.

I combine census and military records to show that the share of black workers in semi-skilled occupations in the American South increased as they filled vacancies created by wartime casualties among semi-skilled whites.

A fallen white worker in a semi-skilled occupation was replaced by 1.8 black workers on average. This raised the share of African Americans in semi-skilled jobs by 10% between 1940 and 1950.

Survey data from the South in 1961 reveal that this increased integration in the workplace led to improved social relations between black and white communities outside the workplace.

Individuals living in counties where war casualties brought more black workers into semi-skilled jobs between 1940-50 were 10 percentage points more likely to have an interracial friendship, 6 percentage points more likely to live in a mixed-race neighbourhood, and 11 percentage points more likely to favour integration over segregation in general, as well as at school and at church. These positive effects are reported by both black and white respondents.

Additional analysis using county-level church membership data from 1916 to 1971 shows similar results. Counties where wartime casualties resulted in a more racially integrated labour force saw a 6 percentage points rise in membership shares of churches, which already held mixed-race services before the war.

The church-related results are especially striking. In several of his speeches Dr Martin Luther King stated that 11am on Sunday is the most segregated hour in American life. And yet my analysis shows that workplace exposure of two groups can overcome even strongly embedded social divides such as churchgoing, which is particularly important in the South, the so-called bible belt.

This historical case study of the American South in the mid-twentieth century, where race relations were often tense, demonstrates that excluding refugees from the workforce may be ruling out a promising channel for integration.

Currently, almost all European countries forbid refugees from participating in the labour market. Arguments put forward to justify this include fear of competition for jobs, concern about downward pressure on wages and a perceived need to deter economic migration.

While the mid-twentieth century American South is not Europe, the policy implication is to experiment more extensively with social integration through workplace integration measures. This not only concerns the refugee case but any country with socially and economically segregated minority groups.

from VOX – The return of regional inequality: Europe from 1900 to today

by Joan Rosés (LES) and Nikolaus Wolf (Humboldt University)

 

Gender, ethnicity, and unequal opportunity in colonial Uganda: European influences, African realities, and the pitfalls of parish register data

by Michiel de Haas and Wourt Frankema (University of Wageningen)

The full article is published by The Economic History Review and it is available here

 

The Renaissance of African economic history in the past decade (see Austin and Broadberry 2014)  has opened up a vast body of qualitative and quantitative source materials.  Most of these materials were originally produced by European missionaries, merchants, travellers, or colonial officials, and thus reflect the biases (explicit or unspoken) of people who were alien to the societies to which their writings and statistics pertain. Moreover, many of the analytical concepts and empirical methods used by scholars to study these materials today, were originally designed for the study of European economic history. To prevent what Gareth Austin has described as ‘conceptual Eurocentrism’ in narratives of long-term African development, it is imperative to scrutinize and debate the applicability of concepts such as national income, real wages, human capital, social mobility, crime, or gender inequality in an African historical context.

In our article, we engage with a recent study by Meier zu Selhausen and Weisdorf to show how selection biases in, and Eurocentric interpretations of, parish registers have provoked an overly optimistic account of European influences on the educational and occupational opportunities of African men and women in Kampala, Uganda. We re-evaluate the link between colonial rule and gendered educational and occupational opportunities in Uganda along several lines. Here, we address two key points: 1) sample selection biases in African parish register data and 2) the flawed  juxtaposition of ‘African tradition’ and ‘European modernity’ to understand educational and occupational change during the colonial period.

Firstly, the use of parish registers by Meier zu Selhausen and Weisdorf illustrates clearly how data biases particular to the African context can result in doubtful conclusions. Parish registers have been widely used in European economic and demographic history, and are typically seen as fairly representative. However, the parish registers extracted from Kampala’s Anglican Namirembe Cathedral exhibit a strong bias towards the upper social classes: elites converted earlier, only the wealthiest and most well-connected African Christians opted for a ring marriage, and this particular Cathedral emerged as the elite church of early colonial Uganda.

To substantiate this issue quantitatively, we re-chart literacy and numeracy trends using microdata from the 1991 population census, made available by IPUMS. As Figure 1 shows, a representative selection of men and women from birth cohorts in the census data accumulated literacy and numeracy much slower than the population of brides and grooms in Namirembe Cathedral. While the Namirembe grooms achieve practically full literacy from the 1890s birth cohort onwards, and brides from the 1900s onwards, a random sample of Kampala-born men achieved similar rates only for cohorts born from the 1940s onwards, and women from the 1960s. That is: half a century later! Notably, Uganda’s female literacy take-off happened around independence, and the gap between men and women remained large throughout the colonial period.

There is ample reason to believe that similar (and/or potentially other) biases will be found among parish register samples in other African settings. Certainly, our study establishes that such registers, while a promising new source of microdata, should be interpreted with utmost caution.

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Literacy rates and literacy gaps, per birth cohort

Secondly, we show that the dichotomy between African tradition and European modernity is flawed on both sides. The diffusion of Christianity and education in Buganda were not a testament to modernizing influences of Europeans, but rather the consequence of the initiative of the indigenous population of Buganda. Local elites pragmatically sought out political coalitions with European missionaries to further their own ends. Moreover, without the Africanization of the mission the diffusion of literacy and schooling would never have attained significant scale. Thus, the widely accepted idea that the uneven diffusion of missionary education can be explained by European supply factors rather than African demand (see a foundational paper by Nathan Nunn and a large body of subsequent studies) is not supported by the Ugandan case.

At the same time, the modernizing influence of Europeans was limited. Demand for African skilled labour in the colonial economy – which was predicated on rural cash crop production – was very limited, and its distribution was highly uneven, along lines of gender, race, ethnicity and location. Uganda’s economy remained overwhelmingly rural (colonial Kampala never harbored more than 1.5 per cent of Uganda’s population), and the skilled labour market was dominated by Asian and European expatriate minorities.

European influences also hardly benefited gender emancipation in Uganda. We revisit the seminal work of Ester Boserup and note, contrary to Meier zu Selhausen and Weisdorf, that she gives primacy to economic rather than cultural explanations for female labour market marginalization, and is skeptical about the emancipatory impact of European influences in Africa. In line with Boserup’s views, missionaries and colonial officials in Uganda often coalesced with indigenous patriarchal interests to domesticize women – a legacy that Ugandan women and society at large struggle with up until today.

 

To contact the authors:

@michieldehaas

@ewoutfrankema

Are businessmen from Mars and businesswomen from Venus? An analysis of female business success and failure in Victorian and Edwardian England

by Jennifer Aston (Oxford University)  and Paulo di Martino (University of Birmingham)

The full paper was published on the Economic History Review, accessible here

 

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Fashion in Edwardian England

Do women and men trade in different ways? If so, why? And are men more or less successful than women? These are very important questions not just, or not only, for the academic debate, but also for the policy implications that might emerge, especially in countries such as the UK where, rightly or wrongly, we believe in personal entrepreneurship as one of the main antidotes to unemployment and to the crisis of big business.

In economic history, it has traditionally been argued that women and men traded in similar ways up to the industrial revolution but, since then, women have ben progressively relegated to a “separate sphere” allowed, at most, some engagement with naturally “female” occupations such as textiles or food provision. Although more recent literature has strongly undermined this view, a lot of ground has still to be covered, especially about the period post 1850s.

We approach this debate by starting with a simple question about business “success” across gender: did women happen to fail more likely than men? Thanks to the reconstruction of original data on personal bankruptcy derived from contemporary official publications by the Board of Trade, this research suggests that this was not the case. In fact, depending on how prudently data on the number of female entrepreneurs are looked at, women appear more successful in, at least, keeping their businesses alive.

This finding, however, only paved the way for more questions. In particular, had the narrative of women only dealing with traditional and safe industries and operating in semi-informal businesses been true, what we observe via the lens of official statistics would be just a distorted view. This researched focussed on other primary sources: the reports of about 100 women whose businesses failed around the turn of the century. The findings support the initial hypothesis: although smaller than male counterparts (hence, in fact, riskier), female businesses were not hidden away from the public sphere, the official trading places, or the rules of the formal credit market. So, boarding house keeper Eleanor Bosito and the hotelier Esther Brandon were declared bankrupt and subject to formal proceedings despite having very few creditors who all lived within five miles from the businesses of the two women.  with unsecured debts of about £160 faced bankruptcy as a result of the petition filed by Jane Davis, a widow who lived less than half a mile from Agnes’s home and had lent her the sum of £5. This was the same destiny faced by Elizabeth Goodchild a businesswoman who, contrary to the other cases, operated on a large scale with suppliers and clients from all around Britain and Europe. This evidence reveals that, first of all, small scale trade was thus not necessarily the rule for women and, even when it was the case, it did not coincide with informality or sheltering from the “rules of the game”.

Businesswomen then did not come from, nor traded on, a different planet and certainly did not need the patronising protection of a male-dominated institutional environment. Instead the legal system forged ad hoc rules for married woman, via specific provisions in Bankruptcy Laws which lifted them from any responsibility. These level of defence, similar only to the one available to lunatics and children, proved ineffective. Or, in fact, the perfect background for frauds: in 1899 a spinster who was due to be declared bankrupt got married before the actual beginning of the procedure, thus avoiding any legal consequence (and, hopefully, having found love too).

In conclusion, this research indicates that Victorian and Edwardian businesswomen were perfectly able to trade in a fashion similar to the one of their male counterpart and, if anything, they were more successful. This leads to a basic and probably intuitive policy implication: if we want more women to successfully engage in business, all we have to do is to remove the economic, social, and cultural barriers that limit their access to opportunities.

WHEN ART BECAME AN ATTRACTIVE INVESTMENT: New evidence on the valuation of artworks in wartime France

by Kim Oosterlinck (Université Libre de Bruxelles)

 

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Scene from the Degenerate Artauction, spring 1938, published in a Swiss newspaper; works by Pablo PicassoHead of a Woman (lot 117), Two Harlequins (lot 115). “Paintings from the degenerate art action will now be offered on the international art market. In so doing we hope at least to make some money from this garbage” wrote Joseph Goebbels in his diaries. From Wikipedia

The art market in France during the Nazi occupation provided one of the best available investment opportunities, according to research published in the Economic Journal. Using an original database to recreate an art market price index for the period 1937-1947, his study shows that in a risk-return framework, gold was the only serious alternative to art.

The research indicates that discretion, the inflation-proof character of art, the absence of market intervention and the possibility of reselling works abroad all played a crucial role in the valuation of artworks. Some investors were ready to go to the black market to acquire assets that could easily be resold abroad. But for those who preferred to stay on the side of legality, the art market provided an attractive alternative.

The author notes that the French art market during the occupation has been the subject of numerous publications. But most of these focus on the fate of looted artworks, with limited attention given to the art market itself.

What’s more, previous research on the economics of art usually considers artworks as a poor investment. But the case of occupied France shows that in extreme circumstances, artworks may prove extremely attractive investment vehicles.

During wartime, illegal activities and the risk of being forced to flee the country increased the appeal of ‘discreet assets’ – ones that allow the storage of a large amount of value in small and easily transportable goods.

By comparing the price index for small and large artworks, the new study establishes that investors were looking for smaller artworks, especially just before the German invasion and during the period 1942-1943, when the black market flourished.

Non-pecuniary motives for buying art, such as ‘conspicuous consumption’, are often thought of as playing an important role in art valuation. The new research analyses this point for occupied France by exploiting the distinction made by the Nazis between ‘degenerate’ and ‘non-degenerate’ artworks.

Pricing of ‘degenerate’ works was indeed affected by the impossibility of engaging in their conspicuous consumption. The price difference between these two categories of artworks is clear at the beginning of the occupation, when the Nazi policy towards ‘degenerate’ artworks held in France had not been clearly spelled out.

The difference gradually vanished as it became known that Hitler took a favourable view of French ‘artistic decadence’ and was not planning to get these works destroyed as long as they remained in France.

Discretion does not only concern artworks, the researcher notes. Other discreet assets, such as collectible stamps, also experienced sharp price increases during the Nazi occupation of France. Assets that are easy to transport and hide therefore have characteristics that are valued by some investors during troubled times.

The interest in discreet artworks goes beyond wartime. At any point, tax evaders may be willing to buy art or other discreet assets to hide illicit profits or to diminish their tax burden. As a result, when wealth and wealth inequality increase, so does demand for discreet assets.

Whereas previous research traditionally attributes these price increases to social competition, the new study suggests an alternative explanation: assets that facilitate tax evasion should fetch a higher price in an environment characterised by increasing wealth inequality. The research thus opens the door to a different interpretation of the high demand for artworks in Japan in the 1990s or in China today.

To contact the author: koosterl@ulb.ac.be

Modelling regional imbalances in English plebeian migration

by Adam Crymble (University of Hertfordshire)

 

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FJohn Thomas Smith, Vagabondiana,1817

We often hear complaints of migrant groups negatively influencing British life. Grievances against them are many: migrants bring with them their language, cultural values, and sometimes a tendency to stick together rather than integrate. The story is never that simple, but these issues can get under the skin of the locals, leading to tension. Britain has always been home to migrants, and the tensions are nothing new, but two hundred years ago those outsiders were from much closer afield. Often they came from just down the road, as close as the next parish over. And yet they were still treated as outsiders by the law. Under the vagrancy laws, poor migrants in particular ran the risk of being arrested, whipped, put to hard labour, and expelled back home.

It was a way to make sure that welfare was only spent on local people. But thanks to this system, we’ve got a unique way to tell which parts of Britain were particularly connected to one another, and which bits just weren’t that interested in each other. Each of those expelled individuals left a paper trail, and that means we can calculate which areas sent more or fewer vagrants to places like London than we would expect. And that in turn tells us which parts of the country had the biggest potential to impact on the culture, life, and economy of the capital.

As it happens, it was Bristol that sent more paupers to London than anywhere else in England between 1777 and 1786, including at least 312 individuals. They did not arrive through any plan to overwhelm the metropolis, but through hundreds of individual decisions by Bristolians who thought they’d have a go at London life.

From a migration perspective, this tells us that the connectedness between London and Bristol was particularly strong at this time. Even when we correct for factors such as distance, cost of living, and population, Bristol was still substantially over-sending lower class migrants to the capital.

There are many possible explanations for this close connection. The tendency for migrants to move towards larger urban centres meant Bristolians had few other options for ‘bigger’ destinations than smaller towns. Improvements to the road network also meant the trip was both cheaper and more comfortable by the 1780s. And the beginning of a general decline in the Bristol domestic service economy was met with a rise in opportunities in the growing metropolis. These combined factors may have made the connections between London and Bristol particularly strong.

Other urban pockets of the country too showed a similarly strong connection to London, particularly in the West Midlands and West Country. Birmingham, Coventry, Worcester, Bath, Exeter, and Gloucester were all sending peculiarly high numbers of paupers to eighteenth century London. So too was Newcastle-upon-Tyne and Berwick-upon-Tweed, despite being located far to the north and almost certainly requiring a sea journey.

But not everywhere saw London as a draw. Yorkshire, Lincolnshire, Derbyshire, and Cheshire – a band of counties within walking distance of the sprouting mills of the industrialising North – all sent fewer people to London than we would expect. This suggests that the North was able to retain people, uniquely acting as a competitor to London at this time. It also means that places like Bristol and Newcastle-upon-Tyne may have had a bigger impact on the culture of the metropolis in the eighteenth century than places such as York and Sheffield. And that may have had lasting impact that we do not yet fully understand. Each of these migrants brought with them remnants of their local culture and belief systems: recipes, phrases, and mannerisms, as well as connections to people back home, that may mean that the London of today is a bit more like Bristol or Newcastle than it might otherwise have been. There is more research to be done, but with a clear map of how London was and was not connected to the rest of the country, we can now turn towards understanding how those connections sculpted the country.

To contact the author on Twitter: @adam_crymble

Engineering the industrial revolution (1770-1850)

by Gillian Cookson (University of Leeds)

The Age of Machinery: Engineering the Industrial Revolution, 1770-1850, is published in February by Boydell Press for the Economic History Society’s series ‘People, Markets, Goods’.

SAVE 25% when you order direct from the publisher. Discount applies to print and eBook editions. Click the link, add to basket and enter offer code BB500 in the box at the checkout. Alternatively call Boydell’s distributor, Wiley, on 01243 843 291 and quote the same code. Offer ends on the 19th of March. Any queries please email marketing@boydell.co.uk

9781783272761_4Early machine-makers have always seemed tantalisingly out of reach. This was a localised, workshop-based trade whose products, methods, markets, skill-sets and industrial structure remained ill-defined. Yet out of it, somehow, was created the machinery – especially textile machines and steam engines – fundamental to industrial change in the eighteenth century. There are questions of great significance still unanswered: How could a high-tech mechanical engineering industry emerged from the rudimentary resources of a few localities in northern England? What can be known of the backgrounds and careers of these pioneering mechanical engineers? How did they develop skills, knowledge and system to achieve their ends?

As a research topic this was clearly a winner. But what is the historian to do when faced with such a dearth of substantial sources? Here is the explanation of why the subject has not hitherto been addressed. Evidence of early engineering was seriously lacking, business records almost entirely absent. It turned out, though, that the industry was hiding in plain sight. We’d been looking in the wrong places.

An early breakthrough came in the Hattersley of Keighley papers. Enough of Richard Hattersley’s early accounts and day books have survived, the first from 1793, to demonstrate a thriving pre-factory industry with Hattersley at its hub. He engaged a wider community in specialist component manufacture, using sub-contracting and various other flexible working practices as circumstances demanded. Hattersley’s company did not itself build machinery at that time, but he fed those who did with precision components, vital in making workable machines. The earliest production systems rested on networking, and can be most neatly described as a dispersed factory[1].

It wasn’t that archives had gone missing (though one or two are known to have been lost); but that businesses were so small scale that by and large they never generated any great weight of documentation. It was community-based sources – directories, muster rolls, parish registers, rate books, the West Riding deeds registry, and a painstaking assemblage of all kinds of stray references – that came to the rescue. While this may not exactly be a novel approach to industrial history, it turned out to be the only realistic way into exploring these small, workshop-based ventures in close-knit communities. Remarkably, too, it shone a light on aspects of the industry which business records alone could not have achieved. Community sources bring forward more than an account of business itself, for they set the actors upon their stage, placing engineers within their own environment. In particular, parish register searches, intended as no more than a confirmation of identities and movements, ultimately exposed remarkable connections. As short biographies were constructed, intermarriages and relationships were revealed which seem to explain career changes and migration (often from south to west Yorkshire, or Scotland to Lancashire) which otherwise had seemed random. So this context, which proved so influential, was not confined to engineering itself, but embraced surrounding cultures that were social and familial as much as industrial and technical. Through this information, we can infer some of the motives and concerns which impacted upon business decision-making.

All this, then, is central to The Age of Machinery. For a fully rounded account, other contexts needed unpacking: Which were the seminal machines, in terms of using new materials and parts that demanded different kinds of skills? Where did technological concepts originate, and how did technology move around? Why did engineering lag a generation behind its customer industry, textiles, in moving into factories? How did bans on machinery exportation and artisan emigration impact upon textile engineering, and why were they abandoned? And in an environment generally very welcoming of innovation, how to explain Luddism?

To contact the author: g.cookson@leeds.ac.uk

REFERENCES:

[1] See Gillian Cookson (1997) ‘Family Firms and Business Networks: Textile Engineering in Yorkshire, 1780–1830’, Business History, 39:1, 1-20

Late Marriage as a Contributor to the Industrial Revolution in England

by James Foreman-Peck and Peng Zhou (Cardiff University)

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A Wedding at St George’s Church in London. Source: http://www.abc.net.au/news/2017-04-17/wedding-at-st-georges-church-in-london/8443430

A central question of economics is why some nations experienced economic growth and are now rich, when others have not and are poor. We go some way to answering this core question by estimating and testing a model of the English economy beginning four or five centuries before the first Industrial Revolution. Western Europe experienced the earliest modern economic growth and also showed a uniquely high female age at first marriage – around 25 – from at the latest the 15th century. Whereas real wages actually began a sustained rise during the first Industrial Revolution, without the contribution of late marriage, average living standards in England would not have risen by 1870.

We utilise long time series evidence, some dating back to 1300, and test the hypothesis that this West European Marriage Pattern was an essential reason for England’s precocious economic development. Persistent high mortality in the 14th and 15th centuries and massive mortality shocks such as the Black Death lowered life expectations. Subsequently as survival chances improved, especially for children, a given completed family size could be achieved with a smaller number of births. In an environment without artificial birth control, a rise in the age at first marriage of females ensured this reduction in fertility.

Later marriage not only constrained the number of births but also provided greater opportunities for female informal learning, especially through ‘service’. A high proportion of unmarried females between the ages of 15 and 25 left home and worked elsewhere, instead of bearing children, as in other societies. This widened female horizons compared with a passage from the parental household directly into demanding motherhood and housekeeping. Throughout this period the family was the principal institution for educating and training future workers. Schooling was not compulsory until 1880 in England. In the early nineteenth century few children attended any school regularly and few remained at school for more than one and a half years. Such skills and work discipline as were learned were passed on and built up over the generations primarily by the family. Our paper shows how, over the centuries, the gradual rise of this human capital raised productivity and eventually brought about the Industrial Revolution.

Over past centuries marriage and the family were an important engine of economic growth. Whether they still have any comparable contribution in an economy where the state has assumed so much responsibility for education and training remains an open question.        .

 

To contact the authors:

James Foreman-Peck,  Cardiff Business School, Cardiff University, CF10 3EU (foreman-peckj@cardiff.ac.uk.  Tel:07947 031945)

Peng Zhou,  Cardiff  Business School, Cardiff University CF10 3EU.  (ZhouP1@cardiff.ac.uk)

RECONSTRUCTION OF MONEY SUPPLY OVER THE LONG RUN: THE CASE OF ENGLAND, 1270-1870

by Nuno Palma (University of Manchester)

This paper provides the first annual time series of coin and money supply estimates for about six hundred years of English history.

It presents a baseline set of estimates, but also considers a variety of alternative plausible scenarios and provide several robustness checks. It concentrates on carefully setting out the details for the data construction, rather than on analysis, but the hope is that these new estimates – the longest such series ever assembled, for any country – will open new vistas to help us understand the complex interaction between the real and the monetary sides of the English economy, at both business-cycle and long-run frequencies. Many applications are possible; for instance, O’Brien and Palma (2016) use it in their analysis of the Restriction period (1797-1821). Furthermore, the new methodology set out here may serve as a blueprint for a similar reconstruction of coin and money supply series for other economies for which the analogous required data is available.

The paper proposes two new estimation methods. The first, referred to as the “direct method”, is used to measure the value of government-provided, legal-tender coin supply only. This method does not consider broader forms of money such as banknotes, deposits, inland bills of exchange, government tallies, exchequer paper or private tokens, which became increasingly important from the seventeenth century onwards. The second method is an “indirect method,” which relies on a combination of information about nominal GDP with the value of coin supply or M2 known at certain benchmark periods. This permits estimating the volume of a broader measure of money supply over time. Figure 1 shows the main results.

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Figure 1. English nominal coin supply, 1270-1870 (log scale of base 2). The periods when direct method A cannot be seen means it coincides with the baseline method (aka direct method B). Source: my calculation based on a series of sources; see text for details.

This paper is forthcoming in The Economic History Review (currently available in early view), and the underlying data has now been included by the Bank of England in their historical database

To contact the author:
nuno.palma@manchester.ac.uk
@nunopgpalma