Agency House Crises in India: What Role Did Indigo Play?

by Tehreem Husain

English, Dutch, and Danish factories at Mocha, 1680 ca. Public Domain picture


History provides us with many examples of asset bubbles which have led to systemic crises in the economy. Popular examples are that of the Tulip mania and the South Sea Bubble. This blog discusses the case of an indigo price bubble in nineteenth century India, perhaps the first of its kind, which lead to a contagion like crises in the economy.

 Almost 17.4% of Indian GDP was derived from the agricultural sector in 2015-16, with nearly half of the Indian population being dependent on agriculture and allied activities for livelihood. This makes smooth functioning of commodity markets of considerable importance to policymakers. Throughout time, there have been many episodes of commodity price surges and ensuing market volatility due to traditional demand-supply gaps, monetary stress and financialization of commodity markets inclusive of speculation (Varadi, 2012). What role did agriculture play in commodity market volatility during the late 18th/ early 19th century? Little is known about perhaps the first asset bubble of its kind in India – the indigo crisis, the reasons attributed to it and the cost it imposed on different sectors of the economy.

With the advent of the East India Company, India was a global trade destination for a number of commodities including cotton, silk, indigo, saltpetre and tea. In order to trade these commodities with global markets, European traders needed banks to finance foreign trade. Indigenous bankers in India did not provide this particular banking function and hence the East India Company diversified its business by introducing agency houses in Calcutta which amongst others also performed banking functions. These agency houses performed all the banking functions of receiving deposits, making advances and issuing paper money. Their responsibility of note circulation crucially helped them in carrying out their diversified lines of businesses as ship-owners, land owners, farmers, manufacturers, money lenders and bankers (Cooke, 1830). It was the agency house of Messrs. Alexander & Co. which started the first European bank in India, called the Bank of Hindostan, in 1770 (Singh, 1966).

In the early nineteenth century these agency houses were tested for their endurance and continuance due to three factors. Firstly and most importantly, during the early 1820s, agency houses borrowed money at low interest rates and invested it prodigally in indigo concerns-the crop being the only profitable means of remittance in Europe. The crisis multiplied when newly formed agency houses, besides investing capital in their own indigo concerns, fiercely competed with the old houses in making indiscriminate advances to indigo planters and paid little regard to the actual state of the market. Excessive demand of indigo fuelled the prices in the mid 1820s and encouraged increased production of the commodity which eventually led to a glut in the market and sharp decline in its price. This rise and fall in prices is evident from the fact that the indigo price shot up from Rs. 130/maund in 1813 to Rs. 300 in 1824, and then fell to Rs. 145/maund in 1832 (Singh, 1966).

The second challenge, along with indigo price volatility, was the start of the first Anglo Burmese war in 1825. This further led to stressed monetary conditions resulting in a scarcity of metal in Calcutta (Sinha, 1927).

Thirdly, in terms of the global landscape, this period marked the peak of investment boom in Britain, which characterized an explosion of company promotions and bond issues by foreign governments, mining companies, railways, utilities, docks and steamships. In total during 1824-25 some 624 companies hoping to raise £372 million were brought to the market. However, with the investment boom peaking out in 1825, market conditions had changed. Interest rates had risen making borrowing more expensive, investor sentiment had become more cautious which eventually led to a panic like situation resulting in bank failures and bankruptcies (Brunnermeier & Schnabel, 2015).

In such times of local and global economic stress, several minor agency houses failed in 1827 which shook investor confidence in the remaining agency houses. A notable case is that of the agency house of Messrs. Palmer and Co., known as the ‘indigo king of Bengal’, which faced heavy withdrawals from their partners and eventually led to the closure of their private bank and finally their own demise in 1830. This panicked the market and led to further withdrawals of capital investments.

During this period agency houses made desperate appeals to the government for financial relief and highlighted their importance in the Indian financial system at that time. In a minute dated 14th May 1830, Lord William Bentick, Governor General of India from 1828-35, accentuated systemic importance of agency houses. He highlighted that not only would there be a dislocation of trade in some staple commodities, any damage to the ‘conglomerate’ nature of the agency houses would cause severe disruptions in other industries, most notably shipping. Finally, loans were granted to these houses in the form of treasury notes bearing 6 percent interest.

Despite the monetary aids provided by the government, the wave of agency house failures could not be curbed. More agency houses failed in January 1832. In addition to this, the unexpected fall in the price of indigo created difficulties for one of the biggest agency houses Messrs. Alexander & Co. It is important to note that the relief package came under stringent conditions. They were obliged to withdraw their bank notes from circulation, and were given an extended period for the payment of their debts provided they end their banking operations (Savkar, 1938). This resulted in the demise of the Bank of Hindostan and the Commercial Bank.

Overall seven great Agency Houses of Calcutta failed within a short span of four years which had detrimental effects on the Indian economy at that time. It may be summarized that speculation in indigo and mixing of trading and agency business were the pivotal reasons behind the failure of these agency houses. More importantly, this episode of a commodity price bubble spreading its tentacles to the entire economy had a phenomenal impact on the structure of business. It is recoded that from a handful of firms in the year before 1850, there were 170 firms working as joint stock organizations in 1868. The first commercial register to identify firms with tradable stock was established in 1843 which listed eights firms (Aldous, 2015). Joint stock organizational form also entered banking. A key example is the rise of the Union Bank of Calcutta (Cooke, 1830). The crisis also led to the establishment of a number of private banks by the British expats (Jones, 1995).


Extractive Policies and Economic Outcomes: the Unitary Origins of the Present-Day North-South of Italy Divide

by Guilherme de Oliveira (Columbia Law School) and Carmine Guerriero (University of Bologna)


Italy emerged from the Congress of Vienna as a carefully thought equilibrium among eight absolutists states, all under the control of Austria except the Kingdom of the Two Sicilies, dominated by the Bourbons, and the Kingdom of Sardinia, ruled by the Savoys and erected as a barrier between Austria and France. This status quo fed the ambitions of the Piedmontese lineage, turning it into the champion of the liberals, who longed to establish a unitary state by fomenting the beginning of the century unrest. Although ineffective, these insurrections forced the implementation, especially in the South, of the liberal reforms first introduced by the Napoleonic armies, and allowed a rising class of bourgeoisie, attracted by the expanding international demand, to acquire the nester nobility’s domains and prioritize export-oriented farming. Among these activities, arboriculture and sericulture, which were up to 60 times more lucrative than wheat breeding, soon became dominant, constituting half of the 1859 exports. Consequently, farming productivity increased, reaching similar levels in the Northern farms and the Southern latifundia, but the almost exclusive specialization in the agrarian sectors left the Italian economy stagnant as implied by the evolution of the GDP per capita in the regions in our sample, which we group by their political relevance for the post-unitary rulers as inversely picked by Distance-to-Enemies (see upper-left graph of figure 1). This is the distance between each region’s main city and the capital of the fiercer enemy of the Savoys—i.e., Vienna over the 1801-1813, 1848-1881, and 1901-1914 periods, and Paris otherwise—and is the lowest for Veneto, which we then label the “high” political relevance cluster. Similarly, we refer to the regions with above(below)-average values as “low” (“middle”) political relevance group or “South” and to the union of the high-middle relevance regions and the key Kingdom of Sardinia regions—i.e., Liguria and Piedmont—as “North.”


Figure 1: Income, Political Power, Land Property Taxes, and Railway Diffusion

1  Note: “GDP-L” is the income in 1861 lire per capita, “Political-Power” is the share of prime ministers born in the region averaged over the previous decade, “Land-Taxes” is the land property tax revenues in 1861 lire per capita, and “Railway” is the railway length built in the previous decade in km per square km. _M (_H) includes Abruzzi, Emilia Romagna, Lombardy, Marche, Tuscany, and Umbria (Veneto), whereas KS gathers Liguria and Piedmont. The North (_L) cluster includes the M, H, and KS groups (Apulia, Basilicata, Calabria, Campania, Lazio, and Sicily). See de Oliveira and Guerriero (2017) for each variable sources and definition.


Despite some pre-unitary differences, both clusters were largely underdeveloped with respect to the leading European powers at unification, and the causes of this backwardness ranged from the scarcity of coal and infrastructures to the shortage of human and real capital. Crucially, none of such conditions was significantly different across groups since, differently from the Kingdom of Sardinia, none of the pre-unitary states established a virtuous balance between military spending and investment in valuable public goods as railway and literacy. Even worst, they intensified taxation only when necessary to finance the armies needed to tame internal unrest, which were especially fierce in the Kingdom of Two Sicilies. The bottom graphs of figure 1 exhibit this pattern by displaying the key direct tax, which was the land property duty, and the main non-military expenditure, which was the railway investment.

Meanwhile, the power of the Piedmontese parliament relative to the king grew steadily and its leader Camillo of Cavour succeeded to guarantee an alliance with France in a future conflict against Austria by sustaining the former in the 1856 Crimean War. The 1859 French-Piedmontese victory against the Habsburgs then triggered insurrections in Tuscany, the conquest of the South by Garibaldi, and the proclamation of the Kingdom of Italy in 1861. Dominated by a narrow elite of northerners (see upper-right graphs of figure 1), the new state favoured the Northern export-oriented farming and manufacturing industries while selecting public spending and the Northern populations when levying the taxes necessary to finance these policies. To illustrate, the 1887 protectionist reform, instead of safeguarding the arboriculture sectors crushed by 1880s fall in prices, shielded the Po Valley wheat breeding and those Northern textile and manufacturing industries that had survived the liberal years thanks to state intervention. While indeed the former dominated the allocation of military clothing contracts, the latter monopolized both coal mining permits and public contracts. A similar logic guided the assignment of the monopoly rights in the steamboat construction and navigation sectors and, notably, the public spending in railway, which represented the 53 percent of the 1861-1911 total. Over this period indeed, Liguria and Piedmont gained a 3 (4) times bigger railway spending per square km than Veneto (the other regions). Moreover, the aim of this effort “was more the military one of controlling the national territory, especially in the South, than favouring commerce” [Iuzzolino et al. 2011, p. 22]. Crucially, this infrastructural program was financed through highly unbalanced land property taxes, which in turn affected the key source of savings available to the investment in the growth sectors absent a developed banking systems. The 1864 reform fixed a 125 million target revenue to be raised from 9 districts resembling the pre-unitary states. The ex-Papal State took on the 10 percent, the ex-Kingdom of Two Sicilies the 40, and the rest of the state (ex-Kingdom of Sardinia) only the 29 (21). To further weigh this burden down, a 20 percent surcharge was added by 1868 creating the disparities displayed in the bottom-left graph of figure 1.

The 1886 cadastral reform opened the way to more egalitarian policies and, after the First World War, to the harmonization of the tax-rates, but the impact of extraction on the economies of the two blocks was at that point irreversible. While indeed a flourishing manufacturing sector was established in the North, the mix of low public spending and heavy taxation squeezed the Southern investment to the point that the local industry and export-oriented farming were wiped out. Moreover, extraction destroyed the relationship between the central state and the southern population by unchaining first a civil war, which brought about 20,000 victims by 1864 and the militarization of the area, and then favouring emigration. Because of these tensions, the population started to display a progressively weaker culture as implied by the fall in our proxy for social capital depicted in the bottom-left graph of figure 2.

The fascist regime’s aversion to migrations and its rush to arming first, and the 1960s pro-South state aids then have further affected the divide, which can be safely attributed to the extractive policies selected by the unitary state between 1861 and 1911.

Empirical Evidence

Because the 13 regions remained agrarian over our 1801-1911 sample, we capture the extent of extraction with the land property taxation and the farming productivity with the geographic drivers of the profitability of the arboriculture and sericulture sectors. In addition, we use as inverse metrics of each region’s tax-collection costs (political relevance) the share of previous decade in which the region partook in external wars (Distance-to-Enemies).

Our fixed region and time effects OLS estimates imply that pre-unitary revenues from land property taxes in 1861 lire per capita decrease with each region’s farming productivity but not with its relevance for the Piedmontese elite, whereas the opposite was true for the post-unitary ones. Moreover, post-unitary distortions in land property tax revenues—proxied with the difference between the observed and the counterfactual ones forecasted through pre-unitary estimates (see upper-left graph of figure 2)—and the severity of the other extractive policies—negatively captured by the tax-collection costs and the political relevance (see below)—positively determined the opening gaps in culture, literacy (see bottom-right graph of figure 2), and development, i.e., the income in 1861 lire per capita, the gross saleable farming product, and the textile industry value added in thousands of 1861 lire per capita.


Figure 2: The Rise of the North-South Divide

2Note: “Distortion-LT” are the land property tax distortions in 1861 lire per capita, “Distortion-R” is the difference between Railway and the forecasted length of railway built in the previous decade in km per square km, “Culture-N” is the normalized share of the active population engaged in political, union, and religious activities, and “Illiterates-N” is the normalized percentage points of illiterates in the population over the age of six. See figure 1 for each cluster definition and de Oliveira and Guerriero (2017) for each variable sources and definition.


These results are consistent with the predictions of the model we lay out to inform our test. First, because of limited state-capacity, the pre-unitary states should reduce extraction if confronted by a more productive and so powerful citizenry, whereas the extractive power of the unitary state should be sufficiently strong to make taxation of the South profitable at the margin and so crucially shaped by his relevance. Second, it should also induce the Southern citizenry to prefer private to public good production and his investment and welfare to rise with factors limiting taxation, i.e., marginal tax-collection costs and political relevance.

Since our proxies for the drivers of extraction are driven by either geographic features independent of human effort or events outside the control of the policy-makers, reverse causation is not an issue. Nevertheless, our results could still be produced by unobserved heterogeneity. To evaluate this aspect, we control for the interactions of time effects with the structural conditions differentiating the two blocks in 1861 and considered key by the extant literature (Franchetti and Sonnino, 1876; Gramsci, 1966; Barbagallo, 1980; Krugman, 1981), i.e., the pre-unitary inclusiveness of political institutions, the land ownership fragmentation, the coal price, and the railway length. Including these controls has little effect on our results. Finally, two extra pieces of evidence rule out the possibility that extraction was an acceptable price for the Italian development (Romeo, 1987). First, it did not shape the manufacturing sector value added. Second, while the pre-unitary length of railway additions was only affected by the farming productivity, the post-unitary one was only driven by the political relevance, resulting useless in creating a unitary market (see upper-right graph of figure 2).


Although the North-South divide has been linked to post-unitary policies before (Salvemini 1963; Cafagna, 1989), nobody has formally clarified how the unitary state solved the trade-off between extraction-related losses and rent-seeking gains. In doing so, we also contribute to the literature comparing extractive and inclusive institutions (North et al., 2009, Acemoglu and Robinson, 2012), endogenizing however the extent of extraction in a setup sufficiently general to be applied to other instances, as for instance the post-Civil War USA.


WELFARE SPENDING DOESN’T ‘CROWD OUT’ CHARITABLE WORK: Historical evidence from England under the Poor Laws

Cutting the welfare budget is unlikely to lead to an increase in private voluntary work and charitable giving, according to research by Nina Boberg-Fazlic and Paul Sharp.

Their study of England in the late eighteenth and early nineteenth century, published in the February 2017 issue of the Economic Journal, shows that parts of the country where there was increased spending under the Poor Laws actually enjoyed higher levels of charitable income.

Edmé Jean Pigal, 1800 ca. An amputee beggar holds out his hat to a well dressed man who is standing with his hands in his pockets. Artist’s caption’s translation: “I don’t give to idlers”. From Wikimedia Commons



The authors conclude:

‘Since the end of the Second World War, the size and scope of government welfare provision has come increasingly under attack.’

‘There are theoretical justifications for this, but we believe that the idea of ‘crowding out’ – public spending deterring private efforts – should not be one of them.’

‘On the contrary, there even seems to be evidence that government can set an example for private donors.

Why does Europe have considerably higher welfare provision than the United States? One long debated explanation is the existence of a ‘crowding out’ effect, whereby government spending crowds out private voluntary work and charitable giving. The idea is that taxpayers feel that they are already contributing through their taxes and thus do not contribute as much privately.

Crowding out makes intuitive sense if people are only concerned with the total level of welfare provided. But many other factors might play a role in the decision to donate privately and, in fact, studies on this topic have led to inconclusive results.

The idea of crowding out has also caught the imagination of politicians, most recently as part of the flagship policy of the UK’s Conservative Party in the 2010 General Election: the so-called ‘big society’. If crowding out holds, spending cuts could be justified by the notion that the private sector will take over.

The new study shows that this is not necessarily the case. In fact, the authors provide historical evidence for the opposite. They analyse data on per capita charitable income and public welfare spending in England between 1785 and 1815. This was a time when welfare spending was regulated locally under the Poor Laws, which meant that different areas in England had different levels of spending and generosity in terms of who received how much relief for how long.

The research finds no evidence of crowding out; rather, it finds that parts of the country with higher state provision of welfare actually enjoyed higher levels of charitable income. At the time, Poor Law spending was increasing rapidly, largely due to strains caused by the Industrial Revolution. This increase occurred despite there being no changes in the laws regulating relief during this period.

The increase in Poor Law spending led to concerns among contemporary commentators and economists. Many expressed the belief that the increase in spending was due to a disincentive effect of poor relief and that mandatory contributions through the poor rate would crowd out voluntary giving, thereby undermining social virtue. That public debate now largely repeats itself two hundred years later.


Summary of the article ‘Does Welfare Spending Crowd Out Charitable Activity? Evidence from Historical England under the Poor Laws’ by Nina Boberg-Fazlic (University of Duisberg-Essen) and Paul Sharp (University of Southern Denmark). Published in  Economic Journal, February 2017

France’s Nineteenth Century Wine Crisis: the impact on crime rates

Street Wine Merchant, France 19th century. From Wikimedia Commons


The phylloxera crisis in nineteenth century France destroyed 40% of the country’s vineyards, devastating local economies. According to research by Vincent Bignon, Eve Caroli, and Roberto Galbiati, the negative shock to wine production led to a substantial increase in property crime in the affected regions. But their study, published in the February 2017 issue of the Economic Journal, also finds that there was a significant fall in violent crimes because of the reduction in alcohol consumption.

It has long been debated whether crime responds to economic conditions. In particular, do crime rates increase because of financial crises or major downsizing events in regions heavily specialised in some industries?

Casual observation and statistical evidence suggest that property crimes are more frequent during economic crises. For example, the United Nations Office on Drugs and Crime has claimed that in a sample of 15 countries, theft has sharply increased during the last economic crisis.[1]

These issues are important because crime is also known to have a damaging impact on economic growth by discouraging business and talented workers from settling in regions with high rates of crime. If an economic downturn triggers an increase in the crime rate, it could have long-lasting effects by discouraging recovery.

But since multiple factors can simultaneously affect economic conditions and the propensity to commit crime, identifying a causal effect of economic conditions on crime rates is challenging.

The new research addresses the issue by examining how crime rates were affected by a major economic crisis that massively hit wine production, France’s most iconic industry, in the nineteenth century.

The crisis was triggered by the near microscopic insect named phylloxera vastatrix. It originally lived in North America and did not reach Europe in the era of sailing ships since the transatlantic journey took so long that it had died on arrival.

Steam power provided the greater speed needed for phylloxera to survive the trip and it arrived in France in 1863 on imported US vines. Innocuous in its original ecology, phylloxera proved very destructive for French vineyards by sucking the sap of the vines. Between 1863 and 1890, it destroyed about 40% of them, thus causing a significant loss of GDP.

Because phylloxera took time to spread, not all districts started being hit at the same moment, and because districts differed widely in their ability to grow wines, not all districts were hit equally. The phylloxera crisis is therefore an ideal natural experiment to identify the impact of an economic crisis on crime because it generated exogenous variation in economic activity in 75 French districts.

To show the effect quantitatively, the researchers have collected local administrative data on the evolution of property and violent crime rates, as well as minor offences. They use these data to study whether crime increased significantly after the arrival of phylloxera and the ensuing destruction of the vineyards that it entailed.

The results suggest that the phylloxera crisis caused a substantial increase in property crime rates and a significant decrease in violent crimes. The effect on property crime was driven by the negative income shock induced by the crisis. People coped with the negative income shock by engaging in property crimes. At the same time, the reduction in alcohol consumption induced by the phylloxera crisis had a positive effect on the reduction of violent crimes.

From a policy point of view, these results suggest that crises and downsizing events can have long lasting effects. By showing that the near-disappearance of an industry (in this case only a temporary phenomenon) can trigger long-run negative consequences on local districts through an increasing crime rate, this study underlines that this issue must be high on the policy agenda at times of crises.


Summary of the article ‘Stealing to Survive? Crime and Income Shocks in Nineteenth Century France’ by Vincent Bignon, Eve Caroli and Roberto Galbiati. Published in Economic Journal on February 2017

[1] ‘Monitoring the impact of economic crisis on crime’, United Nations Office on Drugs and Crime, 2012. This effect was also noted by the French ‘Observatoire national de la délinquance et des réponses pénales’, when it underlines that burglaries sharply increased in France in the period 2007 to 2012.

From Immigrant Entrepreneurship – The Business of Migration since 1815


Millions of American immigrants, who worked in business or started new businesses of their own, also used businesses in order to reach America in the first place. Before the mid nineteenth century advent of the telegraph, railroad and steamship, this migration usually relied on the services of multiple businesses and intermediaries in order to carry out long multi-stage journeys across land and ocean. In the modern “global village,” interconnected by widely available fast air travel, key services needed by international migrants are also generally dispersed across multiple businesses, often related mainly to surmounting and adapting to legal restrictions. In between, during late nineteenth and early twentieth centuries, the business of migration was concentrated mainly on the crossing of the North Atlantic. Mass transatlantic migration then became the core segment of the world’s first major intercontinental travel industry, a business in which large German shipping lines played a leading role. Within a longer term context, this essay emphasizes that middle epoch of commercially-provided physical relocation from Europe to the United States, and also includes a sub-focus on entrepreneurship of German origin.

Read full article here:


Credit, Currency & Commerce: New Perspectives in Financial and Monetary History

Conference Report: University of Cambridge, 13-14 September 2016
by Sabine Schneider, University of Cambridge

‘Dividend Day at the Bank of England’ by George Elgar Hicks (1824-1914), Bank of England Museum. Copyright: The Governor and Company of the Bank of England


Retracing the path to the Great Recession, Barry Eichengreen has observed how ‘The historical past is a rich repository of analogies that shape perceptions and guide public policy decisions.’[1] Certainly, recent years have shown that analogies drawn from historical experience are most in demand ‘when there is no time for reflection.’[2] Beyond the study of banking crises and financial regulation, the past decade of economic turmoil has generated renewed scholarly interest in the evolution and politics of financial capitalism. While the legacy of the Great Recession has profoundly shaken established tenets of mainstream economics, it has also stressed the need for new historical narratives that understand the world economy within the specific cultural contexts, economic ideas and political debates of the past. On 13 and 14 September, the Centre for Financial History at Darwin College, Cambridge, hosted an early career conference to foster an interdisciplinary dialogue about histories of finance, global trade and monetary policy. Over the two conference days, twenty early career scholars and doctoral researchers presented papers that ranged, in period and geography, from medieval Catalonia and eighteenth-century Scotland to pre-war China and post-war Britain. This review will reflect on three major themes of the conference: the art and science of central banking, studies in political economy, and cultural approaches to the history of finance.

Central banking and the formation of monetary policy have resurfaced as key concerns for economic historians since the 2007/8 financial crisis. The debate over the Bank of England’s evolving role as Lender of Last Resort, for instance, was re-examined by Dr Paul Kosmetatos (Edinburgh). His paper analysed Adam Smith’s and Henry Thornton’s differing recommendations for crisis containment as a starting-point for evaluating the Bank’s conduct in 1763 and 1772. Kosmetatos concluded that the Bank’s timely injection of liquidity via the banknote channel during the latter crisis showed that ‘the attitude and means of intervention described by Thornton were already practically in place.’ Pamfili Antipa (Banque de France/Paris School of Economics) presented new Bank of England balance sheet data that adds considerably to our knowledge of how the British government financed the Napoleonic and Revolutionary Wars. Her joint research with Professor Christophe Chamley (Boston) revealed that the Bank strategically operated in the secondary market for Exchequer bills in order to re-direct funds to the Treasury. For the post-war period, Oliver Bush’s paper (Bank of England/LSE) investigated Britain’s approach to monetary and macroprudential policies in the years after the UK Radcliffe Report (1959). Based on collaborative research with Dr David Aikman (Bank of England) and Professor Alan M. Taylor (California), Bush presented new findings on the ‘causal impacts of interest rates and credit controls’ on inflation and economic activity.[3]

The evolution and management of modern central banks in mainland Europe and Great Britain formed the focus of three further papers. Starting with the foundation of Germany’s Reichsbank in 1876, Ousmène Mandeng (LSE) explored the role of competition and monetary stability as integral elements of the operation of Germany’s central bank prior to 1890. Mandeng argued that the Reichsbank’s flexible reserve requirements, as well as its rivalry with regional note issuing banks in the market for bills, created an effective, incentives-based system of central banking. Enrique Jorge-Sotelo (LSE) took a micro-historical approach to the Spanish banking crisis of 1931, assessing the criteria the Banco de España employed for the provision and conditions of its emergency loans. In her closing keynote, Dr Anne Murphy (Hertfordshire) examined the origins of modern management practices at the Bank of England.[4] Shedding light on the Bank’s working processes, recruitment, and staff training during the 1780s, Dr Murphy demonstrated that the Bank took important steps towards fostering and monitoring good managerial practice, which over the long run may have aided ‘the development of trust in the British public finances.’[5]

The politics of currency, taxation, and trade shaped a second major strand of the conference. Professor Martin Daunton (Cambridge) delivered a wide-ranging keynote on ‘Bretton Woods Revisited: Currency, Commerce and Contestation’. Shifting the focus away from the predominant narrative of US-UK rivalry at Bretton Woods, Daunton re-evaluated the specific domestic concerns of several Western European and Commonwealth countries, which affected their negotiating positions at the 1944 summit and at subsequent international trade conferences. The League of Nations’ work in the field of trade finance in the years leading up to the Great Depression was re-examined by Jamieson Gordon Myles (Geneva). His paper investigated the League’s failed internationalist efforts, and traced how economic nationalism and beggar-thy-neighbour policies could take hold in the inter-war period. New research on France, China, and Germany prompted further reflections on the impact of global integration in capital markets, and its effect on nations’ public finances. Jerome Greenfield (Cambridge), for example, investigated the political economy of France’s fiscal constitution between 1789 and 1852. Greenfield’s paper elucidated the central government’s rationale for re-introducing and extending indirect taxes after they had been abolished during the French Revolution. Ghassan Moazzin (Cambridge) discussed the Chinese state’s practice of raising capital for public expenses through foreign bond markets in the early twentieth century. His paper demonstrated that the interventions of Western bankers to uphold China’s credit had a critical influence on the political outcome of the Republican Revolution of 1911. Considering the nexus between finance and diplomacy, Sabine Schneider (Cambridge) appraised the role of cosmopolitan financial elites in Germany’s conversion to a gold standard. Her paper examined the semi-official position of Gerson von Bleichröder, private banker and economic advisor to Bismarck, and his interventions in the monetary reforms Germany pursued after unification.

Several papers pointed to the underexplored potential of cultural and social history to broaden our understanding of how economic cultures, ideologies and policies are themselves socially constructed. Owen Brittan’s paper (Cambridge) drew on autobiographical evidence to assess men’s anxiety over bankruptcy and debt in later Stuart England, and revealed how such fears were mediated through ideals of masculinity, honour and economic independence. Henry Sless (Reading) discussed the news reporting of financial events in the Victorian era, while Damian Clavel (Geneva) revisited the speculative bubble in Latin American bonds that gripped investors in the 1820s, focusing, in particular, on how underwriters constructed the notorious story of the ‘fictitious country of Poyais’.[6] Exploring changing cultural attitudes to speculation, Kieran Heinemann (Cambridge) traced the practices of brokers and investors in Britain’s grey market for stocks and shares during the half-century leading up to the Prevention of Fraud Act of 1939. Heinemann recovered a largely forgotten ‘discursive struggle over the boundaries between investment, speculation and gambling’, which still resonates with the concerns of investors and regulators today.

Credit, Currency & Commerce brought together thirty-six junior researchers and senior academics from across history, economics, development economics, business management, and philosophy. Their contributions from a variety of disciplinary angles and methodologies produced lively exchanges on the trajectory of financial and monetary history, and the opportunities it holds for mastering a deeper understanding of the world economy.


The full conference report and programme are available at

The conference was generously funded by the Economic History Society, the Centre for Financial History and the Faculty of History at the University of Cambridge. For more information on grants and conference funds:


[1] Barry Eichengreen, Hall of Mirrors: The Great Depression, the Great Recession and the Uses and Misuses of History (New York: Oxford University Press, 2015), 377.

[2] Eichengreen, Hall of Mirrors, 377.

[3] David Aikman, Oliver Bush, and Alan M. Taylor, ‘Monetary Versus Macroprudential Policies: Causal Impacts of Interest Rates and Credit Controls in the Era of the UK Radcliffe Report’, NBER Working Paper No. 22380 (June 2016).

[4] Anne Murphy, ‘The Bank of England and the Genesis of Modern Management’, eabh Working Paper, No. 16-02 (August 2016); see also, Anne Murphy, ‘“Writes a fair hand and appears to be well qualified”: the recruitment of Bank of England clerks, 1800-1815’, Financial History Review, 22 (2015), 19-44.

[5] Murphy, ‘The Bank of England and the Genesis of Modern Management’, 29.

[6] Carmen M. Reinhardt and Kenneth S. Rogoff, This Time is Different: Eight Centuries of Financial Folly (Princeton: Princeton University Press, 2009), 93.

From VOX – British wellbeing 1780-1850: Measuring the impact of industrialisation on wages, health, inequality, and working time

by Daniel Gallardo Albarrán, appeared on 22nd May 2016