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.

Small Bills and Petty Finance: co-creating the history of the Old Poor Law

by Alannah Tomkins (Keele University) 

Alannah Tomkins and Professor Tim Hitchcock (University of Sussex), won an AHRC award to investigate ‘Small Bills and Petty Finance: co-creating the history of the Old Poor Law’.  It is a three-year project from January 2018. The application was for £728K, which has been raised, through indexing, to £740K.  The project website can be found at:


Twice in my career I’ve been surprised by a brick – or more precisely by bricks, hurtling into my research agenda. In the first instance I found myself supervising a PhD student working on the historic use of brick as a building material in Staffordshire (from the sixteenth to the eighteenth centuries). The second time, the bricks snagged my interest independently.

The AHRC-funded project ‘Small bills and petty finance’ did not set out to look for bricks. Instead it promises to explore a little-used source for local history, the receipts and ‘vouchers’ gathered by parish authorities as they relieved or punished the poor, to write multiple biographies of the tradesmen and others who serviced the poor law. A parish workhouse, for example, exerted a considerable influence over a local economy when it routinely (and reliably) paid for foodstuffs, clothing, fuel and other necessaries. This influence or profit-motive has not been studied in any detail for the poor law before 1834, and vouchers’ innovative content is matched by an exciting methodology. The AHRC project calls on the time and expertise of archival volunteers to unfold and record the contents of thousands of vouchers surviving in the three target counties of Cumbria, East Sussex and Staffordshire. So where do the bricks come in?

The project started life in Staffordshire as a pilot in advance of AHRC funding. The volunteers met at the Stafford archives and started by calendaring the contents of vouchers for the market town of Uttoxeter, near the Staffordshire/Derbyshire border. And the Uttoxeter workhouse did not confine itself to accommodating and feeding the poor. Instead in the 1820s it managed two going concerns: a workhouse garden producing vegetables for use and sale, and a parish brickyard. Many parishes under the poor law embedded make-work schemes in their management of the resident poor, but no others that I’m aware of channelled pauper labour into the manufacture of bricks.


The workhouse and brickyard were located just to the north of the town of Uttoxeter, in an area known as The Heath. The land was subsequently used to build the Uttoxeter Union workhouse in 1837-8 (after the reform of the poor law in 1834) so no signs of the brickyard remain in the twenty-first century. It was, however, one of several such yards identified at The Heath in the tithe map for Uttoxeter of 1842, and probably made use of a fixed kiln rather than a temporary clamp. This can be deduced from the parish’s sale of both bricks and tiles to brickyard customers. Tiles were more refined products than bricks and require more control over the firing process, whereas clamp firings were more difficult to regulate. The yard provided periodic employment to the adult male poor of the Uttoxeter workhouse, in accordance with the seasonal pattern imposed on all brick manufacture at the time. Firings typically began in March or April each year, and continued until September or October depending on the weather.

This is important because the variety of vouchers relating to the parish brickyard allow us to understand something of its place in the town’s economy, both as a producer and as a consumer of other products and services. Brickyards needed coal, so it is no surprise that one of the major expenses for the support of the yard lay in bringing coal to the town from elsewhere via the canal. The Uttoxeter canal wharf was also at The Heath, and access to transport by water may explain the development of a number of brickyards in its proximity. The yard also required wood and other raw materials in addition to clay, and specific products to protect the bricks after cutting but before firing. The parish bought quantities of archangel mats, rough woven pieces that could be used like a modern protective fleece to protect against frost damage. We are surmising that Uttoxeter used the mats to cover both the bricks and any tender plants in the workhouse garden.


Similarly the bricks were sold chiefly to local purchasers, including members of the parish vestry. Some men who were owed money by the parish for their work as suppliers allowed the debt to be offset by bricks. Finally the employment of workhouse men as brickyard labourers gives us, when combined with some genealogical research, a rare glimpse of the place of workhouse work in the life-cycle of the adult poor. More than one man employed at the yard in the 1820s and 1830s went on to independence as a lodging-house keeper in the town by the time of the 1841 census.

As I say, I’ve been surprised by brick. I had no idea that such a mundane product would prove so engaging. All this goes to show that it’s not the stolidity of the brick but its deployment that matters, historically speaking.


To contact the author:





Wages of sin: slavery and the banks, 1830-50

by Aaron Graham (University College London)


From the cartoon ‘Slave Emancipation; Or, John Bull Gulled Out Of Twenty Millions’ by C.J. Grant. In Richard Pound (UCL, 1998), C.J. Grant’s ‘Political Drama’, a radical satirist rediscovered‘. Available at <;

In 1834, the British Empire emancipated its slaves. This should have quickly triggered a major shift away from plantation labour and towards a free society where ex-slaves would bargain for better wages and force the planters to adopt new business models or go under. But the planters and plantation system survived, even if slavery did not. What went wrong?

This research follows the £20 million paid in compensation by the British government in 1834 (equivalent to about £20 billion today). This money was paid not to the slaves, but to the former slave-owners for the loss of their human property.

Thanks to the Legacies of British Slave-ownership project at University College London, we now know who received the money and how much. But until this study, we knew very little about how the former slave-owners used this money, or what effect this had on colonial societies in the West Indies or South Africa as they confronted the demands of this new world.

The study suggests why so little changed. It shows that slave-owners in places such as Jamaica, Guyana, South Africa and Mauritius used the money they received not just to pay off their debts, but also to set up new banks, which created credit by issuing bank notes and then supplied the planters with cash and credit.

Planters used the credit to improve their plantations and the cash to pay wages to their new free labourers, who therefore lacked the power to bargain for better conditions. Able to accommodate the social and economic pressures that would otherwise have forced them to reassess their business models and find new approaches that did not rely on the unremitting exploitation of black labour, planters could therefore resist the demands for broader economic and social change.

Tracking the ebb and flow of money shows that in Jamaica, for example, in 1836 about 200 planters chose to subscribe half the £450,000 they had received in compensation in the new Bank of Jamaica. By 1839, the bank had issued almost £300,000 in notes, enabling planters across the island to meet their workers’ wages without otherwise altering the plantation system.

When the Planters’ Bank was founded in 1839, it issued a further £100,000. ‘We congratulate the country on the prospects of a local institution of this kind’, the Jamaica Despatch commented in May 1839, ‘ … designed to aid and relieve those who are labouring under difficulties peculiar to the Jamaican planter at the present time’.

In other cases, the money even allowed farmers to expand the system of exploitation. In the Cape of Good Hope, the Eastern Province Bank at Grahamstown raised £26,000 with money from slavery compensation but provided the British settlers with £170,000 in short-term loans, helping them to dispossess native peoples of their land and use them as cheap labour to raise wool for Britain’s textile factories.

‘With united influence and energy’, the bank told its shareholders in 1840, for example, ‘the bank must become useful, as well to the residents at Grahamstown and our rapidly thriving agriculturists as prosperous itself’.

This study shows for the first time why planters could carry on after 1834 with business as usual. The new banks created after 1834 helped planters throughout the British Empire to evade the major social and economic changes that abolitionists had wanted and which their opponents had feared.

By investing their slavery compensation money in banks that then offered cash and credit, the planters could prolong and even expand their place in economies and societies built on the plantation system and the exploitation of black labour.


To contact the author:


Transatlantic Slavery and Abolition: a Pan-European Affair

By Felix Brahm (German Historical Institute London) and Eve Rosenhaft (University of Liverpool)

Slavery Hinterland. Transatlantic Slavery and Continental Europe, 1680–1850 is published by Boydell Press for the Economic History Society’s series ‘People, Markets, Goods: Economies and Societies in History’. SAVE 25% when you order direct from the publisher -offer ends on the 28th June 2018. See below for details.


coverThe history of transatlantic slavery is one of the most active and fruitful fields of international historical research, and an important lesson of the latest work on maritime countries like Britain and France is that there the profits of slavery and indeed abolition ‘trickled down’ to very wide sections of the population and to places well away from the principal slave-trading ports. Recently historians have started to look beyond the familiar Atlantic axis and to apply the same paradigm to the European hinterlands of the triangular trade. That is, they have sought its traces and impacts in territories that were not directly involved (or were relatively minor participants) in the traffic in Africans: the German-speaking countries, Scandinavia, Italy and Central Europe. And they are finding that the slave trade, the plantation economies that it fed, the consequences of its abolition, and not least the questions of moral and political principle that it threw up, were very much a part of the texture of society right across Europe.

In material terms, it is clear that the manufacture of trade goods – the wares with which Europeans paid African traders for the enslaved men, women and children whom they then shipped to the Americas – was an important element of many regional economies. Firearms, iron bars and ironware travelled from Denmark and the Baltic to Western Europe’s slaving ports. Glass beads were exported from Bohemia (the Czech lands), and the higher quality Venetian products attracted Liverpool merchants to set up branch offices in Italy to secure their supply. The Swiss family firm Burckhardt/Bourcard began by supplying cotton cloth for the slave trade and importing slave-produced luxury goods and moved into equipping its own slaving ships. Textile plants in the Wupper Valley in Western Germany and the hand looms of Eastern Prussia provided linens of varying quality for use on the slave plantations, though because they were shipped through English and Dutch ports their German origins have often been obscured. And the trading networks established in the context of the slave economy supported German exporting projects even after the trade was abolished, as German firms continued to trade into territories – Brazil and the Caribbean – where slavery persisted until the late 19th century.

Germans in particular were keen observers of the Atlantic slave economy, and they had their own perspective on international debates about the trade and its abolition. At the beginnings of the trade, the rulers of Brandenburg Prussia had some hopes of buying into it, establishing a slave fort on the Gold Coast between 1682 and 1720. One of the key documents of this episode is the diary of a ship’s barber, Johann Peter Oettinger, who sailed on slaving expeditions. He chose to make no comment about the brutalities that he witnessed and recorded. Characteristically, though, when the diaries were published for German readers 200 years later, they were given a moralising spin; by the 1880s, Germany was at the forefront of the Scramble for Africa, justifying colonisation in the name of suppressing the internal slave trade. Before that, and once the German states were no longer involved in the slave trade, German-speaking scientists and administrators placed themselves in the service of those states that were: Ernst Schimmelmann, whose family had one foot in Hamburg and one in Copenhagen, was a plantation owner and manager of the Swedish state slaving company, but also responsible for the abolition of the Danish slave trade in 1792. And initiatives for the post-abolition exploitation of tropical territories relied on the work of German scientists in service to the Danish state like the botanist Julius von Rohr.

Scholarly attention to the German case is also bringing the Atlantic plantation economies into dialogue with the practices of unfree labour that existed in Central Europe at the same time. Analysis of the conditions of linen production on eastern Prussia’s aristocratic estates indicates that their low production costs helped to keep down the costs of production on slave plantations. And when Germans confronted the moral and legal challenges to slavery that were crystallising into a political movement in Britain and France by the 1790s, they could not escape the implications of abolitionist arguments for the future of their own ‘peculiar institutions’ of serfdom and personal service. This was true of Theresa Huber, the author and journalist who stands for two generations of Germans who engaged in transnational abolitionist networks, and who was equally sharp in her critique of serfdom. And it was true of Prussian administrators who, when challenged by enslaved Africans on German soil to enforce the notion that ‘there are no slaves in Prussia’, could not help asking themselves what that might mean for the process towards reform of feudal institutions.

These issues have only begun to receive greater attention – more studies are needed to gain a clearer understanding of the various links through which continental Europe was connected to the Transatlantic slave business and its abolition.


SAVE 25% when you order direct from the publisher using the offer code BB500 in the box at the checkout. Discount applies to print and eBook editions. Alternatively call Boydell’s distributor, Wiley, on 01243 843 291, and quote the same code. Offer ends on the 28th June 2018. Any queries please email


To contact the authors:
Felix Brahm (;
Eve Rosenhaft (

From VoxEU – Wellbeing inequality in retrospect

Rising trends in GDP per capita are often interpreted as reflecting rising levels of general wellbeing. But GDP per capita is at best a crude proxy for wellbeing, neglecting important qualitative dimensions. 36 more words

via Wellbeing inequality in retrospect — Recent Articles

To elaborate further on the topic, Prof. Leandro de la Escosura has made available several databases on inequality, accessible here, as well as a book on long-term Spanish economic growth, available as open source here


How did investors view the reforms and supervisory organisations of the late nineteenth century?

by Avni Önder Hanedar (Sakarya University)

In the last couple of decades, high debt burden in emerging economies created financial crises and the low growth rate during the 2008 financial crisis led to a default problem for Greece. Some reforms were proposed, such as institutional changes and the establishment of an entity under control of the other Eurozone members to supervise the repayment of debts. These events have some similarities with the default of the Ottoman Empire and the establishment of the Ottoman Public Debt Administration (OPDA) (Düyun-u Umumiye). To deal with the inefficiencies in the Ottoman economy and political system, reforms were implemented, as supervisory organizations were established during the nineteenth century. Important ones were the adoption of the gold standard in 1880, the Administration of Six Indirect Revenues (Rüsum-u Sitte) (ASIR) in 1879, and the OPDA in 1881. It seems that many of them were not seen by investors as promising, since a British weekly magazine, Punch or The London Charivari, illustrated these events as bubbles. A paper of  Elmas Yaldız Hanedar, Avni Önder Hanedar, and Ferdi Çelikay examined how such events were perceived at the İstanbul bourse, which could shed light on today’s realities.

Cartoon of Punch or The London Charivari on 6 January 1877 about the Ottoman reforms.a caption


The paper manually collected historical data on the price of the General Debt bond traded at the İstanbul bourse between 1873 and 1883 from volumes of daily Ottoman newspapers, i.e., Basiret, Ceride-i Havadis, and Vakit. This bond was the most actively traded one at the İstanbul bourse in 1881, during the foundation of the OPDA.

A column of Vakit pointing out the values of bonds, stocks, and foreign currencies at the İstanbul bourse on 6 October 1875 (Vakit. (6 October 1875). Sarafiye, Galata piyasası, 2)

The paper is the first to measure in econometrically sophisticated manner investors’ beliefs at the İstanbul bourse in reference to the reforms and financial control organizations. Historical research does not include detailed empirical information for the effects of reforms and financial control organizations on the İstanbul bourse during the default period. Using unique data on the most actively traded Ottoman government bond, the paper extends the historical literature on the İstanbul bourse (See Hanedar et al. (2017)) and reforms (See Mauro et al. (2006), Birdal (2010), Mitchener and Weidenmier (2010) looking at bond markets in multiple developing countries, with samples that include the Ottoman Empire).

The methodology in the paper was to analyse the variance of returns (derived from the price showed in above) as a proxy of financial instabilities and risks. To model volatility, the paper estimated a GARCH model with dummy variables for reforms and financial control organizations at and after the dates of the events (i.e., short- and long-run).







The General Debt bond price (Turkish Liras) and key events. The data are derived from Vakit, Ceride-i Havadis, and Basiret, 187383.

The empirical results indicated a permanent decrease in volatility after the establishment of the OPDA and the gold standard. The foundation of a locally controlled finance commission in 1874 was correlated with a lower volatility level at the date of the event, but increased volatility in the long term. The Ottoman case is instructive for the understanding of today’s economic situation in emerging markets such as Greece, while it could be argued that long-lived and comprehensive measures with foreign creditors’ supervision on fiscal and monetary systems matter more for investors’ perceptions. Lowering government interventions on economic system and transaction costs due to bimetallism were viewed as promising. Investor beliefs that the local and short-lived reforms and supervisory organizations were ineffective could be due to several factors such as lack of measures to limit public expenditures.


Volatility changes in the General Debt bond return, 1873–83. * and *** denote statistically significant coefficients at 10% and 1%.



Vakit. (6 October 1875). Sarafiye, Galata piyasası, 2.

Birdal, M. (2010). The Political economy of Ottoman public debt, insolvency and European control in the late nineteenth century. London: I. B. Tauris and Co Ltd.

Hanedar, A. Ö., Hanedar, E. Y., Torun, E., & Ertuğrul, H. M. (2017). Dissolution of an Empire: Insights from the İstanbul Bourse and the Ottoman War Bond. Defence and Peace Economics, (Forthcoming).

Mauro, P., Sussman, N., & Yafeh, Y. (2006). Emerging markets and financial globalization: Sovereign bond spreads in 1870-1913 and today. Oxford: Oxford University press.

Mitchener, K. J. & Weidenmier, M. D. (2010). Super sanctions and sovereign debt repayment. Journal of International Money and Finance, 29(1), 19–36.

EHS 2018 special: Ownership and control of land by women in nineteenth-century England

by Janet Casson (independent scholar)


A 19th Century English countryside landscape, oil on canvas, anonymous.

The HS2 train route between London and Birmingham has been modified in response to outrage from people concerned about the impact on their property. This is nothing new. Over 150 years ago, railways cut through the English countryside to provide new infrastructure for an expanding economy. Railway surveyors laying out a route made detailed maps and carefully recorded the usage and ownership of every affected property in books of reference.

The complexity of the laws governing the rights of women has meant that women’s land ownership in the nineteenth century has rarely been investigated. Indeed, it was widely believed that the law deterred women’s ownership of land.

These railway books of reference provide a unique insight into this rarely investigated topic and provide an insight into women’s control of land. Statistical analysis of the information reveals that women owned, either singly or jointly, about 12% of that land.

Detailed profiles of 348 women and their property give an insight not only into the ownership but also the control of land. They reveal if a woman shared ownership and if so, with whom; a woman owning alone had a higher degree of control than a woman owing with others. They indicate the amount of land, the woman’s wealth and her potential influence over other people. If she had a multi-plot portfolio, its geographical dispersal indicates whether her influence was local, regional or even national.

Women who owned with men were regarded as having little control over land. Before the 1882 Married Women’s Property Act, wives were constrained by common law: they could own real property, but lost independent control of its management and the use of any rents or profits unless they had a settlement or trust. Women who owned with an institution had least control given that institutions had statutory powers and often protracted decision-making.

Many women held their property as sole owners (average 35.5%) and were confident to own and control large portfolios. Where women shared ownership, it was usually with men (average 42.0%) rather than exclusively with other women.

There was a trade-off between exercising strong control over a few properties that could be self-managed or weaker control over more properties where co-owners shared the administration. Similarly, a trade-off existed between owning many local properties or fewer widely dispersed properties where, to maximise the economic return on the plots, co-owners were needed for their local knowledge.

The size of property portfolios varied across regions. They were smallest in London, possibly reflecting the high property prices and the significant number of single women living in the suburbs; and largest in Durham where several women owned large national portfolios.

An average of 24% of plots was held by single-plot-owing women. But the typical portfolio comprised 2-5 plots (37.6%). Larger portfolios of 10 or more were also fairly common (24.1%). Large portfolios were often geographically dispersed – across a county, region or nationally.

The picture that emerges from this analysis is that many women as sole owners enjoyed considerable autonomy in the control of their portfolios. Where they relied on others, they typically relied on men.

But as the diversity of their portfolios increased, women did not increase their dependence on men but chose to retain their autonomy instead. Women it appears, valued their autonomy, and did their best to maintain and protect it

A Brief Monetary History of Ireland

by Seán Kenny (Lund University) and Jason Lennard (Lund University and National Institute of Economic and Social Research)


The Irish Famine of the 1840s is one of the great tragedies of history. Beginning with a bout of potato blight, the Irish population subsequently declined by 20 per cent between the censuses of 1841 and 1851 and has never recovered (O’Rourke, 1991). How did an agricultural shock have such devastating effects? Lynch and Vaizey (1960) argue that a lack of monetization facilitated self-dependence and barter, leaving the Irish economy vulnerable to exogenous shocks like the Famine.

In a forthcoming paper in the Economic History Review available here, we constructed new monthly estimates of the narrow money supply and annual estimates of the broad money supply between 1840 and 1921. The aggregates were constructed from a range of archival sources and contemporary publications. A major task was to reconstruct the Irish coin supply. We did this by tracking shipments of coin between the Royal Mint and Irish banks using records held at the National Archives. These flows were then added to stocks, which were either recalculated from contemporary estimates or based on recoinages.

A number of interesting results emerge from the data. First, we find that, by standard measures, Ireland was no backwater, but well monetized on the eve of the Famine. Not only was it more monetized than other European countries for which data is available, such as Norway and Sweden, it was decades ahead of others, such as Germany and the Netherlands. The new data is therefore at odds with the Lynch and Vaizey hypothesis.

A second major finding is the scale of the collapse in the money supply during the Great Famine. This monetary contraction was the largest during any event in the economic history of Ireland since 1840 and perhaps one of the deepest in economic history more generally. Currency in the hands of the public, the nation’s liquidity, collapsed by more than half, the monetary base (currency in the hands of the public plus reserves) by 48 per cent and the broad money supply (currency in the hands of the public plus net deposits) by 27 per cent.

Figure 1. The Great Famine versus the Great Contraction
Notes: Ireland indexed to 1846 = 100. US indexed to 1928 = 100. Year end.
Sources: Kenny and Lennard, ‘Monetary aggregates for Ireland’; Friedman and Schwartz, Monetary history.


Figure 1 plots the narrow (M0) and broad (M3) money supplies in Ireland during the Great Famine against equivalent measures for the United States during the Great Depression. As can be seen in this tale of two crises, the narrow money supply slumped much deeper during the Great Famine than in the Great Contraction. The broad money supply initially declined more steeply in Ireland than in the US. However, the Irish recovery was underway from 1849, while the American contraction continued until 1933.

This new data shines a light on Ireland’s statistical Dark Age, allowing us to revisit old hypotheses and others to develop new ones. On the monetary origins of the Great Famine, we found that Ireland was no less monetized than its European peer group. The Famine did, however, unleash the Great Irish Contraction, during which the money supply drastically slumped.


To contact the authors:



Friedman, M. and Schwartz, A. J., A monetary history of the United States, 1867–1960 (Princeton, NJ, 1963).

Kenny, S. and Lennard, J., ‘Monetary aggregates for Ireland, 1840–1921’, Economic History Review (2017).

Lynch, P. and Vaizey, J., Guinness’s brewery in the Irish economy, 1759–1876 (1960).

O’Rourke, K. H., ‘Did the Great Irish Famine matter?’, Journal of Economic History, 51 (1991), pp. 1–22.

EHS 2018 special: London’s mortality decline – lessons for modern water policy

Werner Troeksen (University of Pittsburgh)
Nicola Tynan (Dickinson College)
Yuanxiaoyue (Artemis) Yang (Harvard T.H. Chan School of Public Health)


The United Nations Sustainable Development Goals aim to ensure access to water and sanitation for all. This means not just treating water but supplying it reliably. Lives are at stake because epidemiological research shows that a reliable, constant supply of water reduces water-borne illness.

Available at <;

Nineteenth century London faced the same challenge. Not until 1886 did more than half of London homes have water supplied 24 hours a day, 7 days a week. The move to a constant water supply reduced mortality. For every 5% increase in the number of households with a constant supply, deaths from water-borne illnesses fell 3%.

During Victoria’s reign, eight water companies supplied the metropolis with water: 50% from the river Thames, 25% from the river Lea and 25% from wells and springs. By the 1860s, the companies filtered all surface water and Bazalgette’s intercepting sewer was under construction. Still, more than 80% of people received water intermittently, storing it in cisterns often located outside the house, uncovered or beside the toilet.

Rapid population and housing growth required the expansion of the water network and companies found it easier to introduce constant service in new neighbourhoods. Retrofitting older neighbourhoods proved challenging and risked a substantial waste of scarce water. The Metropolis Water Act of 1871 finally gave water companies the power to require waste-limiting fixtures. After 1871, new housing estates received a constant supply of water immediately, while old neighbourhoods transitioned slowly.

As constant water supply reached more people, mortality from diarrhoea, dysentery, typhoid and cholera combined fell. With 24-hour supply, water was regularly available for everyone without risk of contamination. Unsurprisingly, poorer, crowded districts had higher mortality from water-borne diseases.

Even though treated, piped water was available to all by the mid-nineteenth century, everyone benefitted from the move to constant service. By the time the Metropolitan Water Board acquired London’s water infrastructure, 95% of houses in the city received their water directly from the mains.

According to Sergio Campus, water and sanitation head at the Inter-American Development Bank, the current challenge in many places is providing a sustainable and constant supply of water. In line with this, the World Bank’s new Water Supply, Sanitation, and Hygiene (WASH) poverty diagnostic has added frequency of delivery as a measure of water quality, in addition to access, water source and treatment.

Regularity of supply varies substantially across locations. London’s experience during the late Victorian years suggest that increased frequency of water supply has the potential to deliver further reductions in mortality in developing countries beyond the initial gains from improved water sources and treatment.

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.

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.