Employment, retirement and pensions: the Victorian era as a golden age for the elderly

by Tom Heritage (University of Southampton)

Elderlyspinnera
Irish spinning wheel – around 1900
Library of Congress collection

For far too long, our elderly ancestors have been viewed through the prism of the National Health Service and the modern welfare state: old people are regarded as a burden, taking out of society rather than contributing. In contrast, this study of census data for five counties across England and Wales from 1851 to 1911 reveals a reciprocal relationship between those living in old age and wider society.

First, across the whole period, 86-93% of men aged 60 and over were in employment. Even if we exclude those in workhouses, the figure is 80-85%.

Most old men worked in agricultural and general labouring, although an increase was evident by 1911 in the mining industry in Glamorgan and metal manufacturing in Sheffield. Bricklaying, house painting, dock labouring and commercial sales were also pursued in urban areas. Labour force participation rates were higher among men in their sixties than among men in their seventies and eighties.

Second, from 1851 to 1911, between a sixth and a third of women aged over 60 were in employment. Although their occupations were less diverse than those of men, the majority were based in domestic service.

Old women were also involved in cotton and silk textiles and in the manufacture of straw hats. Over time, though, the employment rates of old women did not increase like those of men, owing partly to foreign competition in Asian straw imports and French silks.

Third, retirement was not an innovation brought about by the creation of old age pensions. As early as 1891, over 13% of old men were described in the census as ‘retired’, with high rates in the areas favoured by today’s retirees: the coastal areas of Christchurch and Portsmouth in southern England. More old people retired than went into the workhouse.

But retirement was only an option for those who had inherited or managed to accumulate wealth, such as former smallholders, grocers, innkeepers, civil servants or military officers. Others who lacked land or capital, for example agricultural labourers, or boot and shoe makers were forced to resort to the Poor Law.

Even then, this did not always, or usually, mean the workhouse. Welfare assistance to old people in their own homes was common, especially for women. ‘Outdoor relief’, usually around 2s 6d per week, was issued as a weekly ‘pension’.

Moreover, the women who received it were not always as old as those entitled to a pension in the modern era: in Yorkshire in 1891, over 10% of old women described as ‘on relief’ were under 66, which will be the minimum pension age for women by 2020.

So is it really true to say that nowadays, ‘the elderly have never had it so good’? In a sense it is, as old people lead healthier and longer lives today than they have ever done.

But it would be wrong to conclude that old people in Victorian times were largely condemned to lives of pain and poverty. They had a wide range of experiences, and many had access to employment opportunities and sources of assistance that are no longer offered.

In terms of present day policy, we might learn something from our Victorian forebears about ways to integrate the general population in their sixties into the workforce, so that they can contribute to society as well as receive welfare.

Repost – Gentlemen and capitalism: some questions

by Dave Postles, University of Hertfordshire

Consequent upon Wiener’s and Rubinstein’s research respectively into culture and industrial capital and ‘men of wealth’, Cain et al. embarked upon the elucidation of ‘gentlemanly capitalism’, which has become a paradigm of English entrepreneurship, status and the performance of the economy.(1) Perhaps, however, we can illustrate a dichotomy by reference to contemporary literature and ethnographic writing. Ostensibly, Henry Wilcox represents this ethos of gentlemanly capitalism, although his company is a commercial enterprise rather than industrial. We should recollect, however, that, although he purchased the Onibury estate (Clun, Shropshire), he really was not enamoured of the countryside, visited the estate rarely, and abandoned it when an unpleasant incident occurred there. Nor was he especially attracted to his wife’s Howards End. His countenance of both arose from expectations of status and family rather than a desire to enjoy the lifestyle of the country elite. His natural environment was the City.(2) In contrast, Jack London excoriated the 400,000 gentlemen in the 1881 census, ‘of no occupation’ and ‘unprofitable’.(3) Such a number could not have been composed of either retired industrialists or ‘men of wealth’.

Read the full article here: http://davelinux.info/wordpress/?p=32b1bb2b9a79a7a81b8033e6a9e8a9fd33

 

Market anomalies and market crashes: Historical perspectives on modern finance

Early Victorian observers would have found our financial markets familiar,
but would likely expect a crash, writes Andrew Odlyzko*

leadenhall_street

 

What would early Victorians make of today’s markets?  Such questions are more than just idle curiosities.  For example, the recent wide acceptance around the world of negative interest rates was a surprise. Why didn’t the money go into cash?  Yet observers should not have been startled by this development.  In Britain in the early 1850s, Exchequer Bills effectively offered negative rates.  The convenience of those paper instruments gave them higher value than stacks of gold coins, just as today the convenience of electronic ledger balances is worth something compared to having to handle containers full of banknotes.

The Exchequer Bills episode is just one minor finding from recent studies that integrate data from the ledgers in the Bank of England Archive with price reports, press coverage, and other sources. Previously unknown  statistics about completeness of price reports, turnover rates, and dealer activity have been obtained.  It has also been found that the London Stock Exchange was a key part of the “shadow banking system” of the time.

Aside from statistics, we can also obtain some qualitative insights about modern finance from these investigations.  Our basic laws and institutions are clear linear descendants of those created at that time. If some of those early Victorians were to come alive today, they would have no difficulty recognizing all the modern financial instruments and services, although they would surely marvel at such concoctions as CDO squareds.  Many current concerns would have been familiar to them as well.  While they did not talk about climate change, they did worry about natural resource depletion, and effects of globalization. Inequality was even greater than today.  Deflation and the analog of our “Great Savings Glut” were visible, and seemed natural.  Although the terms secular stagnation and liquidity trap had not yet been invented, they corresponded to widely held attitudes.

Although the financial system was far smaller than today, public opinions about it were not dissimilar.  Respect was often mixed with fear and loathing,  as in an 1850 magazine article that called the London Stock Exchange “an institution destitute of moral principle, but at the same time omnipotent in its influence upon the moral and social condition of nations.”

So what would have surprised those early Victorians observers the most, were they to come alive today?  One candidate would surely be our touching acceptance of financial innovation as socially productive.  Another would have been our faith in central planning, in the presumed ability of policy makers to ensure smooth and steady growth.  The Minsky Instability Hypothesis would have been regarded as obviously true.  What we find in the 19th century are opinions, such as that of The Times, that crashes occur about once a decade, and that they lead people to “the reflection that they are at least the wiser for it, that they will not be taken in a second time,” and yet “the next fit comes on them like the rest, and they go through all the stages of the disease with pathological accuracy.”

The Efficient Market Hypothesis would have seemed to the early Victorians as amusing, but a fantasy.  They understood that some semblance of efficiency could be achieved, but only through diligent efforts of experienced traders.  And even those traders could not always control market irrationalities, and were themselves subject to limitations of groupthink.

Perhaps the greatest and hardest to accept surprise in modern markets would have been the combination of high equity prices and low long term interest rates.  Today’s commentators regard this as natural, and keep reassuring investors that low interest rates help sustain record-high corporate profits, which justify the high share prices. There is certainly evidence that in the short run, low interest rates do boost profits.  But on a long scale, basic economic logic says that interest rate and profits should move the same way. After all, bonds and equity are just different ways to fund ventures, and interest and profits are the cost of capital.  There is a difference between the two, reflecting different risks.  But there should be a strong positive correlation.  And that is how the early Victorians thought about it.  The theoretician Robert Hamilton wrote about it in the 1810s. So did James Morrison, one of the richest merchant bankers of that era, in the 1840s.  And so did others.  Were they to come alive today, they would surely be astounded.  They would wonder why, if Lloyd Blankfein, the head of Goldman Sachs, was indeed “doing God’s work,” was he not mobilizing all that low-cost money lying around in order to compete away the extravagantly high equity returns?  And they would surely conjecture that once capitalism started working properly again, this anomaly would disappear, and either bond or share prices (or both) would crash.

 

Notes: this post is based on the author’s papers “Financialization of the early Victorian economy and the London Stock Exchange“, and “Supplementary material for
`Economically irrational pricing of 19th century British government
bonds’” .

This research was presented at the annual conference of the Economic History Society in Cambridge, April 1-3, 2016.

The post gives the views of its author, not the position of the University of Minnesota.

The post is being co-published with the LSE Business Review: http://blogs.lse.ac.uk/businessreview/

* Andrew Odlyzko has had a long career in research and research management
at Bell Labs, AT&T Labs, and most recently at the University of Minnesota,
where he built an interdisciplinary research center, and is now a
Professor in the School of Mathematics.  He has written over 150 technical
papers in a variety of of fields, and has three patents.  In recent
years he has also been working in electronic commerce, economics of data
networks, and economic history, especially on diffusion of technological
innovation.  More information, including papers and presentation decks,
is available on his web site, http://www.dtc.umn.edu/~odlyzko/.

 

From VOX – Comparative advantage in manufacturing: A look back at the late Victorian ‘workshop of the world’

Modern discussions about a country’s ‘decline in manufacturing’ are seldom meaningful. Such talk of industrialisation and deindustrialisation across the entire sector tends to ignore important variation across individual industries. This column draws lessons from the revealed comparative advantage of late-Victorian Britain – the ‘workshop of the world’. Advantage lay mainly in industries that were relatively…

via The late Victorian ‘workshop of the world’ — VoxEU.org: Recent Articles