Murphy A. (2009) The smartest boys in the alley, early derivatives on the London stock market

Murphy, Anne L. (2009) Trading options before Black-Scholes: a study of the market in late seventeenth-century London. Economic History Review, 62/1: 8-30.

The ledger of the financial broker Charles Blunt contains the details of some 1,500 transactions realized between 1692 and 1695, about a third of which regard the then novel trade in equity options (p.9). The technique had arisen in the 1620s in the commodity market and was proving very useful in the decade following the Glorious Revolution, when some 100 joint-stock companies were floated in London  (p.10). During the boom of the early 1690s, it is likely that “several thousand derivatives were transacted each year”.

Murphy A. (2006) The Financial Revolution: a supply-side story (for real)

Murphy, Anne L. (2006) “Dealing with Uncertainty: Managing Personal Investment in the Early English National Debt”, History, 91/302, 200-17.

The sums involved in the so-called English Financial Revolution following the arrival on the throne of William III were altogether not that important: £6.9m from 1688 to 1702 while the government budget over the period reached £72m. However, “the impact of those novel methods of fund-raising was considerable”. In particular because small wealth-owners represented a large share of these early investors (p.201). Samuel Jeake, a merchant from Rye (East Sussex) was one of those small investors. He recorded his thought and his transactions in a diary and a few letters (p.202).

Frehen R., Goetzmann W. and Rouwenhorst G. (2009) Why invest in the bubbles?

Frehen, Rik, William Goetzmann and Geert Rouwenhorst (2009) “New Evidence on the First Financial Bubbles”, Yale international Center for Finance, Working Paper 04, 24p.

This article is available online.

Why did investors decide to bet on the various companies that would form the three 1720 bubbles in France, England and the Netherlands? (p.1). How did these bubbles affect companies which unlike the Compagnie des Indes and the South Sea Company were neither involved in the Atlantic trade nor in public finance?

Flandreau M. et al. (2009) The question was not how to develop finance

Flandreau, Marc, Christophe Galimard, Clemens Jobst and Pilar Nogués-Marco (2009) “The bell-jar: commercial interest rates betwee two revolutions” in The Origin and Development of Financial Markets and Institutions. From the Seventeenth Century to the Present, eds. Jeremy Atack and Larry Neal, Cambridge: Cambridge University Press, 161-208.

An earlier version of this paper is available here.

For institutionalist economists as well as for contemporary commentators, the wealth of nations in 18th century Europe was rooted in their political system which influenced the level of interest rates and thus trade (p.165). The confidence investors had in the government’s credit was thus seen as critical (tellingly John Law’s primary aim was to bring interest rates down; p.166).

North D. and Weingast B. (1989) The economic impact of institutions

North, Douglass C. and Barry Weingast (1989) “Constitution and Commitment: The Evolution of Institutional Governing Public Choice in Seventeenth-Century England”, The Journal of Economic History, 49/4: 803-832.

Disclaimer: this summary is written by the contributors of the blog and not by the author of the article. Any mistake is Manuel’s fault (and he shall be punished).

“Put simply, successful long-run economic performance requires appropriate incentives not only for economic actors but for political actors as well. Because the state has a comparative advantage in coercion, what prevents it from using violence to extract all the surplus?”

O’Brien P. (1988) … or why the Brits used to like paying taxes

O’Brien, Patrick K. (1988) “The Political Economy of British Taxation, 1660-1815″, The Economic History Review , 41/1, 1-32.

Disclaimer: this summary is written by the contributors of the blog and not by the author of the article. Any mistake is Manuel’s fault (and he shall be punished).

Introduction

From the Restoration to Waterloo, warfare occupied nearly half the fiscal years, imposing an ever-increasing burden upon the British taxpayers (p.1). The sudden extra expenditures caused by the conflicts were met not through higher taxes but thanks to loans obtained on the London capital market. The British “tax system was [not] elastic or reliable enough to finance abrupt transitions”. The service of the debt contracted during wars soon took over most of peacetime budget (p.2).

Quinn S. (2001) Public debt to private finance: “Drop dead”

Quinn, Stephen (2001) “The Glorious Revolution’s Effect on English Private Finance: A Microhistory 1680-1705”, The Journal of Economic History, 61/3: 593-615.

Disclaimer: this summary is written by the contributors of the blog and not by the author of the article. Any mistake is Manuel’s fault (and he shall be punished).

Introduction

According to North and Weingast’s famous thesis, the investiture of William III of England in 1688, the “Glorious Revolution”, triggered a quick modernization of the British financial system – prompting in turn a fall of the interest rates. But the arrival of the new king also led the realm into a new war against France which lasted nine years and increased public debt from £1 million to £19 million (⅓ of the national income; p.593).

Bogart D. (2009) The glorious Transport Revolution

Bogart, Dan (2009) “Did the Glorious Revolution Contribute to the Transport Revolution? Evidence from Investment in Roads and Rivers”, University of California-Irvine, Department of Economics Working Papers, #080918, 56p.

This paper is available online. Disclaimer: it is still an ongoing work.

Introduction

By 1600, individual undertakers started proposing to relieve the royal administration and the parishes from the burden of taking care of the rivers and roads. Proposals for individual projects were made to the House of Commons or the House of Lords; “passed bills were sent to the other House and later to the Crown for final approval”.

Carlos A., Key J. and Dupree J. (1998) Early finance’s learning curve

Carlos, Ann M., Jennifer Key and Jill L. Dupree (1998) “Learning and the Creation of Stock-Market Institutions: Evidence from the Royal African and Hudson’s Bay Companies, 1670-1700”, The Journal of Economic History, 58/2: 318-344.

Disclaimer: this summary is written by the blog and not by the authors of the article. Any mistake is Manuel’s fault.

Introduction

“England’s emergence as an international trading nation in the seventeenth century can be linked to the growth of trading arrangements that allowed for a longer life of capital either […] as a joint-stock trading company” (p.318).

According to North and Weingast’s famous thesis this emergence was made possible by the reforms brought by the 1688 Glorious Revolution. However the authors underline the fact that markets don’t grow instantaneously and it takes some times for the actors to learn how to use the market (p.319).

Matthee R. (1994) For piety and pleasure, coffee and coffeehouses in Safavid Iran

Matthee, Rudi (1994) “Coffee in Safavid Iran: Commerce and Consumption”, Journal of the Economic and Social History of the Orient, 37/1, 1-32.

Introduction

Despite the fact that it took place roughly at the same period, the spread of coffee consumption over the world appear to have occurred independently from the European commercial expansion (p.1). It spread during the early 16th century from Arabia through the Ottoman Empire and to Iran (p.2). The habit may have penetrated the Safavid realm via the heavily Arab-influenced southern shores. The constant wars and exchange of territories between the two empires can only have helped to spread this Turkish custom (p.5).

Daudin G. (2008) Is my market bigger than yours?

Daudin Guillaume (2008) “Domestic trade and market size in late eighteen-century France”, Oxford University: Discussion Papers in Economic and Social History, 32p.

This article is available on line

Introduction

The sheer size of the British market is rarely assumed to be a major explanation of the Industrial Revolution. Britons were less numerous than many other people on the continent but low transportation costs and higher density may have created a more integrated economy and thus a larger market. In this paper, the author uses the Tableaux du Maximum (statistics collected in 1794) to estimate whether France was significantly less integrated than England (p.2).

This Week in Economic History (May 11th-17th)

I work as an assistant to Dr. Luis Jáuregui, president of the Mexican Economic History Association (AMHE). One of my duties is to search and edit new contents for the Association’s webpage. Among other things, the Association offers a weekly agenda and a list of future events in economic history.

When I first began looking for and organizing information on economic history events of the region and the world, I faced several problems. Even though EH.net seemed like the obvious place to go, the site lacks information on seminars and conferences smaller than major congresses or anual meetings. For that thing one has to search in the webpages of different universities. The French Economic History Association has a very good calendar; however, it is obviously skewed with the many events related to economic history in France. E-mail lists such as the one from the Societies for the History of Economics,  H-World and H-Business also have events from which otherwise one would probably never know. The economic history associations of Latin America use to be very “local” in terms of the events they announce in their webpages.Thus one has to search in several sources what could probably be updated in a central database.