Temin P. and Voth H.-J. (2008) A case for deregulation… in 18th-century Britain

Temin, Peter and Voth, Hans-Joachim (2008) “Private borrowing during the financial revolution: Hoare’s Bank and its customers, 1702-24”, Economic History Review, 61/3, 541-564.

Introduction

The Financial Revolution is said to have allowed the British government to borrow widely and cheaply. Famously, North and Weingast added that it also had a profound and beneficial effect on private businesses (p.541). To assess the latter claim, the authors use data collected from the archives of a small London goldsmith bank, Hoare’s (p.542). It is likely that their sample is fairly representative since there were only a dozen such establishments around 1700s. The key event of the period is the lowering of the legal maximum interest rate from 6 to 5% in 1714 by the heavily indebted British government at the end of the War of Spanish Succession (p.543).

Schulze M.-S. and Wolf N. (2009) Ethno-linguistic endogenous borders within the Habsburg Empire

Schulze, Max-Stephan and Wolf, Nikolaus (2009), “On the origin of border effects: insights from the Habsburg Empire”, Journal of Economic Geography, 9/1, 117-136.

Introduction

While market integration typically depends on the level of technology and infrastructure, economists have shown that borders affect prices and trade flows (p.117). Administrative borders are strongly trade diverting but what about other types of borders such as the ethno-linguistic ones? The authors study the Austro-Hungarian Empire as it represents a rather unique example of multi-ethnic polity not divided by national borders (p.118).

Medici video

Tip of the hat

An interesting post on Oxonomics.

The world’s first public bank

Vincent Bolandhas just published in the FT a great article about my beloved city of Genoa and its early and complex financial system and the all-mighty Banco di San Giorgio. I realy like when mainstream media deal with Economic History.

Some more about the bank from The Economist.

Published: April 17 2009 17:15 | Last updated: April 17 2009 17:15

On March 2 1408, eight men gathered in the great hall of the Casa di San Giorgio, a trading house on what was then the main street in Genoa, a few metres from where the waters of the Ligurian Sea lap the Italian shore. They were merchants, rich and powerful representatives of the city’s most influential families, and they were meeting to discuss a matter of the utmost gravity. The once-glorious republic of Genoa had fallen on hard times. After years of war with Venice and a crushing defeat at the battle of Chioggia in 1381, the state was effectively bankrupt. The task was to rescue it.

A few months earlier, towards the end of 1407, Genoa’s Council of Ancients had authorised the Casa di San Giorgio to carry out this job. It would be accomplished by creating a bank that would facilitate the repayment of Genoa’s debts in return for interest at 7 per cent and the right to collect taxes and customs owed to the city. The purpose of the meeting that spring day was to declare the Banco di San Giorgio open for business.

False economy

Good review from the FT, found via A New Start:

False Economy: A Surprising Economic History of the World
By Alan Beattie
Riverhead $26.95 336 pages
Published in the UK in June

False Economy is a book about how economic triumphs and disasters have shaped the world – and why it’s so hard to change the course of history once decisions have been made. The book’s central idea is that our smart or stupid choices determine whether a country’s economic development is successful – but that success is still often a surprise.

The reader has to work to arrive at this or any other central idea, however. For much of this fascinating but sometimes maddening book, Alan Beattie, the FT’s world trade editor, seems to follow Mark Twain’s famous preface to The Adventures of Huckleberry Finn: “Persons attempting to find a motive in this narrative will be prosecuted; persons attempting to find a moral in it will be banished; persons attempting to find a plot in it will be shot.”

Gelderblom O. and Jonker J. (2004) Into a higher gear: the VOC shares and the development of Amsterdam

Gelderblom, Oscar and Jonker, Joost (2004) “Completing a Financial Revolution: The Finance of the Dutch East India Trade and the Rise of the Amsterdam Capital Market, 1595-1612”, The Journal of Economic History, 64-3, 641-671.

Introduction

One of the most commonly mentioned innovations of the British Financial Revolution, which occurred under the reign of William III, is the appearance of a secondary market for public and private securities. The earlier Dutch leg of the Financial Revolution, on the other hand, despite the availability of numerous public securities is usually assumed never to have evolve a meaningful secondary market (p.642). But the authors argue that the creation in 1602 of the Verenigde Oostindische Compagnie (the Dutch East India Company or VOC) led to the emergence of such a secondary market and that this market yield some of the advantage associated with the British innovations (p.643).

Help needed

Writing a blog on your own is fine, but writing along with other people who are interested in other subjects and have different views is even better. So if you would like to share your thoughts, your reading or even your research on this blog you are most welcome! Come and join the few, the proud, the economic historians.

Fritschy W. (2003) A ‘Financial Revolution’ reconsidered

Fritschy W. (2003) “A ‘financial revolution’ reconsidered: public finance in Holland during the Dutch Revolt, 1568-1548”, The Economic History Review, 56/1, 57-89.

Introduction

A financial revolution is often mentioned as an important pre-condition for the rise of a modern state. Post-1689 Britain is the best-known example: a shift from short-term to long-term public debt guaranteed by the Parliament allowed the British government to increased substantially its budget (p.57). A roughly similar process is said to have taken place in the Netherlands at a provincial level, in Holland in the 1540s for instance state´s annuities (renten) are assumed to have replaced the cities’ short-term obligation (p.58).

Dittmar J. (2008) The emergence of Zipf’s Law

Dittmar, Jeremiah (2008) “Cities, Institutions, and Growth: The Emergence of Zipf’s Law”, Job Market Paper.

This paper is available on line.

Introduction

Zipf’s Law is a simple power law holding that the number of cities with population greater than N is proportionate to 1/N, this results in a log-linear relation between city population and city size rank (p.2). However, as shown by pre-modern European urban history, this law is not universal nor a-temporal (p.3). This outlying is very significant since economists have recognized that “there is an optimal level of urban concentration and that both over- and under- concentration can be very costly in terms of productivity growth” (p.4). When respecting the Zipf’s Law, city growth is considered random, so what prevented “normal” urban expansion and what later on made it possible?