What my credit can do in (medieval) Venice

January 2, 2013

Mueller, Reinhold C. (1987) I banchi locali a Venezia nel Tardo Medioevo. Studi Storici, 28/1: 145-55.

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There is a lot to be admired in Austrian economists, their resilience, their attachment to simple elegant ideas and their sound understanding of the long-term factors that give the economy its cyclical nature. But one must admit that their Ludite-like hatred for finance is to the very least puzzling. They claim to trust nothing but gold and they would like to see the activity of banks restricted to little more than a locker service. Their trust in free market and in the adaptive nature of human ingenuity ends at the door of their local branch of HSBC. Read the rest of this entry »


Lest we forget life

November 11, 2012

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As the Brits celebrate the young men how have fallen for the crown, numerous touching stories are told in the papers. This one by Caroline Green in The Telegraph caught my eye.

All too often, life is crowded out of war stories. We concentrate on dramatic events such as battles, sieges, the absence of the men at home, the huge traumas when they do march back and other such things but we forget often totally the background. Specially the economic one.

I, for one, was completely stunned when I read this paragraph in the article dedicated to Gordon Eltham (positively dashing young fellow), the writer’s grand father, who had been declared missing presumed dead by White Hall during the First World War:

Surprisingly, there were also a series of letters from Gordon’s bank, diligently reporting to his father that various cheques signed by their “missing” son had begun to turn up at the Berlin office, suggesting that he must still be alive.

I have no clue what bank it was but apparently while countries were at war some business kept on as usual and information could still flow back and forth. I wonder if it was still the case during WWII. That would be a story worth telling.


Seurot F. (2002) Something rotten in the state of medieval banking

October 20, 2009

Seurot, François (2002) “Les crises bancaires en Italie au Moyen Age: un essai d’applicationn de la théorie de Minsky-Kindleberberger”, paper presented at the XIX Journée d’économie monétaire et bancaire, 21p.

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This paper is available online (pdf).

Following a long tradition, Minsky and Kindleberger [1996] have based their analysis of financial crises in the early modern and modern periods on their vision of credit as intrinsically unstable and thus naturally prone to crashes. Their model is based on five steps:

  1. An exogenous shock modifies the incentive system the economy is based upon.
  2. These new incentive channel credit toward a given sector and produces a localized economic boom.
  3. Euphoria leads to the overestimation of the ROI and to overtrading.
  4. Fundamentals are reconsidered and credit dries up.
  5. Torschlusspanik, or bank rush (p.1). Read the rest of this entry »

A’Hearn B. (2005) The not-so-mighty finance

October 16, 2009

A’Hearn, Brian (2005) Finance-led divergence in the regions of Italy. Financial History Review, 12/1: 7-41.

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After the unification, the Italian South did not catch up with the North, on the contrary they engaged on a divergent path as the per capita income gap increased from 15-25% to 55% in the first 50 years (p.7). This continuing disparity may be explained by the sore state of the southern banks which could have been unable to support and finance local development (finance-led growth argument; p.9). However, initial evidence seems not to support this hypothesis, as the share of the Mezzogiorno in the banking activity of the country was in line with the relative economic weight of the region (p.10). Read the rest of this entry »


‘t Hart M. (2009) Trust your friends, buy annuities

September 1, 2009

‘t Hart, Marjolein (2009) “Mutual Advantages: State Bankers as Brokers between the City of Amsterdam and the Dutch Republic”, in The Political Economy of the Dutch Republic, ed. Oscar Gelderblom, p.115-142.

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The Dutch public credit in the early modern period enjoyed a uniquely high standing; but how did it work? (p.116). The sale of the securities to the public were in the hands of a district receiver who earned a brokerage of 0.5% (p.118). It took political and family connection to accede the position as well as a significant amount of wealth (p.120). “The personal wealth of this agent radiated from his office and thus supported the credit of the state”. Besides, the position could be quite rewarding financially. Read the rest of this entry »


Hoppit J. (1986) Financial crises in 18th-century England

March 27, 2009

Hoppit, Julian (1986) “Financial Crises in Eighteenth-Century England”, The Economic History Review, 39/1, 39-58.

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Introduction

“Because the financial system in the 18th century was evolving and becoming more sophisticated, […] the nature of crises developed and changed”. Historians have long disagreed on the very definition of what constituted a crisis in early modern England (p.40). The author defines a crisis as a moment when expectations change leading owners of wealth to abandon a type of asset for another leading to the falls in prices of the former. The more widely available the newly-sought asset is, the lesser the crisis. Read the rest of this entry »


Church R.(2008) Historical Selling Transformations in Britain and the United States and the World’s Current Economic Crisis

January 11, 2009

…for a salesman, there is no rock bottom in life……he’s a man out there in the blue riding on a smile and a shoeshine…..
Willy Loman in Arthur Miller’s, Death of a salesman (1948)
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The article written by Roy Church entitled “Salesmen and the transformation of selling in Britain and the US in the nineteenth and early twentieth centuries” (Economic History Review, 61, 3 (2008), pp. 695-725) unintentionally provides a partial explanation for the world economic problems of today. In this paper, my focus will be restricted to the US and Britain. Read the rest of this entry »