Volume 76- Issue 2-May 2023

The economic history review

Issue Information

Pages 389-390

DOI: https://doi.org/10.1111/ehr.13171

TAWNEY LECTURE

Inflation and globalisation: The Tawney Lecture 2022

Harold James

Pages 391-412

DOI: https://doi.org/10.1111/ehr.13174

Abstract: The paper examines the causal relationships and interdependence between inflation and globalisation over centuries: in the sixteenth century, in the age of Spanish silver; then in the first age of modern globalisation from in the middle of the nineteenth century; and finally in the new globalisation that took off in the 1970s. In the latter cases, inflation was a response to a negative supply shock, and eventually generated policy decisions on economic opening. Both recent globalisations may be explained as technologically driven, and some of the most important productivity gains involved the cost of transport, but the fundamental innovations substantially pre-dated the moment at which they were economically transformative. Scarcity dramatically changes relative prices, but not the overall price level. Initially inflation became a policy solution, an attractive way of meeting the challenges of scarcity, but then its increasing costs became apparent, and more, rather than less, global integration looked like a way of reducing costs and minimising social pressure. Policy choices were involved in generating the globalised world: not only the removal of impediments to commerce, but also a consensus around a stable and internationally applicable monetary framework, whether the gold standard in the late nineteenth century or a modern inflation targeting regime in the late twentieth century.

SYMPOSIUM - BANKING AND CURRENCY

Introduction to the symposium on banking and currency

John D. Turner

Pages 413-414

DOI: https://doi.org/10.1111/ehr.13235

This symposium is the sixth that we have had at the Economic History Review. The papers in this symposium have not been sought or commissioned. In our symposium section, the editors simply group accepted articles on important topics to stimulate debate and to alert our broad readership to important developments in economic history.

The development of banking and currencies have been shaped by political concerns throughout history. Imperial and colonial concerns and attempts to build and maintain empires have had major effects on the nature of banking systems and the strength or otherwise of a currency. Some early papers in the Economic History Review bear this out. For example, in a paper published in 1931, Curtis Nettels highlighted how the condition of the currency in the United States before the American Revolution was shaped by political, trade, and commercial interests in Britain.1 Similarly, in an article published in 1934, Albert Baster highlights the important role of British overseas banks in facilitating foreign trade but also in facilitating Britain's capital exports into its colonies and parts of the world that were within its commercial and political orbit.2 In other words, the economic history of banking and currencies is very much connected to the history of empire and trade.

Wilfried Kisling in his paper looks at foreign banks and thus builds on what Baster did many decades ago. But instead of looking at Britain in isolation, Kisling compares it with Germany, with its imperial ambitions and challenge to British hegemony. In particular, he looks at the role of British and German overseas banks in facilitating trade in the first globalization. He finds that having foreign banks in a country helped Britain and Germany expand their trade in those countries and that German banks acted as initial trade promoters, helping German firms gain access to new markets.

By the 1960s Britain was no longer a hegemonic power. Its empire was gone, its economy had been decimated during World War II, and the dollar had supplanted sterling as the world's currency of choice. But the Sterling Area, where countries (mainly former colonies) pegged their currency to Sterling, remained as a remnant of Britain's former superpower status. The Sterling Area effectively came to an end in 1979. Alan de Bromhead, David Jordan, Francis Kennedy, and Jack Seddon revisit the demise of the Sterling area in the period 1965–1979 to understand when and why individual countries left the Sterling Area. In these twilight years of Sterling as an international currency, they find that geopolitics, economics, and historical legacies all played a role in the unravelling of the Sterling Area.

Hong Kong was part of the Sterling Area: from 1935 it operated a currency board anchored to Sterling. When the pound floated against the US dollar in 1972, the Hong Kong government announced that it would move to use the dollar as its anchor. But this was to be short lived. In 1974, Hong Kong abandoned its peg to the dollar in an attempt to restore price stability. The Hong Kong currency board was no more.

In their article, Åsa Malmström-Rognes and Catherine Schenck describe currency boards as the ‘standard monetary institution of colonialism’, Using new archival material, they tell the fascinating story of how Hong Kong came to adopt its famous currency board in 1983, when it repegged to the US dollar. They find that a short-lived currency crisis in 1982 set off a year-long discussion between banks and government officials about how to reform Hong Kong's monetary system. Thus, in 1983, when a currency crisis and banking instability emerged, the currency board plan was put into operation. Interestingly, Rognes and Schenck also highlight the role of currency and banking arrangements in the Sino-British negotiations over Hong Kong's future. Thus, banking and currency was an important issue in the remaining vestiges of the British Empire and the rise of an emerging power.

Banking and currency seem mundane topics for economic historians to study. But this symposium highlights the important role of banking and currency in the building of political and commercial empires. Banking and currency are key parts of the plumbing of international trade. The chief takeaway of this symposium for economic historians of banking and currency is that politics and geopolitics matters and needs to be more central in the economic history of banking and currency. The symposium also raises an important issue for future research. We need to know much more about the plumbing of the international financial system and the myriad of banking and financial networks that facilitated empire and the rise and fall and subsequent rise of international trade since the nineteenth century.

Sterling's farewell symphony: The end of the Sterling Area revisited

Alan De Bromhead，David Jordan，Francis Kennedy，Jack Seddon

Pages 415-444

DOI: https://doi.org/10.1111/ehr.13175

Abstract: When and why did Sterling Area countries stop holding sterling as the majority of their foreign exchange reserves? This paper takes a comparative approach to examine the relative importance of various determinants of adherence to sterling in its declining years as an international currency. Using an original cross-national panel dataset covering the period 1965–79, we conduct survival analysis which systematically evaluates a comprehensive set of economic and political factors, at the country level as well as in international relations, about when and why countries chose to diversify their reserves away from sterling. Our results highlight the significance of international transactional factors in influencing adherence to sterling, while the effects of British geopolitical retrenchment, Commonwealth cultural ties, and distributional issues were more ambiguous and sensitive to local conditions. We also find that domestic political and historical factors, such as democracy and imperial legacy, played a role in sterling's international unravelling. Finally, we use our results to examine the experience of individual sterling countries and their decisions to diversify.

‘Los von London’: A comparative, empirical analysis of German and British global foreign banking and trade development, 1881–1913

Wilfried Kisling

Pages 445-476

DOI: https://doi.org/10.1111/ehr.13200

Abstract: The role of finance in the development of trade draws increasing attention from economists and economic historians. Yet empirical studies, especially from an historical perspective, continue to be scarce. This study analyses the role of German and British foreign banks in the internationalisation of trade during the first globalisation. It creates a novel data set on the bilateral trade of Germany and Great Britain with the rest of the world and the number and geographical distribution of German and British foreign banks between 1881 and 1913. Using an augmented gravity model of trade, the article shows that banks had a significant positive impact on exports and imports and that this effect was even more pronounced in case of German banks and trade. Moreover, the effect of German banks on trade is the highest in the years closer to bank entry, supporting the idea of German banks being initiators of trade. In contrast, the effect of British banks seems constant over time.

One country, two currencies: The adoption of the Hong Kong currency board, 1983

Asa Malmstrom Rognes，Catherine R. Schenk

Pages 477-497

DOI: https://doi.org/10.1111/ehr.13211

Abstract: Currency boards have had an enduring attraction as a solution to exchange rate and monetary credibility for small open economies, despite few successful examples. In this context, the case of Hong Kong stands out for its longevity; it survived the handover to China, the Asian financial crises in 1997, and the global crises in 2007–8 and 2020. The 1983 currency crisis and the decision to link the exchange rate to the US$ is usually treated as an outcome of local political uncertainty due to the Sino-British negotiations which set the framework for how Hong Kong would fit with the rest of China after 1997. We present fresh archival evidence from Hong Kong and London to reveal the year-long debates over Hong Kong's monetary system after a drop in the exchange rate in September 1982 and to demonstrate how most of the protagonists in Hong Kong and London came only reluctantly to accept the idea of re-pegging the dollar once public expectations had been raised. We also show how the mixture of currency and banking instability affected the terms of the negotiations in 1982 and 1983 and set the framework for the one country, two currencies system that prevails today.

ARTICLES

Soils, scale, or elites? Biological innovation in Uruguayan cattle farming, 1880–1913

Emiliano Travieso

Pages 498-524

DOI: https://doi.org/10.1111/ehr.13196

Abstract: This article examines the economics of innovation in livestock rearing during the first globalisation in Uruguay, the country with the most cattle per person in the world, both then and now. Using a new historical dataset of Uruguayan agriculture, the first one at a sub-provincial level, I exploit regional differences in the adoption of cattle crossbreeding – the genetic improvement of local herds through hybridisation with foreign breeds. Contrary to traditional historiographical claims, I find that this innovation was not primarily explained by the location of enlightened elites (European or local) or by the scale of productive units (i.e. latifundia); rather, rural producers invested in crossbreeding wherever their local landscapes and previous productive choices encouraged it. While it affected biological processes that spanned several agricultural calendars, and thereby developed more slowly than innovations in crop farming, technical change in Uruguayan ranching was also environmentally sensitive, largely scale-neutral, congruent with previous agricultural patterns, and hinged on a widespread response from producers.

The settlers’ fortunes: Comparing tax censuses in the Cape Colony and early American republic

Johan Fourie，Frank Garmon Jr

Pages 525-550

DOI: https://doi.org/10.1111/ehr.13190

Abstract: Europeans at the end of the eighteenth century had settled across the globe, from North and South America to Australia to the southern tip of Africa. While theories of institutional persistence explain the ‘reversal of fortunes’ between settled and unsettled regions, few studies consider the large differences in early living standards between settler societies. This paper uses newly transcribed household-level tax censuses from the Dutch and British Cape Colony and the United States shortly after independence to show comparative levels of income and wealth over four decades both between the two regions and within them. Cape farmers were, on average, more affluent than their American counterparts. While crop output and livestock were more unequally distributed at the Cape, ownership of enslaved people in America was more unequal. There was little indication of an imminent reversal of fortunes.

Consumer revolution in north-western Germany: Material culture, global goods, and proto-industry in rural households in the seventeenth to nineteenth centuries

Henning Bovenkerk, Christine Fertig

Pages 551-574

DOI: https://doi.org/10.1111/ehr.13192

Abstract: Existing scholarship on the early modern consumer revolution postulates a dichotomy between the classic pioneering countries of England and the Netherlands and the remaining parts of Europe, which were more stagnant. We contribute to this literature by analysing probate inventories in a rural area in north-western Germany. We show that a closer look at these spaces, which had an intermediate level of development and integration into global markets, reveals a more gradual development and a discernible market evolution. Sumptuary laws may have somewhat slowed down the change in material culture in German regions, but the presence of towns and the proximity to the Netherlands had noticeably positive effects on consumer behaviour. The proto-industrial orientation of local economies proved to be particularly important, as it led to the granting of access to global markets, in addition to greater availability of cash. We observe a delayed diffusion of the new consumer culture in intermediate European regions and argue for a more gradual view of the European consumer revolution.

Assessing female accountability in the long eighteenth century through debt imprisonment

Alexander Wakelam

Pages 575-598

DOI: https://doi.org/10.1111/ehr.13193

Abstract: This article measures the relationship between marital rates and female economic independence in eighteenth-century England and Wales through an assessment of their confinement in debtors’ prisons. While an array of scholarship has emphasised the enduring agency of women who were able to continue managing enterprises after marriage, this has arguably too severely diminished the significance of coverture which eradicated the legal identity of wives. By insisting agency requires the ability to be held accountable not merely in terms of the capacity to act, this research emphasises that, until it was abolished, coverture continued to matter in a practical economic sense and not merely in legal theory. As marriage rates increased, the rate at which women were held accountable for their debts declined, suggesting a proportional limitation of their independence, functioning essentially as their husband's employee. Industrialisation had little impact upon female accountability, suggesting that demography rather than capitalism governed how women engaged with the market. Furthermore, this research highlights a striking shift in how women understood their own identity, increasingly adopting occupational rather than marital descriptions of themselves possibly owing to the increased marginality of singlewomen.

Factor prices and induced technical change in the industrial revolution

Ravshonbek Otojanov, Roger Fouquet, Brigitte Granville

Pages 599-623

DOI: https://doi.org/10.1111/ehr.13194

Abstract: Using historical data for the 1700–1914 period, this paper analyses the nature and direction of technical change in Britain. The evidence in this paper indicates that, over this long period, labour-saving technology adoption was a major response to changes in relative factor prices, thus supporting the hypothesis that ‘induced innovation’ was a major driver of technical change during the British industrial revolution. Labour saving was made possible and sustained by capital-augmenting and energy-augmenting technical change coupled with continuous capital accumulation and abundant energy supplies. This process placed the British economy on a higher capital–labour ratio equilibrium, and was the primary force driving sustained productivity growth, which further raised wages and living standards.

New perspectives on the contribution of sanitary investments to mortality decline in English cities, 1845–1909

Toke S. Aidt, Romola J. Davenport, Felix Gray

Pages 624-660

DOI: https://doi.org/10.1111/ehr.13195

Abstract: Health improved in English cities in the last third of the nineteenth century, in tandem with substantial increases in public spending on water supplies and sanitation. However, previous efforts to measure the contribution of public expenditures to mortality improvements have been hampered by difficulties in quantifying public health investments and the lack of mortality data for specifically urban populations. We improve upon the existing evidence base by (1) creating measures of the stock of urban district sanitary capital, by type, on the basis of capital expenditure flows, rather than loan stocks; (2) using mortality and capital stock data that relate to the same administrative units (urban districts), and (3) studying the period 1880–1909 as well as the earlier period from 1845. The stock of sewerage capital was robustly related to improvements in all-cause mortality after 1880. The size of this effect varied with the extent of public investment in water supplies, suggesting complementarity between the two assets. For the period 1845–84, investments in water were associated with declines in infant and child mortality but the effect was much smaller and less precisely estimated in later decades. Our results suggest that improvements in water and sewerage targeted different transmission pathways for faecal–oral diseases.

Individual investors and social ownership structures in the UK before the 1930s: Joint holdings and trustee investment

Janette Rutterford, Dimitris P. Sotiropoulos, Carry van Lieshout

Pages 661-692

DOI: https://doi.org/10.1111/ehr.13197

Abstract: After the introduction of limited liability, a growing number of individuals in Britain from a widening social spectrum, including the less affluent, began to own stocks and shares. Drawing upon a unique and large dataset of 35 848 investors between 1870 and 1935, this study analyses joint holdings which have been a neglected aspect of investor behaviour. Our findings reveal that joint holdings were quite common and that about one in five UK investors were involved in a joint investment. Men were more likely to be joint holders than women for reasons related to institutions of social ownership such as trusts and executorships.

BOOK REVIEWS

The Blacketts: A northern dynasty's rise, crisis and redemption By Greg, Finch, Newcastle upon Tyne: Tyne Bridge Publishing. 2021. pp. viii + 367. 28 plates. ISBN Hbk. 9781838280956 Pbk. 9781838280994 Hbk. £20 Pbk. £14.99

Andy Burn

Pages 693-694

DOI: https://doi.org/10.1111/ehr.13250

Pawned states: State building in the era of international finance By Didac Queralt, Princeton: Princeton University Press. 2022. p. 368. 43 figs. 19 tables. ISBN 9780691231525. Hbk

Tehreem Husain

Pages 694-695

DOI: https://doi.org/10.1111/ehr.13249

British imperialism and globalization, c. 1650–1960 , Joseph E. Inikori (ed.), Woodbridge: The Boydell Press, 2022. p. 325. ISBN 9781783276462. Hbk £70.00

Bronwen Everill

Pages 696-697

DOI: https://doi.org/10.1111/ehr.13251