ARTICLES
Measuring extractive institutions: colonial trade and price gaps in French Africa
Federico Tadei
Pages 1–23
https://doi.org/10.1093/ereh/hey027
Colonial extractive institutions are often blamed for current African underdevelopment. Yet, since colonial extraction is hard to quantify, the magnitude of this phenomenon remains unclear. In this paper, I use new archival data to estimate colonial extraction through trade, measured as the gap between prices that the monopsonistic French trading companies paid to African producers and prices that should have been paid in a counterfactual competitive market. The results show that African prices were only a small fraction of competitive prices, implying an annual loss of almost 2 percent of GDP during colonial rule.
British state development after the Glorious Revolution
Gary W Cox
Pages 24–45
https://doi.org/10.1093/ereh/hey028
North and Weingast (1989) argued that the Glorious Revolution broadly enhanced the British state’s credibility. In contrast, I argue that the Revolution made the state’s fiscal-military component credible but left its civil component no more credible than it had been before. This differential credibility explains the stark contrast in efficiency and hierarchy that developed between the fiscal-military and civil administrations after the Revolution. When the Civil List Act 1831 capped a half century of reform and put the civil budget wholly under parliament’s control, the developmental gaps between the state’s two components abruptly began to close. I show this by documenting structural breaks in the growth rate and organization of the civil state.
A Kuznets rise and a Piketty fall: income inequality in Finland, 1865–1934
Petri Roikonen and Sakari Heikkinen
Pages 46–79
https://doi.org/10.1093/ereh/hey032
This study presents the new Gini coefficient and top income share series for Finland in the years 1865–1934 by utilizing Finnish tax statistics, which provide data on a poor country on the threshold of modern economic growth. Income inequality was relatively moderate in 1865, while famine (1867–1868) decreased it further. Income inequality increased substantially during the late nineteenth century, then declined during WWI and its aftermath, followed by another increase in inequality in the late 1920s that was halted by the Great Depression. The rising level of inequality before WWI fits well with the ideas of the Kuznets curve and maximum inequality, whereas the decline in inequality was due to shocks (e.g., civil war).
Living costs and living standards: Australian development 1820–1870
Laura Panza and Jeffrey G Williamson
Pages 80–97
https://doi.org/10.1093/ereh/hey025
This paper contributes to the New World living standard leadership debate by comparing the Australian experience during 1820s–1870s with the USA, Latin America, and the UK. Using novel living costs data, we compute two estimates of income leadership: welfare ratios and purchasing–power–parity-adjusted GDP per capita. Australia started considerably below the UK and the USA but by the 1870s, it had overtaken the former and had almost done so for the latter, due to relatively rapid labour productivity growth and a steep decline in living costs. Still, in the 1870s Australia was not the world income leader, but a close second.
The limits to lender of last resort interventions in emerging economies: evidence from the Gold Standard and the Great Depression in Spain
Enrique Jorge-Sotelo
Pages 98–133
https://doi.org/10.1093/ereh/hey030
Conventional accounts argue that Spain escaped the Great Depression because its currency was not convertible to gold. Accordingly, when a bank run ensued in 1931, the Banco de España would have been able to lend freely as lender of last resort. Drawing on new archival data on bank balance sheets and discount window borrowing, I show that rapid currency depreciation caused by the reversal in international capital flows that started in 1928 bounded monetary authorities to a dilemma between liquidity assistance and capital mobility during the 1931 crisis. These limits to policy reaction help explain the sharp contraction in bank lending and economic activity during and after 1931.
English energy consumption and the impact of the Black Death
Richard W Unger
Pages 134–156
https://doi.org/10.1093/ereh/hey024
Estimates of energy consumed from different carriers in England in 1300 and in 1450 indicates limited increases in consumption in the wake of the large population change after the Great Death. Adjustments in relative use of energy sources, to be expected, yielded variations without apparent structural changes. Indications of some pressure on existing land resources in 1300 suggest energy supplies did constrain growth in the economy, though unexploited options to overcome the pressure did exist. The expectation of profligate use of newly relatively abundant energy in 1450 was not realized. By 1450, output per unit of energy consumed surprisingly rose relative to 1300, indicating efficiency improvements.
Vertical and horizontal integration in Imperial Russian cotton textiles, 1894–1900
Amanda G Gregg
Pages 157–191
https://doi.org/10.1093/ereh/hey031
When do firms produce their inputs instead of purchasing them on markets? Firms may vertically integrate when markets are thinner to mitigate price risk. However, firms that wish to vertically or horizontally integrate may be unable to do if integration requires additional capital and they face financial constraints. Using detailed factory-level and firm-level manufacturing census data, this paper supports a thin markets explanation of integration within the Russian cotton textile industry in 1894 and 1900, though integration into capital-intensive industries like spinning required financial resources. Unlike contexts in which specialized firms dominated, vertically integrated Russian cotton firms were more productive.
Incentives work: performance-related remuneration of directors before and during the great depression in Belgium
Veronique Vermoesen and others
Pages 192–218
https://doi.org/10.1093/ereh/hey022
We study the payment of bonuses to directors of Belgian firms listed on the Brussels Stock Exchange in 1925–1934. Directors received substantial cash bonuses which were positively related to firm performance, measured by accounting income and changes in the market value of equity. If shareholders were expropriated via the payment of excessive director bonuses, we would expect a larger drop in stock market performance during the Great Depression for firms paying higher bonuses. However, our findings suggest that bonuses were a valuable tool for aligning the interest of directors and shareholders in an environment characterized by weak legal investor protection.
