There is a common belief that truly international, or global, freight markets only became possible after the introduction of steam shipping and telegraph communication. It is obvious, however, that some very important developments in maritime trade took place during the era of sail, well before these crucial technological innovations occurred.

In the late 1950s and 1960s, Douglass C. North published a series of articles on the long-run development of freight rates and shipping productivity. In these, he claimed that the costs of seaborne transport declined almost continuously from the mid-seventeenth century until the First World War, thus effectively diminishing the proportion of freight in the prices of overseas products (“freight ratio”). According to North, the fall in the real cost of shipping was steepest in the first half of the nineteenth century, that is, long before the transition from sail to steam. So far, no one else has attempted any comparable long-term analysis.

North explained this secular trend in terms of a long-run improvement in shipping productivity. He did not ascribe this solely to technological change, but also to market factors such as “the expansion in the volume of international trade” and institutional changes like “the ending of navigation laws and other artificial impediments to multilateral shipping.” This is not surprising for a scholar who is best known as an neo-classical institutionalist and has claimed that “improvements in human organization” were probably as important for economic growth as technological development.

However, while North studied the development of hull forms, ship sizes and manning ratios in some detail he did not devote as much attention to the evolution of freight markets. It is true that he identified “the reduction of time idle in port or in ballast”5 as an important contributor to the growth of shipping productivity, but he proceeded no further. Yet this seems to be one of the most interesting aspects of this complex problem: it is quite tempting to suppose that periods of unemployment, whether in port or sailing with ballast, reflect the failure of the market to transmit potential freighters’ needs to actual carriers. If this is true the reduction of “idle time” depended – more or less - on the development of the networks and institutions of the market.