The growth of trade after 1860 has been attributed to declining tariffs, to falling transport costs, and, recently, to monetary arrangements. However, coincident with the rise of trade the second half of the nineteenth century saw the development of the first electric communication network: the telegraph. The first successful trans-oceanic cable was operating in 1865. The telegraph remained the only direct trans-oceanic communication link until into the twentieth century. Little research has been conducted explicitly linking the impact of telegraphs on international shipping and international trade. A panel is used to show that there is a correlation between the diffusion of the telegraph, co-ordination of shipping, and the growth of world trade even controlling for the impact of other well-studied effects. The telegraph reduced the time ships spent in port and allowed ships to travel farther among ports to collect more valuable cargo.

In this article, I test whether there is any evidence of price convergence on intercontinental commodity markets prior to the nineteenth century. I gather price data on eleven commodity markets important to early modern intercontinental trade. The main conclusion is that many of the commodity markets do show signs of price convergence even prior to the nineteenth century. The question of an early globalisation can thus not be dismissed as easily as has often been done so far.

This article examines the institutional foundations of the financial market underpinning Venice's commercial success during the late medieval period. A public-order, reputation-based institution enabled merchants to commit (i) not to flee with investors' capital, despite the limited geographical reach of the legal system, and (ii) not to breach their contracts, despite the investors' inability to directly monitor them. Economic rents in Venice motivated merchants to submit to the city's authorities, while tight administrative trading controls provided the information required to verify a contractual breach. These institutional arrangements differed from other public-order and reputation-based institutions that have been considered in the literature.

This paper sets out the evolution of Anglo-German comparative labour productivity levels since 1870, using a nine-sector disaggregation. Germany caught up with and overtook Britain in terms of aggregate labour productivity largely by shifting resources out of agriculture and improving her relative productivity position in services rather than by improving her position in manufacturing. The key role attributed by many economic historians and growth economists to technology transfer in manufacturing as a major factor driving convergence of productivity and living standards is called into question.

Reparations as an instrument of international peace settlements were abandoned after the failure of Germany to pay its post-World War I indemnity. However, reparations played a useful role in the construction of earlier peace treaties. This article examines the payment of reparations by the French after the Napoleonic Wars. By most measures, these reparations were the largest ever fully paid; and they imposed a high cost on the economy in terms of lost output, consumption, and diminished capital stock. The incentives to pay were appropriately set and payment permitted France to be accepted once again as an equal among the great powers.

The term financial revolution has been abused in the literature. Revolution connotes a sharp and unique break from the past that should stand up to careful historical scrutiny, but in fact it does not. Evolution describes financial history better than revolutions. We compare the classic ‘financial revolutions’ with the financial innovations of Genoa, Venice and Florence in the Quattrocento and Cinquecento and the upshot is that these Italian city-states – the two maritime cities more than Florence – had developed many of the features that were to be found later on in the Netherlands, England and the United States. The importance of the early financial innovators has been eclipsed by the fact that these city-states did not survive politically. Instead, the innovations were absorbed in the long chain of financial evolution and, in the process, lost the identity of their creators.

We consider the relative contributions of changing technology and institutions for economic growth through the investigation of a natural experiment in history: the almost simultaneous introduction of the automatic cream separator and the cooperative ownership form in the Danish dairy industry from around 1880. Using a new database of statistics from creameries and the tool of stochastic frontier analysis, we find that both institutions and technology were important for the success of the Danish dairy industry and, by implication, the growth and early development of the Danish economy.

Over the first half of the nineteenth century, the Prussian-German customs union known as the Zollverein gradually unified a scattered confederation of sovereign states under an internal free trade agreement. This article uses grain prices to quantify the differential effect of the Zollverein for market integration among Zollverein members versus European powers that were not part of the Zollverein, including France, Switzerland, and the Habsburg Empire of Austria. Overall, this border effect is consistently and substantially less than border effect estimates from contemporary samples. For the 1834 liberalisation round, the implied border effect, calculated as the implied decrease in distance that comes about as the result of the customs border being eliminated, is between 140 and 160 kilometres, with the smaller distance for non-German speaking cities, and the larger distance for German–speaking cities. Thus, common language in this sample provides an additional benefit of lowering trade barriers by 11–15 percent in distance, making border elimination more valuable among German-speaking cities than for mixed-language-speaking cities. The article offers a few reasons for why I estimate smaller border effects than are found in studies on twentieth century economies, and the analysis gives a new historical perspective on what drives trade costs and changes in market integration.

This article examines how globalization and industrialization offered the nations of the European periphery opportunities to develop exports in sectors where they enjoyed a comparative advantage. As a case in point, we consider Spanish exports of Mediterranean horticultural products (MHP). Two bi-equational export supply and demand models (an equilibrium and a disequilibrium model) are proposed, in which volumes and prices are determined simultaneously, to throw light on the main causes of Spain's expanding exports of MHP. The results clearly reflect the primacy of rightward shifts in the supply and demand curves in explaining the growth of MHP trade by volume. Thus, both rising incomes in the more developed countries and technological change in agriculture specializing in these products were key to the growth of this trade. Meanwhile, Spanish exporters also benefited from the increasing integration of international markets, especially through declining transport costs and, to a lesser extent, trade liberalization.

Trade is a critical component of economic growth in newly settled societies. This article tests the impact of ship traffic on the Cape economy using a time-series smoothing technique borrowed from the business cycle literature and employing an econometric procedure to test for long-run relationships. The results suggest a strong systematic co-movement between wheat production and ship traffic, with less evidence for wine production and stock-herding activities. While ship traffic created demand for wheat exports, the size of the co-movement provides evidence that ship traffic also stimulated local demand through secondary and tertiary sector activities, supporting the hypothesis that ship traffic acted as a catalyst for growth in the Cape economy.

Recurring changes in the institutional and ideological structures of Central and Eastern Europe have made it difficult to quantify and interpret its long-term economic development. This article provides the foundations for a unified picture of economic growth in the region since 1870. We construct a consistent time series of GDP per capita for the present day states of Central and Eastern Europe over the period 1870–1989, and then draw on the literature of the ‘new’ growth theory in economics to assess their long-term economic performance in the wider European setting.

By 1914, the London Stock Exchange listed and traded one-third of the public capital available to investors anywhere in the world. No other exchange could match it in terms of scale and scope of securities on offer, or in terms of the number of stockbrokers available to potential customers. The reason, we argue, is that the microstructure of the London Stock Exchange was also unique. The owners of the exchange (Proprietors) left governance of the exchange to the users of the exchange (Members). Because the owners of the exchange could only increase revenue by increasing the number of users, newer members constantly sought new sources of revenue through financial innovations. The evolution of the London Stock Exchange's microstructure was path-dependent – the initial conditions for membership set the separate incentives for the owners and operators of the exchange, and these determined how they responded to successive shocks over time. Path dependency, unfortunately, eventually led to decreasing effectiveness and innovation by the members over time.

This article revisits Bairoch's hypothesis that in the late nineteenth century tariffs were positively associated with growth, as recently confirmed by a new generation of quantitative studies (see O'Rourke 2000; Jacks 2006; Clemens and Williamson 2002, 2004). This article highlights the importance of the structure of protection in the relation between trade policy and its potential growth-promoting impact. Evidence is based on a new database on industrial tariffs for the 1870s. The results show that income, factor endowment and policy independence are important for explaining regional asymmetries between tariffs and growth. At a global level, increased protection, measured by total and average tariffs on manufactures, implied more unskilled inefficient protection and less growth, and this is especially true for the poor countries in the late nineteenth century. Protection was only positive for a ‘rich club’ if we include in this group new settler countries, which grew rapidly in the late nineteenth century and imposed high tariffs mainly for fiscal reasons.

This article briefly reviews the core literature on the Golden Age of economic growth and tests the explanatory power of alternative theories against one another, with particular emphasis on the reconstruction thesis as developed by Jánossy. While previous empirical work on the subject relied on cross-sectional analysis, I employ panel-data techniques, which produce more robust estimates. I demonstrate that, for the core western industrialised nations, the rapidity and variety of economic growth during the 1950s and 1960s can mostly be explained by post-war reconstruction, the completion of which marked the end of the Golden Age. Labour-force expansion also made a very strong positive contribution. In the more peripheral countries of the OECD, however, rapid catching-up from the late 1950s was largely brought about by structural modernisation. Finally, human-capital accumulation has had a determining impact on long-run growth potentials, modelled here as time-constant country-fixed effects.

The Ricardian model that inspires the conventional account of pre-industrial economic history assumes that productive opportunities are fully exploited, and that economic growth and fluctuations reflect the interaction of technological improvement, diminishing returns to labour and capital, and homeostatic demographic responses to changes in per capita income. This article argues that the long swings in output and productivity were the consequence of endogenous variation in trading costs affecting the profitability of undertaking specialised investment in market production. Because its markets were often ‘thin’, the pre-industrial economy possessed latent reserves of productivity that were not fully exploited. A search-equilibrium model is developed to demonstrate how such an economy could experience swings in output and productivity in the absence of technological or other ‘fundamental’ changes. The argument is supported by evidence indicating that the level of output in the second century may have approached that of the early eighteenth century.

‘For those who care for the overmastering pattern, the elements are evidently there for a heroically simplified version of English history before the nineteenth century in which long-term movements in prices, in income distribution, in investment, in real wages, and in migration are dominated by changes in the growth of population’. – H. J. Habakkuk (1958).

‘We may say broadly that while the part which nature plays in production shows a tendency to diminishing return, the part which man plays shows a tendency to increasing return’. – Alfred Marshall.

Self-selection mechanisms are important because they shed light on what has been relevant to those who migrate, especially in the nineteenth century. Using new micro data gathered from emigrant permit lists and census data in the homeland, I compare over 10,000 German emigrants to those who stayed at home. I find that artisans were over-represented and farmers and labourers both under-represented. The emigrant population was positively self-selected in terms of skills, but negatively self-selected in terms of financial wealth.

This article investigates the question of how openness affected the growth of income in the late nineteenth-century Atlantic economy. More specifically, is the tariff-growth correlation identified by O'Rourke (2000) driven by European offshoots? Is the correlation perhaps explained by the concurrent integration of intranational markets before 1914? And what can other measures of openness tell us about the growth process in the nineteenth century? This note offers some answers. The results can be summarised as follows: O'Rourke's primary finding is not altered by changes in the sample; incorporating measures of inter- and intranational market integration into the analysis again supports O'Rourke's findings, but apparently leaves no role for intranational market integration; and evidence from trade-flow data suggests that there may been a pro-growth role for tariffs in a non-reciprocal trade environment.

Evidence from newly constructed monthly indices of manufacturing production shows that differences between the Scandinavian countries regarding business cycles in the interwar years were closely related to monetary policy decisions. In the 1920s Sweden made an early return to gold, while Denmark and Norway experienced large fluctuations in nominal and real exchange rates before restoring the gold standard at the prewar parity in 1927–28. The differences in monetary policy were mirrored in the business cycle history; Denmark and Norway being alone in having a particularly severe contraction period in the years 1925–27, referred to as the gold-parity depression. The nominal depreciation of the effective exchange rates following the abandonment of the gold standard in September 1931 led to a significant real depreciation in all three countries. Econometric evidence confirms the view that the decision to leave gold was instrumental in dampening the contractionary business cycle impulses from abroad during the years of the Great Depression.

Electricity and electrotechnical industry have taken a central position in Swedish industrial development ever since the breakthrough of the high-voltage technique in the 1890s. Some reasons for the importance of electricity are quite obvious. Due to her natural resources, Sweden had at an early stage developed many energy intensive industries such as iron and steel works and pulp and paper mills. She lacked, however, deposits of fossil fuels while the supply of water power was abundant. Hence, early on there was a strong stimulus to develop a system of generation and transmission of electrical power as well as to invest in electrotechnical equipment. Similarly, there was a strong stimulus to the development of a domestic electrotechnical engineering industry. This industry became a backbone of the more sophisticated manufacturing that spurred Swedish industrialization from the 1890s onwards.

This article organizes an economic analysis of the effects of colonial rule on capital market access and development. Our insights provide an interpretation of institutional variance and growth performance across British colonies. We emphasize the degree of coercion available to British authorities in explaining alternative set-ups. White colonies, with a credible exit option, managed to secure a better deal than those where non-whites predominated, for which we find evidence of welfare losses.