Previous researchers argue that the legal and regulatory environment helped shape the German financial system in the nineteenth and early-twentieth centuries, with particular emphasis on the damaging effects of the stock exchange law of 1896. This article finds that the stock exchange law of 1896 exerted little measurable impact on the growth and concentration of the universal banking system or on the business turnover of universal banks relative to securities markets. The article also shows that the English commercial banking sector and the German universal banking sector underwent similar movements toward concentration between 1884 and 1920 (both accelerating after 1912), despite no corresponding regulatory changes in England – further suggesting that consolidation of universal banking resulted from factors other than the 1896 law.

It is well-known that clearing banks in Britain did not publish their true profits until 1969. This article sets out to establish from sources in the banks’ archives reliable and consistent estimates of the true profits and profitability of the major English clearing banks during the period 1920–68. The methods used and problems encountered are explained, and the results discussed, together with possible sources of data outside the banks. The impact of inflation on rates of return is considered. The question of ‘smoothing’ of published profits by the banks is addressed. The results are discussed in the context of economic theory and the perceived cartel nature of banking and some comparisons made to estimates of profitability in the wider UK economy. Finally, some interesting questions raised by the results, and which require further study, are identified.

The four reviews make the following major criticisms of the book:

1. (1) A Farewell to Alms assumes one important revolution in economic history, the Industrial Revolution. In reality there were two, with the Neolithic Revolution of equal importance (George Grantham).

2. (2) World income levels did rise between the Stone Age and 1800 (Gunnar Persson, Hans-Joachim Voth).

3. (3) The Malthusian model has been shown to be inapplicable to pre-industrial Europe (Grantham, Persson).

4. (4) The claim of ‘survival of the richest’ is just the revival of discredited and dangerous social Darwinism? (Deirdre McCloskey).

5. (5) There was no Darwinian selection for ‘bourgeois characteristics’ in the pre-industrial world of settled, institutionally stable agrarian societies (McCloskey).

6. (6) The recent growth of India and China, and the experience of immigrants to the USA, easily refute the view that survival of the richest had any impact (McCloskey).

7. (7) The ideas of A Farewell to Alms are not new, merely uncredited borrowings from others (McCloskey, Persson, Voth).

This article examines patterns of structural change and labour productivity growth in the late nineteenth-century Habsburg Empire. Using shift-share analysis and a set of basic measures to account for the contribution of physical and human capital growth, it seeks to address three questions. First, what was the role of labour productivity growth in per capita income growth? Second, to what extent can structural change account for the comparatively slow growth of the Habsburg economy in general, and Austria's, in particular? Third, how important were physical and human capital stock growth in aggregate labour productivity growth in Austria-Hungary as compared to Germany? The article argues that, in contrast to the Hungarian experience, the size and performance of the agricultural sector imposed a severe burden on Austrian aggregate growth. Further, the evidence points to a significantly smaller contribution of TFP growth to aggregate and industrial labour productivity growth in Austria and Hungary than in Germany. A proximate cause for the TFP growth differential may be found in far smaller positive externalities derived from lower initial human capital endowments in the Habsburg lands.

In a sample that contains annual prices of 39 selected commodities in Britain and Germany in the period 1850 to 1913, substantial evidence of well integrated commodity markets is found. The degree of integration is not universal across markets and varies over time, however. Absolute price variability was in general decreasing over the period, indicating more closely integrated markets. But the reintroduction of tariffs in Germany beginning in 1879 implied that this trend was broken for a number of agricultural commodities. With the exception of animal foodstuffs, which were affected by non-tariff barriers, most price series are cointegrated. The speed of adjustments of prices, measured by estimates of the half-life of Law of One Price (LOP) deviations, is often in the range of 1 to 1.5 years, which is lower than that found in many other studies of market integration.

In this article we study the issue of cross-border economic integration in the context of Poland’s reunification from 1919. We find that the Polish interwar economy can be regarded as integrated with some restrictions. Moreover, a significant negative impact of the former partition borders on the integration level in the early 1920s vanishes in the middle of the 1920s. This suggests that the post-reunification integration was surprisingly successful. The degree of integration is comparable to that of 19th century France.

Trade policy constitutes one of the most important chapters in any economic history account of the early years of this century. To assess its impact on the economic development of individual countries we need comparative measures of protection at the sectoral level. This paper offers what appears to be the first attempt to construct such measures for 1913 based on the Heckscher-Ohlin trade model. It uses a newly constructed data set on net trade flows and factor endowments covering fourteen ‘old world’ and four ‘new world’ economies. In contrast to previous studies, the measures suggested here are, first, objective in the sense of not attempting to classify a priori the trade regime of some country based only on its tariff legislation. Second, they reflect all types of trade interventions. Third, they are constructed as continuous measures. Finally, and most importantly, they are comparable across countries and sectors.

This article provides a new perspective on the interwar foreign debt crisis by analysing original data on the credit ratings, market yields and subsequent performance of government borrowers in the New York market. We focus on the four agencies that are known to have been operating at the time (Fitch, Moody's, Poor's and Standard Statistics). We provide a description of the rise of the market for grades and gather information on the products sold, price schedules, etc. We find that rating agencies did exhibit features similar to those that have attracted considerable interest recently: namely, they did not react until the crisis had already begun and then implemented massive downgrades. We conclude by suggesting that, given the less than stellar record of the agencies, their emergence in the 1930s as a regulatory tool will have to be explained in future research.

This paper examines the effects of Germany's inter-war reparation agreements in the framework of the Keynesian transfer problem. According to conventional wisdom, with free capital mobility reparation transfers are necessarily under-effected. I argue that while this is true for the Dawes Plan period between 1924 and 1929, the Young Plan for German reparations after 1929 created an external credit constraint such that during the depression, no counteracting capital flows could come forth and reparations were fully (or over-) effected. This is consistent with the so-called Borchardt hypothesis, which claims that stabilisation policy in Germany during the Great Depression was credit constrained and that lack of budgetary discipline during the preceding years was instrumental in creating this constraint. Accounting for the foreign credit restriction created by the Young Plan, Germany's deflationary policies during the slump can be interpreted as the austerity reaction to an imminent foreign debt crisis. The balance of payment stabilisation required by the Young Plan explains most of the decline in German national product during the depression if Keynesian import functions are assumed and suitably parameterised. Simulation of various different transfer profiles suggests that with tighter macroeconomic policies during the Dawes Plan period after 1924, a large part of the income contraction after 1929 could have been avoided. The results imply that both parts of Borchardt's hypothesis hold up even under plainly Keynesian assumptions.

In this article the economic organisation of the infrastructure industries of transport, communications and energy in the period 1840–1914 is analysed and the role of government evaluated. The article attempts to explain the differences in government involvement across mainly Western European countries: Denmark, France, Germany, Italy, Norway, Spain, Sweden and the United Kingdom. Regulation via the concession system, municipal ownership, state guarantees of bond interest, profit sharing and nationalisation can all be found. In local networks for gas, electricity and tramways the pattern of regulation was determined by the structure and powers of local government and by fiscal considerations, such as the need to generate trading profits as a non-tax revenue for those town councils seeking funds for their mounting public health programmes. At the national level, central government objectives with respect to economic growth and political unification were pursued by the use of rate-of-return guarantees and subsidies to railway companies. State ownership was to be found only when speed in construction was paramount or when network segments were especially unprofitable or, and this applied also to telegraphs, when there was a very strong desire to control information and the flow of goods and persons. Neither a distrust of capitalism nor the advent of municipal socialism were motivating forces behind public ownership.

The article argues that for a region adopting a technology from elsewhere, an existing stock of (relevant) human capital was essential to the rapid and successful adoption of the technology. But once the technology has been fully assimilated, increments to human capital would not be expected to be important in its further growth. Thus, Catalan industrialisation was possible because the level of human capital present in industry was enough to adopt and modify new technologies. Human capital stock was mainly the result of past investments in on-the-job training, and children's informal education took place in the workplace rather than the schoolroom. Therefore, the level of human capital present in the workforce was higher than literacy and schooling rates showed. However, evidence is also presented on the low contribution made by human capital to growth rates.

In this article, we investigate the information efficiency of the Berlin stock exchange using returns of a new daily stock-market index for the years 1892–1913. We focus on the impact of the 1896 stock exchange law and of the increases of the stock-market turnover tax in 1894 and 1900 on information efficiency. We fit an ARMA(0,1)-GARCH(1,1) model to the data and search for structural breaks. This approach yields no convincing evidence that the tax increases had a negative influence on weak information efficiency. In addition, the restriction of derivative trading by the 1896 stock exchange law did not result in measurable changes in the autocorrelation of daily returns.

Since technology is localised and context-specific, the technological trajectories of large firms tend to lock-in to particular national configurations. This article examines evidence on the industrial patterns of technological development in the largest firms originating from the US, Germany, the UK, France, Switzerland and Sweden, through their corporate patenting in the US since 1920. It is shown that in each national group the profile of development is path-dependent, but with some selected convergence between groups leading to the formation of three clusters of groups (the US and UK, German and Swiss, and French and Swedish) that share common characteristics.

The financial market was well developed in France in the years before World War I, and there were many newspapers that provided information to investors. Yet commentators at the time faulted the financial press for inaccuracy and biases, which they linked to the existence of payments made by companies for coverage in the editorial section. This article tests whether the payment scheme induced a systematic bias in the coverage of companies listed on the Paris stock exchanges by newspapers. The results show that, although firms' media coverage was affected, the performance of firms actually touted by the press was good. Thus, the media bias can also be explained by newspapers choosing the companies' exposures according to their editorial policy.

Greg Clark is a master of the art of using one-liners in telling stories and Farewell to Alms: A Brief Economic History of the World is no exception. It offers the Malthusian hypothesis of population growth leading to misery as an all-purpose vehicle for all human history, except for the last 200 years. However, his Malthusianism is at times more evangelical than empirical and analytical. He dismisses Angus Maddison's painstaking efforts (e.g. Maddison 2001, 2003) at providing an empirical basis for long-run income estimates (p. 19) as inconsistent with the logic of the Malthusian economy. When the historical record contradicts Greg Clark it is not allowed to stand in the way of his noble aim and declared intention of writing big history. At least in one respect he has succeeded: this book is the widescreen version of the Postan Thesis, although M. M. Postan (1966, 1972) is remarkably missing in the credits. The book is also big in rhetorical gestures, starting with the title, and a reader must be forgiven for occasionally asking whether the author should be interpreted literally, or whether statements should simply be deflated by common sense. I have decided to go nominal on Clark.

Preindustrial society was characterised by vast uncertainties due to harvest failures and fluctuations in prices of basic commodities. These economic fluctuations had severe effects on the standard of living, especially for the poorer segments of the population, as shown for instance, by the increased mortality following economic crises. This article examines the extent to which migration could be used as a measure to deal with economic stress by sending individual family members away, or relocating the entire family. A micro-level approach is taken, where a longitudinal dataset at the individual level is used in the analysis of a rural community in southern Sweden for the period 1829–1866. The results show that landless people did not move in response to economic stress, most likely because of the lack of available alternatives and prohibitively high costs of long-range migration. Thus, migration does not appear to have been an effective way of dealing with economic stress in this preindustrial rural community.

There is a general consensus among scholars that centralised wage bargaining played a key role in the ability of Sweden to maintain wage moderation in the early post-World War II period. Conventional wisdom suggests that it worked through one of two mechanisms: internalisation of the negative externalities associated with excessive wage settlements or implicit contracts that favoured cooperation between capital and labour over conflict. We contend, instead, that centralised wage bargaining was introduced because Swedish firms and unions adopted the Rehn-Meidner plan. In this environment, centralised wage bargaining was used to facilitate wage compression from below and promote labour release. Wage moderation then was a result of shifts in the labour supply. In the final section of the article we argue that excessive wage compression in the 1970s sapped the morale and effort of skilled workers, pushed down productivity and profits and eventually led to the demise of centralised wage determination.

German-style universal banks are widely believed to improve capital mobilisation and utilisation by stimulating savings, matching savers and investors, and offering business and investment advice to entrepreneurs. Using aggregate and firm-level evidence on deposit taking and branching, banks' liability structure, interlocking directorates between banks and industrial companies, and industrial investment patterns, this article investigates the role of universal banks in two European latecomer economies: Germany and Italy. Comparing the impact of these banks permits some distinction between institutional effects and country-specific effects. The findings suggest that universal banking took on differing forms in Germany and Italy, implying that apparently similar institutions can yield divergent economic outcomes depending on the context in which they develop. For both countries, the results also indicate that the universal banks made a modest impact on capital mobilisation, industrial investment, and economic growth.

Were eighteenth-century financial markets efficient? Neal (1990) shows that the London and Amsterdam markets were integrated. Yet some scholars find that the London capital market was either not integrated across various classes of securities, or was comprised of ignorant investors who were not knowledgeable enough to arbitrage across securities with different maturities, or was even irrational at times. In this article, we demonstrate that these London capital market inefficiencies suggested by previous scholars arise from an incorrect comprehension of the pricing of the financial instrument they use. After examining certain features peculiar to India bonds overlooked by previous authors, we make it clear that the London domestic market was perfectly integrated and that investors were capable of handling and pricing sophisticated options.

A survey of industrial households conducted in 1889–90 is used to investigate participation in self-help organisations, such as sickness and death benefit clubs and friendly societies, and to examine whether payouts were important in seeing families through earnings crises. Formal self-help has been hypothesised to underpin the male breadwinner family form, reducing the risk incumbent in reliance on one source of earnings. The results here show that those households with multiple earners took out most insurance and also had recourse to informal strategies, such as eliciting greater labour force participation from other family members and economising on rent, when adversity carried male earnings down. Those reliant on a male breadwinner were left vulnerable. They insured less, benefits were insufficient to make up earnings shortfalls and they were unable to compensate for deficits through labour market strategies. Formal self-help was a complement to, not a substitute for, family employment.