¹ Gilboy, Elizabeth Waterman, “Demand as a Factor in the Industrial Revolution,” in Cole, A. H., ed., Facts and Factors in Economic History (1932)Google Scholar; rpt. in Hartwell, R. M., ed., The Causes of the Industrial Revolution in England (London, 1967), pp. 121–38Google Scholar.

² Very explicit reiterations of Gilboy's thesis can be found, for example, in Landes, David, The Unbound Prometheus (Cambridge, 1969), p. 46Google Scholar; Eversley, D. E. C., “The Home Market and Economic Growth in England, 1750–1780,” in Jones, E. L. and Mingay, G. E., eds., Land, Labour, and Population in the Industrial Revolution (London, 1967), pp. 206–59Google Scholar; Deane, Phyllis, The First Industrial Revolution (Cambridge, 1969), p. 34Google Scholar; John, A. H., “Agricultural Productivity and Economic Growth in England,” in Jones, E. L., ed., Agriculture and Economic Growth in England, 1650–1815 (London, 1967), pp. 172–93Google Scholar. A recent restatement is in Crouzet, Francois, “Western Europe and Great Britain: ‘Catching Up’ in the First Half of the Nineteenth Century,” in Youngson, A. J., ed., Economic Development in the Long Run (New York, 1967), pp. 113–14Google Scholar. A variation on the same theme is in Georgescu-Roegen, Nicholas, The Entropy Law and the Economic Process (Cambridge, Mass., 1971), pp. 246–47CrossRefGoogle Scholar. Doubts concerning the demand hypothesis were sounded by Rostow, W. W., How It All Began (New York, 1975), pp. 14, 129, 172–73Google Scholar, and in a slightly different context by McCloskey, Donald N., “Did Victorian Britain Fail?” Economic History Review, 23 (Aug. 1970), 446–59CrossRefGoogle Scholar.

³ Gilboy, “Demand,” pp. 122–26.

⁴ Cole, W. A., “Eighteenth-Century Economic Growth Revisited,” Explorations in Economic History, 10 (Summer 1973), 327–48CrossRefGoogle Scholar.

⁵ The evidence for France is summarized in Labrousse, C. E., Esquisse du mouvetnent des prix et des revenus en France au XVIII^e siècle (Paris, 1933), pts. II, III, IV, esp. pp. 137–66Google Scholar. For the nineteenth century, too, the timing does not work. The period usually associated with the most rapid economic growth in France (1840–70) was also one of rising wheat prices. See ibid., p. 141, and Mitchell, B. R., European Historical Statistics (New York, 1975), p. 742Google Scholar.

⁶ Ippolito, Richard A., “The Effect of the ‘Agricultural Depression’ on Industrial Demand In England, 1730–1750,” Economica, 42 (Aug. 1975), 298–312CrossRefGoogle Scholar. Ippolito's overall conclusion is that the agricultural depression of 1730–50 did not constitute a major source of demand for industrial goods either. It should be emphasized that the estimates do not truly reflect the contribution of the agricultural revolution (i.e., shifts of the supply curve of agricultural goods) to the industrial revolution. This would only be the case if the supply curve of agricultural goods were perfectly elastic (as is assumed by Ippolito) or if demand were stationary. Neither of these assumptions seems plausible; hence, what is measured is the impact of price changes only, without further identification of their source.

⁷ Let the demand function have the form Q_M(D) = Y^aP_A^bP_M^c. This means that we can write the relationship between the demand for industrial goods and the relative price P = P_A/P_M as

An approximate value of b can be estimated by using the so-called Cournot relationship between the own and the cross elasticities of demand:

ɛ_A is the own price elasticity of demand for agricultural goods and γ_A is the share of agriculture in total output. A reasonable estimate of γ_A would put it at around . The value of ɛ_A is unknown, but is generally believed to be less than one in absolute value. Setting it equal to − .3 and −.7, we obtain estimates of b between −.35 and −.15.

⁸ The relative prices underlying the calculations were obtained and computed from a number of series which overlap to some extent, or which had to be converted to relative prices using some assumptions about weights. The procedure followed was in each case to choose the extreme estimates, thus obtaining upper and lower bounds.

⁹ Landes, David S., “The Statistical Study of French Crises,” this Journal, 10 (Nov. 1950), 200–01Google Scholar. Phyllis Deane and Cole, W. A., British Economic Growth, 1688–1959 (2nd ed.; Cambridge, 1969), p. 93Google Scholar. Post, John D., “A Study in Meteorological and Trade Cycle History: The Economic Crisis Following the Napoleonic Wars,” this Journal, 34 (1974), 338–39Google Scholar.

¹⁰ Eversley, “The Home Market,” pp. 240–46.

¹¹ A general discussion of the impact of agricultural fluctuations on the English economy is in Gould, J. D., “Agricultural Fluctuations and the English Economy in the Eighteenth Century,” this Journal, 22 (Sept. 1962), 313–33Google Scholar. Gould's attempts to explain the price movement by the operation and later repeal of the Corn Laws in the eighteenth century cannot be viewed as definitive—the export bounties were repealed in 1773, and it is hard to see how that could help raising prices.

¹² Jones, Eric, “Agriculture and Economic Growth: Economic Change,” in Agriculture and the Industrial Revolution (Oxford, 1974), pp. 116–17Google Scholar.

¹³ According to Freudenberger the effective labor input per worker doubled during the second half of the eighteenth century. Cf. Freudenberger, Herman, “Das Arbeitsjahr,” in Bog, Ingomar et al. , eds., Wirtschaftliche und Soziale Strukturen im saekularen Wandel (Hannover, 1974), pp. 307–20Google Scholar.

¹⁴ Minchinton, Walter E., ed., The Growth of English Overseas Trade (London, 1969), ed.'s intro., pp. 36–52Google Scholar. Habakkuk, H. J. and Deane, Phyllis, “The Take-off in Britain,” in Rostow, Walt Whitman, ed., The Economics of Take-off into Sustained Growth (London, 1962), pp. 77–78Google Scholar.

¹⁵ Kindleberger, Charles P., Economic Growth in France and Britain, 1851–1950 (New York, 1964), pp. 264–66CrossRefGoogle Scholar. A longer list of possible links between exports and growth is suggested by Caves, Richard E., “Export-led Growth and the New Economic History,” in Bhagwati, Jagdish N., ed., Trade, Balance of Payments, and Growth (Amsterdam, 1971), pp. 433–37Google Scholar. Some of the mechanisms suggested by Caves work in the wrong direction, however, and other nexuses seem far from easy to test in the case of Europe's industrialization, 1750–1850. For instance, does an expansion in exports stimulate and create ex nihilo entrepreneurial talent and initiative, or does it simply divert those resources away from alternative uses? Do increased exports stimulate the formation of overhead capital (e.g., harbor facilities), or should this be viewed as an additional cost imposed on the export-oriented economy?

¹⁶ Minchinton, English Overseas Trade, p. 38. Deane and Cole, British Economic Growth, p. 42. Ashton, T. S., An Economic History of England: The Eighteenth Century (London, 1972), p. 63Google Scholar.

¹⁷ Schlote, Werner, British Overseas Trade from 1700 to the 1930's (Oxford, 1952), p. 51Google Scholar.

¹⁸ Eversley, “The Home Market,” pp. 247–49.

¹⁹ Exports of woolen goods remained virtually unchanged between 1730–39 and 1780–89, while output of woolen cloth milled in West Riding grew by 396 percent (broadcloth, 1735–85) and 97 percent (narrow cloth, 1739–85). Exports of tin grew by 53 percent (1730/39–80/89), while output increased by 86 percent. Between 1750 and 1790 exports of coal rose by 60 percent while coal output more than doubled.

²⁰ Deane and Cole, British Economic Growth, p. 166. Mitchell and Deane, Abstract, pp. 282–83.

²¹ A similar conclusion has been reached recently by Paul Bairoch, who states flatly that the industrial revolution reached quite an advanced stage in England before seeking foreign outlets. Cf. Bairoch, Paul, “Geographical Structure and Trade Balance of European Foreign Trade from 1800 to 1970,” Journal of European Economic History, 3 (Winter 1974), 569Google Scholar.

²² The colonial market version of the demand hypothesis is even less convincing for other European economies. Spain, Portugal, and the Netherlands—all late industrializes—had access to substantial colonial markets. Belgium and Switzerland, on the other hand, were confined to the demand structure dictated by the competitive world market, and yet underwent an industrial revolution before 1850. Ireland could have benefitted from the enormous demand exerted by Great Britain and its colonial empire, yet Ireland failed to industrialize.

²³ Deane, First Industrial Revolution, p. 34. Murphy, Brian, A History of the British Economy, 1740–1970 (London, 1971), p. 333Google Scholar. Gilboy herself expressed doubts about the importance of population growth by itself.

²⁴ Deane and Cole, British Economic Growth, p. 255. King's estimates for 1688 indicate that the share of labor income was only 39 percent, which would make the critical income elasticity equal to 1.64.

²⁵ Eversley, “The Home Market,” p. 211. Davis, Ralph, The Rise of the Atlantic Economies (London, 1973), p. 304Google Scholar.

²⁶ Mill, John Stuart, Principles of Political Economy, ed. Ashley, W. J. (London, 1929), pp. 79, 87. Emphasis in originalGoogle Scholar.

²⁷ This is true even in the case of a monopoly in which the industry and the firm are the same. A monopolist will always operate on the elastic segment of the demand curve facing him.

²⁸ The seminal article is Kennedy, Charles, “Induced Bias in Innovation and the Theory of Distribution,” Economic Journal, 74 (Sept. 1964), 149–55Google Scholar. For a review of the ensuing debate, see David, Paul A., “Labor Scarcity and the Problem of Technological Practice and Progress in Nineteenth Century America,” in Technical Choice, Innovation, and Economic Growth (Cambridge, 1975)Google Scholar.

²⁹ The classic work is Schmookler, Jacob, Invention and Economic Growth (Cambridge, 1966), esp. pp. 88–103, 202–09CrossRefGoogle Scholar. Lilley, Samuel, “Technological Progress and the Industrial Revolution,” in Cipolla, Carlo M., ed., The Fontana Economic History of Europe (London, 1973), vol. 3Google Scholar. See also, for example, Landes, The Unbound Prometheus, pp. 77, 137. Habakkuk, H. J., “The Historical Experience of the Basic Conditions of Economic Progress,” in Dupriez, L. H., ed., Economic Progress (Louvain, 1955), pp. 150–51Google Scholar. The debate is admirably summed up in Musson, A. E., ed., Science, Technology and Economic Growth (London, 1972), ed.'s introGoogle Scholar.

³⁰ Nadiri, M. Ishaq, “Some Approaches to the Theory and Measurement of Total Factor Productivity,” Journal of Economic Literature, 8 (Dec. 1970), 1148–49 and references cited thereGoogle Scholar.

³¹ The list of inventors who failed to capitalize on their major inventions is very long, with Cort, Crompton, Goodyear, Whitney, W. Kelly, Lenoir, and Ericsson being some of the most notorious examples. Schiff has shown that there is little evidence to support the hypothesis that a national patent system makes a significant difference in the rate of industrialization. Cf. Schiff, Eric, Industrialization without National Patents (Princeton, 1971)Google Scholar. For a sceptical evaluation of the impact of the patent system in Britain, see Ashton, T. S., The Industrial Revolution, 1760–1830 (New York, 1964), p. 11Google Scholar.

³² Rossman, Joseph, The Psychology of the Inventor (Washington, 1931), p. 152Google Scholar.

³³ Edison, for example, “failed to understand the future of his invention [the phonograph] as part of the world of art and entertainment. He thought of it mainly [as a] modem dictaphone, [or] a speaking family album, to preserve the speeches of great statesmen, to teach languages hellip; .” See Hughes, J. R. T., The Vital Few (London, 1973), p. 175Google Scholar. The divergence between the social and the private rates of return on.innovations does not seem to have vanished over time. For a recent study see Mansfield, Edwin et al. , “Social and Private Rates of Return from Industrial Innovation,” Quarterly Journal of Economics, 91 (May 1977), 221–40CrossRefGoogle Scholar.

³⁴ Rosenberg, Nathan, “Science, Invention and Economic Growth,” Economic Journal, 84 (March 1974), 90–108CrossRefGoogle Scholar.

³⁵ For critiques of Schmookler's findings see, e.g., Musson, Science and Industry, pp. 25–29, and Jewkes, John, Sawers, David, and Stillerman, Richard, The Sources of Invention (2nd ed.; New York, 1969), pp. 210–11CrossRefGoogle Scholar.

³⁶ See esp. Rosenberg, Nathan, “The Direction of Technological Change: Inducement Mechanisms and Focusing Devices,” Economic Development and Cultural Change, 18 (Oct. 1969), 23CrossRefGoogle Scholar, and sources quoted there. Schöller, P., “La Transformation économique de la Belgique de 1832 à 1844,” Bulletin de l'Institut des Sciences Economiques, 14 (Dec. 1948), 585Google Scholar. Brown, William, “Innovation in the Machine Tool Industry,” Quarterly Journal of Economics, 71 (Aug. 1957), 406–25CrossRefGoogle Scholar.

³⁷ David, “Labor Scarcity,” pp. 82–83. Hughes, J. R. T., “Foreign Trade and Balanced Growth: The Historical Framework,” American Economic Review, 49 (May 1959), 335–36Google Scholar. Nathan Rosenberg, “The Direction,” pp. 4–11.

³⁸ A good illustration is the case of steel. It has been argued that Henry Bessemer's attention was first directed to steehwhen a cast iron cannon was unable to fire a new projectile he devised, and that the Bessemer process was therefore a result of a “technical imbalance.” It is noteworthy that a much more costly imbalance existed in constructing railroad tracks from wrought iron, which had to be replaced frequently. Experiments conducted in England indicated that steel rails could outlast wrought iron rails by a factor of seven. Fogel has estimated that the distribution of the wear of wrought iron rails was such that 55 percent of all rails laid wore out in the first ten years. Since the life of equipment was much longer and the life of the area-clearing infinite, the inability to produce cheap steel constituted a severe imbalance—which for the first forty years of the railroad was solved by factor reallocation, not by the invention of cheap steel.

³⁹ See, e.g., Derry, T. K. and Williams, T. I., A Short History of Technology (Oxford, 1960), pp. 473–74Google Scholar. Taylor, A. J., “Labor Productivity and Technological Innovation in the British Coal Industry, 1850–1914,” Economic History Review, 14 (Aug. 1960), 58Google Scholar.

⁴⁰ Taylor, “Labor Productivity,” pp. 62–64.

⁴ 1 Even today, there is considerable difficulty in interpreting the evidence whether national market size conveys a clear-cut advantage or not, although it is likely that in some industries small nations fail to achieve scale economies or sufficient competition. Cf. Scherer, F. M., Industrial Market Structure and Economic Performance (Chicago, 1970), pp. 93–95Google Scholar.

⁴² Paul A. David, “Learning by Doing and Tariff Protection: A Reconsideration of the Case of the Ante-bellum United States Cotton Textile Industry,” in Technical Choice, pp. 142–43. See also Weiss, Thomas J., “Economies of Scale in Nineteenth Century Economic Growth,” (Summary of Research Workshop), this Journal, 36 (March 1976), 39–41Google Scholar.

⁴³ Jones, G. T., Increasing Returns (Cambridge, 1933)Google Scholar. Jones's results are upper bound estimates of the importance of scale economies since he is unable to separate scale effects from technological change. Still, he finds an “observed elasticity” (i.e., the proportional growth of output divided by the proportional fall in price) of about 5 for the Lancashire cotton industry between 1850 and 1870. This implies a degree of homogeneity of 1.25, assuming a Cobb-Douglass production function. Sandberg has disputed the accuracy of Jones's index and insists that costs in the British cotton industry fell substantially between 1885 and 1914. He attributes this decline in costs to technological change, however, not to scale economies. Cf. Sandberg, Lars G., Lancashire in Decline (Columbus, 1974), pp. 93–119, 131–33Google Scholar. See also Gould, J. D., Economic Growth in History (London, 1972), pp. 229–35Google Scholar.

⁴⁴ Gatrell, V. A. C., “Labour, Power, and the Size of Firms in Lancashire Cotton in the Second Quarter of the Nineteenth Century,” Economic History Review, 30 (Feb. 1977), 125CrossRefGoogle Scholar.

⁴⁵ A summary of these figures, collected from various Parliamentary Papers, is provided in Blaug, Mark, “The Productivity of Capital in the Lancashire Cotton Industry during the Nineteenth Century,” Economic History Review, 13 (April 1961), 379CrossRefGoogle Scholar. The average size of the 1105 cotton manufacturers surveyed in the Horner Report of 1841 was 175 workers, with the median size almost exactly 100 workers. Cf. Gatrell, “Labour,” p. 98.

⁴⁶ Coppejans-Desmedt, H., “De Statistieken van E. C. Van Der Meersch over de Katoenindustrie in Oost Vlaanderen,” Bulletin de la Commission Royale d'Histoire, 128 (1962), pp. 121–81CrossRefGoogle Scholar. Heuschling, Xavier, Essai sur la statistique générate de la Belgique (2nd ed.; Brussels, 1841), p. 96 nGoogle Scholar.

⁴⁷ Lévy-Leboyer, Maurice, Les banques européenes et l'industrialisation Internationale dans la première moitié du XIX^e siècle (Paris, 1964), pp. 170–71Google Scholar.

⁴⁸ See, e.g., Birch, A., The Economic History of the British Iron and Steel Industry (London, 1967), p. 205Google Scholar. Burn, Duncan, The Economic History of Steelmaking, 1867–1939 (Cambridge, 1940), pp. 191, 194–95Google Scholar. The number of firms engaged in iron production mentioned in the Coal Commission report was 342, of which 187 engaged in pig iron production. Cf. Kurimoto, Shinichiro, “A Statistical Arrangement of the Royal Commission on Coal in 1871,” Quarterly Review, Nara Prefectural College, 22 (Aug. 1974), 65–93Google Scholar. Kurimoto concludes that “small scale firms had not only overwhelming weights in number but also excellent activity in operating equipments [sic].”

⁴⁹ Stigler, George, “The Division of Labor Is Limited by the Extent of the Market,” rpt. In Breit, W. and Hochman, H. M., eds., Readings in Microeconomics (New York, 1968), p. 158Google Scholar.

⁵⁰ Burnet, I. D., “An Interpretation of Take-off,” Economic Record, 48 (Sept. 1972), 424–28CrossRefGoogle Scholar. Rostow himself is lukewarm about this attempt to formalize his take-off, and notes correctly that Burnet's falling supply curve has to level off somewhere. Cf. Rostow, How It All Began, p. 141.

⁵¹ Rosenberg, Nathan, “Factors Affecting the Diffusion of Technology,” Explorations in Economic History, 10 (Fall 1972), esp. pp. 10–14CrossRefGoogle Scholar.

⁵² An interesting case in point is the debate about the adoption of the reaper in ante-bellum midwest grain farming. See Olmstead, Alan L., “The Mechanization of Reaping and Mowing in American Agriculture, 1833–1870,” this Journal, 35 (June 1975), 327–52Google Scholar.

⁵³ The one case that has been investigated in this respect is the New England cotton industry. Robert Zevin has found that demand was indeed elastic (the elasticity being between − 2 and − 3 in the 1820s, falling to about − 1.5 after 1833). Paul David has found evidence for “learning by doing,” although he views the learning more as a function of time than of accumulated output. Cf. Robert B. Zevin, “The Growth of Cotton Textile Production after 1815,” in Fogel, R. W. and Engerman, S. L., eds., The Reinterpretation of American Economic History (New York. 1971), p. 135, and David, “Learning by Doing,” p. 167Google Scholar.

⁵⁴ de Belgique, Royaume, Ministère des Travaux Publics, Statistique de la Belgique: Mines, usines minéralurgiques, machines à vapeur, 1839–44 (Brussels, 1846), p. 48Google Scholar.

⁵⁵ Lévy-Leboyer, Les banques, p. 361.

⁵⁶ The same point is made by McCloskey, “Did Victorian Britain Fail?” p. 455.

⁵⁷ See, for example, Murphy, A History, p. 387; Habakkuk, “The Historical Experience,” p. 153; de Vries, Jan, The Economy of Europe in an Age of Crisis, 1600–1750 (Cambridge, 1976), pp. 177, 241Google Scholar. The assumption that the early industrial economy was subject to serious Keyne-sian unemployment is made also by Anderson, J. L., “A Measure of the Effect of British Public Finance, 1793–1815,” Economic History Review, 27 (Nov. 1974), 610–19Google Scholar.

⁵⁸ See esp. Coleman, D. C., “Labour in the English Economy of the Seventeenth Century,” Economic History Review, 8 (Dec. 1955), 280–95CrossRefGoogle Scholar.

⁵⁹ For a view that attributes “unemployment” to dietary inadequacies, see Freudenberger, Herman and Cummins, Gaylord, “Health, Work, and Leisure Before the Industrial Revolution,” Explorations in Economic History, 13 (Jan. 1976), 1–12CrossRefGoogle ScholarPubMed.

⁶⁰ See, for example, Grampp, William D., “The Liberal Elements in English Mercantilism,” Quarterly Journal of Economics, 66 (Nov. 1952), 465–501CrossRefGoogle Scholar. Vickers, Douglas, Studies in the Theory of Money, 1690–1776 (Philadelphia, 1959)Google Scholar. Hutchison, T. W., “Berkeley's Querist and its Place in the Economic Thought of the Eighteenth Century,” British Journal for the Philosophy of Science, 4 (May 1953), 52–77CrossRefGoogle Scholar. Pauling, N. G., “The Employment Problem in Pre-Classical English Economic Thought,” Economic Record, 26 (June 1951), 52–65Google Scholar. Sen, S. R., The Economics of Sir James Steuart (Cambridge, Mass., 1957)Google Scholar.

⁶¹ Heckscher, Eli, Mercantilism (2nd rev. ed.; London, 1955), vol. II, pp. 340–58Google Scholar. Blaug, Mark, Economic Theory in Retrospect (Homewood, ill., 1968), p. 15Google Scholar. Coleman, “Labour,” p. 289.

⁶² Ward, I. D. S., “George Berkeley: Precursor of Keynes or Moral Economist on Underdevelopment,” Journal of Political Economy, 68 (Feb. 1959), 31–40Google Scholar; Landes, Unbound Prometheus, p. 59.

⁶³ Seasonal unemployment struck agriculture and industry alike, since weather conditions affected water and wind mills, road conditions, bleach fields, and so on. John Law, in his Money and Trade (1705), seemed to think that seasonal unemployment could get as high as 50%. A 1752 pamphlet cited by Mantoux places the proportion of time in which journeymen tailors were unemployed at about 40%. (Cf. Mantoux, Paul, The Industrial Revolution in the Eighteenth Century [rev. ed.; New York and Evanston, ill., 1961], p. 71 n.Google Scholar) In the mid-eighteenth century construction workers were idle at least “four or five months in the year.” R. Campbell, The London Tradesman (1747), pp. 103–04; rpt. in George, M. Dorothy, ed., English Social Life in the Eighteenth Century (London, 1923), pp. 32–33Google Scholar. Seasonal unemployment was particularly severe where rural industry was absent and the crops not diversified, particularly in Ireland. As late as 1836 G. C. Lewis noted that two thirds of the Irish work force was not employed all year round, and that this irregularity was the true cause of poverty in Ireland. Cf. Lewis, G. C., On Local Disturbances in Ireland (London, 1836), p. 312Google Scholar. Other examples are cited by T. S. Ashton, An Economic History, pp. 202–03; idem., Economic Fluctuations in England, 1700–1800 (Oxford, 1959), p. 6. Wages fluctuated seasonally, so that it is not easy to distinguish between voluntary unemployment (i.e., consumption of leisure) and involuntary seasonal unemployment.

⁶⁴ A possible explanation of the widely observed phenomenon of “unemployment” in preindustrial Europe could be built on the idea of structural unemployment. If the marginal productivity of labor was lower than some accepted minimum of subsistence (possibly zero), it follows that people willing to work cannot find employment. For a precise formulation of this idea see R. Eckaus, “The Factor-proportions Problem in Underdeveloped Areas,” in Agarwala, A. N. and Singh, S. P., The Economics of nderdevelopment (London, 1958)Google Scholar. Under these circumstances a change in the composition of demand could reduce unemployment if demand shifted toward comparatively more labor-intensive goods, thus increasing the total demand for labor. William Petty's recommendation to employ idle workers to “build a useless pyramid upon Salisbury Plain, bring the stones at Stonehenge to Towerhill or the like” sounds reasonable on this background. It is quite clear, however, that such compositional effects were becoming rapidly less important as the Industrial Revolution proceeded and industrial production was becoming more capital-intensive. The argument could, however, go a long way in explaining the rapid expansion of domestic industry before 1750, which was much more labor-intensive than factory production.

⁶⁵ See, for example, Mokyr, Joel and Savin, N. Eugene, “Stagflation in Historical Perspective: The Napoleonic Wars Revisited,” in Paul Uselding, ed., Research in Economic History, vol. 1 (1976), pp. 198–259Google Scholar.

⁶⁸ Heckscher, Mercantilism, vol. II, pp. 348–54.

⁶⁷ Keynes, John Maynard, The General Theory of Employment, Interest, and Money (New York, 1936), pp. 347–48Google Scholar.

⁶⁸ De Vries, The Economy of Europe, p. 211; Homer, Sidney, A History of Interest Rotes (New Brunswick, N.J., 1963), pp. 133–43, 155–80Google Scholar.

⁶⁹ The best indicator is still total output of the silver and gold mines in Mexico and South America collected by Von Humboldt and published in 1809 in his Essai politique sur le Royaume de Nouvelle-Espagne. These figures were refined and completed by Soetbeer, Adolf, Edelmetallproduktion und Wertverhältnis zwischen Gold und Silber seit der Entdeckung Amerikas bis zur Gegenwart (Gotha, 1879)Google Scholar. Soetbeer's figures show a marked acceleration of bullion output after 1680. Moreover, if his figures are corrected in the ways suggested by W. Lexis, the acceleration is even more marked. Cf. Lexis, Wilhelm, “Beitrage zur Statistik der Edelmetalle,” Jahrbücher für Nationalokonomie und Statistik, 32 (1879), pp. 361–417Google Scholar. The results of applying Lexis s critique to Soetbeer's figures are provided below:

⁷⁰ Braudel, Fernand and Spooner, Frank, “Prices in Europe from 1450 to 1750,” in Cambridge Economic History of Europe, vol. IV (Cambridge, 1967), pp. 386–87Google Scholar. It is worth noting that Braudel and Spooner claim, albeit without precise evidence, that not only the supply of money rose considerably in the eighteenth century, but the demand for money in fact declined. Cf. ibid., p. 450.

⁷¹ For details, see Mokyr and Savin, “Stagflation in Historical Perspective,” pp. 210–23.

⁷² Mokyr, Joel, Industrialization in the Low Countries, 1795–1850 (New Haven, 1976), ch. 7Google Scholar.

⁷³ The parameter δ is not precisely a demand elasticity. Rather, it is the elasticity of an envelope curve of shifting demand curves. An exogenous decline of A causes an initial rise in P as the economy moves up along the demand curve. In a general equilibrium context, however, δ incorporates the secondary effect produced by the decline in M (from eq. 6), causing a leftward shift in the demand for agricultural goods, partially offsetting the rise in P.