This paper explores the phenomenon of “job-loan trading”—in which employers offered jobs in exchange for substantial loans from their new employees—as practiced in mid-nineteenth-century California. A sample of newspaper advertisements from 1857–76 reveals that despite the obvious inefficiencies of linking labor and capital markets, job-loan trading was both common and profitable. I assess labor market bonding against moral hazard or adverse selection as a possible explanation, but conclude that the job-loan trades primarily provide evidence of substantial Pacific Coast capital market imperfections. This conclusion has implications for the broader question of how financial markets develop.

On this occasion it seems wise to take a leaf from Wassily W. Leontief's book as President of the American Economic Association. He discussed a problem of his organization. His presidential address was a plea for economists to limit their creation of models, especially those difficult of empirical testing, and to test some of those susceptible of verification. My remarks will also deal with a problem, one in the Economic History Association, how it came about, and what we might do about it.

If “colonial politics” denotes the objectives of a metropolitan power vis-à-vis its colony, then, for purposes of this paper, we may define “colonial psychology” as the frame of reference that determines the attitudes of “metropolitans” vis-à-vis the “colonial problem.” By “metropolitans” we mean the inhabitants of those Western societies that are linked to part of the non-West by the historical, political, economic and psychological ties that have always accentuated the dominance of the West. By “colony” we shall here mean only the areas with a multiracial population of which a white element considers itself so integrally a part that it feels itself more strongly associated with its own “colonial” society than with the metropolitan country of its origins.

The flurry of British investment in American manufacturing industry from 1887 to 1891 was viewed with alarm, particularly in the West. At this time the farmer was preoccupied with the economic power of monopolistic industries and trusts, and so die British investor became deeply involved in this phase of the agrarian battle. In the past, capital from die United Kingdom had entered industrial concerns, chiefly railroads, without wresting the management out of American hands. More recently British investors had been building up and controlling dieir own enterprises in the West. Now, well-established and profitable American businesses were bought and directed from Britain. The farmer regarded this unaccustomed interest in American industrials either as a step toward die formation of great monopolies, or, even worse, as part of an imperialistic design conceived by London bankers to enslave the American people.