The 1920–1 recession did not transpire entirely without federal intervention, as commonly believed. Following lending by several Federal Reserve banks, the federally chartered War Finance Corporation (WFC) lent to support exports and shortly after the recession, it lent aggressively to assist banks in agricultural regions, as numerous bank suspensions resulted from the agricultural depression of the early 1920s. Bank suspensions decreased markedly in 1922 to the lowest annual total during the 1921–33 period. This article assesses the impact of WFC lending on bank suspensions, and to what extent the WFC's provision of liquidity helped to resolve the existing difficulties.

The Government Savings Bank of Jamaica (GSB) was created post-emancipation in order to serve the poor as a vehicle for precautionary savings and has been viewed as largely successful in this goal, at least after its restructuring in the late 1860s. We investigate this by examining GSB depositor behaviour after income shocks due to hurricanes. To this end, we combine digitized parish-level GSB account information with a hurricane damage index generated from historical storm tracks. Our results show little evidence of a precautionary savings motive by GSB account holders in that while net account balances and deposits drop after hurricanes, withdrawals and the number of accounts closed also fall. Additionally, the net decrease in account holders seems not to be driven by small savers, who are likely to be the poorest. Our findings are thus more in line with the GSB potentially being used to finance non-necessary consumption.

This article presents the newly reconstructed daily gold price from 1919 to 1968 for the world's primary gold market during the London Gold Fixing auction, when gold was the cornerstone of the world's monetary system. We assess whether this market conformed to the Efficient Markets Hypothesis, which posits that prices are unpredictable, or the Adaptive Markets Hypothesis, which posits that a market efficiency will evolve based on changes in the market structure. We find that the Gold Fixing price was inefficient in periods when prices were market-based from 1919 to 1925 and again in the 1930s when private hoarders began to have a significant impact on the market. We find the Gold Fixing was also inefficient during gold standard periods when central bank interventions limited gold's ability to react to new information, despite two episodes where prices rose above the official ceiling.

This article re-examines the association between democratization and the cost of borrowing abroad in the first era of globalization. Using two representative datasets the literature offers but employing an improved method for panel event study, we find that democratization's impact on the costs of foreign borrowing is uncertain. In one case, the estimated coefficients are similar to the sign and magnitude of the original study but with larger standard errors, rendering the impact statistically insignificant. In the other case, the estimated coefficients hover around zero and are not statistically different from zero.

This research supports the singularity of the Spanish case. The lessons we can learn are a product of the short transition in the mid 1880s from a city-based monetary system (supported by private actors) to a central banking system in the absence of a developed banking system with a nationwide scope, unlike what occurred in the rest of Western Europe. Introducing market arbitrage, we provide novel evidence – using new data – of how price formation in city-based money markets was driven by more than one price. Furthermore, factors such as market conditions, political circumstances and the asymmetrical development of market potential in the Spanish economic geography also played an important role. We also show new empirical support that transaction cost reduction was not associated with improving efficiency during the 1875–85 period when city-based money markets were still operating. The inland payment system was struggling even before its takeover by the Bank of Spain.

In a series of academic publications, Edward Nelson has contended that from the 1950s until the late 1970s, UK policymakers failed to recognise the primacy of monetary policy in controlling inflation. He argues that the highwater mark of monetary policy neglect occurred in the 1970s. This thesis has been rejected by Duncan Needham who has explored several experiments with monetary policy from the late 1960s and challenged the assertion that the authorities neglected monetary policy during the 1970s. Drawing on evidence from the archives and other sources, this article documents how the UK authorities wrestled with monetary policy following the 1967 devaluation of sterling. Excessive broad money growth during the early 1970s was followed by the highest level of peacetime inflation by 1975. The article shows that despite the experiments with monetary policy, a nonmonetary view of inflation dominated the mindset of policymakers during the first half of the 1970s. In the second half of the 1970s there was a change in emphasis and monetary policy became more prominent in economic policymaking, particularly when money supply targets were introduced. Despite this, the nonmonetary view of inflation dominated the decision processes of policymakers during the 1970s.

We study the association of shareholder returns with liberalization in government policy during Britain's railway run-up of 1844–5. The findings sustain two main claims. First, the railway returns during the run-up were associated with the advent of liberalizing policies, especially related to free trade, enhanced transparency and governance of firms, and industry consolidation. Second, analysis of cross-sectional variation reveals higher returns to large railways in the South and Midlands of England, several of which were leading consolidators. This study is the first to report an association between policy liberalization and run-up returns and to identify consolidators as the prime beneficiaries of the liberalization.

We examine how media reports influenced trading volumes and order imbalances on the Sydney Stock Exchange (SSX) from 1901 to 1950, focusing on wool market reports as a substitute for broader financial advice in the absence of a specialised investment press. Given wool's status as Australia's primary export and its integration with various sectors, we construct a weekly media sentiment index based on news about wool sales and auctions from the Sydney Morning Herald. Our findings reveal that positive news about the wool market correlates with increased trading volumes and reduced order imbalances on the SSX. This relationship persisted during significant events such as the UK government's wool purchase plans, the 1929 Wall Street Crash, World War II-related trading restrictions, and the short selling ban.

This article studies a previously unknown asset market in eighteenth-century Sweden. It emerged as a result of a partial default in 1719, when large amounts of recently released fiat coins were converted into government liabilities. These could only be redeemed as a customs duty on international trade, the licent. As merchants had to acquire such assets to conduct their trade, tens of thousands of transactions were carried out on a secondary market over a period of more than 45 years. Networks of local merchants bought assets from initial holders and sold them on to intermediaries or merchants, who deposited the liabilities with a newly established government agency, the Debt Office. Here, hundreds of account holders could transfer the value of their deposits between them. When a licent payment was due, the amount was deducted from the merchant's account. Prices on the liabilities were low and sometimes volatile, but the long-term trend was rising. We have distinguished three types of market participants: a small group of very active users, most of them professional dealers or brokers; merchants who traded on a regular basis as they needed to pay the licent, or when a favorable opportunity appeared; and finally, those who traded sporadically. The emergence of this market was part of a financial expansion that occurred in many European countries at the same time, the closest equivalent being the segmented default in France after the abolition of John Law's system. This study aims to broaden our understanding of eighteenth-century financial developments, which have rarely been studied in a semi-peripheral European economy.

This article explores the complex dynamics of financial innovation in early modern times, challenging linear models of temporal and spatial divisions that tend to shape our understanding of the evolution of financial systems. It supports the idea that innovation should be viewed as a non-linear and contextual process, involving diverse stakeholders and characterised by interactions and unexpected occurrences. The study focuses on the dissemination and trajectories of financial innovations, specifically the bill of exchange and its variation, the ricorsa, as well as the transferability and negotiability of commercial paper. It does so by investigating the interactions and exchanges between merchants and bankers from diverse backgrounds during the sixteenth-century Lyon fairs, using the archival records of one of the first Italian banks in Lyon (Salviati). The study reveals the mutual influence and acculturation among these agents and challenges the compartmentalisation of financial expertise. Through an analysis of transactions recorded in the Salviati bank's ledgers, the article highlights previously unknown uses of commercial paper by Southern merchant communities and discusses the factors that may have hindered the full-scale development of endorsement and discount in the Lyon trading networks, despite their potential benefits. The results provide insights into the intricate nature of financial innovation and the influence of structural and cultural factors on its development.

There is little research studying the effects of political violence on financial markets over decades, especially in an atmosphere where the violence manifested itself in heterogeneous and geographically widespread ways. This article examines the authoritarian edifice of Tsarist Russia in the nineteenth century to examine the way in which capital markets perceived political instability in a country which had paradoxically strong financial institutions but weak political ones. Using a novel database on political violence in Russia in the nineteenth century matched to monthly financial data from Russian equity markets, this article provides strong evidence that Russia's financial markets were negatively affected in the long run by political violence. Consistent with modern views of financial information, the effects of political violence were quickly incorporated into asset prices, but the specific magnitude of such violence was different depending on where the violence occurred and in what manner. Overall, it appeared that political violence was perceived very negatively by investors in Russian equity markets.

When Adam Smith – author of Wealth of Nations (1776) and Theory of Moral Sentiments (1759) – was elected a professor at the University of Glasgow in 1751, he also joined an annuity ‘scheme’ that was unique for its time. The Scottish Ministers’ Widows’ Fund, as it was known, offered members of the Presbyterian Church as well as the university a choice of levels at which to contribute investment savings, ranging from 2 to 10 percent of their wages. The life-contingent benefits were in the form of a reversionary annuity to a spouse and/or lump sum death benefit to children. This article (i) describes the scheme in financial and actuarial terms, (ii) values Smith's reversionary annuity and (iii) examines the choices made by individual participants. The specific research contribution is to compile the archival data to measure the extent of insurance anti-selection and to demonstrate that debates around choice architecture, default options and auto-enrollment, which infuse the literature in the twenty-first century, were prevalent in the mid eighteenth. For the record, Adam Smith actively contributed at the highest allowed rate, but it wasn't a ‘good’ investment for him, either ex ante or ex post. As for why, one must read the article.

This article contributes to the literature analysing the role of public banks in crises. Taking the case of Spain, it analyses the behaviour of the public bank (ICO) between 1971 and 2015, specifically during two crises: the crisis of the 1970s, when Spain was an economically backward country coming out of a dictatorship; and that of 2008–13, by which time it had integrated into the international economy. Public credit underwent sweeping privatization in 1991, which translated into major downsizing. From then on, a gradual process of modernization began, mainly characterized by institutional changes in governance and access to resources. Our results indicate that public and private credit behave differently during recessions. Private credit always remains closely synchronized with the business cycle, but public credit less so.

Financial markets derive their political and societal legitimacy from their ability to produce fair and accurate prices. However, reviewing the literature on how stock exchanges price securities, we find an inherent tension between market organization and price disclosure, which is borne out by this special issue's historical case studies.

This article uses the leading firms of the German chemical industry as a case study to provide a detailed example of how companies in the late nineteenth and early twentieth century used internal financing as an instrument of corporate finance. It traces the at first diverse significance of internal financing for the industry and identifies two moments of market concentration that triggered a convergence of corporate finance by a harmonisation of accounting standards that were not predefined by legal frameworks. The article argues that secret reserves and further ways of internal financing were key components of this harmonisation. The industry-wide creation of secret reserves cloaked the companies’ actual financial strength from outsiders who were merely left with an image of the respective firms that was carefully drafted by companies’ managers.

Since the global financial crisis in 2008, there has been an elevated interest in private debt and as a macroeconomic variable. In light of the lack of high-frequency data, this study presents a unique monthly time series dataset on credit from and deposits in Swedish commercial banks from 1875 to 2020, covering 1,752 monthly observations and most of Swedish commercial banking history. In a first application, the study examines to what extent money in Sweden has been exogenous, created independently of demand by the central bank, or endogenous, created in response to demand by commercial banks, during different institutional settings. The results, derived via cointegration and impulse-response functions, show that though the relationship between deposits and credit has changed over time, both theories often hold validity simultaneously. While changes in deposits often have had significant impact on credit, the opposite has also been true. There are, however, differences between different regulatory regimes, as well as for different groups of banks.

For most of its history Amsterdam securities trading was entirely unregulated and spread over various venues frequented by different social groups, handicapping price transparency. A public price current emerged only in 1796 and then with wide bid-ask spreads to protect margins. To combat the confusion a curious pricing method, the mid-price system, emerged during the nineteenth century. Tied to a market microstructure centring on hoekmannen (market makers), this system transited effortlessly from a public market into a monopoly by 1913, self-governing, still without any government regulation, and offering wide rent-seeking opportunities.

Mutual benefit societies evolved as the major provider for sickness, accident and life insurance in the late nineteenth and early twentieth centuries on both sides of the Atlantic. One of the major problems facing insurers was the risk of adverse selection, i.e. that unhealthy individuals had more incentives than healthy individuals to insure when priced for the average risk. By empirically examining whether longevity among insured individuals in a nationwide mutual health society was different from a matched sample of uninsured individuals, we seek to identify the presence of adverse selection. We find no compelling evidence showing that unhealthy individuals were more likely to insure, or reasons to believe that problems related to adverse selection would have been a major reason for government intervention in the health insurance market in Sweden.

A newly collected historical database for the Helsinki Stock Exchange (HSE) is used to analyse the number and structure of listed equity securities. The analysis shows that from its establishment in October 1912 to the end of 1981, a total of 849 different stock series and related issue rights have been listed on the HSE. Of these, 206 are normal stock series and they represent 167 different companies. The two largest industries represented on the HSE during most of the analysed period are metal and manufacturing and pulp and paper industries. Together they represented more than half of the listed companies throughout most of the sample period.

This article reconstructs the history of direct interventions in exchange rate markets performed by the leading Italian banks of issue: the Banca Nazionale until 1893, then the Banca d'Italia between 1894 and 1913. The article shows that this type of operation represented a constant and relevant commitment for both institutions; interventions were made in the bills and/or the bonds market, sometimes also in conjunction with increases in the discount rate. Although often successful in the initial stages, until 1904 institutional provisions severely constrained the accumulation of foreign assets in the banks’ portfolios therefore reducing the viability, and hence the overall effectiveness, of these interventions.