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“Man to Loan $1500 and Serve as Clerk”: Trading Jobs for Loans in Mid-Nineteenth-Century San Francisco

Published online by Cambridge University Press:  03 March 2009

F. Halsey Rogers
F. Halsey Rogers
Affiliation:
Doctoral student at the University of California at Berkeley, Berkeley, CA 94720
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Abstract

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.

Type
Articles
Information
The Journal of Economic History , Volume 54 , Issue 1 , March 1994 , pp. 34 - 63
Copyright
Copyright © The Economic History Association 1994

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