Peru's experience with sovereign debt during the guano boom is one of the most remarkable in the nineteenth century. Despite the country's ongoing political instability and poor capital market reputation, the price of Peruvian bonds soared shortly after settlement in 1849, and the country enjoyed relatively low credit risk until the 1870s. This article discusses the incentives Peru and its creditors faced, and explains how Peru's extraordinary performance in financial markets was founded on its credible commitment to service its debt with the guano proceeds.

Despite hundreds of studies of the influence of economic interests on the formation of the U.S. Constitution, no consensus has been reached. Our study of the Constitutional Convention differs from previous ones by offering an explicit theoretical model of delegates' voting behavior and employing multivariate statistical techniques. We extend our earlier work by analyzing new information on constituents' economic interests and ideology. Further our econometric results on individual roll-call votes strongly suggest delegates who owned slaves or represented slaveowning constituents were more likely to oppose issues favoring a national form of government.

From about 750 to 1100, China experienced a series of economic changes roughly comparable to the subsequent patterns of European growth from the Crusades to the eve of the French Revolution. The spread in the use of money, development of new credit and fiscal institutions, increase in interregional and international trade, and colonization of hitherto marginal land which took place in the Occident during the half millennium preceding the Reformation was paralleled by an earlier era of progress in East Asia during the two-hundred-fifty years from the rebellion of An Lu-shan (755) to the treaty of Shan-yüan 1004). And the achievements of late sixteenthand early seventeenth-century England, which John Nef terms an “early industrial revolution,” were in many respects even exceeded by the impressive expansion of mining and manufacturing in eleventh-century China.

The provision of capital is generally recognized to be one of the main problems of countries undergoing the process of industrialization. This is true also of the special case of Great Britain, the first country to experience an industrial revolution. In the British case, however, it is important to note that much capital had been accumulated even before the 1760's, the decade when industrial growth began to accelerate and to change its direction. Most of this earlier capital was invested in commerce, in finance, in farming, and in stocks of manufactured goods and raw materials, and what was noteworthy in the next two generations was, not so much the absolute (and probably also relative) growth in the quantity of capital, but a change in its composition: the emergence, for the first time, of large concentrations of fixed capital.

Scholarly opinion currently evinces disturbing symptoms of latent schizophrenia on the subject of economic growth in the ante-bellum United States. Virtually every student of the era now appears convinced that the long-term rate of growth of aggregate product per capita underwent a significant acceleration “somewhere during the period between 1815 and 1860,” as Douglass North recently phrased it. And, if many economic historians protest W. W. Rostow's labeling the years following 1843 as the period of the U.S. “take-off,” most do not seem to balk at accepting the guess hazarded by Raymond Goldsmith: “a fairly sharp break in the trend of real national product per head … occurred not very long before 1839,” quite probably during the 1830's. To the uninitiated, it might seem obvious that everybody also subscribes to an explicit set of assertions about the secular rate of growth of per capita product during the period from, say, the founding of the nation to the date of the putative acceleration; otherwise, how could all agree that a significant alteration in the trend had occurred?

Economic development depends on the establishment of appropriate institutions, such as a patent system that defends property rights in inventions. Skeptics argue that patents in early America were unenforceable because judges arbitrarily ruled against patentees. I examine 795 patent cases to assess the role of the courts and find that judges protected patent rights because they believed that inventors were motivated by expected returns. Although changes occurred in the 1850s, the courts consistently upheld the view that the patent system fostered economic growth. If inventive activity indeed responded to material incentives, this finding implies that the legal system stimulated technical change by reinforcing the effectiveness of the patent system.

The laws of the United States are extremely favorable to the division of property.

—Alexis de Tocqueville, Democracy in America

Five pitfalls commonly encountered in estimating the yield on British Consols are identified and discussed herein. The most difficult question is whether Consol prices in the later 1890s reflected expectations of a conversion of the Consol stock in 1923. This is equivalent to asking whether security markets in the 1890s regarded the then extremely low interest rates to be a temporary or permanent phenomenon. Predictions from estimated equations for the yield spread between other high-class investments and Consols are used to determine this question. A corrected monthly series of the yield on Consols between 1850 and 1914 is presented.

This paper exploits the history of Reconstruction after the American Civil War to estimate the effect of politician race on public finance. While the effect of black politicians is positive and significant, black officials may be endogenous to electoral preferences for redistribution. I therefore use the number of free blacks in the antebellum era (1860) as an instrument for black political leaders during Reconstruction. Instrumental variables (IV) estimates show that an additional black official increased per capita county tax revenue by $0.20, more than an hour’s wage at the time. The effect was not persistent, however, disappearing entirely once black politicians were removed from office at Reconstruction’s end. Consistent with the stated policy objectives of black officials, I find positive effects of black politicians on land tenancy and black literacy. These results suggest that black political leaders had large effects on public finance and individual outcomes over and above electoral preferences.

Few stones have remained unturned in an effort to reconstruct Anglo-American history in the critical years from the Treaty of Paris in 1763 to the outbreak of the Revolution in 1775. Much has been learned by investigating such problems as public finance, colonial administration, and mercantile policy within the context of an expanded British empire. It is not always realized, however, that by the Treaty of 1763 Great Britain acquired new fields for capital investment as well as vast new lands to govern. In addition to taxation and public expenditure, such problems were raised as capital recruitment and allocation, the modification of financial institutions, and the adjustment of debtor-creditor relationships. Though distinct in certain respects, public and private finance impinged upon each other in the period from 1763 to 1775. This was especially the case after the British credit crisis of 1772, when, in addition to the controversy over tea, debtor-creditor relations between the thirteen colonies and the mother country underwent marked deterioration.

This article assembles new data and methods for studying wealth inequality trends in industrializing America. Inequality grew sharply between 1820 and 1850, leveled off, and increased steadily between 1870 and 1900. Inequality grew due to compositional changes in the population, but also grew within occupations, age groups, and the native-born population. Proposed labor-market explanations are inconsistent with the fact that wealth inequality between occupational groups was declining. Wealth accumulation patterns are also inconsistent with the hypothesis of child default on responsibilities for old-age care. We propose research on a new explanation based on luck, rents, and entrepreneurship.

This article explores the location of industry in pre–World War I Britain using a model that takes account both of factor endowment and also of New Economic Geography influences. Broadly speaking, the pattern of industrial location in this period was quite persistent and regional specialization changed little. The econometric results show that factor endowments had much stronger effects than proximity to markets, although the latter was an attraction for industries with large plant size. Overall, falling transport costs had relatively little effect on industrial location at a time when proximity to natural resources, notably coal, mattered most.

This article proposes a reinterpretation of the failure of interwar British productivity levels to match those of the United States. We argue that key elements in poor British productivity performance included inadequate human capital, a bargaining environment that allowed workers to maintain restrictive practices, and collusive agreements that limited the exit of inefficient firms. We suggest that weaknesses in the structure of British firms pointed out by Chandler and his followers have been overemphasized and that more attention should be given to the role of the market environment in determining the conduct of business.

The usual picture of the medieval peasantry is based on nineteenth-century scholarship, which has proven difficult to dislodge from educated minds. This article continues the revision of an important detail in the picture, the scattering of plots in open fields. Some recent work on the subject by Robert Allen and Gregory Clark is midly disputed, and new evidence is presented that risk avoidance is the key to understanding peasant behavior. The reason for the scattering was not sentiment or socialism. Peasants were not perhaps rational in every detail; but they were prudent.

This article asks whether the vaunted comparative stability of the Canadian banking system has been purchased at the cost of creating an oligopoly. We assembled a data set that compares bank failures, lending rates, interest paid on deposits, and related variables over the period 1920 to 1980. Our principal findings are (1) interest rates paid on deposits were generally higher in Canada; (2) interest income received on securities was generally slightly higher in Canada; (3) interest rates charged on loans were generally quite similar; and (4) net rates of return to equity were generally higher in Canada than in the United States.

The battle over gold is typically explained as driven by proinflation debtors. However, going off gold would also have caused a depreciation, raising tradable prices relative to nontradables prices and helping producers of exportable primary products. An analysis of Congressional votes on monetary legislation indicates that higher constituency debt levels were not associated with opposition to gold, whereas mining and agricultural production were. This suggests that gold politics was at least as much about the impact of the exchange rate on relative prices as it was about inflation of the overall price level.

This article examines where consensus does and does not exist among American economic historians by analyzing the results of a questionnaire mailed to 178 randomly selected members of the Economic History Association. The questions address many of the important debates in American economic history. The answers show consensus on a number of issues, but substantial disagreement in many areas—including the causes of the Great Depression and the aftermath of emancipation. They also expose some areas of disagreement between historians and economists.

The relative price of capital goods, an important component of the user cost of capital, has rarely been incorporated into comparative studies of long-run capital accumulation. This article constructs and explores a data set for capital-goods and equipment prices covering the 1870–1950 period for 11 OECD countries. We document substantial differences across countries in the relative prices of capital goods, but also find convergence in those prices over time. Finally, we show that relative capital-goods prices are strongly negatively correlated with investment rates.

The contribution of railroads to economic growth in the nineteenth century depended on two critical variables: unit savings in transport costs the railroads made possible and the quantity of passengers and freight the railroads attracted. Unit savings depended mainly on geography; either cheap water transport existed before the railroads or it did not. Unit savings depended secondarily on the value of the time the railroads saved and on the flexibility in selection of routes made possible by the new technology. The quantities of passengers and freight actually transported depended on two interrelated factors: the prior development of the economy and its responsiveness to cheaper transport.

This article assesses train speeds in England and Wales 1843–1912. Trains were fast compared with coaches or walking, and the social saving of time saved grew over time to become over 10 percent of national income in 1912. Including fare savings as well, social savings were 14 percent of national income in 1912, with consumer surplus of 6 percent. Time savings dominated fare savings once railways became a new good: travel for the masses. Using the social savings-total factor productivity identity, we show that railways accounted for around a sixth of economy-wide productivity growth in this era.

This study presents fresh evidence on nutrition and health in colonial Kenya by using a new and comprehensive data set of African army recruits and civilians and applying a powerful measure of nutritional status: mean population height. Findings demonstrate huge regional inequalities, but only minor changes in the mean height of cohorts born 20 years before and after colonization. From 1920 onwards secular improvements took place, which continued after independence. I conclude that however bad colonial policies and devastating short-term crises were, the net outcome of colonial times was a significant progress in nutrition and health.