In this article the convergence of U.S. interregional interest rates in the late nineteenth century is examined and two major hypotheses are tested in the framework of a bank portfolio selection model based on the capital-asset-pricing model. Both the spread of the commercial paper market and the lowering of entry barriers through the reduction of national bank minimum capital requirements are rejected as principal explanations. The erosion of local monopoly power is shown to have been of central importance, and this development was due to the growth of state rather than national banks.

The article examines the diffusion of waterworks in one hundred Rhenish Prussian towns. It exploits features of the institutions of local political representation to develop and estimate a median voter model of demand for water capacity. The results suggest that rising income of the median voter and demand of industrial users, rather than crises in public health, spurred the installation of improved water supply.

The lack of nineteenth-century national income figures for the small states of present-day Central and Eastern Europe hampers studies of long-term economic development in the region. This article fills the gap by using a proxy approach to estimate GDP per capita on the territories of the Habsburg successor states for the period 1870 to 1910. The results give added support for more optimistic interpretations of the region's performance under Habsburg rule. More importantly, they can be linked to national income figures for later years and used directly in comparisons of international income levels between 1870 and 1987.

The Zollverein was arguably the most important free trade agreement of the nineteenth century. Although 1834 is the official date of the Zollverein's establishment, member states joined in a non-random sequence over several decades because the benefits of becoming a member increased, both as the size of the union increased, and as membership in the union became increasingly important for accessing foreign markets. We incorporate the endogenous effects of accession into an estimate of the economic impact of the Zollverein customs union. Our estimated effects are several times larger than simple estimates that do not take these effects into account.

The Knappschaft was a mutual association through which German miners insured themselves against accident, illness, and old age. The Knappschaft underlies Bismarck's sickness and accident insurance legislation, and thus Germany's system today. This article focuses on moral hazard, which plagued the Knappschaften in the later nineteenth century. Sick pay made it attractive for miners to feign illness that made them unable to work. We outline the moral hazard problem the Knappschaften faced as well as the mechanisms they devised to control it, and then use econometric models to demonstrate that those mechanisms were at best imperfect.

The Seven Years' War warrants a reinterpretation of the colonial paper-money experiment. Pennsylvania, New York, and South Carolina with fiduciary standards issued large quantities of paper money to finance the war accompanied by only moderate increases in the rate of inflation. Massachusetts with its pure specie standard financed the war with interest-bearing debt and fared little better, if not a little worse. Success of war finance in Pennsylvania, New York, and South Carolina can be attributed to paper-money issues that financed government expenditures and were matched by imposition of tax labilities for early redemption.

Biased technical change, scale economies, and factor substitution were part of U.S. manufacturing's technical response to factor price movements during the period 1850 to 1919. In this article we employ the cost dual of a Generalized Leontief production function to test directly for the presence of these three effects for nineteen two-digit manufacturing sectors. Biased technical change is found in all but one sector; scale economies in all but two; factor substitutability, in all but five. Estimates of scale and bias effects for labor, capital, and materials are presented by sector, and the results are compared with other recent work.

We provide 16 purchasing-power-parity-adjusted estimates of U.K. and U.S. income per capita and output per worker between 1872 and 1990 based on new estimates of their price levels. Our income benchmarks depart from current estimates in four crucial respects. The United States, not the United Kingdom, led in income per capita in the 1870s. The United Kingdom kept pace with the United States through the late Victorian era. Most of the United Kingdom's relative decline occurred between 1905 and 1950. Finally, the post-1950 performance of the U.K. economy was stronger than is now estimated.We thank Michael Edelstein for getting us interested in the topic. We are also indebted to two referees for comments on the first draft. Susan Carter, Greg Clark, C. Knick Harley, Alan Heston, Peter Lindert, Robert Lipsey, Luis Locay, Bryan Roberts, Christina Romer, Richard Sylla, Jeffrey Williamson, and the participants in a seminar at the University of California, Riverside gave helpful suggestions. Finally we are especially grateful to Deirdre McCloskey for advice at an early stage.

This article examines the contribution of government policies to the high number of bank failures in the United States during the 1920s. In the state of Kansas, which had a system of voluntary deposit insurance and where branch banking was strictly prohibited, bank failure rates were highest in counties suffering the greatest agricultural distress and where deposit insurance system membership was highest. The evidence for Kansas illustrates how prohibitions on branch banking caused unit banks to be especially vulnerable to local economic shocks and suggests that deposit insurance caused more bank failures than would have occurred otherwise.

Building social tables in the tradition of Gregory King, we develop new estimates suggesting that between 1774 and 1800 American incomes fell in real per capita terms. The colonial South was richer than the North at the start, but was already beginning to lose its income lead by 1800. We also find that free American colonists had much more equal incomes than did households in England and Wales. The colonists had greater purchasing power than their English counterparts over all of the income ranks except in the top percent.

This article examines the role of dowries and highlights the variables that affected the size of dowries in fifteenth-century Tuscany. The estimation, which matches the households found in the marriage contrascts with the corresponding households in the Florentine Catasto of 1427, offers support for the present net value hypothesis and for the altruism model. Results indicate a positive correlation between a bride's dowry size and her age when used as peoxy for her contribution to the marital household. Parents also provided their daughters with larger dowries when they married “down” into relatively less wealthy or socially prominent households.

This paper represents an attempt to summarize the first stages of a research project, the completion of which is still remote. Its purpose is to pose one or two basic problems and to indicate the directions along which the answers may lie.

It is obvious that in the decades following its political unification Italy's economy remained very backward in relation not only to that of England, but also to the economies of industrially advancing countries on the continent of Europe. Whatever gauge one may choose for the purposes of comparison, be it qualitative descriptions of technological equipment, organizational efficiency, and labor skills in individual enterprises; or scattered quantitative data on relative productivity in certain branches of industry, or the numbers of persons employed in industry; or the density of the country's railroad network; or the standards of literacy of its population, the same conclusion will result.

We explore the savings behavior of ordinary Americans through their accounts at the Philadelphia Saving Fund Society, the oldest mutual savings bank in the United States. Our sample contains all 2,374 accounts opened in 1850. Savings accounts were generally brief affairs, but median balances mounted to about three-quarters of annual income in three years. Deposits and withdrawals were infrequent, but substantial. Only female servants, as a group, used their accounts for life-cycle savings, eventually amassing large nest eggs. Men often used them to hold funds before acquiring physical property. We estimate saving rates between 10 and 15 percent on active accounts.

Shipping costs between Europe and Asia were reduced by two-thirds between the 1770s and the 1820s. Copper sheathing and other technical improvements which allowed ships to make more frequent voyages over longer lifetimes accounted for part of the cost reduction. British hegemony in the Indian Ocean, which ended an eighteenth-century arms race, accounted for the rest by allowing the substitution of smaller ships which cost less to build and required fewer men per ton. These changes were at least as important as the elimination of monopoly profits in narrowing intercontinental price differentials during the early nineteenth century.

Occupation charges paid by France to Nazi Germany represent one of the largest international transfers and contributed significantly to the German war effort. We employ a neoclassical growth model that incorporates essential features of the occupied economy to assess the welfare costs of the policies that managed the payments to Germany. Our lower bound estimates show that occupation payments required a severe cut in consumption. A draft of labor to Germany and a reduction of real wages added to this burden. Management of the accumulated domestic debt required large budget surpluses; but post-Liberation inflation slashed the real debt.

This article examines the geographic integration of U.S. labor markets from 1870 to 1898, using previously unexploited wage and price data for 23 occupations in 12 major cities. In contrast to the increasing nationalization found in other markets at that time, the labor market was characterized by large and persistent real wage differentials both within and between regions, leaving little doubt that late nineteenth-century labor markets remained far from completely integrated. The differentials, however, owed as much to substantial variations in labor demand growth as to the lack of labor market integration.

Structural transformation is a key indicator of economic development. We present the first time series of male labor sectoral shares for England and Wales before 1800, using a large sample of probate and apprenticeship data to produce national- and county-level estimates. England experienced a rapid decline in the share of workers in agriculture between the early seventeenth and the beginning of the eighteenth centuries, associated with rising agricultural and especially industrial productivity; Wales saw few changes. Our results show that England experienced unusually early structural change and highlight the mid-seventeenth century as a turning point.

Can learning by doing be held to have played a significant part in raising productive efficiency during the early growth of manufacturing industries in the United States? If there is indeed an adequate basis for regarding technical progress during the pre-Civil War period as an endogenous process depending crucially upon the accumulation of practical experience, what sorts of ‘learning functions” best describe the forms in which that process manifested itself? And, in evaluating the impact of national commercial policies—be they historical or contemporary—what implications flow from the existence and the characteristics of learning effects in young industries, and possibly also in not-so-young industries?