Using recently collected examination data from a sample of Texas state-chartered banks over the period 1919–1926, the role of moral hazard in increasing ex-ante asset risk is explored. Analyzing individual bank-level data, we find that the existence of deposit insurance for state-chartered banks increased their likelihood of failure. Increases in loan concentrations followed declines in capitalization at insured state banks. However, we find no statistically significant relationship between loan concentrations and capitalization at uninsured national banks or at state banks before the introduction of deposit insurance. These results show a moral-hazard effect at work.

It is often suggested that an agricultural revolution, currently defined as a rise in the output of arable workers, was a necessary precursor to industrialization and improved living standards. This article provides the first direct measurement of arable workers' average labor productivity for pre-industrial England. Rates are assessed for those production conditions that it is thought resulted in the lowest agrarian labor productivity rates in the pre-industrial period: c.1300–1348. The rates for English workers before the Black Death either surpassed or met the literature's best estimates for English workers until 1800, well after industrialization was underway.

When private incentives are insufficient, a big push by government may lead to industrialization. This article uses mobilization for WWII to test the big push hypothesis in the context of postwar industrialization in the American South. Specifically, I investigate the role of capital deepening at the county level using newly assembled data on the location and value of wartime investment. Despite a boom in manufacturing activity during the war, the evidence is not consistent with differential postwar growth in counties that received more investment. This does not rule out positive effects of mobilization on firms or sectors, but a decisive role for wartime capital deepening in the South's postwar industrial development should be viewed more skeptically.

An important change in the structure of U.S. institutions occurred when the government under the Articles of Confederation was replaced by a new government under the Constitution. In 1913, Charles A. Beard proposed a view of the formation of the United States Constitution—an economic interpretation—that remains a much discussed yet unresolved explanation of the behavior and motives of the men who wrote the document. This paper provides the first rigorous statistical test of this issue. We summarize the preliminary results of a statistical analysis of the relationship between the voting behavior of individual delegates involved in the making of the Constitution and their economic and personal characteristics. Contrary to current historical wisdom, significant patterns related to economic interests are found in the voting, with the division of interests generally consistent with that outlined by Charles A. Beard seventy years ago.

The literature currently offers no consistent narrative about economic development on Europe's southeastern periphery prior to 1945. Did per capita GNP in the Balkans converge with the rest of Europe? We present new GNP estimates for Bulgaria for 1892–1911 and link these with a new degree of precision to the data available for the 1920s. Our data reveal stagnation in per capita GNP from 1879 to the 1930s. But within agriculture we find evidence for a new phase of intensification from the 1920s onwards. The preconditions for growth, sometimes attributed to Communism, were in place well before 1945.

Between 1890 and 2004 total factor productivity (TFP) growth in the United States has been strongly procyclical, while labor productivity growth has been mildly so. This article argues that these results are not simply a statistical artifact, as Mathew Shapiro and others have argued. Procyclicality resulted principally from demand shocks interacting with capital services which are relatively invariant over the cycle. This account contrasts with explanations emphasizing labor hoarding as well as those offered by the real business cycle (RBC) program, in which TFP shocks (deviations from trend) are themselves the cause of cycles.

Labor costs historically have been decisive in determining the location of cotton textile production. Despite an apparent advantage in wage rates, however, the southern industry did not achieve sustained relative progress before about 1875. This study argues that in most times and places the region did not have “cheap labor” before this date. What matters is not just the level of wages in any year, but the quality of labor attracted at this wage and the geographic scope of the labor market within which firms operate. The scope of the labor market depends in turn on property rights and incentives toward recruitment activity.

The Wealth of Nations does not recognize the fact of industrial production, and its analysis of price does not account for the fundamental feature of industrial markets, falling price per output unit based on exponential growth obtained by technological applications. Smith's laissez-faire doctrine contains distinctive value postulates intended to promulgate an egalitarian agrarian capitalism in the spirit of physiocracy. Criticisms of Smith by Alexander Hamilton, J.-B. Say, Andrew Ure, and Friedrich List are instanced to support the present interpretation.

In an effort to begin to solve the continuing controversy over how high the standard of living was in Japan prior to industrialization, this paper goes beyond the inadequate quantitative data and examines also qualitative and local evidence. Information on housing and food, urban water quality and waste disposal, and life styles is examined along with representative family budgets and two sets of real wage estimates. The evidence, taken together with life expectancy estimates, suggests that the standard of living in mid-nineteenth-century Japan was not only higher than in the 1700s, but relatively high in comparison to most of the industrializing West.

Takahashi Korekiyo is remembered as a wise finance minister saving Japan from the Great Depression. The contribution of his policy measures however remains to be rigorously measured, with proper control of other forces also driving the recovery. Structural vector autoregression analysis of previously unexploited monthly data confirms the pivotal role of Takahashi's debt-financed fiscal expansion. Monetizing the public debts, the Bank of Japan maintained a neutral stance. The recovery was aided by exchange-rate shocks generated during the transition from the gold standard to the floating-exchange-rate regime and, to a smaller extent, by the world recovery.

Educational institutions and intergenerational mobility are closely related; access to schools is a major determinant of a child's future success. This article offers new insight into this relationship with a study of mobility at the beginning of the United States' expansion of public schools in the early twentieth century. A new intergenerational data set is used to establish high rates of income mobility at the start of the century and a negative relationship between school quality and mobility. Educational attainment estimates reveal that this was a product of high-income families being more responsive to improving schools than poor families.

The TVA has been applauded for its anti-malaria programs in the Southeast during the 1930s and 1940s. However, the TVA developed their anti-malaria programs because they created lakes suitable for mosquito breeding. To estimate the relationship between the TVA and malaria, I construct a county-level panel data from the Southeast United States. I find that the net effect of the TVA was to increase malaria rates following its construction. Using statistical life value estimates, I find that the hidden malaria cost of the TVA offset 24 percent of the fiscal stimulus multiplier generated by the TVA.

Agricultural distress in the 1920s is routinely quoted among the causes of the Great Depression. This article challenges the conventional wisdom. World agriculture was not plagued by overproduction and falling terms of trade. The indebtedness of American farmers, a legacy of the boom years 1918–1921, did jeopardize the rural banks, but the relation between their crises, the banking panic of 1930, and the Great Depression is tenuous at best.

Some English country banks were more like modern venture capital firms than modern banks in terms of legal and managerial structure, size and source of investment funding, size and nature of investments, and riskiness. This is exemplified by Praed & Co. of Truro, which was heavily engaged in financing the adoption of a risky new technology—Watt steam engines—by Cornish copper mines in the period 1775–1800. If some banks were proto–venture capital firms, rather than proto-banks, then their illiquid and relatively undiversified investment strategies are more reasonable and their bankruptcies more understandable: high-risk investments sometimes earn negative returns.

Although the American cotton textile industry was heavily protected, most commentators, following Frank Taussig's lead, have concluded that indigenous technological advance made large branches of the industry internationally competitive by the 1830s. The prices of equivalent fabrics in Britain and America in the late 1840s and 1850s challenge that conclusion. “Domestic” fabrics, in which American mills had supposedly become competitive, cost 20 percent more in America. Critical reexamination of other evidence—cost comparisons from the 1830s and American exports—supports the conclusion that an unprotected American industry could not have competed.

We are concerned here with the evasion of price controls in the United States and the United Kingdom in World War II. The evidence suggests that controls produced less evasive activity in the United Kingdom. After considering several explanations we conclude that the key was the degree of regimentation. The British controlled all stages of production, limited the range of products available at each stage, and allocated relatively more resources to managing and enforcing controls.

When the Chairman asked me to undertake this paper he reminded me that the general theme was the West as an underdeveloped area and suggested that some comparison be made with underdeveloped areas today. However, it should be made clear at the outset that the problems of the development of the American West in the nineteenth century are very different from the problems of achieving sustained growth in the underdeveloped areas today. The underdeveloped areas today are most typically characterized by a factor combination of abundant labor with scarce capital and land (and resources), usually complicated by a social and political structure not geared to economic advance. America in the nineteenth century, in contrast, was characterized by scarce labor and capital combined with seemingly endless land (and natural resources) set in a framework of social and political institutions that was highly favorable to economic growth.

We use census data and information on large firms to generate descriptions of structural features of Western industry around 1906. We find that although the United States conforms to existing stereotypes, most other nations do not. German industry stands out as having the smallest plants and firms and the lowest concentration levels both in the aggregate and when grouped by industrial classifications. Equally startling, French levels of plant size and concentration are comparable to those of the United States. We speculate on the importance of these results for rethinking the traditional analysis of industrial development in the early twentieth century.

That the Black Death of 1348–1349 disrupted the economies of Europe during the later middle ages is not open to doubt. That the economic effects of the plague varied from sector to sector is perhaps equally indubitable. The diversity of its impact upon various economic sectors reveals itself both in contemporary evidence and in the fiery controversies generated by modern economic historians, each basing his argument on conflicting statistics or inferences drawn, often without careful regard, from disparate sectors. It is thus not accidental that even the most cursory review of the literature concerning the period after the plague will unearth a surprising lack of agreement among the specialists.

Population growth in eighteenth-century England was due mainly to a fall in mortality, which was particularly marked during the first half of the century. The fall affected all socioeconomic groups and does not appear to have occurred for primarily economic reasons. In addition to an explanation involving the introduction of smallpox inoculation, the major hypothesis considered in this article is that the significant improvement in domestic hygiene associated with the rebuilding of housing in brick and tile brought about a major reduction in mortality.