Spain provides an opportunity to study the causes of regional differences in industrial development over the nineteenth century. As transportation costs decreased and barriers to domestic trade were eliminated, Spanish manufacturing became increasingly concentrated in a few regions. This article combines Heckscher-Ohlin and economic-geography frameworks and finds that comparative-advantage and increasing-return effects were economically very significant and practically explained all differences in industrialization levels across regions. The deficits of some regions in terms of industrialization appear to have been largely attributable to their factor endowments and the absence of home-market effects for modern industries.

This article examines changes in institutions that protected property rights in the Alps between the thirteenth and the nineteenth century and, in particular, alternative management systems adopted for the common pastures and forests in about 200 communities. Over time, private-order institutions in the form of charters replaced informal arrangements sustained by the long-run interaction among villagers. Although costly to run, the charters accomplished several tasks that increased resource use efficiency.

Some neglected turn-of-the century American economists, who influenced or participated in the formation of U.S. foreign policy, argued that modern capitalism tended toward recurrent crises as a result of oversaving and surplus capital. These economists held that the construction of an international investment system offered a partial solution to the surplus-capital problem. Focusing on China, U.S. foreign policy at the outset of the twentieth century sought to install the gold-exchange standard in monetary relations between industrial and nonindustrial countries as a condition of such an international investment system.

Between 1842 and 1852, eleven states adopted new constitutions, simultaneously creating procedures for issuing government debt and for chartering corporations through general incorporation acts. Why simultaneously? Voters wanted geographically specific infrastructure investments but opposed geographically widespread taxation. States resolved the dilemma by developing several innovative public finance schemes. One, “taxless finance,” used borrowed funds and special corporate privileges without raising current taxes. Another scheme, “benefit taxation,” coordinated the incidence of taxes with the geographic benefits of investments through the property tax. After the fiscal crisis of the early 1840s, states changed their constitutions to eliminate taxless finance in the future.

Why did independent inventors account for over half of U.S. patents by 1930 and more than three times the number granted to R&D firms? Using new data on patents and historical patent citations, I show that independents supplied high-quality innovations to a geographically broad market for ideas. Those close to large urban centers developed some of the most significant technological advances. Demand for independent inventions remained high during the growth of the corporate economy as firms continued to acquire external innovations that complemented formal R&D. Despite their relative decline, independents remained central to the process of technological development.

Fifteen or so years ago and for many decades before that, popularly speaking, it was not uncommon to think of the Japanese as slavish imitators of foreign technology. As research workers in economic history, we recognize that slavish imitation of foreign technology is no easy matter. Foreign technical practice is hardly uniform. Choice among a number of competing technologies is hardly child's play. Young Japanese students of a century ago were enjoined to go overseas, discover what was best and make it Japanese. Such injunctions by a semi-feudal oligarchy and its intellectual supporters while progressive in spirit were naive. One process rarely dominates international industry. What was useful for the world's leader might not be appropriate for the human and nonhuman resource endowment of late nineteenth-century Japan. Initially, Japan's worldwide search led it to adopt a French-style army, an American-style banking system, and a British-style cotton textile industry. In time each of these models were either discarded in favor of other national models or otherwise modified to meet the imperatives of assimilation.

In contrast to historical accounts of the boom and crash of the 1929 stock market, recent econometric studies have concluded that there were no bubbles in the American stock market over the past one hundred years. Examining the pricing of loans to stock brokers, we find information on the lenders' perceptions of the future course of stock prices in 1929. From this market, we extract an estimate of the bubble in stock prices. This bubble component contributes significantly to explain stock price behavior, even though standard cointegration tests suggest that there was no bubble in the market.

The analysis of fluctuations longer than the nine-year business cycle has been somewhat confused by a failure to distinguish sharply and to relate three distinct phenomena: the forces set in motion by a leading sector in growth, stemming from the introduction and progressive diffusion of a new technology, and its deceleration; the forces set in motion by changes in the profitability of producing foodstuffs and raw materials, whether from the side of prices or technology, including their effects on investment in new territories and mines, on capital movements, interest rates, terms of trade, and domestic and international income distribution; and the forces set in motion (notably, in housing and urban infrastructure) by large waves of international or domestic migration or other forces changing the rate of family formation, housing demand, and the size of the working force. As the world economy unfolded after 1783, these three phenomena operated concurrently and related to each other in complex ways not easy to disentangle. Nevertheless, the substantial literature on long waves can be usefully clarified by distinguishing these phenomena more sharply than is sometimes done and then relating them to each other at particular times and places. The exercise of doing so has, I believe, some general implications for economic theory, for they are all aspects of the process of adjustment towards a moving equilibrium, never attained—a process for which we lack an adequate dynamic theory.

This paper compares two financial institutions that provided the same functions at the same time, but in different countries and with different memberships. Though the London and New York stock exchanges appear to be alike between 1850 and 1914, they were not, as each responded in its own way to the forces acting upon it. The result was a radically different organization of the securities market in Britain and the United States. This had important implications for the money and capital markets and consequences for business and the economy.

The cliometrics literature on slave efficiency has generally focused on static questions. We take a decidedly more dynamic approach. Drawing on the records of 142 plantations with 509 crops years, we show that the average daily cotton-picking rate increased about fourfold between 1801 and 1862. We argue that the development and diffusion of new cotton varieties were the primary sources of the increased efficiency. These findings have broad implications for understanding the South's preeminence in the world cotton market, the pace of westward expansion, and the importance of indigenous technological innovation.

The most successful economies of modern, and perhaps earlier, economic history appear to have had “financial revolutions” that created innovative financial systems before they became leading economies. This suggests that good financial systems may have played a causal role in economic modernization. I identify the key institutional components of such financial systems. Using the United States and Japan as examples, I discuss how two financial revolutions occurred. Effective leadership on the part of strong-willed individuals was crucial in each case.

Seven or eight years ago our Association and its common-law bride, the Committee for Research in Economic History, earnestly set about producing offspring. One cluster of them, it was expected, would look like examples of laissez faire in the United States. In 1943 we inspected these infants in the form of four papers read at our annual meeting; more recently they have been maturing into books. And now we are obliged to acknowledge that they have disappointed the anticipations of their parents by looking rather more like state intervention than like laissez faire. The announcement of Louis Hartz's study, Economic Policy and Democratic Thought: Pennsylvania, 1774-–1860, is not untypical of the comments on all of them which have been consistently made by relatives, friends, and scholarly reviewers. That announcement says: “Through his critical appraisal of Pennsylvania, a leading state in the formative years of the Republic, Mr. Hartz advances the perhaps startling thesis that the contemporary theory of laissez-faire’ actually embraced a vigorous concept of state economic responsibility.”

When we ask ourselves the question why India failed to industrialize (and develop a capitalistic economy) either before or after the British conquest, we touch the core of an old and hallowed controversy in which the partisans and opponents of British imperiahsm once confronted each other. To admirers of British rule, generally, it seemed that the fault lay with certain inherent weaknesses in Indian society. The influence of an “enervating climate,” the heritage of “oriental despotism” and recurring cycles of anarchy (inhibiting the accumulation and investment of capital), primitive techniques and ignorance, the rigidities of the caste system, the prevailing spirit of resignation rather than enterprise, all created conditions in which nothing but a subsistence economy could function. From such wretched beginnings, the British could not, whatever they did, lift Indian economy to European levels. The critics of imperialism saw things in a different light. They insisted that the primitive nature of Indian economy before British conquests ought not to be overstressed, and they ascribed India's backwardness chiefly to the strangulating effects of British rule, to “the drain of wealth,” the destruction of handicrafts, heavy taxation, and discrimination against Indian industry and capital. It will thus be seen that though the controversy involved a number of important aspects of modern Indian economic history, in part at least it centered on the potentialities of development in the Indian economy prior to the British conquests.

The problem of controlling overseas managers confronts all multilocational firms. Historians have argued that because of the extreme time lags in communication, chartered companies were unable to control managerial behavior. We argue that not only did the Hudson’s Bay Company understand the agency problem but also put into operation strategies designed to attenuate opportunistic behavior. The company used employment contracts and control systems and established a social structure compatible with the company’s aims.

This article discusses the changing living standards among the Korean masses under Japanese rule. Farm income per household, agricultural real wages, and per capita calorie intake from staple foods declined. On the other hand primary school enrollment, literacy, and survival rates rose, and average stature at least did not decrease. Arguing that literacy rates, survival rates, and average stature are variables more directly related to living conditions than the others, this article concludes that the Korean masses' standards of living rose between colonization and 1940. Still, any summary assessment depends on the weights assigned to different variables.

Using a new historical data set on the availability of schools, I analyze why there was so little primary education in British India, where as late as 1911 there were fewer than three primary schools for every ten villages. The findings show that greater caste and religious diversity contributed to both low and misguided private spending. Indeed more diverse districts had fewer privately managed primary schools and a smaller ratio of primary to secondary schools. Given primary schools were correlated with subsequent literacy, local factors that disrupted primary school provision had important consequences for India's limited achievement in basic education.

Industrial historians have generally failed to note the importance of the technical standards that have been developed through intercompany agreements in the automobile industry. While they have studied the changing institutional character of American industry and have chronicled the mechanical developments of recent technology, they have undertaken but few explorations into die complex interrelationships between mechanical technology and business structure. In relating the growdi of intercompany technical standards' in the automobile industry up to about 1930, this study attempts to show the influence of changing business conditions on standardization and hence on the mechanical technology of the automobile.

In this article, we study the emergence of an extractive institution that hampered economic development in Italy for more than a century: the Sicilian mafia. Since its first appearance in the late 1800s, the reasons behind the rise of the Sicilian mafia have remained a puzzle. In this article, we argue that the mafia arose as a response to an exogenous shock in the demand for oranges and lemons, following Lind's discovery in the late eighteenth century that citrus fruits cured scurvy. More specifically, we claim that mafia appeared in locations where producers made high profits from citrus production for overseas export. Operating in an environment with a weak rule of law, the mafia protected citrus production from predation and acted as intermediaries between producers and exporters. Using original data from a parliamentary inquiry in 1881–1886 on Sicilian towns, the Damiani Inquiry, we show that mafia presence is strongly related to the production of oranges and lemons. The results hold when different data sources and several controls are employed.

Between 1850 and 2000 Spain's real output and labor productivity grew at average rates of 2.5 and 2.1 percent. The sources of this long-run growth are investigated here for the first time. Broad capital accumulation and efficiency gains appear as complementary in Spain's long-term growth. Factor accumulation dominated long-run growth up to 1950, while total factor productivity (TFP) led thereafter and, especially, during periods of growth acceleration. The main spurts in TFP and capital coincide with the impact of the railroads (1850s-1880), the electrification (the 1920s and 1950s), and to the adoption of new vintage technology during the Golden Age.

Using records of individual depositors' accounts, this article provides a detailed microeconomic analysis of two banking panics. The panics of 1854 and 1857 were not characterized by an immediate mass panic of depositors and had important time dimensions. We examine depositor behavior using a hazard model. Contagion was the key factor in 1854 but it created only a local panic. The 1857 panic began with runs by businessmen and banking sophisticates followed by less informed depositors. Evidence suggests that this panic was driven by informational shocks in the face of asymmetric information about the true condition of bank portfolios.