The costs and benefits of microfinance. The market for Dutch East India Company transportbriefen in 18th century Amsterdam

Transport-letters became a popular financial instrument without a use of a physical collateral and financial journalism. How was it possible for a system of salary loans obtained with the trade in the VOC transport-letters based on the intermediation of a secondary market to work sustainably?’. In order to address this issue, several problems need to be investigated. The first sub-question is: ’how was there a primary market for these instruments possible, i.e. how could they create a credible commitment in the eyes of any buyer of a transport-letter? The second sub-question is: ‘how were the asymmetries of information overcome in the secondary market?’. The third sub-question that needs to be answered is about the long-term sustainability of the system: ‘how could the buyers, given the lack of a relevant financial journalism, assess the risk correctly and purchase the instruments at the right price?’. Had it been different, the system would have collapsed as the buyers would have gone bankrupt or the sailors would have not obtained credit at such a high expense. There are many ideas grouped around contract theory and information economics that provide theoretical insights as to how such a system could exist. According to Avner Greif, ‘a possibility of an ex-ante commitment to being able and willing to fulfil contractual obligations ex-post’ is a precondition for any deal to be signed. In his view, institutional developments can explain changes in the markets. This is because they have the power to mitigate the risks and allow debtors to make a credible commitment as perceived by the always sceptical creditors. This article argues that the instrument worked despite the above mentioned problems because: (1) there were institutions mitigating the possible asymmetries of information and risks, allowing the employees to make a credible commitment, as well as allowing the traders to exchange the transport-letters; (2) due to specialisation of the buyers of the transport-letters and their domination in the market, the system was sustainable; despite the lack of financial journalism providing them with a ready information, large portfolios allowed lenders to gain knowledge and assess the risk correctly

Labour and Forced Labour in Early Modern History (ca. 1500-1800)

Any inquest into the role of pre-industrial labour may well begin with the reminder that the subject is neither as clear-cut nor as neatly distinguishable as it may appear. ‘Labour’ used to refer primarily to agricultural work, especially physical toil, which constituted the mainstay of pre-industrial production. The emergence of proto-industry in the early modern period witnessed a gradual, if non-linear, shift in employment structures, which corresponds to a secular decline of the agricultural workforce.Analytically, ‘labour’ covered a wide spectrum that ranged from free (voluntary) wage labour to various forms of unfree labour determined by a combination of property rights and an individual’s legal status. The degrees of freedom were determined by taxation levels, landownership, labour rents and services, legal status, and individual dependencies, including temporary limitations (e.g., military conscription, convict labour), various grades of subjection, and personal unfreedom (slavery). Though their diffusion varied considerably across time and space, these overlapping types of labour were found all over Europe: (a) free labour (un-/skilled labour), (b) partially free labour (tenurial relations, incl. serfdom), and (c) unfree labour (e.g., convicts, slaves)

Market conditions in preindustrial Poland, 1500-1772

In this paper I investigate commodity market integration, market efficiency and market performance in preindustrial Eastern Europe. In particular, I look at the Polish rye market between 1500 and 1772. I analyse annual rye price data from seven cities. The results suggest that market conditions in Poland in the sixteenth century were relatively favourable. The market disintegrated in the seventeenth century. Afterwards, Polish markets remained relatively segmented, in contrast to many Western European countries whose markets thrived in the eighteenth century. This supports the hypothesis that even before the Industrial Revolution there was the Little Divergence in economic development between western and eastern Europe. The disintegration crisis in Poland was linked to the separation of landlocked cities from the common market. After the seventeenth century, cities located on the Vistula river enjoyed better market conditions and remained better integrated than the landlocked ones. The long-term market crisis may have resulted from the devastating warfare in the mid-seventeenth century

Economic consequences of state failure; legal capacity, regulatory activity, and market integration in Poland, 1505-1772

With use of innovative proxies and new annual data, I demonstrate that relatively high legal capacity and regulatory activity of the early-modern Polish parliament, the Seym, was positively associated with deeper domestic commodity market integration. Conversely, the lack of effective law-making, caused by the right of a single delegate to discontinue the Seym's sessions, fostered market fragmentation. This indicates that early parliamentary regimes required legal capacity to harmonize domestic institutions and reduce the transaction costs. The Polish case suggests a hypothesis that the pre-1800 "Little Divergence" between European parliamentary regimes could be explained by differences in their governments' capacities

Zmierzyć zacofanie. Zestawienie najważniejszych szacunków materialnych standardów życia w Polsce przedprzemysłowej

Celem artykułu jest przedstawienie obecnego stanu wiedzy na temat materialnych standardów życia w Polsce przedrozbiorowej na tle innych państw europejskich, w szczególności w porównaniu z Anglią i Holandią. Tekst ten opisuje istniejące szacunki płac realnych i produktu krajowego brutto per capita dla dawnej Polski oraz wyjaśnia, w miarę możliwości, różnice pomiędzy tymi szacunkami

The costs and benefits of microfinance. The market for Dutch East India Company transportbrieven in 18th-century Amsterdam

The costs and benefits of microfinance. The market for Dutch East India Company transportbrieven in 18th-century Amsterdam(Summary)Contemporary institutions engaged in extending micro-loans do not usually grant such loans to the poor due to the latters’ inability to provide appropriate collateral and their insufficient creditworthiness. In modern times the Dutch East-India Company created a financial instrument called the “transportbrief” which enabled poor employees of the Company to obtain loans on the financial market. The loans were secured with the right to future salaries of the Company’s employees. This article answers the question of how the instrument was able to create a primary and secondary market. The author also discusses the way in which the people engaged in trading in the instrument were able to value it correctly. To analyze the mass source information collected for the purpose of the research the author used the game theory and the information economy theory, as well as many statistical methods. The transportbrief system worked effectively, but to the cost of significant limitation of the Company employees’ freedom. The purpose of creating the instrument was to safeguard the interests of the Company and to guarantee an inflow of new employees, and not to combat poverty. Despite these flaws the transportbrief is an interesting structure, which reflects the evolution of financial markets; it may also be an inspiration for institutions which nowadays engage in extending micro-loans