Malta and the Nineteenth Century Grain Trade: British free trade in a microcosm of Empire?

It is often assumed that Britain’s colonies followed the British doctrine of free trade in the second half of the nineteenth century. Malta, which became a British colony in 1814, did indeed become an early free trader. However, she failed to liberalize the grain trade, even when the mother country famously repealed the Corn Laws. This paper documents that although institutions changed over the years, the ad valorem equivalents of the duties on wheat did not. The reason for this seems to be that administrators were convinced that is was not possible to fund government spending in any other way. The duties on grain in Malta were therefore not protectionist, but rather for revenue purposes, in contrast to the UK Corn Laws. Taxing an inelastic demand for foreign wheat by Maltese, who were unable to grow enough food to support themselves, was certainly an effective way of raising revenue, but probably not the fairest one, as contemporaries were well aware.Malta; wheat; trade policy; British Empire

Pushing Wheat: Why Supply Mattered for the American Grain Invasion of Britain in the Nineteenth Century

This paper documents the evolution of variables central to understanding the creation of an Atlantic Economy in wheat between the US and the UK in the nineteenth century. The cointegrated VAR model is then applied to the period 1838-1913 in order to find long-run relationships between these variables. The main result is that explanations for the expansion of trade based on falling barriers to trade need to be augmented by another factor: the expansion of US supply. This implies that the growth of the Atlantic Economy cannot wholly be attributed to the decline in transportation costs, as is usually considered to be the case.grain invasion; wheat; globalization

A Malthusian Model for all Seasons: A Theoretical Approach to Labour Input and Labour Surplus in Traditional Agriculture

It has become popular to argue (e.g. Clark 2007) that all societies were Malthusian until about 1800. At the same time, the phenomenon of surplus labour is well-documented for historical (as well as modern) pre-industrial societies. This study discusses the paradox of surplus labour in a Malthusian economy. Inspired by the work of Boserup (1965) and others, and in contrast to the Lewis (1954) approach, we suggest that the phenomenon of surplus labour is best understood through an acceptance of the importance of seasonality in agriculture. Boserup observed that the harvest season was invariably associated with labour shortages (the high-season bottleneck on production), although there might be labour surplus during the low season. We introduce the concept of seasonality into a stylized Malthusian model, and endogenize the extent of agricultural labour input, which is then used to calculate labour surplus and the rate of labour productivity. We observe the effects of season-specific technological progress, and find that technological progress in the low-season increases labour surplus and labour productivity whilst, perhaps surprisingly, technological progress in the high-season, by relaxing the high-season bottleneck, leads to work intensification and a drop in labour surplus and labour productivity.Boserup; labour productivity; labour surplus; land productivity; Malthus; seasonality

The Cost of Railroad Regulation: The Disintegration of American Agricultural Markets in the Interwar Period

We investigate the costs of transportation regulation using the example of agricultural markets in the United States. Using a large database of prices by state of agricultural commodities, we find that the coefficient of variation (as a measure of market integration between states) falls for many commodities until the First World War. We demonstrate that this reflected changes in transportation costs which in turn in the long run depended on productivity growth in railroads. 1920 marked a change in this relationship, however, and between the First and Second World Wars we find considerable disintegration of agricultural markets, ultimately as a consequence of the 1920 Transportation Act. We argue that this benefited railroad companies in the 1920s and workers in the 1930s, and we put forward an estimate of the welfare losses for the consumers of railroad services (i.e. agricultural producers and final consumers).market integration; price convergence; United States; agriculture; transportation regulation

Something Rational in the State of Denmark? The Case of an Outsider in the Cobden-Chevalier Network 1860-1875

We examine the case of an important outsider to the Cobden-Chevalier network of bilateral treaties in the second half of the nineteenth century. We attempt to explain this through a study of the structure of Danish trade and protection. We demonstrate, in contrast to previous accounts that have considered Danish trade policy somewhat irrational, that Denmark was right to remain outside. She had little to gain from concluding treaties, since her main trading partners offered free trade for her exports, agricultural goods, and she needed her own tariffs for revenue purposes.bilateral treaties; Cobden-Chevalier network; Denmark

From Preventive to Permissive Checks: The changing nature of the Malthusian relationship between nuptiality and the price of provisions in the nineteenth century

The Malthusian “preventive check” mechanism has been well documented for pre-industrial England through evidence for a negative correlation between the marriage rate and the price of wheat. Other literature, however, speculates that the correlation was in fact positive from the early nineteenth century. This paper uses the cointegrated VAR model and recursive estimation techniques to document the changing relationship between nuptiality and the price of wheat from 1541-1965. The relationship is indeed positive from the early nineteenth century to the First World War. A simple theoretical model shows that this result is not in fact inconsistent with a stylized Malthusian mechanism, and can be understood within the context of an increasing dominance of shocks to aggregate demand rather than to aggregate supply.

Malthus in Cointegration Space: A new look at living standards and population in pre-industrial England

We analyze Malthus' (1798) model when labor demand shifts persistently. The Malthusian ideas are formalized and derived in terms of stationarity and cointegration, and the implied restrictions are tested against English pre-industrial data 1560-1760. The evidence suggests a negligible marginal productivity effect of population on real income, implying that the Malthusian "check" relations should be analyzed as cointegrating relations. The data support highly significant preventive checks working via marriages, but weak (in-significant) positive checks. These results are remarkably clear-cut. We suggest a simple interpretation for the lack of response of real income to population, which is consistent with positive feed back effects from population on technology, à la Boserupian- and/or Smithian mechanisms. Recursive estimation confirms stable parameters and identify the end of our modified Malthusian regime.cointegrated VAR; unit root econometrics; Malthus; Malthusian model; pre-industrial England

The Cost of Ignorance: Reputational Mark-up in the Market for Tuscan Red Wines

This paper argues that imperfectly informed consumers use simple signals to identify the characteristics of wine. The geographical denomination and vintage of a wine as well as the characteristics of a particular wine will be considered here. However, the specific characteristics of a wine are difficult to ascertain ex ante given the enormous product variety. The reputation of a denomination will thus be an important guide for consumers when assessing individual wines. Denomination reputation is a function of average quality as revealed by the past performance of producers. The impact of past performance increases over time, since producers consider improved average quality to be an important factor in enhancing the price, but this necessitates monitoring of members in the denomination. The market and pricing of Tuscan red wines provide a natural experiment because there are a number of denominations of different age, each of which is typically undergoing a process of gradual increase in quality standards over time. Furthermore, Tuscan red wines are easily comparable because of great similarities in climate and choice of grape varieties, soil and exposure to sun etc. We show that new denominations have a lower average quality score and that price differentials between denominations are linked to differences in average quality, although consumers tend to exaggerate the quality gap between prestige denominations and new denominations. Thus, a producer in an old denomination benefits from a substantial mark-up relative to an equally good producer from a new denomination. Since ambitious producers in new denominations suffer from price ‘discrimination’ it can be expected that they will produce vineyard branded but denomination neutral wines, provided they can overcome the large fixed costs associated with that strategy. We show that denomination neutral wines do indeed have a stronger price-quality relationship than denomination specific wines.wine; Tuscany; price-quality relationship

A Malthusian model for all seasons?

An issue often discussed in relation to agricultural development is the effect on agricultural labour productivity of more intensive land-use. Introducing aspects of seasonality into a stylized Malthusian model, we unify two diverging views by showing that labour productivity may go up or down with agricultural intensification, depending on whether technological progress emerges in relation to cultivation or harvesting activities. Our result rests on evidence reported by Boserup (1965) and others, which suggests that harvest seasons in traditional agriculture are characterized by severe labour shortage.agricultural intensification ; Boserup ; labour surplus ; Malthus ; seasonality

The role of technology and institutions for growth: Danish creameries in the late nineteenth century

We consider the relative contributions of changing technology and institutions for economic growth through the investigation of a natural experiment in history: the almost simultaneous introduction of the automatic cream separator and the cooperative ownership form in the Danish dairy industry from around 1880. Using a new database of statistics from creameries and the tool of stochastic frontier analysis, we find that both institutions and technology were important for the success of the Danish dairy industry and, by implication, the growth and early development of the Danish economy.Creameries, dairies, Denmark, development, economic growth, institutions, technology, stochastic frontier analysis