78 research outputs found
Estimating medieval market integration: Evidence from exchange rates
In this paper we present a new method for estimating market integration under a commodity money system such as that which existed in Europe until the demise of the gold standard. The approach is based on the analysis of deviations between exchange rates and parity, which under conditions of a perfectly functioning and fully integrated market should not exceed the bullion points. Consequently the time needed for adjustment, following a violation of the bullion points, can be used as an indicator of market imperfections and as a measure of integration. We apply this approach to trade between late medieval Flanders, LĂŒbeck and Prussia, our results showing that Flanders-LĂŒbeck constituted a much better-integrated market than Flanders-Prussia. Moreover, the results indicate that the degree of market integration increased between the early fourteenth and the middle of the fifteenth century. --
The Political Economy of Agricultural Protection: Sweden 1887
We analyse the Swedish general elections that took place in spring and autumn 1887. Our aim is to discover which groups of voters were responsible for the severe losses that the supporters of free trade suffered in the second of these contests, and that allowed the protectionists to gain the majority in parliament and to initiate a new tariff policy. We find that while capital owners and wage earners consistently favoured free trade, in the spring election only the largest farmers supported protectionism. By autumn, political preferences among smallholders and middling farmers had shifted in favour of protectionism, too. As these groups were not specialised in the production of import competing goods, we assume that the political landslide in the autumn elections can be attributed to the influence of anti-free trade propaganda.voting, election analysis, tariffs, trade policies
Trade in coinage, Gresham's Law, and the drive to monetary unification: the Holy Roman Empire, 1519-59
Research on premodern monetary unions has so far started out from the idea that such unions were designed to promote trade and economic integration. The present paper demonstrates that this in an anachronistic misconception. Premodern monetary unions were the answer to political and fiscal problems caused by Greshamâs Law in a monetary environment characterised permeable borders and by the increasing integration of currency markets. As integration advanced significantly in the fifteenth and early sixteenth centuries, the regional monetary unions that had been formed in the late medieval Holy Roman Empire were increasingly insufficient to address these problems. This is why the imperial estates were interested in creating and Empire-wide common currency â an aim they reached at the end of the 1550s
Voting like your betters: the bandwagon effect in the diet of the Holy Roman Empire
Scholars agree that a core feature of the political style of the Holy Roman Empire was the focus on consensus, without which policies at the level of the Empire were impossible. The present article demonstrates that the consensus on which decisions of the imperial estates was based tended to be superficial and was often in danger of breaking down. This was because the dietâs open and sequential voting procedure allowed the bandwagon effect to distort outcomes. An analysis of the votes cast in the princesâ college of the diet of 1555 shows that low-status members of the college regularly imitated the decisions of high-status voters. Reforming the system would have required accepting that the members of the college were equals â an idea no one was prepared to countenance. Hence, superficial and transitory agreements remained a systematic feature of politics at the level of the Empire
Bimetallism and its discontents: cooperation and coordination failure in the empireâs monetary politics, 1549-59
The article uses new sources to review the hypotheses that Charles Vâs currency bill of 1551 failed because of the electoral-Saxon resistance against the undervaluation of the taler that it stipulated, or because the emperor was too weak to overcome the estatesâ resistance to collective action in monetary policies. The study shows that these issues were overshadowed by the dispute about whether a bimetallic currency should be established. Charles Vâs currency bill failed because the Diet of Augsburg (1550-51) asked the emperor to publish it before all open issues had been resolved. This request placed the emperor in a dilemma where he had to make a decision but could not do so without antagonising important parties. It was the result of a coordination failure at the level of the Empire; this, in turn, was a consequence of a lack of continuity among the personnel involved in shaping monetary policies
Technologies of money in the Middle Ages: the 'Principles of Minting'
The paper discusses which options medieval political authorities had to satisfy the demand for complex currencies. It distinguishes several models, each of which caused problems: A first one, where the basic unit was supplemented by a range of other denominations whose weight and purity where exactly proportional. While this did not take the proportionally larger labour costs involved in the production of small change into account, the second model did: here, small change had an over proportionally high content of base metal. In consequence, the stable numerical ratios between units of the same currency began to shift. The third option involved using gold for high purchasing power coins; a strategy that made currencies vulnerable to changes in the relative market prices of gold and silver. Again, the outcome was a that the numerical ratios between units of the same currency became instable. The paper discusses how political authorities chose between these options, how they supplied their mints with the necessary bullion and how minting was organised
The Influence of Information Costs on the Integration of Financial Markets: Northern Europe, 1350-1560
In this paper, the influence of information costs on the integration of Northern European financial markets between ca. 1350 and 1560 is explored. The approach is based on splitting information costs into their constitutive components and on measuring one of these, i.e. the costs of transmitting information, which have particular importance for market integration. The analysis has two main results: First, under pre-industrial conditions, when transmitting information was extremely labour intensive and very little capital intensive, transmission costs can be largely identified with labour costs, and were subject to the same influences. Next, the integration of financial markets depended crucially on the level of transmission costs, high costs being strongly and significantly correlated with weak integration, while lower costs favoured convergence.Financial markets, integration, information costs, economic history
How successful was Germany's first common currency? A new look at the imperial monetary union of 1559
The paper starts out from the insight that success or failure of the common currency, on which the diet of the Holy Roman Empire agreed in 1559, cannot be assessed against how modern currencies are functioning. Rather, the benchmark is provided by historical criteria, primarily by the aims of the political authorities that joined the union. The analysis finds that there were two overriding aims: 1) preventing high-ranking economic agents from exploiting their social standing in order to push up prices and rents, and 2) removing the conditions that allowed Greshamâs Law to undermine monetary stability. The participants in the union tried to reach the first aim by retaining regional small change in addition to the Empire-wide larger units. While there is limited evidence for the common currency preventing the functioning of Greshamâs Law within the Empire up to the immediate run-up to the Thirty Years War (1618-48), it failed to prevent inflation and the inflow of foreign coinage. However, in neither respect the post1559 Empire differed from other contemporary polities. On balance, therefore, the Empireâs common currency can be considered a success
evidence from exchange rates
In this paper we present a new method for estimating market integration under
a commodity money system such as that which existed in Europe until the demise
of the gold standard. The approach is based on the analysis of deviations
between exchange rates and parity, which under conditions of a perfectly
functioning and fully integrated market should not exceed the bullion points.
Consequently the time needed for adjustment, following a violation of the
bullion points, can be used as an indicator of market imperfections and as a
measure of integration. We apply this approach to trade between late medieval
Flanders, LĂŒbeck and Prussia, our results showing that Flanders- LĂŒbeck
constituted a much better-integrated market than Flanders-Prussia. Moreover,
the results indicate that the degree of market integration increased between
the early fourteenth and the middle of the fifteenth century
Power politics and princely debts: why Germanyâs common currency failed, 1549-1556
The article argues that in the first half of the sixteenth century the need to avoid rounds of competitive debasements was the primary motive for the creation of a common currency valid in the whole Holy Roman Empire. In the years 1549 to 1551, the estates came close to achieving this. In contrast to what is suggested in the literature, their attempt did not fail because the Empire was economically poorly integrated or the will to co-operate was lacking. Rather, it failed because during the talks, the estates lost sight of the original motive, the princes favouring a bimetallic system that they hoped would allow them deflating the real value of their debts, and Charles V undervaluing the taler in the hope that this would weaken political opponents. These decisions antagonised important actors; when it proved impossible to enforce them, the Empireâs common currency failed
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