Bank notes were the largest component of the antebellum money supply despite losses as high as 5 percent in some years. Using a comprehensive bank-level panel of note discounts in New York City and Philadelphia, I explain this contradiction by showing that the secondary market reduced losses by accurately discounting notes based on their individual risk of default. Note discounts were almost exclusively sensitive to those factors which increased a bank's probability of default: specie suspensions, falling bond prices, and undiversified portfolios. Thus, by accounting for a bank's composition and environment, the market protected noteholders and allowed notes to circulate throughout the economy.

Until the 1790s marine insurance in the United States was organized by brokers and underwritten by private individuals. Beginning in 1792, however, the private underwriters had to compete with newly formed marine insurance corporations. Each organizational form had advantages and disadvantages. This article uses archival data from a private underwriter and a corporation to study how the competition between these different organizational forms was affected by a powerful exogenous shock which substantially increased the risks to American merchant shipping in the late 1790s: the “Quasi-War” between the United States and France.

We explore the effects of human capital on workers during the latter nineteenth century by examining the U.S. Navy. Naval officers belonged either to a regular or an engineer corps and had tasks assigned for their specialized training. We compile education and career data for officers from Naval Academy and navy registers for the years 1858 to 1907. Wage premia for “engineer-skilled” officers deteriorated over their careers; more traditionally skilled officers enjoyed higher gains in earnings and more frequent promotions. This compelled those with engineering skills to leave the service early, hindering the navy's capacity to further technologically develop.

We examine the role of social and geographical networks in structuring entry into premodern London's skilled occupations. Newly digitized apprenticeship indenture records for 1600–1749 offer little evidence that personal ties strongly shaped apprentice recruitment. The typical London apprentices had no identifiable tie to their master through kin or place of origin. Migrant apprentices' fathers were generally outside the craft sector. The apprenticeship market was strikingly open: well-to-do families accessed a wide range of apprenticeships, and would-be apprentices could match ability and aptitude to opportunity. This fluidity aided human capital formation, with obvious implications for economic development.

The rapid growth of deposits in New York over the late nineteenth century is often attributed to the release of pent-up demand for transactions services. I advance a complementary explanation that emphasizes the market for bank shares. The stock market was important because it generated quotations that signaled depositors about the condition of individual banks as innovations in banking practices allowed confidence to grow. A new database of prices, dividends, and balance sheet items for traded banks and a series of dynamic panel models show that fluctuations in bank prices influenced the course of the expansion.

While economists predicted a return to double-digit unemployment rates during the reconversion from World War II, this outcome did not materialize. This article explores the role that the significant rise in net exports—which accounted for nearly 4 percent of GDP in 1946 and 1947—played in helping the United States avoid a postwar unemployment problem. Using an input-output analysis, we find that the export surplus directly accounted for 1.33 million jobs in 1946 and 1.97 million jobs in 1947. This accounts for close to half of the gains to private sector employment during these years.

Using a novel data set on 2,483 British privateering cruises, we show that state-licensed raiding of commercial vessels was a popular and flourishing business among merchants that took a serious toll on enemy trade from 1689 to 1815. Why, then, did privateering merchants gradually turn away from these profitable endeavors? We show that the expansion of overseas trade increased the opportunity costs for merchants and resulted in the decline of privateering. Our findings document that the decline of privateering had as much to do with an expanding maritime economy as with the rising naval power of the British state.

Economic interests, ideas, and politics have been put forward as explanations for the Repeal of the British Corn Laws. This article evaluates these competing explanations using the case of the Belgian Corn Laws between 1834 and 1873. A detailed quantitative analysis assesses the success of party affiliation and personal and constituency economic interests in predicting representatives' voting behavior. These factors prove to be insufficient to explain the shift towards free trade. This article then moves on to a qualitative analysis, which points to the importance of political strategy and ideas in the liberalization of corn tariffs.

Why was the Industrial Revolution British? In a recent article published in this Journal, Robert Allen argues that only in England was the price of labor relative to capital high enough to justify the adoption of the labor-saving technologies which characterized the Industrial Revolution.1 To support his argument, he uses the spinning jenny as a case study. The jenny was indeed an important labor-saving technology that was invented and widely adopted in England but not in France. Allen explains this fact by calculating the returns to adopting the jenny in each country: according to his calculations the jenny was profitable in England but not in France.

The present note shows that Allen's conclusions rest on implausible profitability computations. In particular, Allen assumes that output remains constant after the adoption of the jenny while hours worked decrease dramatically. From a theoretical perspective, this is equivalent to an assumption that hours worked move inversely with the marginal product of labor. As soon as these restrictive assumptions are abandoned, the jenny turns out being profitable both in England and in France. Hence the mystery of the adoption of the jenny during the Industrial Revolution remains.

In 1686 the leadership of Massachusetts became involved in the first operational bank scheme in America. In 1688 this note-issuing bank was mysteriously aborted at an advanced stage. I suggest a new, simple explanation for the bank's demise. The bank's notes were supposed to be backed mostly by private land in Massachusetts, but a new royal governor invalidated all the land titles. This episode demonstrates the importance of clearly defined and enforced property rights for the development of financial institutions.

“After showing him an Indian deed for land, he said that their hand was no more worth than a scratch with a bear's paw, undervaluing all my titles, though everyway legal under our former charter government.”1

Joseph Lynde

By analyzing a newly compiled database of exchange rates, this article finds that in Central Europe money markets integrated cyclically during the fifteenth century. The cycles were associated with monetary debasements. Long-distance financial integration progressed in connection with the rise of the territorial state, facilitated by the synergy between princes and emperor, which helped to avoid coordination failures. For Central Europe, theories of state formation and market integration should therefore take interstate actors into account.

Today, German machine toolmakers accuse their Chinese competitors of violating patent rights and imitating German technology. A century ago, German machine toolmakers used the same methods to imitate American technology. To understand the dynamics of this catching-up process, we use patent statistics to analyze firms’ activities between 1877 and 1932. We show that German firms deployed imitating strategies in the late nineteenth century and the 1920s to catch-up to their American competitors. The German administration supported this strategy by stipulating a patent law that discriminated against foreign patent holders and by delaying the granting of patents to foreign applicants.

Matching 2,777 R&D firms in surveys conducted by the National Research Council between 1921 and 1938 with U.S. patents reveals that 59 percent of all firms and 88 percent of publicly traded firms patented. These shares are much higher than those observed for modern R&D firms. Industry, firm size and the location of R&D facilities relative to major cities are shown to be important determinants of the propensity to patent. The effect of these factors remained constant across the 1920s and the Depression years suggesting that the tradeoff between patent disclosure and secrecy did not change over time.

In “The Industrial Revolution in Miniature,” I calculated that the spinning jenny was profitable to install in England in the 1780s but not in France.1 My calculations assumed that a spinner using a wheel in a domestic setting worked a total of 100 days per year and spun 100 pounds of coarse cotton (one pound per day). The jenny raised labor productivity to three pounds per day in the “most likely” scenario. I showed that it would have been cheaper to spin 100 pounds per year with a jenny than with a wheel in England, while the reverse would have been true in France. Hence, the jenny was installed in England rather than France. Ugo Gragnolati, Daniele Moschella, and Emanuele Pugliese have pointed out that this argument assumes that output was kept at 100 pounds per year, and the effect of the jenny was to reduce the spinner's work year to only 33–1/3 days per year.2 They suggest that it was more likely that the spinner would have continued to work 100 days per year and produce 300 pounds of yarn instead. In that case, they argue, it would have been profitable to install the jenny in France as well as England. Profitability would have increased in both countries under these assumptions because capital costs would have been cut by a third if three times as much output was produced from the same capital (although profitability was still much higher in England). Hence, they conclude that economic considerations do not explain the diffusion of the jenny.

New York City historiography holds that Manhattan developed two business centers—downtown and midtown—because the bedrock is close to the surface at these locations, with a bedrock “valley” in between. This article is the first effort to measure the effect of depth to bedrock on construction costs and the location of skyscrapers. We find that while depth to bedrock had a modest effect on costs (up to 7 percent), it had relatively little influence on the location of skyscrapers.