Prof. John H. Munro munro5@chass.utoronto.ca

Department of Economics john.munro@utoronto.ca

University of Toronto http://www.economics.utoronto.ca/munro5/

Topic No. 14: The European Price Revolution Era c.1540 - c. 1640: The Problem of Inflation and Economic Growth in Early-Modern Europe

READINGS:

* 1. R. B. Outhwaite, Inflation in Tudor and Early Stuart England, Studies in Economic and Social History series, 2nd edn. (London, 1982), pp. 9 - 60. Good overview, but weak on economic analysis.

* 2. Peter H. Ramsey, ed., The Price Revolution in Sixteenth Century England (London, 1971): the Introduction, pp. 1-18. Read the negative review by D. McCloskey, The Journal of Political Economy, 80 (1972), 1332-35. These essays are also very weak in economics.

* 3. Jack A. Goldstone, 'Urbanization and Inflation: Lessons from the English Price Revolution of the Sixteenth and Seventeenth Centuries,' American Journal of Sociology, 89 (1984), 1122 - 60. Advances an interesting if questionable 'Velocity' explanation of the Price Revolution.

* 4. Peter Lindert, 'English Population, Wages, and Prices: 1541 - 1913,' Journal of Interdisciplinary History, 15:4 (Spring 1985), 609-34, especially pp. 618-29. Offers a modified version of the Goldstone 'Velocity' model.

* 5. Nicholas Mayhew, 'Population, Money Supply, and the Velocity of Circulation in England, 1300-1700,' Economic History Review, 2nd ser., 48:2 (May 1995), 238-57. Reviews the 'Velocity' model.

6. Harry Miskimin, 'Population Growth and the Price Revolution in England,' Journal of European Economic History, 4 (1975), 179-85. Reprinted in his Cash, Credit and Crisis in Europe, 1300 - 1600 (London: Variorum Reprints, 1989), no. xiv. Original proponent of the Velocity model.

* 7. Michael D. Bordo, 'Explorations in Monetary History: A Survey of the Literature,' Explorations in Economic History, 23 (1986), 339-415. On the Price Revolution: see pp. 373-74, with comments on Lindert and Goldstone, and critiques of the Velocity model.

* 8. Douglas Fisher, 'The Price Revolution: A Monetary Interpretation,' Journal of Economic History, 49 (December 1989), 883 - 902. For an earlier attempt at using this model see Dennis Flynn, 'A New Perspective on the Spanish Price Revolution: The Monetary Approach to the Balance of Payments,' Explorations in Economic History, 15 (1978), 388-406. 

9. David Hackett Fischer, The Great Wave: Price Revolutions and the Rhythm of History (Oxford, 1996), pp. 70-80. Similar to Ramsey, in presenting fallacious explanations of the Price Revolution. See my review of this book on the web, at: EH.Net Review <ehreview@eh.net>, 24 February 1999.

10. John H. Munro, 'Patterns of Trade, Money, and Credit,' in Thomas A. Brady, jr., Heiko O. Oberman, and James D. Tracy, eds., Handbook of European History, 1400-1600: Late Middle Ages, Renaissance and Reformation, Vol. I: Structures and Assertions (Leiden/New York/Cologne: E.J. Brill, 1994), pp. 170-79. Another critique of the 'Velocity' model.

11 . John Munro, 'The Central European Mining Boom, Mint Outputs, and Prices in the Low Countries and England, 1450 - 1550,' in Eddy Van Cauwenberghe, ed., Money, Coins, and Commerce: Essays in the Monetary History of Asia and Europe (Leuven University Press, 1991), pp. 119 - 83. See also: John Munro, 'Precious Metals and the Origins of the Price Revolution Reconsidered: The Conjuncture of Monetary and Real Forces in the European Inflation of the Early to Mid-Sixteenth Century,' in Clara Eugenia Núñez, ed., Monetary History in Global Perspective, 1500 - 1808, Proceedings of the Twelfth International Economic History Congress at Madrid, August 1998 (Seville, 1998), pp. 35-50.

*12 . Ralph Davis, The Rise of the Atlantic Economies (1973), chapter 6, pp. 88-107.

*13. Donald C. Coleman, The Economy of England, 1450-1750 (Oxford, 1977), chapter 2, 'Population and Prices, Mainly to 1650,' pp. 12-50.  Very good survey indeed.

On the Consequences of the Price Revolution:

14. Earl Hamilton, 'American Treasure and Andalusian Prices, 1503-1660: A Study in the Spanish Price Revolution,' Journal of Economic and Business History, 1 (1928), reprinted in P.H. Ramsey, ed., The Price Revolution in Sixteenth-Century England (London, 1971), pp. 147-81. The study that sparked the modern debate, though his monetary ideas were obviously not original.

15. Earl J. Hamilton, 'American Treasure and the Rise of Capitalism, 1500-1700,' Economica, 27 (Nov. 1929), 338-57.

16. J. U. Nef, 'Prices and Industrial Capitalism in France and England, 1540 - 1640,' Economic History Review, 1st ser. 7 (1937); also in E.M. Carus-Wilson, Essays in Economic History, vol. I (1954), 108-34. On the industrial consquences of inflation; and a critique of Hamilton.

* 17. David Felix, 'Profit Inflation and Industrial Growth: The Historic Record and Contemporary Analogies,' Quarterly Journal of Economics, 70 (1956), 442-63; reprinted in Roderick Floud, ed. Essays in Quantitative Economic History (Oxford, 1974), pp. 133-51. Critique of Hamilton.

* 18. J.D. Gould, 'The Price Revolution Reconsidered,' Economic History Review, 2nd ser., 17 (1964-65). Reprinted in Peter Ramsey, ed., The Price Revolution in Sixteenth-Century England, Debates in Economic History series (London, 1971), pp. 91-116. Perhaps the best analysis of the impact of inflation on factor costs.

QUESTIONS: There are two main questions.

1. What were the chief causes of the European-wide inflation of the period ca. 1540- ca. 1640: monetary, or real; or some combination of the two? Was this a 'demand-pull' or 'cost-push' type of inflation? If the latter, could such inflation have been 'justified' without a corresponding monetary expansion? That involves changes in the flow (velocity) as well as the stock; and changes in money include credit as well as coin. In your discussion, be sure to distinguish between changes in relative prices and in the price level.

2. What were the economic consequences of the Price Revolution?

(a) Did inflation stimulate and promote economic growth; or did it distort and retard economic growth? How did the consequences vary according to the several sectors of the economy?

(b) Who gained and who lost by inflation? What economic groups and social classes?

(c) Did inflation cheapen any of the relative factor-costs of production: the costs of land (rent), labour (wages), and capital (interest)?

(d) Discuss in particular Hamilton's thesis of 'Profit Inflation': that inflation produced a widening profit margin, as wages fell behind industrial commodity prices, to stimulate the growth of larger-scale industrial capitalism. See also no. 18 above (Gould).