61st Annual Meeting
Finance and Economic Modernization
September 14-16, 2001
SESSION 8A. FINANCE IN COLONIAL
BRITISH NORTH AMERICA
Sunday, September 16
10:45 - 12:45
David Flynn (Indiana)
economic history literature understates credit's role in the economy of
colonial New England and book credit itself is mischaracterized.
Using a data set I built from more than 50 merchant account books with
over 9,000 purchases and more than 4,000 payments, I estimate certain vital
characteristics of book credit. Perkins (1988) and Martin (1939) place
the average amount of time a debt lasted, its term, at three to nine months
or one year. Neither cites extensive account records to support their
estimate. I construct life tables and use other event history techniques
to measure average term length for complete debt repayment. My estimate,
fourteen months, is longer than either Perkins or Martin. The account books,
new estimates of term length, along with the size and volume of credit
purchases show the New England economy to be highly sophisticated in the
use of credit.
The Role of Monetary Mismanagement in Stirring Revolutionary Discontent"
Ron Michener (Virginia)
|Abstract: While the American colonists frequently complained about monetary shortages, recent scholarship has tended to dismiss these complaints. In New York, during the depression that gripped the colony in the 1760s, these complaints were especially prominent. This paper argues that New York's difficulties during this decade were consistent with the predictions of an open-economy IS-LM model. A detailed recounting of the narrative history establishes that these complaints, in this instance at least were quite plausible.|
Balance Sheet Deterioration and "Debtor" Angst in Colonial America"
Robert Wright (Virginia)
|Abstract: American colonists easily evaded usury laws; so, despite some claims to the contrary, market forces largely determined interest rates, though quotations are difficult to find. Although data is limited, it is very clear that unstable macroeconomic and monetary conditions caused considerable interest rate volatility. Because of the illiquid nature of colonial assets, and a high level of information asymmetry, interest rate risk for colonial firms was particularly severe. Higher interest rates caused colonial balance sheets to deteriorate, resulting in increased numbers of "debtors," i.e. individuals or firms with negative net worth. Colonists, therefore, were willing to pay a relatively high price for liquid assets like government debt and ground rents. To the extent that imperial policies caused, exacerbated, or prevented colonial reactions to unstable macroeconomic and monetary conditions, colonists' distrust of London was amply justified.|
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