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Emile and Isaac Pereire: Bankers, Socialists and Sephardic Jews in Nineteenth-century France

Author(s):Davies, Helen M.
Reviewer(s):Redmount, Esther

Published by EH.Net (January 2016)

Helen M. Davies, Emile and Isaac Pereire: Bankers, Socialists and Sephardic Jews in Nineteenth-century France. Manchester: Manchester University Press, 2015.  x + 260 pp., $100 (hardback), ISBN: 978-0-7190-8923-7.

Reviewed for EH.Net by Esther Redmount, Department of Economics, Colorado College.

While Emile and Isaac Pereire: Bankers, Socialists and Sephardic Jews in Nineteenth-century France was not written for economic historians, the topics it covers cannot help but be of interest to those who study economic and financial development, the Industrial Revolution, entrepreneurship and the history of economic thought.

The brothers Emile and Isaac Pereire rose from extreme deprivation in the Jewish community of Bordeaux to the pinnacle of the grande bourgeoisie in Paris during the Second Empire as founders and directors of the Crédit Mobilier.  Their meteoric rise and the roles they played in nineteenth-century economic development in Europe are not unlike those of other only recently emancipated (though still largely unenfranchised) Jewish financiers of the period including the Rothschilds, the Bleichröders and the Ephrussi.  Helen Davies’ monograph is the first biography of the brothers Pereire in English and it makes extensive use of archival sources, relying, in particular, on the Archives de la Famille Pereire, in Paris.  This gives Davies access to letters and other communications that shed new light on the network of relationships among the Pereires, the Saint-Simonians, the Rothschilds, Napoleon III and others influential in the political and economic development of France.  Her book serves as an interesting complement to more standard economic histories of nineteenth-century France.

Several themes play out in the lives of Emile and Isaac Pereire.  Both men grew up poor, but closely attached to a network of cousins and in-laws who helped them on their way.  As young men, both were effectively apprenticed as bookkeepers in the banking and maritime establishments of Bordeaux. When they subsequently relocated to Paris, those same networks provided housing and social support as well.  Most importantly, their connection to Olinde Rodrigues brought them into contact with Claude Henri de Rouvray, comte de Saint-Simon, whose writings on the possibilities for economic and moral enhancement attendant on the careful and deliberate direction of economic activity became their guiding light in the decades to come.

It is easy now to underestimate how influential Saint-Simon’s utopian socialism was during this period.  Davies reminds us of how many politicians, social theorists and economic analysts were influenced by the writings of de Rouvray and those who surrounded him, including Napoleon III.  She can do little more than remind us, since that topic is well beyond the scope of the present book and would require at least another whole treatise to address.

The brothers spent considerable time and energy writing and lecturing on the major economic tenets of Saint-Simonianism before the movement dissolved.  Davies argues convincingly that the work they did actually laid the foundation for their own forays into industrial capitalism. From articles they had written, the Pereires foresaw what a system of railways could do for France and how urban renewal might transform what was still primarily a medieval city into the new Paris.  In 1832, Emile Pereire developed a proposal to build a passenger railway between Paris and St. Germain and the family became small investors in the project that included James de Rothschild among others.  At this stage, relations between the two were cordial, though they would not remain so.

When the Paris-St. Germain concession was granted, Emile Pereire became a director and four bankers comprised the board.  With the inauguration of the line, the Pereires achieved political as well as economic influence, but having seen the power bankers could wield, they strove to be the chief brokers of their own dreams.  Davies deftly shows how they managed this through the creation of a financial institution that bought shares or invested directly in the acquisition and building of infrastructure.  That bank, the Crédit Mobilier, was to be the great work of their lives.

The lives of the Pereires and their enterprises intersect the great political upheavals in France mid-century.  Davies walks us through how the Revolution of 1848 and its aftermath opened opportunities for the Pereires to work with Louis-Napoleon.  Indeed in 1852, the man who was to become Emperor formally established the Crédit Mobilier.  Davies describes this bank as “a powerful instrument in the expansion of French capitalism, the lynch-pin which facilitated a revolution in banking and heavy industry.”  Because her book is not an economic history, per se, she does not attempt to assess the strengths and weakness of this institution.  Rather she gives readers a view of this financial institution as it evolved and was discussed in the correspondence of its principals.  Historians such as Rondo Cameron, Alexander Gerschenkron and Niall Ferguson have all weighed in on the impact of the Crédit Mobilier and those interested in the broader ramifications of this form of state-sponsored development might begin a study of the larger question with their works.

The Crédit Mobilier collapsed in December of 1867.  Its capital was raised primarily by issuing bonds. The funds from those issues were then used to buy shares in the industrial enterprises in which it was interested or to establish and then run and manage those enterprises directly.  When those enterprises were profitable or when share values were high, the bank was highly liquid and profitable.  In downturns or in the face of increasing competition, the bank became insolvent. By the time of its most serious distress in 1867, as the correspondence among family members and business associates makes clear, the Rothschilds were no longer allies and the willingness or ability of the Emperor to come to the Pereires’ aid was waning. The bank was unable to find funds to pay its creditors.  Charges of malfeasance were levied, but Davies finds support for mismanagement rather than fraud.

Even if the Crédit Mobilier was no longer financially sound, it had, in addition to railroads, created or reorganized public utilities (gas and omnibus services within Paris).  It owned industrial laundries, housing developments and significant tracts of land, grand hotels and opera houses.  What remained Davies notes, even after the financial institution was swept away, established France as a modern, industrial and commercial powerhouse, second only to Great Britain in the period.

This book is not a substitute for a standard history of French economic development.  Nor is it a substitute for a thorough treatment of utopian socialism as outlined by Saint-Simon and his followers.  It is, however, a well-written and useful addition to the literature on economic development because it makes clear how macroeconomic outcomes arise from the actions of individual agents, how theory and ideas can be influential, and how entrepreneurship crops up in unlikely places to transform the society from which it arises.  Were this book to go to a second edition, I would welcome a time-line of French political history and a map of railway lines developed by the Pereires and their enterprises in France at this time.

Rondo Cameron (1953), “The Crédit Mobilier and the Economic Development of Europe,” Journal of Political Economy, 61:6, 461-488.

Niall Ferguson (1999), The House of Rothschild: The World’s Banker, 1849-1999, New York: Viking.

Alexander Gerschenkron (1962), Economic Backwardness in Historical Perspective: A Book of Essays, Cambridge, MA: Harvard University Press.

Fritz Stern, (1979), Gold and Iron: Bismarck, Bleichröder and the Building of the German Empire, New York: Vintage.

Esther Redmount is the editor of The Economics of the Family: How the Household Affects Markets and Economic Growth (Praeger, 2014) and “The Effect of Wage Payment Reform on Workers’ Labor Supply, Wages, and Welfare,” Journal of Economic History, 2012 (with Arthur Snow and Ronald S. Warren Jr.).

Copyright (c) 2016 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ( Published by EH.Net (January 2016). All EH.Net reviews are archived at

Subject(s):Business History
Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):Europe
Time Period(s):19th Century

Project 2000/2001

Project 2000

Each month during 2000, EH.NET published a review essay on a significant work in twentieth-century economic history. The purpose of these essays was to survey the works that have had the most influence on the field of economic history and to highlight the intellectual accomplishments of twentieth-century economic historians. Each review essay outlines the work’s argument and findings, discusses the author’s methods and sources, and examines the impact that the work has had since its publication.

Nominations were received from dozens of EH.Net’s users. P2K
selection committee members were: Stanley Engerman (University of
Rochester), Alan Heston (University of Pennsylvania), Paul
Hohenberg, chair (Rensselaer Polytechnic Institute), and Mary
Yeager (University of California-Los Angeles). Project Chair was
Robert Whaples (Wake Forest University).

The review essays are:

Braudel, Fernand
Civilization and Capitalism, 15th-18th Century Time
Reviewed by Alan Heston (University of Pennsylvania).

Chandler, Alfred D. Jr.
The Visible Hand: The Managerial Revolution in American Business
Reviewed by David S. Landes (Department of Economics and History, Harvard University).

Chaudhuri, K. N.
The Trading World of Asia and the English East India Company, 1660-1760
Reviewed by Santhi Hejeebu.

Davis, Lance E. and North, Douglass C. (with the assistance of Calla Smorodin)
Institutional Change and American Economic Growth.
Reviewed by Cynthia Taft Morris (Department of Economics, Smith College and American University).

Fogel, Robert W.
Railroads and American Economic Growth: Essays in Econometric History
Reviewed by Lance Davis (California Institute of Technology).

Friedman, Milton and Schwartz, Anna Jacobson
A Monetary History of the United States, 1867-1960
Reviewed by Hugh Rockoff (Rutgers University).

Heckscher, Eli F.
Reviewed by John J. McCusker (Departments of History and Economics, Trinity University).

Landes, David S.
The Unbound Prometheus: Technological Change and Industrial Development in Western Europe from 1750 to the Present
Reviewed by Paul M. Hohenberg (Rensselaer Polytechnic Institute).

Pinchbeck, Ivy
Women Workers and the Industrial Revolution, 1750-1850 
Reviewed by Joyce Burnette (Wabash College).

Polanyi, Karl
The Great Transformation: The Political and Economic Origins of Our Time
Reviewed by Anne Mayhew (University of Tennessee).

Schumpeter, Joseph A.
Capitalism, Socialism and Democracy 
Reviewed by Thomas K. McCraw (Harvard Business School).

Weber, Max
The Protestant Ethic and the Spirit of Capitalism
Reviewed by Stanley Engerman.

Project 2001

Throughout 2001 and 2002, EH.Net published a second series
of review essays on important and influential works in economic
history. As with Project 2000, nominations for Project 2001 were
received from many EH.Net users and reviewed by the Selection
Committee: Lee Craig (North Carolina State University); Giovanni
Federico (University of Pisa); Anne McCants (MIT); Marvin McInnis
(Queen’s University); Albrecht Ritschl (University of Zurich);
Winifred Rothenberg (Tufts University); and Richard Salvucci
(Trinity College).

Project 2001 selections were:

Borah, Woodrow Wilson
New Spain’s Century of Depression
Reviewed by Richard Salvucci (Department of Economics, Trinity University).

Boserup, Ester
Conditions of Agricultural Growth: The Economics of Agrarian Change under Population Pressure
Reviewed by Giovanni Federico (Department of Modern History, University of Pisa).

Deane, Phyllis and W. A. Cole
British Economic Growth, 1688-1959: Trends and Structure
Reviewed by Knick Harley (Department of Economics, University of Western Ontario).

Fogel, Robert and Stanley Engerman
Time on the Cross: The Economics of American Negro Slavery
Reviewed by Thomas Weiss (Department of Economics, University of Kansas).

Gerschenkron, Alexander
Economic Backwardness in Historical Perspective
Review Essay by Albert Fishlow (International Affairs, Columbia University).

Horwitz, Morton
The Transformation of American Law, 1780-1860
Reviewed by Winifred B. Rothenberg (Department of Economics, Tufts University).

Kuznets, Simon
Modern Economic Growth: Rate, Structure and Spread
Reviewed by Richard A. Easterlin (Department of Economics, University of Southern California).

Le Roy Ladurie, Emmanuel
The Peasants of Languedoc
Reviewed by Anne E.C. McCants (Department of History, Massachusetts Institute of Technology).

North, Douglass and Robert Paul Thomas
The Rise of the Western World: A New Economic History
Reviewed by Philip R. P. Coelho (Department of Economics, Ball State University).

de Vries, Jan
The Economy of Europe in an Age of Crisis, 1600-1750
Review Essay by George Grantham (Department of Economics, McGill University).

Temin, Peter
The Jacksonian Economy
Reviewed by Richard Sylla (Department of Economics, Stern School of Business, New York University).

Wrigley, E. A. and R. S. Schofield
The Population History of England, 1541-1871: A Reconstruction

Project Coordinator and Editor: Robert Whaples (Wake Forest

Ireland’s Great Famine

Ireland’s Great Famine

Cormac Ó Gráda, University College Dublin

The proximate cause of the Great Irish Famine (1846-52) was the fungus phythophtera infestans (or potato blight), which reached Ireland in the fall of 1845. The fungus destroyed about one-third of that year’s crop, and nearly all that of 1846. After a season’s remission, it also ruined most of the 1848 harvest. These repeated attacks made the Irish famine more protracted than most. Partial failures of the potato crop were nothing new in Ireland before 1845, but damage on the scale wrought by the ecological shock of potato blight was utterly unprecedented (Solar 1989; Clarkson and Crawford 2001). However, the famine would not have been so lethal had dependence on the potato been less. Poverty had reduced the bottom one-third or so of the population to almost exclusive dependence on the potato for sustenance. For those in this category, the daily intake was enormous: 4 to 5 kilos (9 to 11 pounds) daily per adult male equivalent for most of the year. That, coupled with an inadequate policy response from the authorities, made the consequences of repeated failures devastating (Bourke 1993).

Ireland was a poor country in 1845, income per head being about half that in the rest of the United Kingdom. The half-century or so before the famine was a period of increasing impoverishment for the landless poor. With impoverishment came rising inequality. Increasing population pressure was only partly relieved by an increase in the emigration rate and a fall in the birth rate (Boyle and Ó Gráda 1986). Moreover, demographic adjustment was weakest in the western and southern areas most at risk. The nutritional content of the potato and widespread access to heating fuel in the form of turf eased somewhat the poverty of Ireland’s three million ‘potato people.’ They were healthier and lived longer than the poor in other parts of Europe at the time. However, their poverty meant that when the potato failed, there was no trading down to a cheap alternative food (Ó Gráda 1994). Nowhere else in Europe had the potato, like tobacco a gift from the New World, made such inroads into the diet of the poor. It bears noting that the potato also failed throughout Europe in the 1840s. This brought hardship in many places, and excess mortality in the Low Countries and in parts of Germany. Yet nowhere was Ireland’s cataclysm repeated (Solar 1997).

The first attack of potato blight inflicted considerable hardship on rural Ireland, though no significant excess mortality. The catastrophe of the Great Famine really dates from the fall of 1846, when the first deaths from starvation were recorded. At first there were food riots and protests, but they subsided as hope and anger gave way to despair (Eiriksson 1997). During the winter and spring of 1846-7 the carnage reached its peak, but the famine continued for another three years. Like all major famines, the Irish potato famine produced many instances of roadside deaths, of neglect of the very young and the elderly, of heroism and of anti-social behavior, of evictions, and of a rise in crimes against property. It was widely reported in the contemporary press at first, both in Ireland and abroad. It elicited a massive response in terms of private donations for a time, especially through the Catholic Church worldwide and the Society of Friends. Philanthropists in Britain were also moved by Irish suffering. That was before compassion fatigue set in. For narrative accounts of the tragedy see Edwards and Williams (1956), Woodham-Smith (1962), Ó Gráda (1999), and Donnelly (2001).

Public Action

The debate about relief measures for Ireland in the press and in parliament in the 1840s has quite a modern resonance (compare Drèze and Sen 1989). At first the government opted for reliance on the provision of employment through public works schemes, the cost of which was to be split between local taxpayers and the central government. At their height in the spring of 1847 the works employed seven hundred thousand people or one-in-twelve of the entire population. The works did not contain the famine, partly because they did not target the neediest, partly because the average wage paid was too low, and partly because they entailed exposing malnourished and poorly clothed people (mostly men) to the elements during the worst months of the year.

The publicly-financed soup kitchens which replaced the public works reached three million people daily at their peak in early 1847. Mortality seemed to fall while they operated, though doubts remain about the effectiveness of a diet of thin meal-based gruel on weakened stomachs. The drop in food prices during the summer of 1847 prompted the authorities to treat the famine henceforth as a manageable, local problem. The main burden of relieving the poor henceforth was placed on the workhouses established under the Irish Poor Law of 1838. In principal those requiring relief were supposed to pass ‘the workhouse test,’ i.e. refusal to enter the workhouse was deemed evidence of being able to support one’s self. In practice, most of the workhouses were ill-equipped to meet the demands placed upon them, and in the event about one-quarter of all excess famine mortality occurred within their walls. Local histories highlight mismanagement and the impossible burden placed on local taxpayers; and the high overall proportion of workhouse deaths due to contagious diseases is an indictment of this form of relief. The very high mortality in some workhouses in 1850 and 1851 is evidence of the long-lasting character of the famine in some western areas (Guinnane and Ó Gráda 2002; Ó Murchadha 1998).

Traditional accounts of the famine pit the more humane policies of Sir Robert Peel’s Tories against the dogmatic stance of Sir John Russell’s Whig administration, which succeeded them. Peel was forced out of office in July 1846 when his party split on the issue of the Corn Laws. The contrast between Peel and Russell oversimplifies. Though Peel was more familiar with Ireland’s problems of economic backwardness than Whig ideologues such as Charles Wood, the crisis confronting him in 1845-6 was mild compared to what was to follow. Moreover, Peel broadly supported the Whig line in opposition, and it was left to his former Tory colleagues to mount a parliamentary challenge against Russell and Wood. Assessment of the public policy response cannot ignore the apocalyptic character of the crisis that it faced. Nonetheless, the government’s obsession with parsimony and its determination to make the Irish pay for ‘their’ crisis cannot but have increased the death rate. The same goes for the insistence on linking relief with structural reform (e.g. by making the surrender of all landholdings over a quarter of an acre in size a strict condition for relief). At the height of the crisis the policy stance adopted by the Whigs was influenced by Malthusian providentialism, i.e. the conviction that the potato blight was a divinely ordained remedy for Irish overpopulation. Compassion on the part of the British elite was in short supply. The fear that too much kindness would entail a Malthusian lesson not learnt also conditioned both the nature and extent of intervention (Gray 1999).

The Irish famine killed about one million people, or one-eighth of the entire population. This made it a major famine, relatively speaking, by world-historical standards. In pre-1845 Ireland famines were by no means unknown — that caused by arctic weather conditions in 1740-41 killed a higher share of a much smaller population (Dickson 1998) — but those that struck during the half-century or so before the Great Famine were mini-famines by comparison. The excess death toll of one million is an informed guess, since in the absence of civil registration excess mortality cannot be calculated directly (Mokyr 1985; Boyle and Ó Gráda 1986). The record of deaths in the workhouses and other public institutions is nearly complete, but the recording of other deaths depended on the memory of survivors in households where deaths had taken place. In many homes, of course, death and emigration meant that there were no survivors. The estimate does not include averted births, nor does it allow for famine-related deaths in Britain and further afield (Neal 1997).

Mortality was regionally very uneven. No part of Ireland escaped entirely, but the toll ranged from one-quarter of the population of some western counties to negligible fractions in counties Down and Wexford on the east coast. The timing of mortality varied too, even in some of the worst hit areas. In west Cork, a notorious problem area, the worst was over by late 1847, but the deadly effects of the famine ranged in county Clare until 1850 or even 1851. Infectious diseases — especially typhoid fever, typhus and dysentery/diarrhea — rather than literal starvation were responsible for the bulk of mortality. While Karl Marx was almost right to claim that the Irish famine killed ‘poor devils only,’ many who were not abjectly poor and starving died of famine-related diseases. Medical progress, by shielding the rich from infection, has made subsequent famines even more class-specific. By and large, the higher the death toll, the higher the proportion of starvation deaths (Mokyr and Ó Gráda 2002). As in most famines, the elderly and the young were most likely to succumb, but women proved marginally more resilient than men.

The famine also resulted in migration on a massive scale. Again precise estimates are impossible. Though these migrants were also victims of the famine, their departure improved not only their own survival chances, but also those of the majority who remained in Ireland. True, the Atlantic crossing produced its own carnage, particularly in Quebec’s Grosse-Isle, but most of those who fled made it safely to the other side. There thus is a sense in which migration was a crude form of disaster relief, and that more spending on subsidized emigration would have reduced the aggregate famine death toll (Ó Gráda and O’Rourke 1997). Most of those who emigrated relied on their own resources; some landlords helped through direct subsidies or by relieving those who left of their unpaid rent bills. The landless poor simply could not afford to leave.

A Hierarchy of Suffering

Like all famines, the Irish famine produced its hierarchy of suffering. The rural poor, landless or near-landless, were most likely to perish, and the earliest victims were in that category. Farmers found their effective land endowment reduced, since their holdings could no longer yield the same quantity of potatoes as before. They also faced increased labor costs, forcing them to reduce their concentration on tillage. Landlords’ rental income plummeted by as much a third. Many clergymen, medical practitioners, and poor law officials died of infectious diseases. Pawnbrokers found their pledges being unredeemed as the crisis worsened. Least affected were those businesses and their work forces who relied on foreign markets for their raw materials and their sales. The relative impact of the famine on different occupational groups may be inferred from the 1841 and 1851 censuses. The overall decline in the labor force was 19.1 percent. There were 14.4 percent fewer farmers, and 24.2 percent fewer farm laborers. Not surprisingly, given their vulnerability, the number of physicians and surgeons dropped by 25.3 percent. The small number of coffin makers (eight in 1841, twenty-two in 1851) is a reminder that during the famine most coffins were not made by specialist coffin makers. It is difficult to identify any significant class of ‘winners’ in the 1840s, though the census indicates increases in the numbers of millers and bakers, of barristers and attorneys, and of bailiffs and rate collectors. The huge fall in the numbers of spinners and weavers was partly a consequence of the famine, partly due to other causes (Ó Gráda 1999: chapter 4; 2001).

Post-Famine Adjustment

The Great Irish Famine was not just a watershed in Irish history, but also a major event in global history, with far-reaching and enduring economic and political consequences. Individual memories of the famine, coupled with ‘collective memory’ of the event in later years, influenced the political culture of both Ireland and Irish-America — and probably still do (Cullen 1997; Donnelly 2000; Ó Gráda 2001). The famine brought the era of famines in Ireland to a brutal end. Serious failures of the potato in the early 1860s and late 1870s, also due to potato blight, brought privation in the west of the country, but no significant excess mortality. The famine also resulted in higher living standards for survivors. The bargaining power of labor was greater. Any negative impact on landlords’ income from a declining population was more than compensated for by the relative increase in the prices of land-intensive output and the prompter payment of rents due. Higher emigration was another by-product of the famine, as the huge outflow of the crisis years generated its own ‘friends and neighbors’ dynamic. Only in a few remote and tiny pockets in the west did population fill the vacuum left by the ‘Great Hunger,’ and then only very briefly (Guinnane 1997).

Whether or not the famine led to the decline of certain native industries by reducing the domestic market remains a moot point, worthy of further research (Whelan 1999). The long-run impact of the famine on the health of affected survivors is another unresearched topic (compare Lumey 1998). Finally, though the introduction of new potato varieties offered some respite against phythophtera infestans thereafter, no reliable defense would be found against it until the 1890s.

Note: This essay builds on my entry on the Great Irish Famine in Paul Demeny and Geoffrey McNicoll, editors, Encyclopedia of Population (New York: Macmillan, 2003).

Further Reading

Bourke, Austin. The Visitation of God? The Potato and the Great Irish Famine. Dublin: Lilliput, 1993.

Boyle, P.P. and C. Ó Gráda. “Fertility Trends, Excess Mortality, and the Great Irish Famine.” Demography 23 (1986): 543-62.

Clarkson, L.E. and E.M. Crawford. Feast and Famine: Food and Nutrition in Ireland 1500-1920. Oxford: Oxford University Press, 2001.

Cullen, L.M. ‘The Politics of the Famine and Famine Historiography,” Comhdháil an Chraoibhín 1996 (Roscommon, Ireland) 1997: 9-31.

Dickson, David. Arctic Ireland. Belfast: White Row Press, 1998.

Donnelly, James S. The Irish Potato Famine. London: Sutton Publishing, 2000.

Drèze, Jean and Amartya Sen. Hunger and Public Action, Oxford: Oxford University Press, 1989.

Edwards, R.D. and T.D. Williams. The Great Famine: Studies in Irish History, 1845-52. Dublin; Browne & Nolan, 1956 [new edition published by Lilliput Press, 1994].

Eiriksson, Andrés. “Food Supply and Food Riots.” In Famine 150: The Teagasc/UCD Lectures, edited by Cormac Ó Gráda, 67-93. Dublin: Teagasc, 1997.

Gray, Peter. Famine, Land, and Politics: British Government and Irish Society, 1843-50, Dublin: Irish Academic Press, 1999.

Guinnane, Timothy W. The Vanishing Irish: Households, Migration and the Rural Economy in Ireland, 1850-1914. Princeton: Princeton University Press, 1997.

Guinnane, Timothy W. and Cormac Ó Gráda. “Workhouse Mortality and the Great Irish Famine.” In Famine Demography, edited by Tim Dyson and Cormac Ó Gráda, 44-64. Oxford: Oxford University Press, 2002.

Lumey, L.H. “Reproductive Outcomes in Women Prenatally Exposed to Undernutrition from the Dutch Famine Birth Cohort.” Proceedings of the Nutrition Society 57 (1998): 129-35.

Mokyr, Joel. Why Ireland Starved: An Analytical and Quantitative History of the Irish Economy, 1800-1850. London: Allen & Unwin, 1985.

Mokyr, Joel and Cormac Ó Gráda. “What Do People Die of during Famines? The Great Irish Famine in Comparative Perspective.” European Review of Economic History 6, no. 3 (2002): 339-64.

Neal, Frank. Black ’47: Britain and the Famine Irish. London: Macmillan, 1998.

Ó Gráda, Cormac. Ireland: A New Economic History, 1780-1939. Oxford: Oxford University Press, 1994.

Ó Gráda, Cormac. Black ’47 and Beyond: The Great Irish Famine in History, Economy, and Memory. Princeton: Princeton University Press, 1999.

Ó Gráda, Cormac. “Famine, Trauma, and Memory. ” Béaloideas 69 (2001): 121-43.

Ó Gráda, Cormac and Kevin H. O’Rourke. “Mass Migration as Disaster Relief: Lessons from the Great Irish Famine.” European Review of Economic History 1, no. 1 (1997): 3-25.

Ó Murchadha, Ciarán. Sable Wings over the Sand: Ennis, County Clare, and Its Wider Community during the Great Famine. Ennis: Clasp Press, 1998.

Solar, Peter M. “The Great Famine Was No Ordinary Subsistence Crisis.” In Famine: The Irish Experience, 900-1900, edited by E.M. Crawford. Edinburgh: John Donald, 1989.

Solar, Peter M. 1997. “The Potato Famine in Europe.” In Famine 150: The Teagasc/UCD Lectures, edited by Cormac Ó Gráda, 113-27. Dublin: Teagasc, 1997.

Whelan, Karl. “Economic Geography and the Long-run Effects of the Great Irish Famine.” Economic and Social Review 30, no. 1 (1999): 1-20.

Woodham-Smith, Cecil. The Great Hunger: Ireland, 1845-49, London: Hamish Hamilton, 1962.

Citation: O Grada, Cormac. “Ireland’s Great Famine”. EH.Net Encyclopedia, edited by Robert Whaples. March 16, 2008. URL

Global Perspectives on Industrial Transformation in the American South

Author(s):Delfino, Susanna
Gillespie, Michele
Reviewer(s):Carlson, Leonard A.

Published by EH.Net (March 2012)

Susanna Delfino and Michele Gillespie, editors, Global Perspectives on Industrial Transformation in the American South. Columbia, MO: University of Missouri Press, 2005.? x + 240 pp.? $30 (paperback), ISBN: 978-0-8262-1583-3.

Reviewed for EH.Net by Leonard A. Carlson, Department of Economics, Emory University.

This volume is a part of the Southern Industrialization Project (SIP), an effort among historians to promote research on the relatively neglected topic of industrial development in the southeastern U.S.? The goal is to counter the view that the South was exclusively agrarian and backwards relative to contemporary nations.? The global perspective in the title reflects in part the research interests of one of editors, Susanna Delfino, who is an historian of Italy and an Italian national.? She compares the U.S. and Italy in ?The Idea of Southern Economic Backwardness: A Comparative View of the United States and Italy.?? Looking at Italy as similar to the U.S. allows one to separate the issues of underdevelopment from race to a degree that is hard in the U.S. case alone.? She emphasizes role of the northern political elites in overstating the relative backwardness in both ?Souths,? as part of an attempt to affirm the importance of a liberal state in economic development.

Some authors work within the framework put forward by Fogel and Engerman in Time on the Cross and later works that the slave system in the antebellum South was a prosperous, flexible form of capitalism.? Engerman himself, in his essay ?Southern Industrialization: Myths and Realities,? argues that the problems of the South after emancipation and war cannot be used as evidence about the performance of the antebellum economic system.? Others, notably Gavin Wright in Old South, New South, have reached a somewhat different conclusion.? Wright argues that while the antebellum South was indeed prosperous, slavery retarded development of industry and cities and that poor performance of the postwar southern economy is a direct consequence of the negative effects of the legacy of slavery.? Some of the essays in this volume examine the performance of the post-Civil War southern economy and discuss structural factors that slowed the development of manufacturing in the South.

As is inevitable in such a collection, the articles vary in methodology and topics.? Emma Hart in ?Charleston and the British Industrial Revolution, 1750-1790,? looks at Charleston as a typical eighteenth-century British city with a thriving community of small artisans within a larger Atlantic economy.? By the 1750s Charleston had evolved to serve the prosperous low country rice plantations.??

Brian Schoen, ?Alternatives to Dependence: The Lower South?s Antebellum Pursuit of Sectional Development through Global Interdependence,? looks at the views on political economy expressed by the planter elites.? The arguments centered on how to protect their regional interests.? Free trade fit the interests of the South and by supporting free trade planters also hoped to gain support from the fact that free trade fit the ideology and interests of British manufacturers.? Opinion leaders also advocated developing domestic industry and the railroad system as a way to protect the southern economy from excessive dependence on the North.?

Shearer Bowman, ?Industrialization and Economic Development in the Nineteenth-Century U.S. South: Some Global and Intercontinental Comparative Perspectives,? looks at the South as compared both with the North and with the six eastern-most provinces in Prussia, the most agricultural region in rapidly industrializing Germany in the nineteenth century.? He finds that a common theme that explains industrial underdevelopment is the lack of integration of markets and regional divisions.? Schoen sees these as stemming from geographical and environmental features in both regions.?

John Majewski and Viken Tchakerian, in ?Markets and Manufacturing: Industry and Agriculture in the Antebellum South and Midwest,? focus on comparing two agricultural areas, the Midwest and the South.? They emphasize the role of lower population densities in the South as discouraging the growth of industry relative to the Midwest.? They see this as a function of both geography and rational profit-oriented decisions made by southern planters.?

David Carlton and Peter Coclanis, ?Southern Textiles in Global Context,? emphasize that the southern textile industry was part of a world market competing with stable producers in England and New England as well as newly developing regions in Brazil and India, often using the same British-built machinery.? The shift of the industry from the North in the 1920?s also meant that the products were competing in new markets with other global producers.

Beth English, ?Beginnings of the Global Economy: Capital Mobility and the 1890s U.S. Textile Industry,? looks at the move of the Dwight Manufacturing Company from New England to the South.? The shift began in the 1890s and was not complete until 1927.? This adds an interesting dimension to understanding the gradual collapse of the New England textile industry.

Erin Clune, ?Black Workers, White Immigrants, and the Postemancipation Problem of Labor: The New South in Transnational Perspective? discusses the Southern response to labor shortages in the textile industry in the 1890s.? She sees racism and ideology as blocking the use of black workers in the textile industry.? One alternative was to look to southern and eastern European immigration.? This was resisted on racist grounds and led to an unsuccessful attempt to encourage immigration from the British Isles as a way of protecting racial homogeneity in the white population.

This collection is too broad in its topics and methodology to use in most undergraduate courses.? It offers a good introduction to a wide range of research by a number of researchers and will be helpful to scholars interested in these topics.

Leonard A. Carlson?s recent publications include ?Similar Societies, Different Solutions: U.S. Indian Policy in Light of Australian Policy toward Aboriginal Peoples,? in Economic Evolution and Revolution in Historical Time, edited by Paul W. Rhode, Joshua L. Rosenbloom, and David F. Weiman (Stanford University Press, 2011).

Copyright (c) 2012 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ( Published by EH.Net (March 2012). All EH.Net reviews are archived at

Subject(s):Economywide Country Studies and Comparative History
Servitude and Slavery
Industry: Manufacturing and Construction
Markets and Institutions
Geographic Area(s):General, International, or Comparative
North America
Time Period(s):18th Century
19th Century
20th Century: Pre WWII

Die Kreditbanken in der Gr?nderzeit

Author(s):Burhop, Carsten
Reviewer(s):Guinnane, Timothy W.

Published by EH.NET (February 2008)

Carsten Burhop, Die Kreditbanken in der Gr?nderzeit. Stuttgart: Franz Steiner Verlag, 2004. 279 pp. ?38 (paperback), ISBN: 3-515-08413-4.

Reviewed for EH.NET by Timothy W. Guinnane, Department of Economics, Yale University.

Ever since their appearance in the 1850s, Germany?s large, universal banks have been the object of admiration, fascination, and sometimes fear. Throughout the nineteenth century they grew in size and influence, provoking worries that they were responsible for an unhealthy concentration of wealth and power. A long tradition assigns to these banks a central role in Germany?s late but rapid industrialization. Most economic historians have at least heard of them via the work of Alexander Gerschenkron, although for some reason, Anglo-Saxon scholars are only aware of Gerschenkron?s admiring comments. He, too, was skeptical of their power in the Germany economy, a point that usually gets lost in secondary accounts.

Despite all the interest, many discussions of the Kreditbanken, as they are known, rested on a weak scholarly basis. Most accounts relied on close knowledge of a small number of banks, usually the very largest. Richard Tilly began to remedy this weakness in the 1960s (Tilly 1966, 1986). More recent studies have been even more skeptical of earlier claims about the banks; Edwards and Ogilvie (1996), for example, effectively demonstrate the implausibility of most admiring claims about the Kreditbanken. In an extended project that began with her dissertation, Caroline Fohlin has zeroed in on several of the main claims about these banks? distinctiveness. Her recent book (Fohlin 2007) extends her original focus on the bank?s role in firm governance to broader questions, including the connection between the banks and the performance of German securities markets.[1]

The book under review here is part of this re-assessment. Die Kreditbanken in der Gr?nderzeit was originally a doctoral dissertation completed at the University of Bonn in 2004, but has served as the starting point and basis for a great deal of subsequent, detailed research on this theme. The dissertation itself reports the basic results of extensive, well-conceived primary research on the banks. The later papers draw on this research to examine several specific features of the way the banks operated. Not all of the later papers have been published yet, but I expect them to appear in due course in international journals. The dissertation itself will probably never appear in English. Given its quality, it warrants extensive comment.

The book has four substantive sections. The first section provides an outline of the economics of banking and the German economy in the period of this study, usually 1870-1879. Burhop is to be commended for a clear, cogent explanation of the central role of informational asymmetries in banking structure. The second section works through the basic accounting measures of bank size and performance, illustrating how different business strategies led to different types of risks and returns. Many readers will find this dry, but its clarity makes it worth close reading. The third section traces the early days of selected Kreditbanken. The strength of this section is to demonstrate, as only a series of case studies can, the great diversity in the origins, strategy, and early results of the several banks. The fourth substantive section focuses on the defining feature of universal banks, which is their role in underwriting securities. Here Burhop again relies on a selection of specific bank histories to make his points about the role of the banks in German securities markets.

The dissertation per se has two great strengths, both of which will spill over into the later research. The first is the care with selecting the banks for study. Burhop starts with a ?universe? of all credit banks defined by earlier studies, but is unusually careful in accounting for the fact that some are missing crucial information, and some exit the sample before the end of his period because they failed. By augmenting this information with archival material for a selection of banks, he has achieved a good representation of the best of both worlds: completeness of coverage, but also depth on some banks. The second strength is his ability to bring to bear on the German banking literature what in another context might be viewed as simply good accounting. Burhop carefully and clearly explains how different banking strategies, and experiences, led to different returns on invested capital, and difference sources for those returns.

The dissertation is long on specifics and short on generalizations. But two themes run through the results. First, two historical events combined to produce the Gr?nderboom in which the early Kreditbanken flourished. The first was France?s quick payment of the indemnity imposed after the Franco-Prussian War; many German governments paid off most of their debts, leaving investors looking for new places to park their money. Bankers were happy to oblige. The second, and less emphasized, event was the introduction of general incorporation. Prior to 1867, entrepreneurs could not form a joint-stock firm without the specific permission of the state. Prussia and other German states had been very tough about granting this concession. With liberalization many new firms were formed, some of them Burhop?s banks. Just as importantly, founding new firms was an important activity for the new banks. The literature on German banking history has always stressed the role of the French indemnity, but has had less to say about the important change in company law.

Burhop also is fond of noting some ironies in the timing of bank formation. Banks that were started in 1870 and quickly got involved in the securities business often just as quickly regretted it ? the equity market crashed in 1873, leaving some banks with securities they had underwritten and could not sell. Banks that had the ?misfortune? of a late start actually did better than those who got a head start.

Two articles that emerged from the dissertation project give a sense of the range of questions these banks raise. One article uses the methods of time-series econometrics to ask whether the banks ?caused,? in the statistical sense, Germany?s industrialization (Burhop 2006). What one thinks of such exercises is partly a matter of taste; for my money, this kind of research has a useful but limited role to play in developing our understanding of the way financial institutions contribute to economic development. Burhop (2004) digs into the way the banks compensated their executives, more than a few of whom were among the bank?s founders. Many readers will be amazed to learn that the banks often devoted large proportions of their net revenues to incentive schemes for managers. In the early 1870s the managers (Vorstand) of the D?rmstadter Bank, for example, took around ten percent of bank profits in their capacity as managers, and not as share owners. These incentive payments were a huge proportion of their total pay from the bank; for the top managers, incentive pay was more than 80 percent of total compensation. This payment system raises all the questions we associate with the stock-options scandals of the 1990s and early twenty-first century in the United States. One could ask how much these payments were really the fruit of high-powered incentives needed to propel managers to hard work, and how much reflected cozy relations with the entities responsible for setting their pay.

The dissertation and later articles mark an important step in our better understanding of the German Kreditbanken and their role in the German economy. The combination of careful empirical work, sensible use of economic and financial theory, and broader understanding of the German economy are just what is needed in research on these and other financial institutions.

A Bigger Picture

Much of the recent literature on the German Kreditbanken has maintained an almost claustrophobic focus on these banks alone, to the exclusion of the rest of the German banking system.[2] There are good and bad reasons for doing so. Burhop (and Fohlin, and others) are certainly justified in arguing, explicitly or implicitly, that the Kreditbanken were the only part of the system that were individually large institutions, that they were the only banks that usually had a country-wide presence, and that they were the primary source of finance for industry especially. And while they might not have been entirely unique (in the strict sense of that word) the German Kreditbanken?s methods were sufficiently different from banks in other major economies in the nineteenth century that it is understandable that scholars such as Alexander Gerschenkron assigned to the Kreditbanken a major role in Germany?s industrialization and development. As such they are worthy of detailed study. In any case, we all have to specialize, and there is no sense in which a scholar of these banks should be criticized for not studying something else.

But we should not accept the implication (by omission, at least) that the other parts of the banking system are not worth close study. In addition to a number of specialized banks for mortgages and other purposes, the German banking system had two other classes of institutions largely unfamiliar in the Anglo-Saxon world: credit cooperatives (Kreditgenossenschaften, but also called by several other names) and savings banks (Sparkassen). For the cooperatives the reader can refer to my own work (see, for example, Guinnane 2001 and 2003). One would be hard-pressed to assign to these individually very small institutions any major role in German economic development; their importance (at least to me) rests on the intellectual issues they raise, although they clearly mattered to their owners, borrowers, and depositors.

The more important current lacuna in the literature concerns the Sparkassen.[3] The Sparkassen were, collectively, larger than the Kreditbanken, taken together (see Guinnane 2002, Table 1). The Sparkassen and their regional affiliates, the Landesbanken, were owned and controlled by local authorities, either a city or a regional government. As such their depositors enjoyed an iron-clad deposit guarantee (unless the government itself went bankrupt, which was not a realistic fear until after World War I). The Sparkassen were intended to provide a safe place for working-class deposits, but contemporaries were aware that most Sparkassen deposits actually came from middle-class and professional households who lacked good alternatives at other banks. Here we see the first question one might pose about the relationship among the various classes of German banks: as Burhop notes, the Kreditbanken did not begin to take deposits in the modern sense until the 1870s, and as late as World War I, retail deposits were not a significant part of their liabilities. Instead, most large German banks had very low leverage ratios; they were, in effect, lending mostly their own money. This meant the banks had to worry less about the liquidity of their loan portfolios (owners cannot as easily ?run? on the bank as can depositors) and reduced the information problems associated with lending someone else?s money.

Burhop and others have noted the importance of this fact for the lending practices of these banks, but none, to my knowledge, ask what it had to do with the strength of the Sparkassen (and to a less extent, the credit cooperatives). I can think of two hypotheses to explore. First, how much of the Kreditbanken?s policies were in effect forced on them by the difficulty of raising deposits in the face of these competitors? One might think that Kreditbanken would not only have to pay higher interest rates to pry depositors away from the Sparkassen; such depositors might also be more likely to ?run,? given the safe haven of the Sparkasse, often literally down the street.[4] Second, as in most countries, the German banks were periodically the objects of political fears about their size and power. In the United States, the development and persistence of the unit banking system owes much to two specific concerns. One was the generalized fear of large financial institutions. A second was the more specific fear that regional banks would ?siphon? capital out of an area to invest at higher rates elsewhere; that is, local savings would not be available to fund local investments. Scholars familiar with the history of banking in the United States will wonder whether the credit cooperatives and the Sparkassen reduced the fear of large, centralized banking institutions in part by giving any locality in Germany a simple way to create its own banking institution that would provide services even if Berlin bankers were not interested.[5]

Another important outstanding question concerns Sparkassen loan portfolios. Most scholars simply repeat the assertion that the Sparkassen lent most of their funds to governments and put the rest in very safe mortgages. Most accounts claim these banks almost never lent to industry. A few accounts, on the other hand, claim just as baldly that they routinely did. I know of no study what would justify either opinion. We can probably safely assume that prior to World War I, when the Sparkassen were empowered to take on many of the roles of a universal bank, their involvement with industrial lending was minimal. But there are two possible objections here. First, we need to know more about what the Sparkassen actually did on the lending side. Assertions, no matter how confident or time-worn, are not a good substitute for research. Second, we need to ask what indirect roles the other parts of the system played in industrial lending. Here the questions become more speculative. One could imagine, for example, that a well-functioning system for mortgage lending made it easier for firms and cities to finance the large-scale infrastructure projects (such as electrification) that were so important to the Kreditbanken?s customers. In any case, even if the Sparkassen did little direct lending to industrial firms, it strains credulity to believe that institutions of this size had no indirect impact on German industrialization.

Burhop (and Fohlin, and the others who have built this reassessment of the Kreditbanken) are to be commended for setting the operation and characteristics of these banks on much firmer empirical and theoretical foundations than had ever before been the case. Burhop in particular has, in my judgment, made a major advance in the research reported here and elsewhere. But we need someone else, probably several scholars, to follow up on the Sparkassen. When I began my research on the credit cooperatives, a number of German economic historians were overtly contemptuous of the idea of spending any time on what they viewed as quaint, irrelevant institutions. I can only hope that those embarking on a career in banking history today will not be put off by the similar attitude toward the Sparkassen. If we are going to understand how banks contributed to the development of the German economy, we need close study of all its banks.


1. Fohlin wrote several articles before combining and extending her work in a recent book (Fohlin 2007). Fohlin?s book has been reviewed recently in a number of outlets, and will not be discussed further here. Burhop reviewed it at and Dieter Ziegler, another German historian of banks, reviewed it There is of course a more extensive literature on the banks in German, which I will not discuss here. Guinnane (2002) contains references to much of that until that date. Much of the most recent research on Kreditbanken focuses on their role in the Nazi era.

2. In reading the next few paragraphs, the reader might notice a slightly irritating sound in the background. That sound is the grinding of an ax. Guinnane (2002) is the complete recording.

3. In addition to specialized institutions such as mortgage banks, Germany also had private banks that thrived even after the development of the large, joint-stock bank. Scholars are well aware of the role these private banks played, often working closely with Kreditbanken. See Wixforth and Ziegler (1994).

4. Burhop quotes a decision by the Schaffhausen, the first of the large, joint-stock banks, to decline to take deposits and instead rely on its own resources (note 201, pp. 80-81). The Schaffhausen was formed out of an earlier private bank that had failed in the panic of 1848. I know of no connection to Sparkassen in this incident, but surely the bank?s managers were acutely aware of the problems panics could pose to banking institutions.

5. A recent paper argues a version of just this: Hakenes and Schnabel (2006) argue that the main reason for public banks such as Sparkassen is that they constrain capital from leaving the area where depositors live.


Burhop, Carsten, 2004. ?Executive Remuneration and Firm Performance: The Case of Large German Banks, 1854-1910.? Business History, 46 (4), October 2004, 525-43

Burhop, Carsten, 2006. ?Did Banks Cause the German Industrialization?? Explorations in Economic History, 43 (1), January 2006, 39-63

Edwards, Jeremy and Sheilagh Ogilvie, 1996. ?Universal Banks and German Industrialization: A Reappraisal.? Economic History Review 49 (3): 427-446.

Fohlin, Caroline, 2007. Finance Capitalism and Germany?s Rise to Industrial Power. New York: Cambridge University Press.

Gerschenkron, Alexander, 1962. ?Economic Backwardness in Historical Perspective,? in Economic Backwardness in Historical Perspective: A Book of Essays. Cambridge, MA: Harvard University Press.

Guinnane, Timothy W., 2001. ?Cooperatives as Information Machines: German Rural Credit Cooperatives, 1883-1914.? Journal of Economic History 61(2): 366-389.

Guinnane, Timothy W., 2002. ?Delegated Monitors, Large and Small: Germany?s Banking System, 1800-1914.? Journal of Economic Literature 40: 73-124.

Guinnane, Timothy W., 2003. ?A ?Friend and Advisor?: External Auditing and Confidence in Germany?s Credit Cooperatives, 1889-1914.? Business History Review 77: 235-264.

Hakenes, Hendrik, and Isabel Schnabel, 2006. ?The Threat of Capital Drain: A Rational for Public Banks?? Preprints of the Max Planck Institute for Research on Collective Goods.

Tilly, Richard, 1966. Financial Institutions and Industrialization in the Rhineland, 1815-1870. Madison: University of Wisconsin Press. Tilly, Richard, 1986. ?German Banking, 1850-1914: Development Assistance for the Strong.? Journal of European Economic History 15 (1): 113-152.

Wixforth, Harald and Dieter Ziegler, 1994. ?The Niche in the Universal Banking System: The Role and Significance of Private Bankers within Germany Industry, 1900-1933.? Financial History Review 1(2): 99-120

Timothy W. Guinnane is the Philipp Golden Bartlett Professor of Economic History in the Department of Economics at Yale University. Current projects include a comparative history of company law, with Ron Harris, Naomi Lamoreaux and Jean-Laurent Rosenthal, focusing on France, Germany, the United Kingdom and the United States in the period 1800-2000 (see ?Droit et capital ? l??preuve de l?histoire: l?essor des soci?t?s ? responsibilit? limit?e? forthcoming in Annales E.S.C., and available in English as SSRN paper #1071007); and continuing work on German cooperatives and their role in the banking system.

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):Europe
Time Period(s):19th Century

Europe’s Third World: The European Periphery in the Interwar Years

Author(s):Aldcroft, Derek H.
Reviewer(s):Wolf, Nikolaus

Published by EH.NET (June 2007)

Derek H. Aldcroft, Europe’s Third World: The European Periphery in the Interwar Years. Aldershot: Ashgate, 2006. xi + 217 pp. $100 (cloth), ISBN: 0-7546-0599-X.

Reviewed for EH.NET by Nikolaus Wolf, Centre for the Study of Globalisation and Regionalisation, University of Warwick.

Aldrcoft’s book is a compact and very useful survey on what we know about the economic development of the European Periphery during the interwar years. In large parts it reads like an extension of Berend and Ranki (1982) into the 1930s and like Berend and Ranki, Aldcroft refuses to present an overarching scheme or some unified model for the European Periphery. The main virtue of the book is to synthesize in a highly readable way a vast literature on the puzzling persistence of economic backwardness outside the north-western European core. Moreover, the book underlines the urgent need for further comparative research into the economic history of the Europe’s periphery.

The book is organised in nine chapters, covering thirteen European countries, namely Poland and Hungary in Central Europe, the three Baltic States, the Balkan countries of Albania, Bulgaria, Romania and Yugoslavia, and the Mediterranean countries of Turkey, Greece, Spain, and Portugal. There are many informative comparative tables on these countries, a list of references that is quite impressive (though of course incomplete: I missed for example the excellent 1997 book of Feinstein, Toniolo and Temin) given the shortness of the text, and a very good index. But the reader will not find any maps, except the one on the front cover, which is rather misleading about the geographical scope of the book. This absence of maps is understandable from a publisher’s perspective, especially because the cartography of Europe after 1914 is rather challenging, but it is hard to justify from an academic point of view. Good maps on the ethno-linguistic patchwork, on the extreme differences in natural geography, or on the presence or absence of infrastructure across the European Periphery would have been very telling about the economics of this region.

The first chapter argues for an “economic rather than a geographic” (page 3) definition of the European Periphery, encompassing those countries as peripheral which at the turn of the last century still had at least 50 percent of their population dependent on agriculture and with per capita incomes of less than 50 percent of the advanced European nations. On these grounds the exclusion of Czechoslovakia from the book is straightforward, but less so the exclusion of Italy. Here and elsewhere in the book, Aldcroft should have touched upon the massive regional differences within countries that prevailed during the interwar years. Then of course the exclusion of southern Italy but also that of Slovakia from the European Periphery would have become even more debatable, as well as the inclusion of Upper Silesia or some parts of Spain into the periphery: geography matters and I will come back to this. The chapter continues with a description of several common characteristics of these peripheral countries, which implicitly also indicates Aldcroft’s conceptual framework for economic backwardness as such. All countries showed a low land and labor productivity in agriculture, coupled with a not much higher productivity in industry, which is reflected in the dominance of primary commodities in their foreign trade. Urbanization rates were much below Western Europe and the development of infrastructure and capital in a broad sense lagged behind. A growing population was fragmented into a diversity of ethno-linguistic groups, which contributed to political instability and helped to bring about authoritarian regimes. Chapter two elaborates on this to describe the situation of Europe’s periphery prior to 1914: agriculture hampered rather than helped economic progress, human capital formation was slow and institutions poor. It also touches upon the “core-periphery” concept of development limited by economic dependency, but Aldcroft is skeptical about its general applicability (pp. 19-23).

Chapter three on “Peripheral Europe in the Interwar Setting” is the key narrative of the book as it surveys in about thirty pages the interwar experience of the thirteen countries in question. Here Aldcroft shows his outstanding command of a vast literature to tell a tale of many small and often young states fighting against a series of disasters. After a brief description of the difficult post-war reconstruction he rightly points to the fragility of the economic upturn in the late 1920s. Manufacturing production in the periphery grew, but all too often nurtured by subsidies and tariff protection, while still too slow to induce any structural change. When the Great Depression hit, it made a bad situation worse, by limiting access to markets while (often) increasing the debt burden. Aldcroft argues that the policy turn towards strategies of economic nationalism in most parts of the European Periphery during the mid-1930s was essentially without alternative (page 59). He mentions the raising share of defense spending in public expenditure due to a climate of military threat and concludes that “the international background … was scarcely the most auspicious of environments for latecomers to modern development” (page 67). It might have been rewarding to explore that international background a bit closer ? I missed some reference to the work of Eichengreen on international cooperation or more specifically to Ritschl on the international reparations problem. Instead, the following chapters (four to eight) look into some details of the country-specific experiences, before chapter nine concludes with a question mark on “development stalled?”

The country chapters give a concise and suitable introduction into the economic development of the periphery during these years. While Aldcroft acknowledges that the available data on the overall performance of the peripheral economies “should be treated with some caution” (page 172), the data show an intriguing variety in experience. The Baltic countries fared better than most of the Periphery, especially Estonia and Latvia, as did Greece or Bulgaria compared to the rest of the Balkans. Albania did ? for the little we know about it ? develop least, while Poland struggled for most of the period to catch-up to her pre-war level. This cross-country variation within the European Periphery, but also the changes over time that Aldcroft’s survey depicts in a very compact manner, suggest to this reviewer a reconsideration of the “core-periphery” debate in a way that places geography where it belongs: at the very heart of economic development.

As stated earlier, Aldcroft used an “economic rather than a geographic” (page 3) definition of the European Periphery, but he is reluctant to provide the reader with a conceptual framework to make economic sense of it. Paradoxically, geography might deliver such an economic framework. Rosenstein-Rodan’s landmark work of 1943 on economic development dealt with Eastern and South-Eastern Europe, and was elaborated in the work of Krugman and others on the “new” Economic Geography. In Krugman (1991), and in the vast literature that has developed in the wake of Krugman, a core-periphery pattern emerges from the notion that different access to markets can be self-replicating, without any recurrence to economic dependency or exploitation. Aldcroft’s whole book can be read as a history of failed development due to bad access to markets for peripheral countries, made worse by the limits that international politics imposed, especially for the new stats of Eastern Europe. A suitable example is provided by Poland between the wars. The reunification of Poland inevitably reduced the size of her accessible markets in the early 1920s as the Polish domestic market was far too small to make good for the loss of access to Russia. The implied dependency on German markets threatened the state, and Poland tried to channel her trade over the Baltic Sea ? often competing with Britain ? and improve access to “friendly” capital. When Scandinavia entered the Sterling Bloc and capital inflows dried up, Poland was left with a possibly hopeless strategy of autarchic industrialization that started in 1936. Other countries seem to fit into such a picture. Countries that fared best in the 1930s were those with (politically enabled) access to significant markets: Bulgaria and Greece that opened up to Nazi Germany; Estonia and Latvia that became de facto part of the Sterling bloc. The data on many of these states are still very poor, but there are signs for some improvement. While we still lack reliable GDP estimates for Poland, Latvia, Lithuania, or Albania, recent work on Estonia (by Jaak Velge) or Bulgaria (by Ivanov and Tooze) has started to fill some of those gaps and may help to rewrite the history of the European Periphery some day.

For the time being, Aldcroft’s book provides a highly readable and compact survey on what we currently know about the economic development of Europe’s periphery during the interwar years, linking up with the work of Berend and Ranki (1982) for the period up to 1914. It is a good starting point for further research into one of the most promising areas in European economic history.


Ivan T. Berend and Gyoergy Ranki (1982), The European Periphery and Industrialization, 1780-1914, New York: Cambridge University Press.

Charles Feinstein, Gianni Toniolo, and Peter Temin (1997), The European Economy between the Wars, Oxford: Oxford University Press.

Paul Rosenstein-Rodan (1943), “Problems of Industrialization of Eastern and South-Eastern Europe,” Economic Journal 53: 202-11.

Paul Krugman (1991), “Increasing Returns and Economic Geography,” Journal of Political Economy 99: 183-99.

Nikolaus Wolf is a Senior Research fellow at the Centre for the Study of Globalisation and Regionalisation (CSGR), University of Warwick and a Research Affiliate (International Trade) at the CEPR. He works on European economic geography in the long run. Recent publications include “Estimating Financial Integration in the Middle Ages: What Can We Learn from a TAR-model?” Journal of Economic History (2006), with Oliver Volckart and “Endowments vs. Market Potential: What Explains the Relocation of Industry after the Polish Unification in 1918?” Explorations in Economic History (2007).

Subject(s):Historical Geography
Geographic Area(s):Europe
Time Period(s):20th Century: Pre WWII

Dilemmas of Russian Capitalism: Fedor Chizhov and Corporate Enterprise in the Railroad Age

Author(s):Owen, Thomas C.
Reviewer(s):Nafziger, Steven

Published by EH.NET (June 2005)

Thomas C. Owen, Dilemmas of Russian Capitalism: Fedor Chizhov and Corporate Enterprise in the Railroad Age. Cambridge, MA: Harvard University Press, 2005. xvi + 275 pp. $49.95 (hardcover), ISBN: 0-674-01549-5.

Reviewed for EH.NET by Steven Nafziger, Department of Economics, Yale University.

How do corrupt and arbitrary bureaucracies, weak legal systems, and autocratic leaders impede economic growth? While the counterfactual (that better institutions lead to higher growth rates) has received much attention by economists in the past thirty years, showing exactly how bad bureaucrats, bad courts, and bad rulers hurt growth is perhaps just as important as a research agenda. No where may this be truer than in the case of Russia, where corruption and random state intervention have long been identifying features of the economic system. And no scholar has done as much to outline these possible impediments for entrepreneurial activity as Thomas C. Owen, the Kathryn, Lewis, and Benjamin Price Professor of History at Louisiana State University.

Owen’s previous research documents the ideology and activities of the Moscow merchant elite over the nineteenth and early twentieth centuries, the underdevelopment of corporate law throughout Russian history, and the persistence of policy arbitrariness and anti-capitalist beliefs under both the Tsarist and Soviet regimes (Owen, 1981; 1991; and 1995). This scholarship is squarely against the Gerschenkronian view that the Russian state played a positive role in overcoming economic backwardness and sparking industrial growth in the late nineteenth century (Gerschenkron, 1962). Further, Owen’s publications have emphasized the intellectual foundations of Russian entrepreneurship in the Slavophile movement of the mid-nineteenth century. This influential group argued for a uniquely Russian path of development and against both Western participation in the Russian economy and prevailing notions of free trade and economic liberalism. Such a belief system persists within large sections of Russian society today.

The monograph under review here pursues these themes further by focusing on the thought and career of one member of the Russian industrial elite — Fedor Vasil’evich Chizhov (1811-1877). From his birth as a relatively impoverished member of the gentry, Chizhov wore many hats over his lifetime: mathematics professor, European traveler, amateur historian, internal exile, silk cultivator, economic journalist and journal editor, and the founder and manager of several railroads, a bank, a mutual credit society, and a steamship company. As a key early advocate of nationalistic Slavophile capitalism Chizhov was closely allied to the Moscow merchants.[1] In writings and letters, Chizhov argued sharply against corruption and autocratic state interference and for the encouragement of ethnically Russian entrepreneurship. Thus, Chizhov serves as an exemplary figure through which Owen explores the themes of his earlier works.

Dividing the book into an introduction, four chapters, a concluding section, and a bibliographic essay, Owen draws heavily on a thorough reading of the unpublished and voluminous diaries Chizhov kept from the age of fourteen until his death. In addition to this key primary source (which took over twenty years to fully collect due to the vagaries of Soviet and Russian archival policies), Owen utilizes a wide variety of other materials. These include the published editorial work and writings of Chizhov; documents from various Russian archival holdings; letters, memoirs, and works of friends and contemporaries; and a secondary literature on the Russian economy and business elite in the nineteenth century.

Owen begins in the introductory section by arguing for the importance of biography in the study of entrepreneurship. Then the first three chapters proceed roughly chronologically through Chizhov’s career. Chapter one focuses on Chizhov’s early life as an academic, his long stint as a European traveler, and, rather unconvincingly, tries to link his personality in this period to his later career as an entrepreneur.

In the second chapter, Owen explores Chizhov’s efforts at advocating Slavophile capitalism. After ending a period of internal exile and failed silk cultivation at a small estate near Kiev, Chizhov returned to Moscow in the 1850s to take up editorial positions with a series of Slavophile scholarly and business publications. Owen does an impressive job of describing Chizhov’s emerging economic nationalism. This ideology was based on ethnic Russian ownership and management of railroads, provision of investment capital to Russian-owned enterprises, tariff protection for emerging industries, benevolence towards workers, and patriotism in undertaking economic activities. Owen seems to argue that this system was a unified whole that the Russian state could have adopted if it had more open to change.

In the third chapter, Owen explores how Chizhov then attempted to apply the tenets of this Slavophile capitalism to a succession of entrepreneurial efforts from the 1850s to the 1870s. Beginning in railroads, Chizhov and a small group of like-minded merchants and industrialists founded the Moscow Merchant Back and the Moscow Merchant Mutual Credit Society and engaged in a number of other business endeavors in transportation and finance. Owen’s knowledge of corporate practices and the intricacies of doing business in nineteenth-century Russia is without peer and it shows in this chapter. Especially impressive is his description of the complicated financing of the railroads Chizhov helped found and played a key managerial role in.

In the fourth chapter, Owen addresses the failure of Chizhov to bring his vision of Russian development to fruition. This is largely based on the argument that the difficulties Chizhov faced in his business practices were evidence for the poor institutions of the Russian economy. Although this is a key issue in Russian economic history and Owen argues forcefully, it is sometimes unclear whether the examples he gives from Chizhov’s career and writings are representative or simply the grumblings of one industrialist. Chizhov often complained about the corruption or stupidity of different government figures, but this does not necessarily mean that it would have been economically more efficient for him to get his way, or what the counterfactual actually should be. Also, it is sometimes difficult to distinguish Chizhov’s voice from the wording of Owen’s argument, which makes the empirical support for these themes less convincing, especially since these counterfactuals are not fully formulated or tested. Although important headway is made in this book, the notion that nineteenth-century Russian institutions were especially bad for growth remains a critical open question.

The concluding section documents the death of Chizhov and the legacy he left in business, the arts, and philanthropy. There is a brief attempt to compare his experience with the career of Eiichi Shibusawa, a Japanese entrepreneur in the Meiji era who successfully advanced a Confucian variant of corporate capitalism. This fascinating sketch could have been drawn out into a fully comparative chapter on the interactions between cultural and economic nationalism in the nineteenth century. Detailed notes and an excellent bibliographic essay end the monograph.

Owen offers the tale of Chizhov’s intellectual and business activities as a window into the ideological and entrepreneurial foundations of early Russian industrialization. In this way, he has written a valuable biographical work that will appeal to economic and business historians interested in the Tsarist economy, corporate practices in nineteenth-century Europe, and the ways in which institutional inadequacies may undermine the efforts of the entrepreneurial classes. Indeed, as Owen notes in concluding, such lessons may be valuable for the new capitalists of post-Soviet Russia.


1. “Slavophile capitalism” is Owen’s shorthand for the interconnected movement of Slavophile intellectuals and (mostly) Moscow merchants who argued for tariff support and the subsidization of ethnically Russian business by the state.


Alexander Gerschenkron. Economic Backwardness in Historical Perspective. Cambridge, MA: Harvard University Press, 1962.

Thomas C. Owen. Capitalism and Politics in Russia: A Social History of the Moscow Merchants, 1855-1905. Cambridge: Cambridge University Press, 1981.

Thomas C. Owen. The Corporation under Russian Law, 1800-1917. Cambridge: Cambridge University Press, 1991.

Thomas C. Owen. Russian Corporate Capitalism from Peter the Great to Perestroika. New York: Oxford University Press, 1995.

Steven Nafziger is a doctoral student in the Department of Economics at Yale University. His dissertation utilizes household and village micro-data to study the long-run implications of serfdom and the functioning of rural Russian factor markets in the period 1861-1905.

Subject(s):Markets and Institutions
Geographic Area(s):Europe
Time Period(s):19th Century

The Invention of Coinage and the Monetization of Ancient Greece

Author(s):Schaps, David M.
Reviewer(s):Silver, Morris

Published by EH.NET (April 2004)

David M. Schaps, The Invention of Coinage and the Monetization of Ancient Greece. Ann Arbor: University of Michigan Press, 2004. xvii + 293 pp. $75 (cloth), ISBN: 0-472-11333-X.

Reviewed for EH.NET by Morris Silver, Department of Economics (Emeritus), City College of the City University of New York.

Briefly stated, David Schaps’ central argument runs as follows:

Coinage = Money (in the Greek experience the two are equated) was invented in Greece or Asia Minor (Lydia) in the later seventh or earlier sixth century. The Greeks eagerly copied/adapted this innovation and it spread rapidly in their cities during the sixth century. The result was a profound transformation in Greek economy and society. Before the Greek adoption of coinage, the ancient Mediterranean world knew only primitive money, not money as we know it. Primitive money was incapable of generating the revolution that Greece experienced.

I begin with a number of quotations capturing the argument and then, in the main part of the review, move on to consider the details.

This book will tell the story… of the development of money both in the Near East and in Greece up to the invention of coinage and its widespread adoption by the Greek cities, the only communities that adopted it wholeheartedly at its first appearance. (17)

Something new happened with the invention of coinage, and it produced a new idea that persists to our day. (5)

I have tried throughout only to sketch the ways in which Greek thought and behavior were changed by the introduction of money. (vii)

From the Greeks onward, we find a new way of speaking and ofthinking. Now a person might state the entirety of a household’s possessions in terms of money, as no member of a premonetary society would ever do. (16)

One of the central propositions of this book is that when we speak historically, the invention of coinage was the invention of money: that is, the concept that we understand as “money” did not exist before the seventh century B.C.E., when coins were first minted. There surely had been many items before that we may recognize correctly, as money, there were even places…where a single item performed all the functions associated with money. Never before, however, had these items been conceptualized as money, for money to the Greeks, as to us, was the measure of all things, something different in nature from all the valuables that might represent it. (15; emphasis in original)

All ancient Near Eastern societies had a conventional standard of value, usually precious metals or a specified grain. The standard of payment was always “primitive money,” never coin, and it did not always perform all the functions that coin was later to perform…. If Greece was the cradle of coinage and Lydia its birthplace, the societies of the Near East were its ancestors. (34)

Schaps links the unprecedented Greek adoption of coinage with Greek backwardness. The Greeks… who had only very primitive forms of currency, thought of coins as they had never thought of those items in which they had once traded, evaluated and paid. An ideal that had grown up in the East at a time when Greece had no need for it suddenly dawned on the Greeks when coins appeared. It was a time when the Greeks were in a period of economic and intellectual expansion for which their relatively primitive economic concepts did not provide an adequate basis…. Precisely because of their economic backwardness, they had no sufficient preexisting conceptual structure to compete with or subordinate the idea of money. (16-17)

Why did the ancient Near East (ANE) not move from a very evident monetization to “money, as we know it”? Technology would not have raised a barrier to the transformation. Why were coins so exciting to the Greeks and so uninteresting to their neighbors? The answer is that they filled a need peculiar to Greek society…. It was Greece that was searching for new forms of government and administration to manage the new complexity of the poleis and new ways of organization to maintain its people, and coins made that administration and that organization simpler and more manageable than spits and cauldrons [primitive money] could have done. (108)

This is interesting, but not entirely convincing. An alternative line of explanation is that coinage (guaranteed money) is not nearly as important economically as Schaps supposes. The alleged special interest of the Greeks in coinage may then reflect an ideological dimension peculiar to the Greeks. Schaps mentions “the particular Greek appreciation of the universality of money” (196). There is also a real question, explored below, whether Greece was really so backward monetarily as Schaps suggests.

Schaps’ presentation is quite clear and, obviously, there is rich material here. The view that coinage was invented by the Lydians is one that is generally accepted by scholars. I do have some problems with the equation of money with coinage and the meaning of “primitive money.” There is also something of a problem with respect to whom, according to Schaps, invented coinage: On the one hand, the Lydians invented coins and then the Greeks eagerly used them. On the other hand, the time when the Greeks eagerly used coins is the time of invention. These are relatively minor issues and I put them aside. On to the details!

I. Did the Ancient Near East Know Coinage?

A. Indirect Evidence

1. Schaps states that a “discussion of the factors that go into price determination does not form part of this book, for their importance arises in a money economy, and the point at which the Greeks achieved a money economy is the point at which this study ends” (30). I am not sure exactly what this means. Schaps is perhaps suggesting that the forces of supply and demand determine prices only in an economy with money, which he equates with coinage. This is, of course, completely false. Later Schaps adds “The Babylonian economy was still not, as it would become in the Hellenistic period, dominated by a market where prices changed each day; but it was not immune to the law of supply and demand” (49). This is a heroic understatement! Although we do not have daily price data, there is ample evidence of price changes and of the operation of supply and demand. Indeed, the Old Babylonian period (earlier second millennium BCE) has been characterized by Hallo (1958: 98) as one in which “there was a price on everything from the skin of a gored ox to the privilege of a temple office.”

2. Silver was indeed used as a means of payment in the ANE. However, rather than spreading through the population, it remained in the hands of merchants. “It never became, as coins eventually would, synonymous with wealth itself. It could not have done so, if only because too few people owned it. For this reason, the Babylonians never thought of silver as we think of money” (51).

The surviving documents do not demonstrate that Mesopotamians thought of money in the same way the Greeks did. Caution is justified about the reason for this presumed difference. There is evidence for the dispersal of precious metals in the population. As early as the middle of the third millennium in Ebla (in Syria) silver was used to purchase ordinary goods including clothing and grain as well as wine and semi-precious stones (Archi 1993: 52). Mesopotamian texts of the middle of the second half of the third millennium already show us street vendors, and, according to Foster (1977: 35-36, nn. 47, 48), the use of silver to pay rents and purchase dates, oil, barley, animals, slaves, and real estate; in addition, “silver was widely used in personal loans and was often in possession of private citizens and officials.”

3. Schaps asserts “The silver of the Near East had never been coined; it was weighed at each transaction, and the scale was an essential accessory to every sale” (49). This statement may reflect general belief, but it goes beyond the evidence. It is not true that ANE texts invariably mention weighing and/or scales. Indeed, to my knowledge, the mention of scales is infrequent. Nevertheless, Schaps is on strong ground in stressing the centrality of weighing in transactions recorded in the Bible.[1]

B. Direct Evidence

Schaps maintains that “an examination of the various primitive items that have at one time or another been claimed to be coins fails to reveal any clear example, and it may be useful to clear the air of the various hypotheses, which by their very number can create the false impression that coinage was common in the eastern Mediterranean Basin long before the Lydians and the Greeks” (222-23). Elsewhere he maintains that “the verisimilitude of the preceding suggestion is not much above zero” (235). Schaps may well be correct in rejecting this hypothesis. However, his treatment of the evidence leaves something to be desired.

1. The evidence is reasonably clear that the ANE went a good part of the way toward coinage by circulating ingots of guaranteed quality. Assyrian loan contracts of the eighth to seventh centuries use various formulas to advance “silver of (the goddess) Ishtar (of the city) Arbela (or Nineveh or Bit Kidmuri).” Lipinski (1979) argued brilliantly against interpreting this phrase to mean “temple capital.” Expressions of this kind, he suggested, refer to the quality of the metal, and their inclusion in contracts makes no sense unless the metal is impressed with a stamp of guarantee. The practice of guaranteeing metal quality, it may be added, probably goes back to the second millennium. The expression “silver of the gods” is found in texts from Mari in Syria and Amarna in Egypt. For example, in a letter concerning the disposition of an inheritance the king of Mari refers to the deceased person’s “silver of the gods” (Malamat 1998: p. 185; cf. CAD s.v. ilu 1.e).

In discussing the ingots from the temple of Arbela Schaps concludes: There was nothing particularly important about this development as far as Assyria was concerned. The temple’s ingots, even if stamped, were no more than good quality silver…. It will have been the business of a merchant to recognize them and to know good silver from bad, but there was nothing revolutionary about them. They may have come in convenient sizes…, but they were hardly standardized, and it is hard to imagine that a merchant would have failed to put them on the scale before accepting them. (92)

A guarantee of metal quality surely reduced the transaction cost of using money and it is therefore puzzling that Schaps considers this a development little or no importance. Moreover, he goes beyond the evidence in saying that the ingots were not standardized in weight. The texts do not say that the ingots were weighed.

2. Schaps writes of the Egyptian shaty “piece”: “It is regularly used as an item of account, not a medium of trade: that is, not ‘pieces’ but other items changed hands, bartered for each other and evaluated in terms of ‘pieces'” (224-25). In fact, there is evidence for the circulation of shaty‘s in texts of the Ramesside era (second half of the second millennium). In the Eighteenth Dynasty, a text (Papyrus Brooklyn 35.1453A) records the delivery of silver shaty‘s to a woman at the meryet “quay, marketplace” (Condon 1984: 63-65). In Papyrus Boulaq 11 merchants pay for quantities of meat and wine with shaty‘s (Castle 1992: 253, 257; Peet 1934). The texts do not say that the shaty‘s were weighed or tested for quality.

3. Schaps discusses the Egyptian Hekanakht letters of about 2000 BCE, but he does not refer to the following significant detail. Copper coins may be indicated when Hekanakht sends to his agent “24 copper debens” for renting land. James (1984: 245) explains that “the letter says quite clearly ’24 copper debens,’ not ’24 debens of copper,’ which ought to signify 24 pieces of copper each weighing, one deben.”

4. Schaps does not mention texts from the Assyrian trading station in Anatolia (earlier second millennium BCE) in which we sometimes find prices being expressed in terms of copper ingots, patallu and sad?lu. Thus, one Dakuku “owes 12 copper sad?lus as the price of donkey.” Dercksen (1996. 60, n. 179) notes that “quantity is expressed by simply giving the number of ingots instead of their weight [which] points to a more or less customary weight and size for this type” (emphasis added). I would add that use of the number of ingots also points to a standard quality.

5. Schaps defines “coin” as follows: “[A] coin is an object, usually but not necessarily of metal, which circulates as a medium of trade, and whose value is guaranteed by the stamp of the issuing authority” (223). He adds: “We may thus ignore without further discussions such items as spits, rings, and sealed bags of silver, which although they served many of the purposes that coins later served were not by themselves coins at all. They belong to the history of ‘primitive money’… (223).

Schaps’ dismissal of sealed bags of silver is most puzzling and instead of ignoring these, he offers a brief discussion of their significance. He concludes that “When silver was to be reused, a certain amount was given to the assayer in advance. Whatever the assayer did not use was sealed with a royal seal, obviating the need for weighing and assaying it again. The ‘sealed silver,’ then, is ordinary silver sealed in a sack, not a coin” (223-24).

In my view, sealed bags provide evidence for widespread use of “coinage” in the ANE. The background is as follows. Cuneiform sources of the first half of the second millennium refer to sealed bags of silver (e.g. kaspum kankum). We hear of “(silver) in lumps-sealed in a bag” (CAD s.v. kankua) and “x silver which is placed in its sealed bag” (CAD s.v. kan?ku 2). There is also mention of silver “marked” (udd?) with its weight (CAD s.v. id? 4.a). Copper might also be packed into purses called (c)hurshianu (CAD s.v.; Dercksen 1996: 66)

The sealed bags might be transferred: “I needed (and asked you for in writing) ten shekels of silver under seal.” x silver which PN gave to PN2 , and which is marked with the name of the merchant. (CAD s.v. s(umu 1.e); “you have sent me silver which is not fit for business transactions… send me silver, (in) a sealed bag” (CAD s.v. kaniktu 2). Oppenheim (1969) makes brief mention of cuneiform sources of the first half of the second millennium that refer to sealed bags of silver deposited with persons who used the silver in various transactions. Most directly, the practice of transacting with sealed bags of silver is reflected in the call, in eighteenth-century contracts from Mesopotamia (the city of Larsa), for merchants to pay for palace-owned goods with “sealed silver” (Stol 1982: 150-51). The transactional use of sacks is ignored by S.[2]

Some years ago, in reflecting on these references, it occurred to me that in eleventh-century-CE Egypt and elsewhere in North Africa, in Talmudic times (400-500 CE) and earlier in Carthage and in Rome (the tesserae nummulariae), various coins and (probably) metal fragments were kept in purses labeled on the outside with the contents and sealed by governments or private merchants. In addition to keeping the coins “fresh” — that is, preserving their full weight — Udovitch (1979: 267), who studied the usage in medieval Islam, explains: “these packaged and labeled purses made settlement of accounts much more convenient… by obviating the need to weigh, array, and evaluate coins for every individual transaction. Significantly, most payments and transfers of funds were executed by the actual physical transfer of the purses.” We may assume that these purses circulated among the wealthier classes.

Schaps responds as follows: “[Morris] Silver (126-27) obfuscates this point, going so far as to say that (medieval Islamic!) sealed purses ‘in short… were large denomination coins.’ This is surely to broaden the definition of a coin far beyond reason” (224, n. 9). Schaps obtained this quote from my 1985 edition. In 1995 I wrote: “In short, the sealed purses functioned as large-denomination ‘coins'” (161). The reason for the change in formulation is that numismatic specialists and antiquarians insisted that coins had to be made of metal. I was hammered on this, to an economist, unimportant detail. Schaps? properly broadened definition of “coin” makes my original formulation perfectly appropriate. Under his definition a “nickel,” as he says, can be wooden and “a dollar bill would also count as a ‘coin’ (223, n. 3). The important point is that there is evidence to suggest that the kaspum kankum functioned as/were coins!

6. Schaps does not mention evidence provided by Joann’s (1989). Hammurabi (1792-1750) paid/rewarded Mari’s soldiers with (mysterious) shamsh?tum “sun discs,” gold rings, silver of 5 or 10 shekels, and with small pieces of silver impressed with a seal. Joann?s bases himself on ARMT 25, 815 and a letter (A-486+) to Zimri-Lim, the king of Mari. The key word here is kaniktum from kan?kum “to mark a seal” (see CAD s.vv.). In the absence of (additional?) evidence for the use of kaniktum to make payments, Joann?s suggests that these sealed metal objects may have been “medals.” Perhaps. On the other hand, perhaps they were coins. Indeed, as far as I am aware, the evidence for coinage is more ample than the evidence for “medals”! The text is silent about whether and how Mari’s soldiers spent the small pieces of sealed silver.

7. Several bread-shaped ingots of the eighth century inscribed with the name of a king preceded by the Aramaic letter lamed have actually been found in the palace of Zinjirli, a north Syrian state located on the only good crossing of the Amanus mountains from east to west. The meaning of the possessive l is debated. One possibility is that it means “belonging to” in the sense of personal possession. Balmuth (1971: 3), however, suggests that it means “on behalf of” or “in the name of” (its meaning on coins of later times) and, therefore, that the inscription represents a royal guarantee of the metal. Any such guarantee might refer only to the quality of the metal or to both quality and weight. Schaps responds as follows: “But there is no indication that this disk… was ever meant to be currency at all, and coins did not become current in this area until centuries later” (91, n.52). Thus, Schaps comes close to saying that the ingot could not be a coin because they had not been invented yet! Schaps believes that the disks were designed for storage of wealth, not for making payments. Perhaps he has guessed right. The fact is, however, that there is simply no evidence beyond the inscribed ingots themselves.

As I will show next, Schaps requires much more from the Near Eastern coinage evidence than from the Greek.

II. Greek Coinage Evidence

1. There is clear evidence of a double standard in Schaps’ consideration of the Lydian evidence (93-6). The “Lydian” coins excavated in the Artemision at Ephesus are mostly dated to the seventh and earlier sixth centuries BCE. However, the dating remains controversial. Two of the pieces were dumps not coins. The significance of their inscriptions is still being debated. All but two of the ninety-three pieces conformed to the Milesian weight standard. There is no evidence that merchants would not have had to weigh them. There is no direct evidence that the coins circulated. The coins are made of the wrong metal, electrum instead of silver, gold, or copper. (Variation in the ratio of gold to silver, would seem to call for quality testing.) In short, despite numerous opportunities for raising objections, Schaps does not hesitate to call the finds in the Artemision, the “earliest datable coins” (93; emphasis added).

Schaps explains further: “The motivation behind the ‘cutting’… of such coins must have been quite different from the motivation of the temple of Arbela in casting its ingots. Ingots of a pound or so are a convenient way in which to store silver, and they were probably made for that purpose. Small and minutely subdivided weights of electrum [as in the Ephesus hoard], however, were undoubtedly made for payment not storage” (100). Possibly. However, there is evidence for the circulation of the Arbela ingots. A contract in which neither the temple nor its commercial agent is a party shows the silver being loaned out. The document originates some 50 miles from Arbela. On the other hand, no direct evidence is presented that the Ephesus coins circulated.

Contrast Schaps’ evaluation of the Artemision coins with his view of the Cappadocian lead disks, which may date to the mid-second millennium (225-26). The “ornamentation” on (one side) of the disks is similar but not identical. The disks “vary irregularly in weight.” They are made of the “wrong metal.” There is no evidence of “circulation from place to place.” Scholars have expressed doubts that “such small bits of lead could have had much monetary value” (225). “Nothing suggests that they are coins except their size and shape and the fact that they are made of metal…” (225). It would seem that ANE candidates for designation as early coins are always too large or too small or whatever.

2. Schaps does not demonstrate that the Greece took its inspiration from Lydian coins. Schaps explains: “The Greek coins were silver, not electrum…. The change to silver indicates that coins, even if they had begun as a solution to the problem of the variability of electrum, had come to be appreciated as what they now were: a countable unit of value” (104; emphasis added). Clearly, this terminology simply assumes an imitation and modification of Lydian coinage practices.

3. There are hints that the Greeks had long been familiar with “primitive money” or even coinage. Greek traditions and legends place coinage much earlier than the sixth century. Thus, Plutarch (Theseus 25.3) wrote in the first century CE that Theseus, the legendary unifier and king of Attica, issued coins. In the second century CE, the scholar Pollux (9.83), claimed that coinage was invented by the even more shadowy Athenian figure Erichthonius, an early king. We find reports in ancient literary sources that Pheidon, king of Argos, introduced a silver coinage possibly as early as the eighth century (see S 101-4).

Hacksilber “cut-silver” hoards have not been found inside Greece. However, an eighth century hoard was excavated in Eretria in Euboea. (The Taranto 1911 hoard is dated to c. 600.) Balmuth (1975: 296) suggests that “although many of these have been called silversmith’s hoards, the practicability of exchange by weight suggests that Hacksilber could simultaneously be both material for a jeweler and material for exchange.” Schaps does not “believe there was ever an internal bullion economy in Greece” (195).[3] However, Kim (2001) has presented evidence that money of weighed silver bullion was employed in the Greek world well before the introduction of coinage. There are references to the use of silver to pay fines in Solon’s time.

More importantly, Schaps provides evidence consistent with bullion usage. In the eighth century, at Gortyn in Crete, the leb?s “cauldron” was used to make payments. Schaps explains that “it is hard to escape the impression that cauldrons, as inconvenient as they may seem to be, were functioning as a means of payment… in which fines could be assessed and deposits demanded” (83, cf. 195). Actually, it is preposterous that physical cauldrons were used as means of payment. More reasonably, “cauldrons” might be the name for an ingot, perhaps stamped with the image of a cauldron. Mysterious monetary units are, after all, commonplace in the historical documents. Thus, a text from the ANE (Isin) records the purchase of an orchard for copper “hoes” ((c)haputu) inscribed with the name of the goddess Ninisina. Payments are also made in “sickles” and “axes” (CAD niggallu 1.b).

III. Alleged Revolutionary Effect of Coinage/Money

Schaps’ central proposition is not documented in a credible manner. In this endeavor, he receives only limited mileage from his strained identification of coinage with money. Sometimes he claims for money/coin the effects of Greek economic growth. In other instances, he admits that no revolution occurred. The quotations cited below illustrate his difficulties.

1. “The conceptual revolution that identified coins with wealth turned money into an item of which one could never have too much, or, indeed, enough” (175). What then of the Assyrian merchants of the early second millennium BCE whose wives scolded them “You love only money, and you hate your own life!” (Larsen 1982: 42)? More to the point, what of Solon (Fragment 13.43-45. 47-48, 71-73 West):

One hastens after one thing, another after something else; one man, desiring to bring home profit, wanders over the fishy sea in ships … another, whose concern is the curved plow, cleaves the thickly wooded land and slaves away for a year… but no limit of wealth [ploutou d’ouden terma] is clearly laid down for men; for those of us who now have the greatest livelihood [pleiston…bion] have twice the eagerness [diplasion specdousi]; who can satisfy [koreseien] all? (Balot 2001: 90)Presumably, this view originates in the late archaic period — i.e. before the Greeks adopted coinage. In any event, Solon does not link human acquisitiveness with coinage or money.

2. “To the extent, then, that Homeric society had distinguished prestige goods from nonprestige goods, money subverted the distinction: money could buy anything and could be gotten in exchange for anything. It follows that even a peasant or a shopkeeper could amass enough money to buy the most prestigious goods; and it followed from this that the possession of those goods, which is now open to everybody, no longer distinguished the best from the worst” (117).

3. “The history of the late archaic age in Greece is the story of the crumbling of oligarchies. This development was already underway before coinage had been invented…. Nevertheless, it is more than probable that money and the market had their share in continuing the process and in changing the entire concept of oligarchy” (120).

4. An (alleged) trend from socially embedded transactions to impersonal economics should not be attributed to the adoption of coinage. There is no doubt that economic transactions tended, as Greek society developed from the archaic age to the classical and the Hellenistic, to be more a matter of immediate mutual economic benefit and less a form of discharging social obligations. The invention of coinage certainly facilitated this change, which may, however, have been propelled more by simple population growth than by any technological or cultural development. (33)

5. “The agora grew up in the Kerameikos, the potters quarter, and excavations have found evidence of potters’ waste as far back as 1000 B.C.E., but there are not other signs of commercial or industrial activity before the growth of the agora itself [in the sixth century]” (113). “We cannot… prove that there was no retail trade before coins were invented; but what we have seen suggests that if there was any, there was not much” (115). The latter suggestion, however, does not depend so much on “what we have seen” as on what we have not, namely the archaic agora! “The place in which Athenians had previously congregated was hardly remembered by the Athenians and has not been securely identified to this day” (113).

In the end, Schaps offers a more balanced appraisal. The various participants “were all making a profit, and they were doing it in a way that would have been a good deal more difficult before the invention of coinage” (115). “Money, we may reiterate, did not create trade, but it marked the beginning of a new age of commerce in Greece” (122). “An expansion of retail trade was the first visible concomitant of coins. At this distance, we cannot tell which is cause and which is effect, but we can say at least that the marketplace and coinage grew up together” (196).

6. “Without money, the great temples, the dramatic festivals of Athens, its navy, and its democracy would have taken a very different form, if they had come to exist at all” (197). This is simply a reach.

7. “Merkelbach’s observation that a bordello was hardly conceivable before the invention of money is a plausible one, though the ‘money’ involved need not have been coins: the weighed silver of the Levant would also have been sufficient” (160). “Merkelbach’s observation” is “plausible” only because he does not identify money with coinage. How did Greeks pay for sexual services before the (alleged) “invention” of coinage/money in the sixth century? Schaps does not tell us.

8. “The ancient Greeks, even when money had become the universal medium of exchange, still considered the exchange of labor for money to be the exceptional case” (162). No revolution in the labor market.

9. “In sum, it appears that money never truly transformed Greek agriculture” (172).

Schaps, however, underestimates the market orientation of Greek agriculture in the later archaic period. Citing Hesiod (Works and Days 618-94), he (89, cf. 119) suggests that “Peasants might try to change an agricultural surplus into a more lasting form of wealth by sailing abroad during the seasons when the farm could be left alone.” What exactly was the “more lasting form of wealth” in these days (allegedly) before money/coin? With respect to Schaps? “agricultural surplus,” Redfield 2003: 168) points out that Hesiod advises “peasants” to “leave the greater part, and load as cargo the lesser” (Works and Days 690). Hesiod it seems can actually imagine farming entirely for export, although he is against it.” Moreover, Hesiod’s comment that “wealth means life to poor mortals” indicates an appreciation of production for the market.

IV. Peripheral Contributions

Apart from his central argument, Schaps makes a number of rather interesting and useful observations. Some examples follow.

“When the [Mycenaean] palaces had been burned and their far-flung bureaucracy dispersed, there will have been more need for exchange. The Homeric heroes did indeed have to weigh the value of a slave against the value of a tripod; if this seems to us a step toward the concept of money, it is not for that reason a sign of an expanding economy” (71). Thus, as I would see this, the Homeric era can be viewed and an “Intermediate Period” of a type familiar in Egyptian economic history.

Speaking of the marketplace in Athens, Schaps notes: These merchandises were not mixed: not only was there no one ‘general store’ that sold them all, but there was not even a single place where one could ‘do the shopping.’ Each merchandise had its own part of the agora, and a person would speak of being ‘among the fish’ or ‘among the banks.’ (167)

Or even, citing Aristophanes, “among the tragedies” (S 167, n. 19)!

Schaps (123) cites Aristophanes’ joke that a politician could win public support by lowering the price of sardines.

Schaps takes up private enterprise in the coinage business: It might, in theory, have happened that coining would have become a form of business, in which private individuals turned silver into coins that would have been accepted by the reputation of the coiner…. It did not happen in Greece. Once coinage was generally adopted in Greek cities, the coining of money was normally a state monopoly. (179)

By contrast, I would suggest, some of the inscriptions on the coins from the Artemision coins seem to be personal names, which leaves open the possibility that the issuers were private individuals.

Large business loans were made at Athens. “It is true, however, that large loans at Athens were, as far we can tell, never designed to be paid off in drips and drabs out of one’s regular income” (245).

There are also some rather unfortunate observations. “Behind the [Greek] prejudice [against merchants] though hardly ever explicitly expressed, lies a real paradox, namely, the syllogism that: (a) a trade should be fair; (b) if a trade is fair, both sides should remain with the same value; whence it follows that (c) if a person can increase his capital by trade, he is cheating someone” (177). It should be needless to say that there is no “real paradox.” An uncoerced exchange benefits both parties. Unless each contractor views his postexchange position to be superior to his preexchange position, exchange will not take place. Contrary to the Marxist perspective, exchange is productive. Specifically, trade rearranges an existing stock of goods in a way that enables each participant to become better off as measured relative to his own values at the time of deciding to trade. The creative nature of trade is little appreciated by scholars untrained in basic economic principles. Schaps (177, n. 7) compounds the problem by minimizing the contribution of the middleman in “making a market.” Later, he redeems himself by crediting the obolostat?s “obol weigher” for smoothing the function of the marketplace by “redistributing — for a fee — the coins that circulated in the market so that any seller could count on finding enough coins to start a day’s business” (186).

Concluding Remark

Not surprisingly, Schaps fails to demonstrate his thesis that coin=money revolutionized Greek economy and society. In my judgment, it is not nearly enough to cite the obvious advantages of coins in retail trade and to note that a Greek household might now express the entirety of its possessions in terms of money. With respect to the invention of coinage, the communis opinio has long been that it first appeared in the Greek world, not in the Near East. Schaps, to his credit, does explore the evidence for coinage in the Near East. However, he omits or misrepresents much and treats the remainder in an unbalanced manner. He has a tendency to make definitive statements not supported by evidence. Outside his central argument, he has many worthwhile things to say. The latter insights are sufficient to justify a favorable evaluation of the book.


1. In Genesis 23.16, Abraham “weighed” for Ephron’s field the sum of 400 shekels of silver kesep ‘?ber lass?cher. The latter phrase is usually translated “current money of the merchant,” but the literal meaning is “silver passing for the merchant.” The expression makes us focus on the kind of silver that would be employed in commerce. Hurowitz (1986: 290, n.3), taking note of the Old Assyrian usage kaspum asshumi PN (personal name) equlam ittiq — “silver will travel overland to the name of PN” — concludes that the silver “must have been of a standard, recognized quality.” There is no mention in Genesis of a test of the quality of the metal. Hence, it seems reasonable that a merchant’s stamp or seal guaranteed the silver. Schaps (91, n. 50) rejects this interpretation. He (228, n. 37) is correct in insisting that the silver was weighed

2. Despite the dangers, some biblical evidence should be noted. In 2 Kings 12.10-12 we read that in the ninth century under King Jehoash: a box with a hole bored in it was set up in the temple for the collection of silver [presumably silver pieces] for a repairs fund; at a certain point the Temple officers removed the silver from the box and “tied it up”/”bagged it” [warrasuru]; then the silver was counted [wayyimnu]; and then the “measured”/”regulated” [metukkan] silver was given to contractors who delivered it to various workers at the Temple who used it to purchase timber and stone. The text does not say that the sacks were opened in order to make payments. Thus, expressing all due caution, the most direct understanding is that the sacks circulated outside the Temple.

3. There is some reason to believe that terms originally meaning “weigh” came to have the meaning “pay” (compare S 228, n. 37) The Greek material provides a possible example of this kind of development in meaning. A law of Solon states: “Silver is to be stasimon at however much the lender may choose” (Kroll 2001: 78; Schaps 2001: 97). The orator Lysias (later fifth-earlier fourth century BCE) explains “This stasimon, my good man, is not a matter of placing in a balance but of exacting interest at whatever rate one may choose” (10.18). Schaps (2001: 98) concedes that stasis may refer to weighing but he opposes Kroll’s interpretation of Lysias as referring to an obsolete procedure, the weighing of silver on a scale: “The claim hinges on the presumption that stasimon ‘properly’ should mean ‘weighable'; but there are no parallels for such a meaning.” What then does stastimon mean in Solon’s law? According to Schaps (2001: 98) the word means “nothing more than ‘is to be paid’.”

In fact, there are no other examples of the use of stasimos in the meanings “weighing” (Kroll) or “paying” (Schaps). What is clear is that “There is an absolute connection between the adjective stasimos and the noun stasis, both derived from the verb hist?mi ‘to stand up, to cause to stand up” (David Tandy personal correspondence dated March 2, 2004; LSJ s.v. hist?mi). The verb hist?mi is well attested in the meaning “to weigh.”

In classical Athens, long after the introduction of coins, we find the term obolostate? “weigh obols” in the meaning “making small loans” (LSJ s.v.). There is evidence here of an evolution from “weighing” to “paying.”


CAD: Gelb et al., The Assyrian Dictionary of the Oriental Institute (University of Chicago)

LSJ: Lidell, Scott, Jones, Greek-English Lexicon References


Archi, Alfonso. (1993), “Trade and Administrative Practice: The Case of Ebla.” Altorientalische Forschungen, 20, 43-58.

Balmuth, Miriam S. (1971). “Remarks on the Appearance of the Earliest Coins.” In David G. Mitten et al. (eds.), Studies Presented to George M.A. Hanfmann. Cambridge, MA: Fogg Art Museum, 1-7.

Balmuth, Miriam S. (1975). “The Critical Moment: The Transition from Currency to Coinage in the Eastern Mediterranean.” World Archaeology, 6, 293-98.

Balmuth, Miriam S. (ed.) (2001). Hacksilber to Coinage: New Insights into the Monetary History of the Near East and Greece. New York: American Numismatic Society.

Balot, Ryan K. (2001). Greed and Injustice in Classical Athens. Princeton, N.J.: Princeton University Press.

Castle, Edward W. (1992). “Shipping and Trade in Ramesside Egypt.” Journal of the Economic and Social History of the Orient, 35,239-77.

Condon, Virginia. (1984). “Two Account Papyri of the Late Eighteenth Dynasty (Brooklyn 35.1453A and B).” Revue d’?gyptologie, 35, 57-82.

Dercksen, Jan Gerrit. (1996). The Old Assyrian Copper Trade in Anatolia. Leiden: Nederlands Historisch-Archaeologisch Instituut te Istanbul.

Foster, Benjamin R. (1977). “Commercial Activity in Sargonic Mesopotamia.” Iraq, 39, 31-44.

Gelb, I.J. et al. (eds.) (1956-). The Assyrian Dictionary of the Oriental Institute of the University of Chicago. Locust Valley, N.Y.: Augustin.

Hallo, William W. (1958). “Contributions to Neo-Sumerian.” Hebrew Union College Annual, 29, 69-107.

Hurowitz (Avigdor), Victor. (1986). “Another Fiscal Practice in the Ancient Near East: 2 Kings 12:5-17 and a Letter to Esarhaddon (LAS 277).” Journal of Near Eastern Studies, 45, 289-94.

James, T.G.H. (1984). Pharaoh’s People. Chicago: University of Chicago Press.

Joann?s, F. (1989). “108) M?dailles d’argent d’Hammurabi?” Nouvelles Assyriologiques Br?ves et Utilitaires, (no. 4 D?cembre), 80-1.

Kim, Henry S. (2001). “Archaic Coinage as Evidence for the Use of Money.” In Andrew Meadows and Kirsty Shipton (eds.), Money and Its Uses in the Ancient Greek World. Oxford: Oxford University Press, 7-21.

Kroll, John H. (2001). “Observations on Monetary Instruments in Pre-Coinage Greece.” In Balmuth (ed.), Hacksilber to Coinage, 77-91.

Larsen, Mogens Trolle (1982). “Caravans and Trade in Ancient Mesopotamia and Asia Minor.” Bulletin of the Society of Mesopotamian Studies, 4, 33-45.

Liddell, Henry George, and Robert Scott. (1968). A Greek-English Lexicon. Henry Stuart Jones and Roderick McKenzie, rev. ed. London: Oxford University Press.

Lipinski, Edward. (1979). “Les temples neo-assyriens et les origines du monnayage.” In Edward Lipinski (ed.), State and Temple Economy in Ancient Mesopotamia, II. Leiden: Brill, 565-88.

Malamat, A. (1998). Man and the Bible. Leiden: Brill.

Oppenheim, A. Leo. (1969). “Review of R. Bogaert.” Journal of the Economic and Social History of the Orient, 12, 198-99.

Peet, Thomas Eric. (1934). “Unit of Value s(‘ty in Papyrus Bulaq 11.” In M?langes Maspero, Vol. 1, Fasc 1. Cairo: Institut Fran?aise d?Archa?ologie Orientale du Caire, 185-99.

Refield, James M. (2003). The Locrian Maidens: Love and Death in Greek Italy. Princeton, N.J.: Princeton University Press.

Schaps, David M. (2001). “The Conceptual Prehistory of Money and Its Impact on the Greek Economy.” In Balmuth (ed.), Hacksilber to Coinage, 93-103.

Silver, Morris. (1985), Economic Structures of the Ancient Near East. Totowa, N.J.: Barnes & Noble Books.

Silver, Morris. (1995). Economic Structures of Antiquity. Westport, Conn.: Greenwood Press.

Stol, M. (1982). “State and Private Business in the Land of Larsa.” Journal of Cuneiform Studies, 34, 127-230.

Udovitch, Abraham L. (1979). “Bankers without Banks: Commerce, Banking, and Society in the Islamic World in the Middle Ages.” Center for Medieval and Renaissance Studies, University of California, Los Angeles, The Dawn of Modern Banking. New Haven. Conn.: Yale University Press, 255-74.

Morris Silver is Professor Emeritus of Economics in the City College of the City University of New York. His most recent publications about ancient economies are Taking Ancient Mythology Economically (Leiden: Brill, 1992) and Economic Structures of Antiquity (Westport, CT: Greenwood Press, 1995). “Modern Ancients” is forthcoming in Rollinger and Ulf (eds.), Commerce and Monetary Systems in the Ancient World , Fifth Annual Melammu Conference 2002. Professor Silver maintains a website on “Ancient Economies” at

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):Middle East
Time Period(s):Ancient

The Fly Swatter: How My Grandfather Made His Way in the World

Author(s):Dawidoff, Nicholas
Reviewer(s):Mosk, Carl

Published by EH.NET (September 2003)

Nicholas Dawidoff, The Fly Swatter: How My Grandfather Made His Way in the World. New York: Pantheon, 2002. ix + 353 pp. $26 (cloth), ISBN: 0-375-40027-3.

Reviewed for EH.NET by Carl Mosk, Department of Economics, University of Victoria.

Alexander — a.k.a. Sasha, Sashura, Shura — Gerschenkron, Professor of Economic History at Harvard from the late 1940s through the mid-1970s, loved parables. Indeed, it is apparent from this moving account penned by his grandson, Nicholas Dawidoff — author of several books and contributor to the New Yorker and the New York Times Magazine — that he viewed his own life as a parable. Shura’s unpublished memoir was entitled “The Uses of Adversity.” There is little doubt that Shura extolled the virtues of character steeled through adversity, character forged through prodigious dedication and hard work. One of his favorite stories was of his dying weakened dog Tracy, who was being driven to the veterinarian’s office to be put down. Tracy kept fighting to climb up onto the back seat, only to keep falling back, Gerschenkron refusing to assist his efforts. A last extraordinary effort brought success. Dawidoff (p. 256) recounts Gerschenkron’s telling of the tale thusly: “This way he had accomplished something momentous, and all of his own. It was his achievement, to take with him into death. Greatness … was possible, but only possible if you made it possible.”

Shura’s early and middle years were surely filled with great adversity, great dedication and great effort, crowned with the most improbable and unexpected successes. He was twice uprooted and plunged into exile. In the early 1920s his family fled Bolshevik purges of the rich; in the late 1930s Shura and his Austrian wife, Erica, fled Nazi purges of Jews and Social Democrats, only to end up in Berkeley as a research assistant for Charles Gulick. Through all of this his commitment to reading and learning remained unabated, whether he read and wrote in German or English. During World War II his vast knowledge of Europe and Russia paid off: he was invited to work for the Foreign Affairs Section of the Federal Reserve. Then Harvard called.

At Harvard Shura became the Great Gerschenkron, simultaneously revered and feared for his boundless erudition, his unceasing search for knowledge, and his mastery of language after language. At Harvard, during the 1950s and 1960s, he developed the theory of how economic backwardness afforded advantages that might — or might not — be mobilized by late developers; and he put together the Economic History Workshop which became one of the intellectual crucibles of Cliometrics.

In Dawidoff’s telling Shura’s most important publication, the 1966 collection of essays, Economic Backwardness in Historical Perspective, embodied key concepts of his parable of character. With backwardness comes adversity, but also opportunities. The more backward a country, the more rapidly it could develop, and it did not necessarily have to blindly emulate earlier developers. It could exploit a “pattern of substitutes” for the “missing prerequisites for industrialization” enjoyed by the United Kingdom during the eighteenth century.

Character was also crucial to Gerschenkron’s ability to build a seminar that promoted the New Economic History. Dawidoff maintains that it was Shura’s colorful character — his studied cultivation of literature and chess; his recounting of his wartime days working in shipyards of Richmond, California as a shipfitter and flanger; and his extolling the joys of following the Red Sox on a transistor radio — that ultimately served as a magnet to the talented graduate students who poured into the Economic History Workshop.

But Dawidoff’s parable of Shura’s life is not simply a celebration of triumphant character won through adversity. He recounts a darker side: too much reading, too much erudition, prevented Gerschenkron from writing a one great book, a massive summation: no economic history of Russia issued from his pen, rather essays and collections of lectures in the main. And sometimes cultivating character became a con. True, Shura did charm Marlene Dietrich; true he played chess with — and was beaten by — Marcel Duchamp. But Ted Williams of the Red Sox was not a personal friend, even though Shura claimed that it was Ted Williams who informed him that Galbraith was “a high fly ball to shallow left field.”

Finally one comes away from reading this fine volume with a question about the parable most relevant to Gerschenkron. Might it not be: there’s nothing like good luck? Knowing German and Russian did not hurt during World War II and the onset of the Cold War; presiding over a seminar in Economic History at one of the most prestigious universities in the world during a period when university enrollments were soaring throughout the English-speaking world also didn’t hurt. That said, it would be churlish to completely reject Shura’s parable of character created through struggle with adversity as a theory, of economic development and the development of scholarship alike.

Carl Mosk is Professor of Economics at the University of Victoria. His most recent book is Japanese Industrial History: Technology, Urbanization and Economic Growth (2001). He is currently doing research on international political economy.

Subject(s):History of Economic Thought; Methodology
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

The Mediterranean Response to Globalization before 1950

Author(s):Pamuk, Sevket
Williamson, Jeffrey G.
Reviewer(s):Simpson, James

Published by EH.NET (August 2001)


Sevket Pamuk and Jeffrey G. Williamson, editors, The Mediterranean Response to Globalization before 1950. London and New York: Routledge, 2000. xvi + 430 pp. $115 (cloth), ISBN 0-415-22425-X.

Reviewed for EH.NET by James Simpson, Universidad Carlos III de Madrid.

The title of the book is slightly misleading as the majority of the thirteen papers consider just the half-century prior to the First World War. The main agenda is to explain why economic backwardness in the Mediterranean persisted, and why the gap with the European leaders increased during this “first great globalization boom.”

The first problem is to show relative levels of development. Jaime Reis, after questioning the usefulness of existing real wages series for establishing cross-country comparisons, calculates new estimates of GDP for 1850 and concludes that there was “not a single ‘poor’ periphery” in Europe, but rather there existed a wide range of income levels among both Mediterranean and Scandinavian countries. Jeffrey Williamson, using real wages from a wide sample of Mediterranean countries also finds major differences, with northern Italian workers earning about four times more than Egyptian workers in the late nineteenth century. Williamson also notes that “there is absolutely no evidence of labor market integration in the Mediterranean, and plenty of evidence of segmentation” between 1820 and 1870. Although changes in real wages varied among Mediterranean countries in the half-century prior to the First World War, there was no consistent catch-up or fallback against the industrial nations. The global challenge produced different responses, the subject treated in most of the remaining essays.

The Mediterranean has been a great trading region for centuries, and some of the best papers in this book are devoted to trade. Gelina Harlaftis and Vassilis Kardasis contribute an interesting piece on international shipping in the eastern Mediterranean, which shows that shipping costs for bulk products such as cereals, coal and cotton fell almost as quickly as they did in the North Atlantic trade in the half century prior to 1914. Trade boomed, and provided rich opportunities for shipowners, especially Greek merchants. Falling transport costs and growing urban markets in the industrial economies also provided Mediterranean farmers with new and growing markets for their produce. Yet the response was often disappointing. Jose Morilla-Critz, Alan Olmstead and Paul Rhode show convincingly one of the reasons why this was so. In their paper on raisins and prunes, they show how California as a “late comer” was able first to imitate traditional European production techniques, and then develop better quality fruit, more efficient production processes and better selling techniques. What at the outset had appeared as promising niche markets for Mediterranean farmers had, by the early twentieth century, been largely captured by the Californians.

The theme of product quality and competition in the international food market is also pursued, again highly successfully, by Ramon Ramon-Munoz in his study of olive oil. This author argues that specialization took place in Mediterranean countries according to factor endowments. The labor-intensive nature of olive production implied that it was increasingly carried out in low wage regions (Tunisia, Algeria, Greece), whereas the capital-intensive nature of refining and building brand names were activities found in France and northern Italy.

Three interesting papers underline the importance of market integration for agricultural specialization in the Eastern Mediterranean. Ahmed Akarli shows that in Ottoman Macedonia the decline in international cereal prices after 1870 encouraged producers to switch into other cash crops, such as tobacco, silk, opium or cotton, although by the early twentieth century limits had already appeared to this sort of specialization. Tarik Yousef shows that local commodity markets for farm produce were fully integrated in Egypt during the interwar period. Finally, Jacob Metzer shows how exports of citrus fruit, which by the early 1930s accounted for 77 percent of all mercantile exports, contributed to the rapid growth in per capita incomes in Mandatory Palestine.

What of industry? Unfortunately there is no paper for the 1870-1914 period, or any indication of either industrial growth, or the relative importance of manufacturing exports. There are perhaps four major arguments usually advanced for why industrial growth in the Mediterranean was limited before 1914. First, coal deposits were few and of a poor quality, making the region heavily dependent on imported British coal. Second, domestic demand was limited because of low incomes. Third, international trade was small because producers’ costs were high, not just because of the need to import coal, but also because of the impact of domestic tariffs that inflated the costs of everything, from raw materials to workers’ food. Finally, growth suffered because of the low levels of human capital. In their growth model to explain the Mediterranean’s backwardness in comparison to the UK, James Foreman-Peck and Pedro Lains find that tariffs, coal production and human capital were indeed all important. Both tariffs and illiteracy appear to have increased in importance between 1870 and 1910, but growing imports compensated for the lack of domestic coal. Only in Italy were tariffs relatively unimportant, a point Giovanni Federico and Antonio Tena (1998, 1999) have also argued, and which is the subject of the chapter by Federico and Kevin O’Rourke. These authors, using a computable general equilibrium model, not only show that tariffs had a minimal impact on GDP, but that the relative importance of the agricultural and industrial sectors would have been little different in 1911 in their absence. Only within each sector would an important reallocation of resources have taken place if there had been free trade.

With respect to human capital, Joan Ramon Roses argues that the skill levels of the workforce determined technical choice in the cotton industry between 1830 and 1860. Looking at technology, product quality and skills in four different international centers, he finds that Catalan cotton workers were more skilled than those of New England or Piedmont, but less so than those in Lancashire. This implies that the available levels of human capital were not necessarily an obstacle in establishing a competitive textile industry at this period, at least for Catalonia.

Labor markets play an important role in the integration of the international economy in this period, and this was another area where the Mediterranean response was weak. For Spain, a country where most emigrants originated from the Atlantic coastal regions, Blanca Sanchez-Alonso argues that emigration was income constrained. As a heavily rural economy, the increase in tariffs after 1891 should, by raising incomes, have encouraged emigration. However the 30 percent depreciation of the peseta between 1895 and 1905 raised emigration costs even more, and reduced by an estimated 600,000 the number of migrants who would have left if the exchange rate had remained stable. Sanchez-Alonso argues that without this currency depreciation, numbers would have been similar to those of Italy.

The economic environment of the interwar period was very different from that of the pre-1914 period and virtually all countries faced considerable difficulties, especially after 1929. The Turkish government, as Sevket Pamuk shows here, responded with a series of protectionist measures encouraging import-substitution industrialization. Unfortunately, and here Turkey was not alone, the relative success of these polices in the 1930s encouraged their continuation in the post Second World War period, when they quickly became an obstacle to growth. One major exception in this period was Mandatory Palestine, where Metzer shows that per capita income increased by about five percent per year between 1922 and 1947, despite population increasing by almost four percent per year.

It is easy to point out the “gaps” in a book that examines a geographical area as large as the Mediterranean, but this would be unfair. Most of the region’s economic historians write highly specialized local or, at best, national studies, rather than follow in the footsteps of Fernand Braudel. However the majority of the authors in this book, no doubt in some cases responding to enthusiastic prodding by the editors, have attempted to present their work in a regional or international context. Although the papers are highly varied, the overall quality is high. The book is important for those interested in Mediterranean history before the First World War.

James Simpson is lecturer in Economic History at the Universidad Carlos III in Madrid. He is author of Spanish Agriculture: The Long Siesta, 1765-1965 (Cambridge University Press, 1995) and, with Juan Carmona, Latifundistas, colonos y jornaleros. Organizacion rural y el desarrollo agraio en Espana, 1850-1936 (Biblioteca Nueva, in print). He is currently working on a book on wine production and consumption in the nineteenth century.


Subject(s):International and Domestic Trade and Relations
Geographic Area(s):Middle East
Time Period(s):20th Century: Pre WWII