is owned and operated by the Economic History Association
with the support of other sponsoring organizations.

Contractual Knowledge: One Hundred Years of Legal Experimentation in Global Markets

Editor(s):Mallard, Grégoire
Sgard, Jérôme
Reviewer(s):Barnes, Victoria

Published by EH.Net (August 2017)

Grégoire Mallard and Jérôme Sgard, editors, Contractual Knowledge: One Hundred Years of Legal Experimentation in Global Markets. Cambridge: Cambridge University Press, 2016. xix + 403 pp. $125 (hardback), ISBN: 978-1-107-13091-3.

Reviewed for EH.Net by Victoria Barnes, Max Planck Institute for European Legal History.
This book aims to trace the meaning of the term “contract.” A contract, as it is traditionally understood, is an agreement among parties that comes with a set of expectations about the parties’ performance as well as creating certain legal obligations and rights. These expectations naturally vary. In their edited collection, Grégoire Mallard (Graduate Institute of International Studies, Geneva) and Jérôme Sgard (Sciences Po, Paris) demonstrate how the legal and social construction of a contract has developed over the last hundred years. In doing so, they place a particular emphasis on transactions that take place internationally in global markets. To trace these changes across a number of case studies, Mallard and Sgard create the notion of “contractual knowledge.” This is an unashamedly interdisciplinary and socio-legal concept as the chapters focus on explaining the thoughts of those who made contracts rather than simply those who enforced them in legal proceedings. The edited collection, therefore, considers the views of economists, politicians, diplomats, businesses, lobbyists and investors much more than those in the legal profession or with legal training.

The book begins with an introduction written by the editors and this is where they expound the theory which underpins the entire collection. The explanation here is unusually lengthy and Mallard and Sgard consider their aims, objectives and findings in considerable depth. Since it is tends to be difficult to unite groups of scholars from different jurisdictions — let alone different disciplines — to work in a common legal framework with shared concepts and language, this approach should be commended. The explicit discussion of the theory helps the reader to understand the book’s contribution and it pulls together what could have easily become disparate chapters which were related somewhat distantly.

The edited collection is divided into three parts which consider sovereign debt agreements, the role of international organizations, and the structuring of fields. The variety of subjects and case studies on offer here is exceptional. Chapter 2 is the first substantive analytical chapter and this is an excellent starting point. Juan H. Flores Zendejas takes a long-term perspective of sovereign debt contracts and provides background information and draws parallels between different periods. This imparts a good deal of the historical content needed to appreciate the later chapters of this section. In Chapter 3, W. Mark C. Weidemaier, Mitu Gulati, and Anna Gelpern investigate what happens when governments write contracts by focusing on the construction of modification clauses in sovereign debt contracts. Stephen C. Nelson closes this section with a chapter examining the pari passu clause and also currency denomination.

The second part is led by Sgard’s chapter and this is one of the strongest pieces of the book. Sgard considers the choice of courts for international arbitration. He notes the declining power of national groups and the reasons behind the political choice to eventually establish the International Chamber of Commerce in Paris after short-lived rivals were founded in London and New York. In the next chapter, Yves Dezalay and Bryant G. Garth add to this discussion by examining the corporate and commercial lawyers attached to the International Chamber of Commerce and their national and transnational battles. Chapter 7, by Ariel Colonomos and Mallard, is another excellent contribution which is entitled “The Duty to Repair in Practice: The Hundred Years History of a Legal Concept.” This title is perhaps misleading. It does not cover the provisions about the seller’s duty to repair, replace or refund the value of goods under the Sales of Goods Act or the Uniform Commercial Code as scholars of the United States, Great Britain and the commonwealth countries would probably expect. Rather, it considers divisions over agreements about war reparations from World War I to the Cold War. In Chapter 8, Marco Bertilorenzi and Giuseppe Telesca examine informal modes of regulation as mechanisms which kept prices artificially high. This chapter is highly innovative and it takes a form of prosopography to explore the social capital of financial elites in Italy and France.

Several themes and issues overlap in the final section. Chapter 9, written by Gregory Shaffer and Michael Waibel, investigates money orders and the International Monetary Fund. They dismiss the assumption that soft law or informal rules strengthen as they become clearer over time. Bruce Carruthers in Chapter 10 considers the way investors and regulations use knowledge to value assets. The last chapter returns to the long-run historical analysis drawing the essays together. Susan Block-Lieb and Terence Halliday trace developments in international private and public law using ecology theory with particular emphasis on the Hague Conference on Private International Law, the International Institute for the Unification of Private Law (later known as UNIDROIT) and the UN Commission on International Trade Law (UNCITRAL).

Altogether, the chapters in this book provide a set of valuable and interesting findings. When taken as a whole, they show the international convergence and then fragmentation of contractual knowledge over the course of the twentieth century. They further our understanding of the chronology of this process, while avoiding grand theorizing about when this occurred. They show that in some instances, the fragmentation began much earlier than expected but, in others, divergence began only twenty years ago. Mallard and Sgard do not draw these microstudies together by turning points or periodization but by the scientific framework being developed. In furthering the theoretical concept of contractual knowledge, they demonstrate the multiplicity of actors but also the role of nations in this process of generating beliefs and interpretations. Contractual knowledge was, as these twelve chapters show, not derived from one state or group — despite the power of the United States in the twentieth century and Great Britain in the late nineteenth century.

Overall, this book offers a set of insightful and convincing arguments which explain how governments and other international actors created and shared their interpretations of contracts. These ideas were often disputed by other groups. With a broad coverage of jurisdictions and legal systems, it provides much for those with an interest in globalization, international transactions and the decline of national bargaining power. It will interest readers who are looking beyond the traditional courtroom accounts to see how international commercial practice and understandings developed. The index is also particularly useful for those interested in locating the discussion of people and/or organizations.
Victoria Barnes is a Senior Researcher Fellow at the Max Planck Institute for European Legal History in Frankfurt am Main, Germany. She previously held posts at Georgetown University and the University of Reading and has worked in the facilities of law, business, and history. She has recently published an article in the Journal of Legal History which considers how English courts reacted to the contractual rights which were given to shareholders and company managers.

Copyright (c) 2017 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 (August 2017). All EH.Net reviews are archived at

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Government, Law and Regulation, Public Finance
International and Domestic Trade and Relations
Markets and Institutions
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: Pre WWII
20th Century: WWII and post-WWII

John Bascom and the Origins of the Wisconsin Idea

Author(s):Hoeveler, J. David
Reviewer(s):Johnson, Marianne

Published by EH.Net (July 2017)

J. David Hoeveler, John Bascom and the Origins of the Wisconsin Idea. Madison: WI: University of Wisconsin Press, 2016. xi + 229 pp. $45 (hardcover), ISBN: 978-0-299-30780-6.

Reviewed by EH.Net by Marianne Johnson, Department of Economics, University of Wisconsin — Oshkosh.

In 2014, as part of the biennial budgetary process, Governor Scott Walker proposed to modify the University of Wisconsin’s mission, known as the Wisconsin Idea, striking the statements to “extend knowledge and its application beyond the boundaries of its campus,” to “serve and stimulate society,” and to “extend training and public service designed to educate people and improve the human condition.” He also proposed to delete the phrase “Basic to every purpose of the system is the search for truth.” Instead, the university system was to “meet the state’s workforce needs.”

When discovered buried deep within the budget proposal, the changes were met with outcry and condemnation from the University and its supporters. University of Wisconsin System President Ray Cross stated “The Wisconsin Idea is embedded in our DNA. It is so much more than words on a page. It is the reason the UW System exists. It defines us and forever will distinguish us as a great public university” (Milwaukee Journal Sentinel, 4 February 2015). The New York Times editorialized “Save the Wisconsin Idea” (16 February 2015).

When confronted, the governor denied instigating the changes and blamed a “drafting error.” Sued by the Center for Media and Democracy and several Wisconsin citizens under Wisconsin’s Open Records Law, documents revealed a deliberate attempt to circumscribe the mission of the University of Wisconsin and its system of affiliated schools.

To understand both why the governor had sought the change and the reaction of those in the University of Wisconsin system, it is important to have a book such as that by David Hoeveler on John Bascom and the Origins of the Wisconsin Idea. Combined with Nancy Unger’s biography of Robert La Follette (2000) and Malcolm Rutherford’s The Institutionalist Movement in American Economics (2011), academics and interested readers now have a trio of excellent historical works on the Wisconsin Idea, Wisconsin Progressivism, and Wisconsin’s unique brand of Institutional economics.

Wisconsin gained outsized influence in the early part of the twentieth century, driven by larger-than-life personalities such as “Fighting Bob” La Follete and his partner in reform, University of Wisconsin President Richard Van Hise. The latter is usually credited with the first complete statement of the Wisconsin Idea. Richard T. Ely and E.A. Ross remade the social sciences as taught at American universities, drawing on the German academic tradition of seminars. John R. Commons and his army of disciples oversaw an expansive national political advocacy campaign for labor reform, unemployment insurance, social security and the minimum wage.

Ely was famously prosecuted for espousing socialist doctrines in 1894. The Board of Regents ruled in Ely’s favor, setting the standard for academic freedom. University President, Charles Kendall Adams, writing on behalf of the Board of Regents concluded that “Whatever may be the limitations which trammel inquiry elsewhere, we believe that the great state University of Wisconsin should ever encourage that continual and fearless sifting and winnowing by which alone the truth can be found.” This statement can be found on a plaque at the entrance of Bascom Hall, the best-known building on campus.

Though Bascom predates the great hey-day of Wisconsin Progressivism, Hoeveler makes a compelling case for Bascom’s importance in laying the foundation for change at the end of the nineteenth century.

During Bascom’s professional lifetime, two socio-demographic trends emerged that were to fundamentally alter higher education in the United States: an increased demand for specialized education and an increased demand by women for professional training and careers. American universities responded to the first of these changes by expanding course work at all levels. The second shift involved the transformation of educational opportunities for women. With the influence of Progressivism and the suffrage movement, public opinion slowly shifted to support higher education for women. Having lost the battle for co-education at Williams College, Bascom accepted the presidency of the University of Wisconsin in 1874. Earlier that same year, the university had affirmed a co-educational curriculum. Bascom was an avid supporter of women’s access to higher education. Rather than limiting women’s education to domestic subjects and finishing schools, Bascom argued forcefully for their access to a full liberal education stating that “This exclusion of women from our highest seats of learning is among the remnant…[of] a dark and savage past” (Bascom 1872, 2). Bascom’s two daughters both earned their bachelor’s degrees at Wisconsin, where he defended the right for women to face an identical curriculum to men. Florence Bascom became the second woman to earn a Ph.D. in geology in the U.S.

Much of the book is given over to Bascom’s biography and intellectual influences, including German philosophical idealism, the liberal Protestantism associated with the Social Gospel movement in the U.S., and the theory of evolution. Hoeveler argues that “Bascom made a creative synthesis of these intellectual systems and from them forged the beginning of the Wisconsin Idea” (p. 5). Individuals interested in the intellectual influences of the period will find the book particularly useful.

The first two chapters consider Bascom’s education and early career years, with a heavy emphasis on his own writings and philosophical struggles, particularly in reaction to the American Civil War. Chapter 3 addresses Bascom’s move to Wisconsin, where he served as president from 1874 to 1887. Chapter 4 deals with the changing nature of American universities and their role in society at the end of the 1800s, and Chapter 5 looks at the impact of the Social Gospel movement on the University of Wisconsin and American universities more generally.

The next three chapters address the origins of Progressivism which Hoeveler identifies in three distinct forces: (1) the temperance movement, (2) the women’s suffrage movement, and (3) the profound shift in perceptions of class struggles and of labor rights in the last decades of the nineteenth century. Though much of the book provides interesting background for those that study intellectual history, it is Chapter 8 that will capture the attention of historians of economic thought. Most of the material in this chapter will be familiar to economists who work in this period, but Hoeveler does a nice job of situating Bascom in this milieu of change and to introduce Ely who would later play such a significant role for the University of Wisconsin.

Chapter 9 returns to the Wisconsin Idea and guides the reader through Bascom’s departure from Wisconsin, the hiring of Richard T. Ely, Charles Van Hise’s presidency, the arrival of John R. Commons, and the great debates between La Follette and the university over World War I.  These changes left Wisconsin to be viewed as either the “the outstanding liberal university” (Howe 1989, 247) or a “hot bed of radicalism” (New York Times 1930, 34). Though Bascom’s presidency had ended before these momentous events, Hoeveler does a great service by presenting an excellent account of the life of Bascom and reminding us that ideas emerge from a complex interaction of social, political, philosophical and personal forces.


Bascom, John. 1872. “College Organization,” Independent, September 5 (1872), 2 – 3.

Howe, Florence. 1989. “Practical in Her Theories: Theresa Schmid McMahon,” in Lone Voyagers: Academic Women in Coeducational Universities, 1870–1937, ed. G.J. Clifford, 223 – 280. New York: The Feminist Press at the City University of New York.

Rutherford, Malcolm. 2011. The Institutional Movement in American Economics, 1918–1947. New York: Cambridge University Press.

Unger, Nancy C. 2000. Fighting Bob La Follette: A Righteous Reformer. Chapel Hill, NC: University of North Carolina Press.

“The Wisconsin Idea,” University of Wisconsin Madison.

Marianne Johnson is the author of several works on Wisconsin Institutionalism and Progressivism in economics including papers in the Journal of Economic Issues (2017, 2015, 2011) and History of Political Economy (2014) — and a book chapter on the “Daughters of Commons” for Routledge (forthcoming).

Copyright (c) 2017 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 (July 2017). All EH.Net reviews are archived at

Subject(s):History of Economic Thought; Methodology
Geographic Area(s):North America
Time Period(s):19th Century
20th Century: Pre WWII

The Oxford Handbook of Banking and Financial History

Editor(s):Cassis, Youssef
Grossman, Richard S.
Schenk, Catherine R.
Reviewer(s):Neal, Larry

Published by EH.Net (July 2017)

Youssef Cassis, Richard S. Grossman, and Catherine R. Schenk, editors, The Oxford Handbook of Banking and Financial History. Oxford: Oxford University Press, 2016. xviii + 537 pp., $160 (hardcover), ISBN: 978-0-19-965862-6.

Reviewed for EH.Net by Larry Neal, Department of Economics, University of Illinois at Urbana-Champaign (emeritus).

The global financial crisis that began in 2007-08 and continued to rattle the Eurozone countries after 2010 has certainly been good for the market for financial history.  The Oxford Handbook of Banking and Financial History is clearly a response to these events.  In their introductory chapter, the editors set out their ambitious agenda, which is to deal with the individual parts of our modern complex financial system and trace how each has evolved over time.  Each chapter ends with some insight into how the current turmoil in global banking and finance might affect part of the global financial system. This broad-ranging approach is very much in keeping with current analysis by policy economists, who have become very sensitive to how our financial system intertwines banks, which specialize in particular niches of the economy; shadow banks, which innovate to find new niches; money markets, which deal with short-term finance; capital markets, which provide long-term finance; and regulators, who attempt to oversee the operation of the financial system for the interest of the public (or the government).  The editors’ goal is to provide anyone concerned with a particular aspect of the financial system an authoritative treatment by an acknowledged expert that is clearly written for the non-specialist combined with a useful bibliography to follow up particular aspects.

The Oxford Handbook is organized into four parts: Part I, Thematic Issues, deals explicitly with the problems that the editors confronted at the outset: how have historians approached the issues in financial history (Youssef Cassis); how have economists dealt with the issues that interest them (John D. Turner); and how have policy makers tried to apply lessons from history for promoting economic development (Gerard Caprio, Jr.).  To pay due attention to historical contingency, economic analysis, and policy relevance in each of the following chapters is, indeed, a daunting task for each author.

Part II, Financial Institutions, takes up these challenges by separating out several categories of distinctly different institutions, a useful distinction too often overlooked in practice and one that illustrates nicely the complexity of any financial system.  Youssef Cassis’s “Private Banks and Private Banking” begins with the initial role models for banks, from their origins in kinship networks in Renaissance Italy to today’s Swiss managers of private wealth.  Gararda Westerhuis’s “Commercial Banking: Changing Interactions between Banks, Markets, Industry, and State” follows by dealing with the nineteenth-century spread of industrialization globally, which led to the rise of universal banks.  By the end of the twentieth century, however, it appeared that commercial banks might be in “a state of terminal decline.” (See Raghuram Rajan, 1998, “The Past and Future of Commercial Banking Viewed through an Incomplete Contracts Lens,” Journal of Money, Credit, and Banking. 30(3), 524.)  The financial crisis of 2008 led many observers to push for a separation of investment and commercial banking once again in the interest of financial stability.  Westerhuis goes on to distinguish the motives for establishing market-based systems (U.S. and England) versus bank-based systems (Germany and Japan).  She posits that the two paths diverged early on due to the differences in government control over banks and then the role played by banks in financing industrialization for follower countries, such as Germany and Japan.  Oddly missing from her overview is any consideration of the experience of Scottish banking, which developed joint-stock banks with national branches early in the eighteenth century.  Only after the financial crisis of 1825 did the English care to look seriously at the Scottish example for improving their commercial banking system!  Further, joint-stock banks did not disappear in the U.S. during the “free banking” period as she asserts. While they were confined within state boundaries, limitations on branching within a state varied considerably.  The wide range of experiments undertaken by various states has stimulated a growing and interesting literature among U.S. scholars, largely omitted from her bibliography.

Caroline Fohlin’s “A Brief History of Investment Banking from Medieval Times to the Present” takes up the most challenging role of banks, how to transform short-term liabilities into long-term assets.  Rather than taking specific organizational forms, she prefers to analyze investment banks as a set of services that help finance the long-term capital needs of business and governments. After briefly looking at merchant banks from medieval times to the early nineteenth century, this loose definition requires her to take up individual countries one by one during the nineteenth century.  Sections follow that deal with England, the European continent, Belgium and the Netherlands, France, Germany, Austria and Switzerland, Italy, Japan, and the United States. Each section highlights the differences in organizational structures created to accomplish basically the same goals, helping governments promote industrialization.  The twentieth century presents more interesting differences, essentially due to the ways various governments regulated, deregulated, and then re-regulated from the 1920s to the present.  She concludes, “even well-known investment banking names that have endured over the centuries bear little resemblance to their ancestors” (p. 159).

Christopher Kobrak’s “From Multinational to Transnational Banking” takes up the complex transformations of the world’s leading banks by size as they successively internalized their international operations.  The availability of huge advances in information technology combined with increasing opportunities for re-allocating domestic savings across foreign investments provided the basis for the growth of today’s megabanks.  Oddly, however, Kobrak takes as archetypes of the new transnational bank two of the worst performers after 2008 — Deutsche Bank and Citibank.  Relying on their respective annual reports in 2007-2010, he touts each of them as “market players” rather than staid fiduciary agents, lauding their scale and scope of activities that are only vaguely related to financial intermediation associated with banks “lending long, while borrowing short.” He dispassionately notes that three-quarters of Deutsche Bank’s two trillion euros in assets in 2007 were securities held for trading, and 40 percent were financial derivatives (p. 183), without disparaging the obvious omission of fiduciary responsibility. Citibank, similarly, by 2007 had “invested huge resources in creating an internal market, in essence warehousing securities and derivatives to build hedged positions and for future sale” (p. 182). All these intra-bank holdings of assets and liabilities enabled such banks to make a lot of money by proprietary trading that remained unobserved by regulators or by publicly accessible financial markets.  He refrains from criticizing the model developed by these two megabanks, each of which has suffered huge losses and justified public acrimony since 2008, confining himself to the anodyne remark that “megabanks may be forced, as they have many times in the past, to find an intertwined institutional and organizational adaptation more sustainable in the modern social order” (p. 185)!

R. Daniel Wadhwani’s “Small-Scale Credit Institutions: Historical Perspectives on Diversity in Financial Intermediation” concludes Part II by lumping together a motley assortment of credit cooperatives, savings banks, industrial banks, pawn shops, and savings and loans associations.  Wadhwani argues their cumulative size makes their impact on their respective economics arguably as great or greater than that made by the commercial, investment, and public banks dealt with in the previous chapters.  Their common origin across many cultures and through past millennia he finds in the ubiquitous presence of ROSCAs (rotating savings and credit associations).  Beginning with small kinship groups desiring to pool their limited resources to enable individual members to acquire a desired goal, perhaps a piece of land, a dwelling, livestock, or even the means to migrate somewhere else for employment, ROSCAs often provide a basis for transition to the more modern forms of intermediation.  These include savings banks, credit cooperatives, and savings and loans, with each evolving quite differently depending on local circumstances.  Critical to their evolution historically is the role of government, whether as regulator (restricting competition), competitor (postal savings banks), or customer (providing sovereign debt as risk-free asset).  The theoretical economic bases for their evolution and persistence are robust, both for their monitoring capability and for their local knowledge of investment possibilities.  Nevertheless, Wadhwani calls attention to more post-modern “theories” that favor the creation of supportive narratives when cultures confront changes in economic regimes.

Part III, Financial Markets, begins with Stefano Battilossi’s “Money Markets,” which emphasizes the importance of access to outside liquidity for banks when they face unanticipated shocks either for increased loans or increased withdrawals of deposits.  Further, Battilossi argues that a key lesson learned by banking theorists and practitioners in the nineteenth century, namely that money markets are essential for a smooth working of the economy but are inherently unstable, was lost over the course of the twentieth century.  The success of the Bank of England in stabilizing the money market at the center of the global economy of the nineteenth century, he argues, was due to a complex combination of close monitoring by the Bank of England and cartel complicity by the major joint-stock banks, each with extensive branching networks domestically and overseas.  U.S. efforts to imitate the British example after creation of the Federal Reserve System in 1913 failed due to irreconcilable differences in institutional structures between the two banking systems and their respective central banks.  It took over a century and a half for the Bank of England to learn how to avoid being a dealer of last resort, a role that the Federal Reserve System in the U.S. had to undertake in the 2008 crisis, and which it has not yet been able to relinquish.  Readers are left to draw the implications for the future of the global financial system for themselves!

Ranald C. Michie’s “Securities Markets” lays out convincingly and clearly the importance of securities markets for a successful financial system.  Divisibility and transferability of a security expands greatly the potential customer base, adding the virtue of diversity in demands for liquidity among the creditors as well.   He distinguishes clearly between “Primary Securities Markets” and “Secondary Securities Markets,” showing their interdependence in layman’s terms.  “Stock Exchanges” provide the effective linkage between the two levels of markets, but fall prey in turn to problems either of monopoly pricing or government repression. His exposition of the underlying theory of securities markets provides the structure for his narrative that follows. From “Early Developments in Securities Markets,” which only mentions briefly the roles of informal markets in the speculative booms of 1720, Michie insists on focusing on the nineteenth century, starting with the London Stock Exchange in 1801.  It’s unfortunate that he ignores recent work on the Amsterdam stock market, (e.g., Lodewijk Petram, The World’s First Stock Exchange, New York: Columbia University Press, 2014), or early work by this reviewer on the precedents for the London Stock Exchange (Larry Neal, The Rise of Financial Capitalism, New York: Cambridge University Press, 1990).  Committed to the importance of formal structures for modern stock exchanges, however, Michie takes up their rise in the advanced capitalist economies of the nineteenth century and then their eclipse from 1914 to 1975.  Thanks to the exigencies of war finance from World War I through the Cold War, stock markets seemed to “appear somewhat irrelevant in a world dominated by governments and banks” (p. 253)  “The Era of Global Banks” did not come to an end in 2008, however, but what had ended was the “self-regulation that had contributed so much to the attractions of stocks and bonds to governments, businesses, and investors through the reduction or elimination of counterparty risk and price manipulation and the certainty that sales and purchases could be made as and when required” (p. 258).  Big banks are bad once again!

Moritz Schularick’s “International Capital Flows” is the most quantitative and instructive of the chapters, as he summarizes succinctly in nine brief tables and one graph, the levels of international capital flows over the nineteenth and twentieth centuries, their size relative to Gross Domestic Product, and the main sending countries and main receiving countries over time.  In sum, rich countries invested in poor countries in the nineteenth century, when international capital flows were highest relative to GDP, and the rich continued to invest in poor countries even when capital flows were severely constrained during the period 1914-1975.  But after the collapse of Bretton Woods, when international capital flows rose sharply once again, the result has been for poor countries to invest in rich countries.  Further, when capital does flow suddenly to emerging economies, financial crises often follow when the flow tapers off, undoing whatever economic advance may have occurred.

Youssef Cassis’s “International Financial Centres” concludes the coverage of financial markets by analyzing the recurring features of international financial centers that lead to their persistence over time.  The physical layout of the dominant cities, the combination of functions they perform (government, communications, education, as well as trade and finance), and their organization may change as the technology of transport, communications, and information change, but, Cassis argues, the network externalities created by the concentration of so much expertise in one location make the existing centers hard to replace.

Part IV, Financial Regulation, takes up the most vexing questions for policy makers, starting with Angela Redish’s “Monetary Systems.”  Redish begins with the complexity of metallic currencies with coins minted in varying combinations of copper, silver, and gold in early modern Europe, and deftly reviews the causes that concerned European policy makers as they sought to maintain coins with fixed legal tender values, whether minted in any or a combination of the three precious metals.  Basically, their concerns were the same as today, “whether nominal change can have real consequence for the balance of trade or level of economic activity?” (p. 327).  Redish goes on to trace out the academic literature that has dealt with the Emergence of the Gold Standard, the Latin Monetary Union, the Cross of Gold, the Classical Gold Standard, and the Good Housekeeping Seal of Approval, highlighting the controversies that have arisen under each rubric.  Next, she divides the End of the Gold Standard into the First World War and the Interwar Period, Bretton Woods and European Monetary Arrangements, and the End of Bretton Woods and the Rise of the Euro.  Reproducing faithfully the graph produced by Eichengreen and Sachs to show that countries that stayed committed to the gold standard after 1929 suffered in terms of industrial production relative to those that devalued, she doesn’t point out that the outliers of Germany and Belgium are readily explained by mistaking their formal exchange rate regimes with the ones they followed in practice (Germany using bilateral trade agreements to increase industrial exports while keeping the nominal exchange rate fixed, and Belgium reducing its nominal exchange rate while being forced to maintain existing trade agreements with France).  She concludes with a brief discussion of both inflation targeting under fiat currency regimes and the rise of crypto currencies such as Bitcoin, Her conclusion is merely that “money is information, a method to enable multilateral clearing of myriad transactions.  It would be surprising if the digital revolution did not lead to a revolution in how this information is managed” (p. 339).

Forrest Capie’s “Central Banking” takes up the baton passed on by Redish to provide a brief synopsis of the issues confronting central banks as they have increasingly taken control of the supply of money over the past two or more centuries.  Monetary stability, their prime responsibility, can be assessed in terms of price stability, but financial stability, which has become a major concern, he notes is more difficult to assess, much less to sustain.  Central bank independence, however defined, does seem to correlate with monetary and price stability, which shows that policy lessons have been learned successfully on that score.  Continued independence of central banks, however, hinges very much on attaining and then sustaining financial stability.  This task, very much underway now among the world’s central banks, 174 at last count, may require expanding their role to include financial regulation as well as oversight of the banking system.

Harold James’s “International Cooperation and Central Banks” makes an interesting argument that central banks in their pursuit of the goal of monetary stability naturally tend to cooperate with other central banks internationally, but without need for formal mechanisms.  Cooperation can then be merely discursive, as it was during the classical gold standard.  Financial crises, however, often do call for international cooperation, but cooperation is difficult, perhaps impossible, to sustain given the priority of strictly national policy concerns.  Large countries, needed to make cooperative efforts successful, are the most reluctant to join in cooperative efforts.  His examples cover episodes during the classical gold standard, the interwar period, the brief Bretton Woods period, and the ongoing travail of the euro-system, which he concludes is “the global test case for both the possibilities and the limits of central bank action” (p. 391). In an interesting aside, he explains why the Bank for International Settlements was resuscitated to manage the European Payments Union in the 1950s.  Top U.S. officials were wary of using the newly-established International Monetary Fund because its staff were largely protégés of Harry Dexter White, then under suspicion as a possible Russian agent!

Catherine Schenk and Emmanuel Mourlon-Droul’s “Bank Regulation and Supervision” develops a sub-theme to the arguments presented by Harold James, namely the recurring problems of regulatory competition, moral hazard, and regulatory capture.   Essentially, “[r]eputation and private information are key bank assets in a market with information asymmetry, but this complicates the ability to engage in transparent prudential supervision” (p. 396).  The U.S. stands out for having the most complicated and unwieldy array of conflicted regulatory agencies, summarized in Table 17.1.  The authors conclude, as do Charles Calomiris and Stephen Haber (Fragile by Design: The Political Origins of Banking Crises and Scarce Credit, Princeton, NJ: 2014), that it is no accident that Canada and the UK, with more coherent approaches to bank regulation have had fewer banking crises.  Much of the remaining chapter focuses on China and the successive efforts of China’s rulers to establish, then regulate, a banking system to enable industrialization and modernization, concluding, perhaps prematurely, that China managed to reduce the problem of non-performing loans after their peak in 2000.  The difficulties of deciding where to locate the regulator of the banking system are highlighted by tracing the successive efforts of the U.S., then the UK to find an ex post regulatory solution to the problems of recurring financial crises.  The efforts of the Basel Committee, established after the collapse of the Bretton Woods System, are described in the context of the European Union’s efforts to move toward regulatory cooperation within a more limited scope of international cooperation.  Prospects for success on that score are still very much in doubt.

Laure Quennouelle-Corre’s “State and Finance” takes a step back to look at the origins of the ongoing dilemma for the Eurozone of the interaction between governments’ sovereign debt and financial fragility of their banks.  The recurring differences between France and the other members of the European Union form the backdrop for his rambling notes on the interactions of private and public financial institutions, ending with the observation that France alone has had to deal with the European Union’s pro-market ideology versus the French tradition of state intervention.

Part V, Financial Crises, opens with Richard Grossman’s “Banking Crises,” which reprises the standard story of boom-bust cycles, exacerbated when new opportunities for speculative investments open up (first globalization after 1848; second globalization after 1979; post-war adjustments after WWI) but then moderated under strict regulation (capital controls, interest rate restrictions from 1945-71).  In his perspective, the Eurozone crisis fits the boom-bust pattern first described by D. Morier Evans in 1859 (The History of the Commercial Crisis, 1857-58, and the Stock Exchange Panic of 1859, New York: Augustus M. Kelley, 1969).

Peter Temin’s “Currency Crises: From Andrew Jackson to Angela Merkel” takes up the international aspect of the boom-bust paradigm by extending it into national decisions about setting the exchange rate with foreign trading partners and possible investors. To bolster his long-standing conviction that most, if not all, banking crises are really currency crises at heart, he lays out in detail the open macro-economy model developed by Trevor Swan. Swan’s diagram relates a country’s domestic level of production to its real exchange rate.  Internal balance is maintained if production rises with the real exchange rate, while external balance requires the real exchange rate to fall when production increases. The model leads to dire consequences for a country if it does not succeed in maintaining both internal balance (matching domestic investment with domestic supplies of savings) and external balance (matching capital account flows with offsetting trade balances) simultaneously.  Either excessive inflation or long-term unemployment occurs whenever imbalances are sustained due to misguided government policy.  Banking crises then arise as the necessary outcome of such policy failures by governments. The historical evidence to support Temin’s argument starts with Andrew Jackson and the crisis of 1837 in the U.S., continues through the Great Depression in the U.S. in the 1930s, not to mention the concurrent crisis in Germany, and concludes with the ongoing Eurozone crisis, all basically due to misguided political leaders, as named in his sub-title.

Juan H. Flores Zendejas’s “Capital Markets and Sovereign Defaults: A Historical Perspective” concludes the Oxford Handbook.  The first global financial market, arising with the collapse of the Spanish Empire in Latin America after the Napoleonic Wars, saw various devices to cope with the recurring problem of governments defaulting on the sovereign bonds they issued for whatever reason, usually to fight a war or quell a revolution.  Flores recounts the success of the London Stock Exchange in bringing governments to heel if they wanted access to British savers. The monitoring capabilities of the leading merchant bankers, especially the Barings and Rothschilds, put their imprimatur on bonds issued through their firms.  Twentieth century regulatory restrictions on these leading investment banks by their host governments, however, have limited the effectiveness of their “branding” and their intrusive follow-up in monitoring the finances of their customer governments.  Flores casts some doubt as well on the effectiveness of the Council of Foreign Bondholders in the nineteenth century.  He could also have challenged the effectiveness of international financial control committees that served as the model for the League of Nations Financial Commission after World War I if he had cited the recent work of Coskun Tuncer (Sovereign Debt and International Financial Control, The Middle East and the Balkans, 1870-1914, London: Palgrave Macmillan, 2015).  Flores concludes in general that governments that avoided defaulting in times of general crisis did so because they had been excluded from the earlier expansion of international credit.

All in all, the editors did get the compilation in print still in time to be useful for anyone concerned with how the ongoing financial crisis of the early twenty-first century will play out.  Specialists in each topic, however, may be disappointed in the necessary brevity of treatment, not to mention absence of references to their own work, particularly if they worry most about the future of the U.S. financial system.

Larry Neal is the author of A Concise History of International Finance: From Babylon to Bernanke, Cambridge: Cambridge University Press, 2015

Copyright (c) 2017 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 (July 2017). All EH.Net reviews are archived at

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):General, International, or Comparative
Time Period(s):18th Century
19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII

The Chinese Market Economy, 1000-1500

Author(s):Liu, William Guanglin
Reviewer(s):Pomeranz, Kenneth

Published by EH.Net (June 2017)

William Guanglin Liu, The Chinese Market Economy, 1000-1500. Albany, NY: State University of New York Press, 2015.  xviii + 374 pp., $30 (paperback), ISBN: 978-1-4384-5568-6.

Reviewed for EH.Net by Kenneth Pomeranz, Department of Economics, University of Chicago.

William Guanglin Liu has written a valuable book on a big, important, topic: the general trajectory of the Chinese economy from roughly 1000-1650.  (The title says 1500, but the argument goes beyond that date.) The research is excellent, and the author comes up with some original and inventive ways to use his data.  At times, however, it frames its arguments in overly stark forms, and makes claims that go beyond what it can prove.  But despite these concerns, this is a book well worth reading, which will stimulate very useful debate on fundamental questions of Chinese economic history.

As a first approximation, Liu’s theses are hard to argue with.  The author shows that China experienced very impressive growth during the Song dynasty (ca. 960-1279), a period in which there was also a striking expansion of the role of markets in Chinese society.  He also show that the policies of Zhu Yuanzhang (r. 1368-1398), founder of the Ming Dynasty (1368-1644) dealt a major blow to China’s economy by trying to resurrect an idealized world of largely autarkic and demonetized villages.  It took a long time for China to recover from this: in contrast to many scholars who think that by 1500 China had returned to a market economy generating at least a Song level of prosperity, Liu argues that this did not happen until at least 1600, and quite likely not even then.  Moving beyond China, Liu then suggests that this historical case shows the centrality of market institutions for stimulating economic growth, beginning at a very low level of development.

The first three of these points — the marketization and relative prosperity of Song times, and the damaging effects of early Ming policies — are broadly accepted.  The first controversy concerns matters of degree: how prosperous? How marketized?  How big and lasting a blow did the early Ming inflict?  A second set of controversies centers on causation, and thus on the role of other factors.  For instance, Liu says very little about the many technological innovations during the Song — including the invention of gunpowder, the magnetic compass, paper money, and the importation (from Southeast Asia) of early-ripening rice — except to note that some of the most important innovations did not diffuse rapidly.  Some others would assign those innovations (and some that began in the Tang, such as printing) a good deal of credit for the growth that occurred in the Song, and continued into the Yuan (1279-1368) in some parts of the empire. While we will never have the data necessary to arrive at a precise allocation of growth to different factors, there is still room for further productive discussion about relative weights. Likewise, it is possible to show that the Mongol conquests of the mid-thirteenth century had a devastating impact in some places (especially North China and Sichuan), and very little elsewhere (the Middle and Lower Yangzi Valley, and in the far south); the relative weight of those different regional stories is still unsettled, and matters greatly in whether Liu is justified in placing an overwhelming emphasis on early Ming anti-market policies in explaining an apparent stagnation or decline in living standards between the eleventh and sixteenth centuries.

One of the book’s contributions is to concentrate in one place the arguments for transformational change concentrated in the Song period, and followed by a later reversal: a once popular view (e.g. Elvin 1973) that has lately given way to a tale of more gradual progress across several centuries (Smith and Von Glahn 2003).  Making the best of flawed data, Liu estimates population growth of 0.92% per year between 980 and 1109, a remarkable rate for a pre-modern society.  And drawing on a large body of secondary scholarship, he points to considerable evidence for changes in agriculture — capital deepening, especially in the form of massive investments in irrigation, and increasing use of oxen – which should, logically, have raised agricultural yields significantly, allowing a population that had more than tripled to eat as well or better than its forebears.

Unfortunately, however, we lack much good data on actual yields in the Song.  Liu notes that Dwight Perkins’ well-known estimates are (like most others for this period) inferences from agricultural rents, and that much of the land in question was land used to support schools; he further argues that school land was often rented out at below-market rates, depressing these inferred yields, and that the land which families donated to schools was often their least fertile property, anyway.  Meanwhile several of Perkins’ later data points come from agricultural handbooks, and probably represent optimal results.  Thus Liu argues, the impression of slow but steady growth across centuries that emerges from Perkins’ highly influential work may well be a statistical illusion. He prefers the older idea of a Song boom followed by little progress in subsequent dynasties.   Building on work by Zhou Shengchan, Liu tries to work backwards from data on population and average food consumption to estimate thirteenth century yields in the Lower Yangzi region; the results vary considerably among prefectures, but are generally near the high end of our range of estimates for any period before the arrival of modern farm inputs.  They would therefore leave little room for continued growth in the Yuan, Ming, or even Qing.

If verified, this would be a very important finding, but I have my doubts.  In part, my doubts come from personal experience, as adopting a similar methodology for estimating eighteenth century output of various crops led to extremely high estimates.[1]  There are also technical problems with some of this data (particularly in Table 7.8), though probably not big enough to change the results dramatically.[2]   The most we can say with strong confidence, I think, is that some Song farmers achieved yields near the pre-modern maximum, and more and more of their neighbors caught up over time — though whether this happened over decades or centuries remains very uncertain.

For most non-food items, we simply lack the data to generate serious estimates of per capita consumption in Song times; and while anecdotal evidence of rising consumption exists, Liu prefers not to rely on it.  Instead, he relies on an estimate of real wages for unskilled workers to show that living standards in the Song were as high as they ever got in China prior to the twentieth century.  Because we have not found for China any very long series of wages for privately-hired workers in a relatively standardized occupation in a particular place — like the long runs of wages for construction workers on European cathedrals and colleges, for instance — Liu constructs a long-run series of military wages, for which data are comparatively rich; and because we lack data for enough commodities to construct a long-run price index, he uses grain prices as the denominator for his series.  The resulting series peaks at its very beginning (in 1004) and fluctuates wildly while declining overall for the next roughly 170 years. It is then relatively stable until another steep drop in the early Ming, and recovers slightly in the late Ming before declining again in the early Qing (Figure E-1).

Liu has done us a considerable service by piecing this data series together, but as a proxy for the living standards of ordinary people it must be taken with a very large grain of salt.  Governments did not engage soldiers through a true labor market, nor did the institutional setting of military recruitment or the conditions of being a soldier (aside from the wage) remain constant over time.  Moreover, even if we had a reliable private sector wage series, it would not necessarily follow that this was a reliable basis for estimating popular living standards, much less per capita GDP, as Liu argues (p. 133).  Wage earners were never more than 15 percent of the labor force in late imperial China, and most farmers either owned their own land or had a relatively secure tenancy (especially in Qing times).  Consequently, they earned far more than unskilled laborers did — perhaps three times as much on average, according to preliminary estimates I have made for the eighteenth century (and for the early twentieth, where the data are better). (Among other things, this is confirmed by the fact that tenants and smallholders could support families, while unskilled laborers could rarely afford to marry. And for GDP per capita, we would also have to average in the earnings of well-to-do families.  Last but not least, if the ratio between wages and average farm earnings changed over time — as it might well have, given a gradual strengthening of tenant usufruct rights over the course of the late empire — even a much better wage series might not tell us what we want to know about general living standards.

But if Liu does not prove his most ambitious claims, he does succeed in proving many of his smaller empirical claims.  In particular, the evidence for relative prosperity in the Song and a sharp decline in the early Ming seems too much to explain away, even if one can raise doubts about each individual measurement.  The money supply contracted very sharply in early Ming times, followed by the introduction of government notes (for state payments) that soon became almost worthless; customs receipts (and presumably long-distance trade declined; and the wage decline between ca. 1050 and ca. 1400 is too big to be explained entirely by data problems.  A separate estimate, later in the book, suggests that per capita income in North China might have fallen by as much as half between 1121 (on the eve of the Song loss of the North) and 1420, though output per capita seems to have remained stable in the Yangzi Delta.  Liu also makes a strong case that Song people were freer than their early Ming counterparts, and perhaps even less unequal economically (though Song writing shows so much worry about inequality that one is tempted to believe there was fire behind so much smoke).

This brings us to the problem of explaining these differences.  Liu provides a straightforward answer: Song reliance on the market worked while the early suppression of it backfired.  Moreover, this represents a timeless truth, most recently vindicated by the sharp contrast between the Maoist and post-Maoist periods.  Here. I think, Liu lets his argument outrun his evidence, focusing too exclusively on one broad-brush contrast.

It would be hard to deny that the increased influence of market principles in the Song stimulated growth: above all, probably, the agricultural growth of the south, which required significant investment (especially for water management) that would surely have been more modest had earlier dynasties’ restrictions of private landowning remained in force; and given the surpluses that southern agriculture soon generate, and the relatively easy transportation that its rivers offered, impressive commercial and urban growth soon followed.  Since the coastline south of the Yangzi also has far more good sites for ports than the coastline north of the Yangzi, the southward shift of China’s economic center of gravity was also propitious for foreign trade, which boomed under both the Song and the (Mongol) Yuan.

Even in the south, however, the state provided essential infrastructure (though its role declined over time), and often played a very active role in foreign trade. In the north, meanwhile, both the enormous system of canals built by the Song government and the huge concentration of demand in the capital region were crucial, both for consumer markets and the growth of a precocious iron industry stimulated by unprecedented levels of military spending.   A variety of inventions also must have contributed something to the robust growth of the Song period.

Nor, I think, would many people deny that the early Ming attempt to return to local autarky had serious and lasting negative consequences. But we should bear in mind that the North, where Liu’s decline in estimated output between 1121 and 1420 was concentrated, suffered a number of  major shocks in this period, all of which bypassed or fell much more lightly on the south (except for Sichuan). These included conquests by three sets of northern invaders (including, most devastatingly, the Mongols); the prolonged turmoil that toppled the Mongols and brought the Ming to power; a civil war between supporters of two Ming heirs; and repeated, enormous, Yellow River floods, including two that dramatically shifted the river’s course (out of six such incidents in the last 4,000 years) and made it impossible to rebuild the Song-era canal system.   Ming policies certainly did great damage, too, but the relative size of these setbacks needs more detailed analysis before we can accept Liu’s almost exclusive emphasis on the Ming founder’s anti-market policies.

I would also caution against lumping all the parts of Ming anti-commercialism under the heading “command economy,” and comparing it to an ideal type of “market economy,” as Liu often does (e.g. pp. 1, 4-12, 134-136, 197, 199).  No pre-modern state could maintain the vigorous intervention needed to run a true command economy for long.  The Ming may have been more effective than most, but their massive redistribution of property and forced migration was over by about 1425, with land and labor again being exchanged in private markets;[3] the system of artisan conscription unraveled during the fifteenth century; foreign trade outside the official tribute system gradually returned; and so on.  This did not mark the end of Ming anti-commercialism as an attitude, or of its effects: among other problems, the dynasty never tried to provide the money supply that the private economy needed, saddling its subjects with costs that lingered for centuries.[4]   But even if this failure was originally part of an aggressive state’s attempt at command economy, it soon evolved into something else: the failure of a relatively weak state to undertake even those interventions that could have benefited both itself and the private economy.  The succeeding Qing dynasty (1644-1912) certainly had no dream of a command economy, and often (though not always) sought to encourage markets;  and the state’s share of GDP may have slipped as low as 2 percent, compared to at least 10 percent and perhaps as much as 20 percent at the peak of Song military-fiscalism.[5]  Yet the Qing provided the most stable bronze currency — the money used for most everyday transactions — China had ever known, while uncoined silver provided a reasonably adequate currency for big transactions; and it mobilized impressive resources for various physiocratic projects, from water control to grain price stabilization to promotion of best practices in agriculture and handicrafts. (That it spent much less, proportionately, on its military than the Song or Ming had facilitated this combination of low extraction and significant services.[6])  And for about a century and a half, they presided over impressive demographic and economic growth, Interestingly,  three prominent economic historians — Loren Brandt, Debin Ma, and Thomas Rawski, none of them remotely anti-market — have argued that the principal reason why Qing economic development was not even better was that the government was too minimalist: that a small government spread across a vast area was unable to prevent all sorts of local actors — from bandits to local elites employing private enforcers to rogue government clerks — from interfering with local markets and property rights.[7]  Such interference was clearly a problem in the late Ming as well, though it is not precisely measurable in either period.  It does, however, remind us that a simple contrast between “market economy” and “command economy” does not give us enough tools to understand the different relationships between state and market in imperial China, or anywhere else.

Nonetheless, the book does an impressive job of demonstrating how much dynamism the marketizing economy of the Song generated, and how much of those gains had been lost by the mid-Ming, at least in certain regions.  The author’s efforts to quantify trends that many others have been content to describe qualitatively are impressive; this is a book where the appendices are often as thought-provoking as the text.  The results are not as revolutionary or dispositive as the book sometimes suggests, but they will stimulate productive debates for years to come.


1. Lacking data on the acreage devoted to non-grain crops in certain areas, I decided to estimate how much land must have been devoted to non-grain crops, relying on generally accepted numbers for population, grain consumption, and imports, and then multiply the acreage left over by conservative estimates of yields for the non-grain crops.  The results came out so high that I cut them in every way I could think of — including, in one case, arbitrarily reducing the estimate of non-grain acreage by half. The results I came up with were still at the high end of the existing range of estimates, or in some cases significantly beyond it.  I am not ready to toss out those estimates completely, and would be happy to see this approach vindicated; but I am inclined to be cautious here, especially since Liu has not made the same efforts to depress his results as I did.

2. The conversions from Zhou’s numbers, which mostly use Yuan dynasty measurements, is complicated. Trying to reproduce his results for one prefecture after an email exchange with me, Prof. Liu got a figure about 1 percent lower.

3. A rare set of household-level records, for instance, shows a family with modest landholdings in Huizhou engaged in no less than 18 land purchases or sales between 1391 (not long after the Ming came to power) and 1432.  See Von Glahn 2016: 291-293.

4. Von Glahn 1996 and Kuroda 2000 suggest that this was finally addressed with moderate success in the Qing.

5. Perkins 1967: 492; Wang 1973: 133 for the Qing; Golas 1988: 93-94 comes up with 24 percent for the Song, but admits that this seems unlikely.  Hartwell 1988: 79-80 suggests a bit over 10 percent.

6. On military spending compare Hartmann 2013: 29 with Zhou 2000: 36-38.

7. Brandt Ma and Rawski 2014: 60, 76, and 79.


Brandt, Loren, Debin Ma and Thomas Rawski. 2014.  “From Divergence to Convergence: Reevaluating the History behind China’s Long Economic Boom,” Journal of Economic Literature 52(1):45-123.

Elvin, Mark. 1973.  The Pattern of the Chinese Past.  Stanford: Stanford University Press.

Goals, Peter, 1988. “The Sung Economy: How Big?”  Bulletin of Sung-Yuan Studies 20: 89-94.

Hartmann, Charles. 2013.  “Sung Government and Politics,” in John Chafee and Dennis Twitchett, eds., The Cambridge History of China, Volume V Part 2: Sung China, 960-1279 (Cambridge: Cambridge University Press):19-133.

Hartwell, Robert. 1988. The Imperial Treasuries: Finance and Power in Song China,” Bulletin of Sung-Yuan Studies 20: 18-89

Kuroda Akinobu. 2000. “Another Monetary Economy: The Case of Traditional China,” in A.J. H. Latham and Heita Kawakatsu, eds, Asia-Pacific Dynamism, 1500-2000 (London: Routledge): 187-198.

Perkins, Dwight. 1967. “Government as an Obstacle to Industrialization: The Case of Nineteenth-Century China,” Journal of Economic History 27 (4): 478–92

Perkins, Dwight. 1969. Agricultural Development in China, 1368-1968.  Chicago: Aldine Publishing.

Smith, Paul, and Richard Von Glahn, eds., 2003. The Song-Yuan-Ming Transition in Chinese History.  Cambridge:  Harvard Asia Center.

Von Glahn, Richard. 1996.  Fountain of Fortune: Money and Monetary Policy in China, 1000-1700.  Berkeley: University of California Press.

Von Glahn, Richard. 2016.  The Economic History of China: From Antiquity to the Nineteenth Century.  Cambridge: Cambridge University Press.

Wang Yeh-chien. 1973. Land Taxation in Imperial China, 1750-1911.  Cambridge, MA: Harvard University Press.

Zhou Yumin. 2000.  Wan Qing caizheng yu shehui bianqian (Late Qing Fiscal Administration and Social Change).   Shanghai: Shanghai renmin chubanshe.

Kenneth Pomeranz is University Professor of History at the University of Chicago.  His best known book is The Great Divergence: China, Europe, and the Making of the Modern World Economy (Princeton, 2000).  His most recent publication is “The Data We Have vs. the Data We Want: A Comment on the State of the Divergence Debate,” Pt. I and Pt II New Economics Papers (June 8, 2017) Forthcoming publications include “Water, Energy, and Politics: Chinese Industrial Revolutions in Global Environmental Perspective,” in Gareth Austin, ed., Economic Development and Environmental History in the Anthropocene (forthcoming, 2017: Bloomsbury Academic).

Copyright (c) 2017 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 (June 2017). All EH.Net reviews are archived at

Subject(s):Economic Development, Growth, and Aggregate Productivity
Economywide Country Studies and Comparative History
Geographic Area(s):Asia
Time Period(s):Medieval
16th Century
17th Century

The Economics of Ottoman Justice: Settlement and Trial in the Sharia Courts

Author(s):Coşgel, Metin
Ergene, Boğaç
Reviewer(s):Jared Rubin

Published by EH.Net (June 2017)

Metin Coşgel and Boğaç Ergene, The Economics of Ottoman Justice: Settlement and Trial in the Sharia Courts. Cambridge: Cambridge University Press, 2016. xv + 346 pp. $100 (hardback), ISBN: 978-1-107-15763-7.

Reviewed for EH.Net by Jared Rubin, Department of Economics, Chapman University.

Metin Coşgel and Boğaç Ergene’s The Economics of Ottoman Justice employs the best aspects of historical research and economic analysis in a compelling account of Ottoman courts. This is very much a work of history: the authors impressively collect reams of archival data on trials, settlements, and registrations from the courts of Kastamonu, a relatively small Ottoman town in what is now north-central Turkey. But it is also very much a work of economics: the authors utilize insights from the law and economics literature to analyze the data in a systematic way, deriving testable predictions and testing them with regression analyses.

Indeed, one of the most interesting aspects of this book is the full-throated endorsement Coşgel and Ergene give for interdisciplinary work between economists and historians. The introductory chapter, while ostensibly introducing the book, is primarily dedicated to highlighting the insights that each of the authors felt they gained by working with someone outside of their discipline. Most economists are familiar with working with co-authors and understand the huge benefits of exploiting comparative advantage. Coşgel and Ergene go one step further, noting that aspects of the book simply could not have been written if either of them had decided to go at it alone. The introduction is a brilliant defense of interdisciplinary co-authorship and is worth a read for any economic historian, whether or not she is interested in the Ottoman Empire.

The core of the book primarily presents and analyzes the data, with a few chapters dedicated to presenting the historical context (i.e., the history of Kastamonu, insights into Sharia courts more generally) as well as the law and economics framework the book employs. The data are quite rich. We know the gender, religion, and social status of almost all parties in each of the cases. This is important because it allows for multiple economic analyses. It permits the authors to ask questions such as: Who goes to court? Who settles? Who wins when the case does indeed go to trial?

The answers to these questions are not as straight-forward as they appear, nor can they be gleaned by simply looking at means across all cases. Most importantly, there is significant selection bias in the types of cases that are registered and go to trial. As the authors eloquently lay out, there are numerous sources of bias. For instance, friends or relations can settle disputes without going to trial; asymmetric stakes in the outcome may encourage parties to settle prior to adjudication; and asymmetric information or legal knowledge may encourage certain groups to enter into trial and/or use certain techniques (such as securing a fatwa). These insights yield testable predictions which the authors test using standard econometric techniques. They find support for most of the predictions the law and economics framework yields.

A question that may naturally arise to the reader — it certainly arose to myself — is “what can we learn from Kastamonu?” If Coşgel and Ergene analyzed the archival court records of Istanbul this would be one thing — it would give us insight into how Ottoman courts worked in the presence of the sultan and top government and bureaucratic officials. None of these were present in Kastamonu. While reading the book, the economist in me kept thinking that Coşgel and Ergene would eventually get to the general lessons from Kastamonu. But these lessons never come. Upon reflection, this is the right move on their part for two reasons. First, economists tend to overclaim generality; I am certainly guilty of this in my own work. This is not necessarily a terrible sin, but in a work such as Coşgel and Ergene’s where the authors have spent so much time digging into the details of the Kastamonu courts, it is nice to simply have a portrait of how courts in this town operated. Second, and more importantly, the analysis employed by the authors is general in a sense, even if the authors do not explicitly state it as such. Coşgel and Ergene employ a standard law and economics framework to their data — a framework derived centuries after the data they draw from and originally applied to a very different set of circumstances. The fact that these economic insights help explain how the courts of Kastamonu were employed in such a different setting than twenty-first-century Westerners are used to suggests the universality of these insights while also telling us much about early modern Sharia courts. If these courts were used in a manner that is predictable by basic economic theory, then we can almost certainly subject them to more rigorous analyses when studying the role of courts and legal institutions in the economic life of the Ottoman Empire. This is important support for the recently growing group of economic historians (such as Timur Kuran and Şevket Pamuk) who use modern theory to better understand the economics and institutions of the Ottoman Empire.

In short, Metin Coşgel and Boğaç Ergene have written a well-researched book that pushes the boundary of interdisciplinary scholarship. Their history is informed by economics, and their economics is generalized via history. It is an impressive and difficult methodology to pull off, yet Coşgel and Ergene have done just this.

Jared Rubin is an associate professor of economics at Chapman University. He is the author of the recent book, Rulers, Religion, and Riches: Why the West Got Rich and the Middle East Did Not (Cambridge University Press).

Copyright (c) 2017 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 (June 2017). All EH.Net reviews are archived at

Subject(s):Government, Law and Regulation, Public Finance
Geographic Area(s):Middle East
Time Period(s):17th Century
18th Century

History by Numbers: An Introduction to Quantitative Approaches

Author(s):Hudson, Pat
Ishizu, Mina
Reviewer(s):Roberts, Evan

Published by EH.Net (May 2017)

Pat Hudson and Mina Ishizu, History by Numbers: An Introduction to Quantitative Approaches (second edition).  London: Bloomsbury, 2017. xx + 339 pp. $35 (paperback), ISBN: 978-1-84966-537-7.

Reviewed for EH.Net by Evan Roberts, Department of Sociology, University of Minnesota.

For a field on the wane (see the discussion in Historically Speaking in 2010) quantitative history has a good stock of textbooks, but the flow of new entrants is slow. The revised edition of History by Numbers — originally solo-authored by Pat Hudson in 2000 and now co-authored with Mina Ishizu in its 2017 second edition — would make an excellent textbook for an upper division undergraduate history class. Anyone wishing to extend their students and themselves could add Charles Feinstein and Mark Thomas’s Making History Count for a more advanced undergraduate or graduate-level class in quantitative history. Of course, this supposes there is sufficient demand among history students to enroll in such a class, a critical question I return to later in the review.

The presumed audience for History by Numbers is history rather than economics students. Chapter 1 situates quantitative history within the discipline of history, while Chapter 2 discusses the nineteenth-century statistical movements in Britain and the epistemology of quantitative reasoning. Economics students would benefit from reading these chapters, yet they fit more squarely within the design of a history course and curriculum. The remainder of the book takes students and their instructors through a standard sequence of data management, exploration and analysis, written with the presumption that students begin with only a memory of high school mathematics. The exploratory data analysis chapters focus on graphical methods, and how to characterize the distribution of a single variable. Examples in all the chapters come from the published literature, but with a hand on the scale for modern British economic and social history. British universities have been more successful than their North American peers in maintaining quantitative work within history departments, so the choice of examples reflects the state of the field.

The chapter on time series and indices is particularly strong, with clear worked explanations of how to construct indices and the art of choosing the right base period. There is a very good explanation of cyclical fluctuations and seasonality, and how to work with this form of data correctly. The graphics and the text complement each other especially well here. Regression and correlation is then covered in one chapter, integrating both time series and cross-sectional data. For an introductory course this is appropriate, and the separation of cross section and time series approaches can await students in a subsequent course, where Feinstein and Thomas’s more advanced text separates these issues. Sampling and significance testing in Chapter 7 wrap up the purely statistical chapters, with more worked examples from published research. Chapter 8 outlines how economic historians put statistical methods to work in building models and testing theories, putting cliometrics in perspective for history students. It is not until Chapter 9 that we get to the foundational work of doing History by Numbers: getting numbers from manuscripts into the computer. Again, the authors do well in putting recent developments in creating quantitative data into historical perspective for a generation of students who have grown up in an era where important tools of quantitative history: digital cameras, laptops, databases, geographic information systems, and fuzzy matching of text are ubiquitous in their daily lives.

History by Numbers would make an excellent textbook for a course introducing students to quantitative methods in the context of historical examples, particularly for instructors who would integrate that introduction with a history of the British industrial revolution. A more general and topically eclectic course on quantitative history could also use this book as a core text with very little modification, as it discusses research on topics ranging from violence in nineteenth-century New Zealand to the wolfram market in World War II Spain. Two sections of discussion questions integrate the worked statistical examples in the text with substantive historical and economic questions, and could be used as the basis for labs or tutorials.

Alternatively, instructors might use History by Numbers as their secret guide to teaching statistics to history students without assigning it as a text (I apologize to the authors for the significant reduction in their royalties this implies). Indeed, this was how I used the previous edition of the book; as a script for teaching statistics to history students in a social history class using entirely American data. With IPUMS, EH.Net, and Historical Statistics of the United States it is not hard to find data that can be used to teach all the statistical concepts introduced in History by Numbers. Bearing in mind that book authors face harder constraints on length than online book reviewers whose words come cheap, there are some omissions in an otherwise quite comprehensive survey of modern quantitative history. There could be greater discussion of longitudinal data from cohort studies which are mentioned just briefly at the end of the text. Moreover, in an otherwise diverse set of articles for discussion I was surprised to see none from the strong Scandinavian quantitative history tradition (largely written in English these days).

Overall then there is much to recommend in History by Numbers for instructors whose goal is to teach statistics using relatively clean data from already digitized sources. Working with small clean datasets allows students to focus on learning statistics, statistical software, and gaining confidence in making statistical inferences. The next step in students’ development, directly suggested by Chapter 9, is writing an Honors or senior thesis using methods from the book, and available sources tailored to student and instructor interest.  This supposes that students have been motivated to first take a course guided by History by Numbers. Yet, as the authors note quantitative history has not grown since the first edition was published.

Perhaps we are doing it wrong, and need to rethink how we introduce students to quantitative history. The same arguments apply mutatis mutandis to introducing students to quantification in other undergraduate social science programs such as sociology, political science, and anthropology. In all of these disciplines a meaningful fraction of students approach quantitative methods with some anxiety. In the same spirit as Joshua Angrist and Jörn-Steffen Pischke (2017) recommend changing the traditional sequence of introductory econometrics courses to reflect changes in empirical econometric practice, quantitative historians should also introduce students to their practices “by example rather than abstraction.”

For historians and their kin in economics and sociology departments, teaching by example means beginning with primary sources. It is now straightforward to lead with the sources, to begin where students are found, a little shy of quantification but probably willing to enroll in a class that offers an introduction to research methods and an immersion in primary sources. Leading with immersion in primary sources meets the modal student closer to their interests, and can be a powerful recruitment tool for a class, compared to others built around textbooks and reading. Tools for transcribing data can now be easily built using Google tools, or the Zooniverse Project Builder (  Such a course could also be pitched to students as “digital history.” The fashion for attracting students with “digital” may wane in the future, but the pedagogical underpinnings of beginning with collaborative digitization of sources (quantifiable sources!) are sound.

When students get their hands metaphorically dirty with the sources, see that their small sample of sources differs internally, and differs from their classmates’ sample of sources, the motivation to investigate questions statistically comes more organically.  They can then learn statistics with data they have created. Fitting data collection and analysis into one semester requires compressing analysis somewhat, the omission depending on the manuscripts and data at hand. If the data are cross sectional surveys, for example, index numbers may be omitted. My experience has been that beginning with the manuscript sources, creating a small dataset, and then analyzing it, leads to the greatest engagement from students who initially lack confidence in quantitative methods. Such an approach punts some of the statistics taught in History by Numbers to later semesters, but with the benefit of having engaged more students in quantification than a course framed explicitly as quantitative history.

Thus, the conclusion that History by Numbers is an excellent text for an upper division class is premised on the existence of a sophomore course that introduces students to quantitative methods quietly, and maybe just a little surreptitiously. Call it digital history, call it social history or historical sociology, whatever topic you think will attract students at your institution, and ideally the students will be so far into the course that they won’t realize they’re learning statistics until you’ve shown them they can do it. As Hudson and Ishizu emphasize many students have more of an aptitude for the common-sense tools of statistics than they realize. In short, while I can recommend History by Numbers to social and economic historians, I also recommend that we think carefully and creatively about how our curricular sequences can bring more students into quantitative history courses.


Joshua D. Angrist and Jörn-Steffen Pischke. 2017. “Undergraduate Econometrics Instruction: Through Our Classes, Darkly,” Journal of Economic Perspectives 31(2): 125-44.

Charles H. Feinstein and Mark Thomas. 2002. Making History Count: A Primer in Quantitative Methods for Historians. New York: Cambridge University Press.

Robert Whaples. 2010. “Is Economic History a Neglected Field of Study?” Historically Speaking 11(2): 17-20.

Evan Roberts is Assistant Professor of Sociology and Population Studies at the University of Minnesota. His best enrolling quantitative methods class went by the title “Living, Working and Dying in Chicago.” Recent publications include “Family Structure and Childhood Anthropometry in Saint Paul, Minnesota in 1918” (with John Robert Warren), History of the Family.

Copyright (c) 2017 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 (May 2017). All EH.Net reviews are archived at

Subject(s):Development of the Economic History Discipline: Historiography; Sources and Methods

Destructive Creation: American Business and the Winning of World War II

Author(s):Wilson, Mark R.
Reviewer(s):Duncan, Thomas K.

Published by EH.Net (May 2017)

Mark R. Wilson, Destructive Creation: American Business and the Winning of World War II. Philadelphia: University of Pennsylvania Press, 2016. v + 379 pp. $45 (cloth), ISBN: 978-0-8122-4833-3.

Reviewed for EH.Net by Thomas K. Duncan, Department of Economics, Radford University.

In Destructive Creation: American Business and the Winning of World War II, Mark R. Wilson (UNC-Charlotte) provides a very detailed account of the U.S. industrial war machine. The information contained within makes this book well worth the read for anyone who is seriously studying the war economy of World War II. Wilson’s stated purpose is to redefine the narrative of the war, positing that “business and government were reluctant, contentious, and even bitter partners” (p. 286) rather than the stated alternative narrative where the war is won by unbridled capitalism. Wilson also attempts to dismiss the argument that the war led only to the confluence of interests that became the military-industrial complex. The evidence provided does not definitively resolve the issue. Interestingly, the case falls short not due to lack of research but perhaps due to an overabundance. The research that went into Destructive Creation is detailed enough to allow for a far more nuanced view of the war and its economic effects.

Chapter 1 establishes the anti-war view that U.S. enterprises held after World War I. During the Great War, the U.S. had seen an increase in regulation, government seizures, the rise of state capitalism, and the excess profits tax. After the war, industrial leaders were labeled “merchants of death,” investigated by the Nye Committee, and saw the New Deal expand the role of government through the TVA and other public ventures. The interwar period was a time of industrial mistrust of war policies and a hesitancy to engage in the pre-war buildup.

While most chapters of the book have a wealth of information, Chapter 2 is the strongest in this regard. The U.S. began its armaments buildup of 1938-1940 despite industry misgivings. Though Wilson states that the war economy should not be interpreted as creating a “military-corporate alliance,” he notes the rise of government organizations headed by business leaders, increasing industrial dependence on government investment, and the growing importance of the government-owned, contractor-operated plants, where government financed construction and leased the plants to private contractors. The buildup was also the period where cost-plus fixed-fee contracts and subsidized construction allowed for massive industrial expansion. Wilson attempts to downplay the role of large corporations by highlighting the increases in subcontractors, but this argument is weakened with the discussion of the high costs of conversion for mid-sized firms and the prominence of prime contracting where large firms dominated.

Shifting focus, the “War Stories” chapter describes how U.S. industrial leaders attempted to win the war at home – as well as abroad. To highlight the narrative of free enterprise, Wilson offers detailed accounts of the public relations efforts of the National Association of Manufacturers with its 1942 “Production for Victory” tour and corporate radio ads. Yet he far too quickly dismisses the influence of the counter narratives of labor’s “soldiers of production” and the reemergence of the “merchants of death” label. While the Republicans’ Congressional gains in 1942 may suggest the dominance of the pro-business narrative, Wilson’s next two chapters provide evidence of concern over excess profits and of seizures to enforce union contracts. Such evidence suggests that the alternative narratives found traction in some corners of government and public opinion.

In fact, the next two chapters clearly illustrate the nuance needed in reading this book and the tension in the simple narratives. In Chapter 4, Wilson argues that business did not enjoy working with government, particularly when faced with regulations, contract cancellations, changing specifications, and the excessive paperwork associated with bureaucratic red tape. Variability in contracts, such as the Army’s tank and small arms reductions, caused painful reallocations for industrial manufacturers. The new excess profits tax, established to prevent war profiteering, created additional uncertainty in the profitability of the war effort. Yet even as contracts were cancelled and profits reduced in some areas, other projects, such as Boeing’s B-29, saw expansions in orders to offset losses. Larger industrial leaders like General Motors and Du Pont were also able to access significant tax loopholes to lower their burden. The fifth chapter exhibits many of these same tensions, with government willing to seize companies to break union wage strikes in a pro-business manner, but also to seize companies for underperformance and for failing to adhere to the union’s maintenance of membership rules in decidedly not pro-business actions.

Chapter 6 is perhaps the weakest of the chapters. Though it provides the history of the reconversion era after the war’s end, there is far less detail given than in previous chapters. This lack of depth is likely due to the span of history Wilson is attempting to cover, as the reconversion period discussed covers the years up to and partially during the Vietnam era. The chapter argues that the shift to privatization, ramped up by Robert McNamara, has led to a less regulated and more expansive military industry. Wilson again offers mixed evidence for business favoritism across the economy, yet very clearly lays out the foundations of the military-industrial complex in the specific areas of aviation and missile programs.

In summation, there are a few times the author presses an argument that does not appear to be supported by the evidence surrounding it, yet overall Wilson offers a well-researched and largely well-written historical account that, despite the title, spans from the end of World War I to the beginning of the Vietnam War. Wilson ultimately concludes that the lessons of World War II may provide guidance for resolving current issues such as climate change and healthcare. However, this conclusion misses the singular focus that all-out war mobilization brings, namely producing military ordnance in great abundance. This singular focus may not be true of the disparate and conflicting wants and needs of a peacetime economy.

Thomas K. Duncan is an Assistant Professor of Economics in the College of Business and Economics at Radford University. He has published research on the U.S. war economy in journals such as The Independent Review, the Review of Austrian Economics, and Peace Economics, Peace Science and Public Policy, and has been a contributor to the Oxford Handbook of Austrian Economics in the area of U.S. foreign intervention. Email:

Copyright (c) 2017 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 (May 2017). All EH.Net reviews are archived at

Subject(s):Military and War
Geographic Area(s):North America
Time Period(s):20th Century: Pre WWII
20th Century: WWII and post-WWII

Competition in the Promised Land: Black Migrants in Northern Cities and Labor Markets

Author(s):Boustan, Leah Platt
Reviewer(s):Bodenhorn, Howard

Published by EH.Net (April 2017)

Leah Platt Boustan, Competition in the Promised Land: Black Migrants in Northern Cities and Labor Markets. Princeton: Princeton University Press, 2017.  xv +197 pp. $30 (hardcover), ISBN: 978-0-691-15087-1.

Reviewed for EH.Net by Howard Bodenhorn, Department of Economics, Clemson University.

The principal, big-picture issue addressed in In Competition in the Promised Land is how the migration of southern African-Americans into northern and western cities transformed labor and housing markets in mid-twentieth-century urban America. There is an already extensive, high-quality literature and Leah Platt Boustan offers several original and valuable insights and extensions. Before discussing Boustan’s contributions it is useful to summarize what economic historians know about these issues. Using the 1940 and 1950 censuses, Thomas N. Maloney (1994) and Robert A. Margo (1995) decompose the black-white wage gap to better understand the observed convergence in wages and attribute the convergence to a combination of wage compression within occupations and industries, as well as an occupational, industrial, and geographic redistribution of the black labor force during the war and post-war years. Their findings are consistent with Gunnar Myrdahl’s (1944) belief that the racial gap in occupations and wages would be reduced, at least in part, by blacks moving to the North with its better employment opportunities and less discriminatory regime. William J. Collins (2000) uses individual work histories to recreate the industrial and geographic transitions for blacks in the 1940s and finds little evidence in support of the traditional “southern farm to northern factory” tale. He also documents a modest wage gap in northern employment between southern-born black migrants and northern-born blacks residing in the same city. Maloney (2001) and Collins and Marianne H. Wanamaker (2014) use linked census data to study the first wave of the Great Migration that commenced in the 1910s. Maloney finds that migrant and native-born northern blacks experienced similar rates of occupational mobility in the 1910s. Collins and Wanamaker (2014, p. 220) find that black migrants increased their wages by 90 percent and that “blacks’ relative gains may be accounted for fully by their interregional migration.” Based on the black experience in the early decades of the twentieth century, Myrdahl’s belief was not unfounded. Disfranchised and unable to influence their condition through “voice” in the Jim Crow South, it appears that southern African-Americans might improve their lot through “exit” (Hirschman 1970).

It turns out that young black men who followed Myrdahl’s exhortation to “go North” in the post-depression decades experienced slightly higher wage gains than those of the First World War-era migrants (130 percent). South-to-North white migrants, by comparison, experienced 60 percent increase in wages on average. Boustan’s readable volume reveals that despite the substantial improvements in wages due to migration, black migrants did not follow the trajectory of other immigrant groups into northern and western cities. Unlike the Irish, Germans, and Italians before them, blacks did not integrate into urban economies and continue to move up the occupational ladder.

Boustan notes that the traditional explanation for the failure of African-Americans to achieve socioeconomic parity with whites emphasizes two factors: post-1970s deindustrialization, and racism. The relatively high-paying, if grueling, urban factory jobs available to blacks in the North earlier in the twentieth century vanished. The meatpacking industry, once concentrated in Chicago dispersed after 1960; the Chicago stockyards closed in 1970. Detroit, too, where Ford’s workforce was once 50 percent African-American, entered into a period of slow decline in the 1970s (Maloney and Whatley 1995; Glaeser 2011). Other rust-belt cities followed similar trajectories.

Boustan adds a supply-side factor to the mix of explanations. The continuing influx of southern black migrants into northern and western cities, intensified competition in already tight urban labor and housing markets. Migrants, she points out, pushed up housing costs, pushed down wages, crowded more youth into already overcrowded, underfunded urban schools, all while whites fled to the suburbs. An increasing number of whites also simply fled the North altogether; the falling costs of central air conditioning and the elimination of Jim Crow made the Sunbelt a more attractive place to live and work (Wright 2013). In the five substantive chapters of her book, Boustan investigates the causes and consequences of black migration into the urban North and white migration out.

The first chapter analyzes black migration out of the South. Here, and throughout the volume, she offers a brief depiction of the traditional interpretation and then, rather than trying to overturn those interpretations, she offers extensions and subtleties. The traditional explanation for black exit from the South, for example, focuses on violence, racism, and large exogenous events, such as the great Mississippi flood of 1927. While not denying that these factors were important, she contends that economic conditions were quantitatively more important determinants of the choice to leave and that existing transportation networks determined where blacks went. Southern areas more reliant on cotton cultivation and with more segregationist institutions experienced greater black migration, while areas in the South that offered industrial employment opportunities experienced less migration. A more interesting feature, however, was how railroad networks influenced where blacks went when they left the South. Blacks tended to move “due North,” because the principal rail lines did (p. 32). Blacks from the Mississippi delta, for example, tended to end up in Chicago; those from the Carolinas settled in Philadelphia, Newark, and New York.

Chapter 2 considers who migrated. She finds that sons of common laborers and sons of the small class of southern white-collar blacks were the most likely to leave. Sons of tenant farmers were less likely to migrate. Any economic analysis of the subsequent employment and earnings of black migrants must confront the issue of selection bias. Was it the case that blacks with more gumption were more likely to leave? To eliminate the effects of selection, she gathers and analyzes data on brothers, at least one of whom migrated and at least one of whom did not. This identification strategy will correct for any bias that results from common household factors, except, of course, differences in unobservable gumption across siblings. Because she finds relatively small differences in the return to migration between the overall (unmatched) and brother sample, Boustan concludes that selection is not driving the result. She then makes an effort to show that the gumption effect itself is fairly small, by comparing the earnings of northern-born and migrant blacks. Assuming that the northern-born sample exhibits the full distribution of characteristics, the trivial difference in earnings points to absence of selection on unobserved characteristics.

The book’s third chapter analyzes black employment and wages, and Boustan’s results are consistent with earlier studies (Donohue and Heckman 1991; Sundstrom 1994). Discriminatory hiring practices prevented northern-born blacks from moving out of traditionally black employments and southern immigrants pushed blacks’ relative wages down. Racial segmentation in the job market followed from both pre-market (education, training, experience) factors and market-based discrimination (employers’ refusals to hire blacks into supervisory, sales and clerical roles). Boustan’s estimates imply that pre-market factors account for about two-thirds of the imperfect substitutability of black for white workers. Lower-quality southern schools left many blacks ill-prepared for skilled and semi-skilled urban employments. “Discrimination,” concludes Boustan (p. 81), “originated not at the northern factory gate but in the southern schoolhouse; by the time southern blacks arrived in the North, they were already at a disadvantage.”

I find the fourth and fifth chapters, which document and explain white flight to the suburbs, the most fascinating and compelling section of the book. Black migration into urban areas may have encouraged white flight through three channels: the housing market channel; the social interactions channel; and the fiscal channel. The housing market channel signifies that the influx of southern blacks drove up rents and home prices, which made the suburbs cost competitive (home prices versus commuting costs). The social interactions channel posits that whites preferred not to live in close proximity to blacks, and there is a now large theoretical literature on tipping points consistent with the hypothesis that consumers prefer to reside in proximity to like persons, and considerable empirical evidence consistent with theory (Schelling 1971; Blair 2016). The fiscal channel posits that the increasing share of blacks in an urban area alters the political coalitions and local government spending priorities.

The empirical problem is sorting out the relative contribution of these three effects. Boustan offers two relatively ingenious approaches. She first tackles the social interactions channel. She adopts an instrumental variables (IV) approach based on the observed patterns of chain migration between southern and northern locales. Chicago, for example, historically attracted southern migrants from the lower Mississippi valley. Some may have been pulled by high wages in Chicago, while others were pushed by low wages in the delta. At the same time, urban, white Chicagoans may have been pulled to the suburbs by high wages in Arlington Heights or Evanston, or they may have been pushed by a distaste for living next to black migrants. Boustan’s identification strategy is premised on the idea that low wages in the delta should not have any effect on whites’ decisions to move to the suburbs except through the connection between low southern wages and black migration in historically white areas. Her IV estimates imply that each black migrant into the urban North is associated with 2.5 suburb-bound whites. A rate greater than 1.0 implies a white distaste for black neighbors. Still, she cannot yet conclude that whites exited due to a distaste for proximity or whether they had different preferences for local public goods.

To distinguish between prejudice and public goods, or the interactions versus fiscal channels, Boustan employs what are essentially within-metropolitan area, cross-border effects to identify the motivations for white flight. If black migration shifted the political balance and fiscal priorities of city governments, even whites residing in all-white enclaves may have headed for the exit. Although white families could probably maintain control of local elementary and middle schools, for example, they may not have been willing to send their teenagers to economically and racially diverse high schools. It is also possible that black and white neighborhoods differed in their preferences for public safety and other municipally supplied public goods. The evidence pretty clearly demonstrates increasing segregation: in 1940, 21 percent of whites lived within two miles of a black enclave; in 2000, just 13 percent of whites did. But she finds that much of that change is due to local political and fiscal factors. When comparing two comparable, adjacent neighborhoods separated by an urban-suburban political border, she finds that housing prices are significantly higher to the white side and lower to the black. Whites are willing to pay more for housing to reside on the white side; the wider the gap in black population share between city and suburb, the larger the housing price differential. But the motivating factor appears to be differences in mean income across the border rather than race per se. Different incomes also lead to different fiscal choices. While suburbanites do not spend more per pupil on education or on parks, sanitation or road maintenance, they spend less on public safety perhaps because they face fewer social problems and they pay less in taxes (p. 140). Suburbanites also live around more college graduates, a valuable amenity if peer effects influence current and future labor productivity and wages.

Some readers might, and perhaps should, question some of Boustan’s approaches and conclusions, yet her volume is a thoughtful and valuable contribution to the economic literature on race relations and social interactions. While reading her analysis of brothers’ outcomes, I could not help but reflect on the casual observation that I have known lots of brothers that were different in so many dimensions that a household fixed effect will not capture. Still it is a methodological advance in accounting for potential selection of movers and stayers. And in her analysis of white and black enclaves, I kept asking whether two miles, or even four, represents a meaningful distance when automobiles are ubiquitous. I attended high school in a suburban Virginia town in which the high school was about 60 percent white and lived about two miles from a black enclave, separated by a four-lane divided highway. I had virtually no interaction with black students during school hours, but lots of interaction after school on the outdoor basketball courts across the highway. Was that what my parents were paying for? And how can Boustan account for it? I look forward to seeing her answers to these and other questions as she continues to grapple with these kinds of difficult questions.


Blair, Peter Q. 2016. “The Effect of Outside Options on Tipping Points.” Working paper, Clemson University.

Collins, William J. 2000. “African-American Economic Mobility in the 1940s: A Portrait from the Palmer Surveys,” Journal of Economic History 60(3): 756-781.

Collins, William J. and Marianne H. Wanamaker. 2014. “Selection and Economic Gains in the Great Migration of African Americans: New Evidence from Linked Census Data,” American Economic Review: Applied Economics 6(1): 220-252.

Donohue, John J. III and James Heckman. 1991. “Continuous versus Episodic Change: The Impact of Civil Rights Policy on the Economic Status of Blacks,” Journal of Economic Literature 29(4): 1603-43.

Glaeser, Edward. 2011. Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier. New York: Penguin.

Hirschman, Albert O. 1970. Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States. Cambridge: Harvard University Press.

Maloney, Thomas N. 1994. “Wage Compression and Wage Inequality between Black and White Males in the United States, 1940-1960,” Journal of Economic History 54(2): 358-81.

Maloney, Thomas N. 2001. “Migration and Economic Opportunity in the 1910s: New Evidence on African-American Occupational Mobility in the North,” Explorations in Economic History 38(): 147-65.

Maloney, Thomas N., and Warren C. Whatley. “Making the Effort: The Contours of Racial Discrimination in Detroit’s Labor Markets, 1920–1940,” Journal of Economic History 55(3): 465-493.

Margo, Robert A. 1995. “Explaining Black-White Wage Convergence, 1940-1950,” Industrial and Labor Relations Review 48(3): 470-81.

Myrdahl, Gunnar. 1944. An American Dilemma: The Negro Problem and Modern Democracy. New York: Harper & Brothers.

Schelling, Thomas C. 1971. “Dynamic Models of Segregation,” Journal of Mathematical Sociology 1(2): 143-186.

Sundstrom, William A., 1994. “The Color Line: Racial Norms and Discrimination in Urban Labor Markets, 1910–1950,” Journal of Economic History 54(2): 382-396.

Howard Bodenhorn is a professor of economics at Clemson University. He is author of The Color Factor: The Economics of African-American Well-being in the Nineteenth-Century South (Oxford University Press, 2015).

Copyright (c) 2017 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 (April 2017). All EH.Net reviews are archived at

Subject(s):Education and Human Resource Development
Historical Demography, including Migration
Household, Family and Consumer History
Labor and Employment History
Urban and Regional History
Geographic Area(s):North America
Time Period(s):20th Century: Pre WWII
20th Century: WWII and post-WWII

Rulers, Religion, and Riches: Why the West Got Rich and the Middle East Did Not

Author(s):Rubin, Jared
Reviewer(s):Mokyr, Joel

Published by EH.Net (April 2017)

Jared Rubin, Rulers, Religion, and Riches: Why the West Got Rich and the Middle East Did Not. New York: Cambridge University Press, 2017. xxi + 273 pp. $30 (paperback), ISBN: 978-1-108-40005-3.

Reviewed for EH.Net by Joel Mokyr, Departments of Economics and History, Northwestern University.

The Middle East, it has been said, is not just a collection of failed states. It is a failed region. It generates a disproportional number of the world’s orphans and refugees, its GDP per capita is intolerably low despite oil riches, and there are few signs that there is light at the end of tunnel. Democracy seems to have been put on the back burner indefinitely, and human rights are a lost cause in most countries and in retreat elsewhere. Intellectually, too, things look rather dismal: In 2005 Harvard University alone produced more scientific papers than 17 Arabic-speaking countries combined. Muslim countries contribute just 2.5 percent of more than 11.5 million papers published worldwide each year (Muslims constituted 23 percent of the world’s population in 2010). A 1997 Scientometrics paper estimated that 46 Muslim countries (which of course contain much more than the Middle East) contributed 1.17 percent to world science literature as opposed to Spain (1.48 percent).

Is the Islamic religion to blame? Jared Rubin, in this stimulating and highly original study, would deny that emphatically. Although this is a book about religion and its implication for institutional and economic change, Rubin is little interested in the actual doctrinal content of religion. He points out, as many others have, that the essence of Islam could not possibly be as rigid and opposed to commerce and economic change as it may seem, because for the first centuries of its existence, the nations that adopted Islam flourished not just commercially but also in terms of technology, architecture, poetry, agriculture, medicine, and engineering, while western Europe was an ignorant, violent and poverty-stricken backwater. What we have witnessed since 1200 is more than a “divergence”: it is a Great Reversal, of momentous importance till the present day.

Rubin’s book presents us with an explanation for this great reversal, which will have to be taken into account from now on in all future discussions on the economic history of the Islamic world. He does not oversell his argument as the reason for the great reversal, he makes a plausible argument for it as a complementary argument to the ones other serious scholars have made. The book is divided into a few chapters that outline the theory and logic of the argument and then applies these insights to a number of historical case studies. It is a tale that combines economic history, political economy, and religion in a unique and novel way.

Here is the basic argument: any kind of ruler has power because his or her subjects accept their rule and their main concern is what Rubin calls “propagating their rule.”  How do you get people to accept you as their ruler and let you keep your job? Political power is supported by a combination of coercion (that is, violence) and legitimacy (people willingly accept a ruler because they believe that this person has the right to rule them). Through most of history, rulers depended on a combination of the two, though the weights of each differed greatly depending on their costs and benefits. Rubin is exclusively interested in the legitimacy part. Legitimacy is provided by what he calls “legitimizing agents” — groups or entities that have enough influence to make the subjects of the ruler follow instructions and pay taxes. An obvious legitimizing agent is the religious establishment — for example, European rulers once ruled ex dei gratia and called themselves the most Catholic King. Some modern royalty still include the line in their title, although in most places such relics are empty.

Rubin observes that in the early medieval period, both Christian and Muslim rulers used religious authorities as legitimizing agents, but that at some point in the later Middle Ages, Muslim and western European society diverged. Whereas in the Ottoman Empire the sultans continued to rely on religious authorities for their legitimacy, in many western societies the Church’s political leverage was diminished irreversibly. From the beginning, Rubin points out, Christian doctrine envisaged separate spheres for secular and religious power. The schisms and exiles to which the late medieval papacy was subject weakened it greatly in the face of ambitious rulers, and the reformation administered to religious legitimization the coup de grace. Apart from a few corners of Europe such as Spain, religion lost the power it had exercised since even before the prophet Samuel anointed Kings Saul and David.

Why and how did this matter to economic history? Rubin argues that religious authorities were in general conservative, and that the institutions they established are less aligned with commerce and finance than when an economically important elite such as rich urban merchants and artisans are more powerful. As a result of their political influence, religious authorities in the Middle East were successful in blocking critical breakthroughs, most notably the printing press and more sophisticated financial institutions. The printing press facilitated the success of the Reformation, and the Reformation had further favorable economic effects, as has recently been shown by a pair of important papers (Cantoni, Dittmar and Yuchtman, 2016; Dittmar and Meisenzahl, 2016). One might add that even in France, in which the reformation was suppressed, the power of religious authorities to legitimize the king disappeared. Napoleon famously took the crown out of the hands of Pope Pius VII during his 1804 coronation and crowned himself, symbolizing that his legitimization came from military power, not God.

In summary, Rubin argues that the leaders of organized religion tended to be conservative across the board. Their influence, he thinks, depended on their monopoly of eternal truths, and updating those truths threatened to erode their credibility.  The Islamic world was unable to curtail the influence of Islamic scholars until the Islamic world had fallen hopelessly behind Europe. Even within Christian Europe, the power of religious authorities, he feels, helped determine the difference between successful regions such as the Netherlands and Britain and economic laggards such as Spain. When discussing the past three centuries, the influence of religious authorities is somewhat diminished, but what counts in Rubin’s view is that in all poor and backward states, the institutional structure and the capability of key players to “sit at the bargaining table” as he calls it was little affected by the urban-commercial classes whose demands for free and open markets, constraints on the executive, and a rule of law led to rapid economic progress in the north-west corners of Europe.

By combining an institutional argument with religion through the effect that religion had on institutions and politics (rather than on cultural beliefs), Rubin’s argument is reminiscent of an important recent book by Karel Davids, which has not thus far received sufficient attention (Davids, 2013). Both books, in a different way, stress how religious institutions mattered regardless of the precise content of religion. Davids, however, emphasizes another aspect, namely the role of religion in the generation and dissemination of technology. Rubin is primarily interested in institutions that support markets. Yet an explanation of modern economic growth cannot possibly avoid the primum movens of economic growth, which was the rapid expansion and dissemination of useful knowledge. In early medieval Islam, engineers, doctors, and chemists were at the forefront of pushing the envelope. By 1600 the Islamic world had become a follower, by 1800 they were a laggard. A natural extension of Rubin’s idea is that a government dominated by religious authorities will also be less than accommodating to out-of-the-box ideas from natural philosophers, astronomers, mathematicians, and medical doctors. The tradeoff between religiosity and scientific and technological progress has become a serious topic of investigation in recent years (Benabou, Ticchi, and Vindigni, 2014; Squicciarini, 2016). Their findings support the notion that devoutness affects innovativeness negatively and that political institutions could be used by powerful religious leaders to suppress what they considered heretical views.

Rubin is correct in pointing out that in the most progressive countries in western Europe the ability of religious leaders to halt progress was limited.  A striking example of this phenomenon is provided by Amir Alexander (2014), who documents the fierce resistance to infinitesimal mathematics by the Jesuits in the seventeenth century, which seriously slowed down the development of mathematics in Italy. The reason the reactionary powers such as the Jesuits were not able to slow down the development of radical new ideas in Europe materially is primarily the high level of political fragmentation in Europe. If a particular ruler tried to crack down on his most creative subjects because they wrote things he felt to be subversive or heretical, they could always move across the border. Such outside options may have been much more limited in the Ottoman Empire and in China. Interstate competition is another factor that rulers worried about, beside Rubin’s legitimization story. After all, every ruler faced both internal and external threats. Without interstate competition, or “emulation” as eighteenth-century writers called it, Europe might never have had the Enlightenment, which opened the doors to so many of the institutional and technological changes that have helped create economic modernity.

Here and there one could nitpick some of Rubin’s historical interpretations. His account of Spain’s political economy would have greatly benefitted from a closer attention to Regina Grafe’s path-breaking work (Grafe, 2012). Rubin’s agnosticism as to the actual content of religion may be somewhat misplaced: the Sunni revival of the eleventh century did in time move the ruling orthodoxy into a more conservative direction, as Eric Chaney (2015) has shown. More generally, an argument that focuses on “the ruler” and the significance of the propagation of political power may exaggerate the ability of the state to control what the citizens did in pre-twentieth-century societies.

All the same, Rubin has written an important and timely book. His methodology is very much that of the historically informed economist: certain choices are made at some point because they make sense, that is, the benefits to those that make the decision exceed the costs. But once made, these initial conditions can have cascading unintended and unanticipated consequences, and those historically contingent causal chains may well be what drove much of the great and little divergences that our profession is so interested in. Equally important, this well-argued and sensible book about Islam provides a much-needed antidote to the toxic rubbish masquerading as scholarship produced by some of the Islamophobes in the current American administration (e.g., Gorka, 2016). The Middle East’s problem is not Islam; it is History.


Alexander, Amir. 2014. Infinitesimal: How a Dangerous Mathematical Theory Shaped the Modern World. New York: Farrar, Straus and Giroux.

Benabou, Roland, Davide Ticchi, and Andrea Vindigni. 2014. “Forbidden Fruits: The Political Economy of Science, Religion and Growth.” Unpublished working paper, Princeton University.

Cantoni, Davide, Jeremiah Dittmar and Noam Yuchtman. 2016.  “Reformation and Reallocation: Religious and Secular Economic Activity in Early Modern Germany.” Unpublished.

Chaney, Eric. 2015. “Religion and the Rise and Fall of Islamic Science.” Unpublished working paper, Harvard University.

Davids, Karel. 2013. Religion, Technology and the Great and Little Divergences. Leiden: Brill.

Dittmar, Jeremiah E. and Ralf Meisenzahl. 2016. “Origins of Growth: Health Shocks, Institutions, and Human Capital in the Protestant Reformation.” Unpublished.

Gorka, Sebastian. 2016. Defeating Jihad: The Winnable War. Washington, DC: Regnery Publishing.

Grafe, Regina. 2012. Distant Tyranny: Markets, Power, and Backwardness in Spain, 1650–1800. Princeton, NJ: Princeton University Press.

Squicciarini, Mara. 2017. “Devotion and Development: Religiosity, Education, and Economic Progress in 19th-century France.” Unpublished working paper, Northwestern University.

Joel Mokyr is the author of Culture of Growth: The Origins of the Modern Economy (Princeton University Press, 2016).

Copyright (c) 2017 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 (April 2017). All EH.Net reviews are archived at

Subject(s):Economic Development, Growth, and Aggregate Productivity
Economywide Country Studies and Comparative History
Geographic Area(s):Europe
Middle East
Time Period(s):General or Comparative

Feeding Gotham: The Political Economy and Geography of Food in New York, 1790-1860

Author(s):Baics, Gergely
Reviewer(s):Cain, Louis P.

Published by EH.Net (February 2017)

Gergely Baics, Feeding Gotham: The Political Economy and Geography of Food in New York, 1790-1860.  Princeton: Princeton University Press, 2016.  xv + 347 pp.  $40 (cloth), ISBN: 978-0-691-16879-1.

Reviewed for EH.Net by Louis P. Cain, Department of Economics, Northwestern University and Loyola University Chicago.

In Feeding Gotham, Gergely Baics, assistant professor of history and urban studies at Barnard College, describes in fascinating detail how food (meat, in particular) was supplied to antebellum New Yorkers and examines the economic and geographic consequences of New York City’s transition from public to private food markets.  Baics sets the public sector’s lessening involvement with the food supply in apposition to its increasing involvement with the Croton River water supply.  Until 1843, meat sales, the business that anchored New York’s markets, were restricted to licensed butchers.  As Baics argues, the decision to deregulate the butchers’ trade reflected a “growing distrust of monopolistic privileges and greater embrace of open entry” (p. 5) for all food sales.  Baics notes the irony that the era’s social and health reformers were actively seeking the regulation of housing, but not of food.

Under the common law, local governments were responsible for maintaining well-ordered markets, what was termed “market overt.”  All transactions had to be witnessed, and public markets were the answer to the question of when property rights in commodities were legally transferred.  Over time, the notion that only chattels exchanged in such markets were of guaranteed legality proved unrealistic.  By the late eighteenth century, market overt and its protective regulations had become an impediment to most trade.  Yet, as public markets disappeared, government’s “police powers” remained, and quality-control ordinances were common.  As Baics notes, the enforcement of such ordinances proved almost impossible in a world of many individual points of sale.  Caveat emptor also remained and allowed aggrieved buyers to sue sellers.  This was a system that worked well for non-perishable items and the rich, but less so for perishable items and the poor.  The desire of all concerned to have some assurance of safety helps explain why public food markets persisted long after such markets disappeared for other commodities.

Feeding Gotham is divided into three parts.  Chapter 1 provides a general overview that emphasizes three major topics.  One is what Baics characterizes as the political economy of public markets and how that reflects the interests of buyers, sellers, and regulators.  Two is a discussion of the deregulation of buyers’ access to food as rapid population growth led to an expansion of sellers operating outside public markets.  Third is how the fiscal demands of major public works, such as the Croton waterworks, competed with the city’s ability to make the necessary construction and maintenance investments in public market infrastructure.

Early markets were neighborhood institutions, financed by the buyers and sellers, but by 1810 financial responsibility was shifting to the city.  For the next three decades, public food markets grew with population, but the market system began to shrink with the Panic of 1837.  Baics notes the city’s revenues from stall rents, fees assessed on meat sales, and premiums for prime market space were greater than direct costs, but less than cost defined to include the opportunity cost of the capital invested in these markets.  For many buyers, that revenue stream was viewed as a tax which increased food prices, and, by the mid-1830s, the growing quantity of food sold outside public markets made that clear.  Even before the Panic, the city’s revenue from these markets was a declining share of the total.  By the late 1830s, the balance of public opinion had shifted from food access viewed as a public good toward free markets.  That licensed butchers sought to restrict sales to those with a license was viewed as simple rent-seeking.

The second part, focused on the years up to 1820, is divided into three chapters, all of which demonstrate Baics’ command of advanced statistical and geographical techniques.  Chapter 2 presents estimates of meat consumption based on market fees and uses GIS mapping to describe the geography of food (meat) access.   Baics addresses three questions, all of which he answers in the affirmative.  Was the supply of meat sufficient to meet dietary needs?  Was it distributed evenly across neighborhoods?  Did the public market system “sustain the public good of citizens’ access to food”?

Chapter 3 discusses the seasonal, weekly, and daily patterns of food shopping in a world where fresh meat was demanded year round, but fresh produce was only available in season.  Baics’ analysis is based on two series of household accounts and two sets of public market returns.  He notes public markets typically forbade trade to go past midday to reduce putrefaction and enacted high penalties for selling what market inspectors considered “unwholesome provisions,” among other regulations.  Even so, the market was considered “through” by 10AM.  After that, the poor appeared looking for bargains.  By noon, street peddlers purchased what was left and resold it to the poor, an activity approved by market law.  Chapter 4 presents a case study of the Catharine Market.  That multiple sellers of various types of goods could be found cheek-by-jowl in the market meant buyers could compare quality as well as price — as could sellers.  One potential extension of Baics’ analysis would be to examine the relationship between Catharine Market, the adjacent ferry terminal, and the farms and farmers across the river.

The final part on the post-dissolution period consists of two chapters.  The analysis in Chapter 5 is analogous to Chapter 2.  Baics’ GIS maps now examine the city’s overall land-use and pattern of commerce in the context of neighborhood access to food.  Parenthetically, the maps in general, and the color ones in particular, are one of the book’s highlights.  Baics finds the public market infrastructure was “weighed down by insufficient investments relative to rapidly growing demand” (p. 166).  On the other hand, “the dispersal of provision shops was determined both by urban growth and changing patterns of land use,” “wealthy uptown areas excluded provision stores,” and “centrally located working-class areas were teeming with groceries, meat shops, and other food vendors” (p. 178).  The chapter also returns to the Catherine Market to find the neighborhood now anchored by the “vibrant” retail trade along Catherine Street.

Chapter 6 is a study of the impact these changes had on what Baics describes as growing income and social inequality in a time of rapid immigration.  He integrates what he finds to be growing inequality in food access with the literature on the health and housing inequalities that customarily frame discussions of antebellum New York City.  He ties a “deteriorating disease environment” and “generally worsening conditions of food access” to a discussion of the antebellum puzzle.  In particular, animal populations did not grow as fast as the city’s population, which had an average annual growth rate just under 5 percent between 1840 and 1860.  Tying this supply constraint to the finding that shops in low-income areas were “selling cheaply, in smaller quantities and at lower quality” (p. 207), Baics’ brief concluding chapter argues, “In a city with ever deeper socioeconomic disparities, the liberalization of food markets propelled a formerly more egalitarian resource to become another structural layer of inequality, much like housing and sanitation” (p. 235).

Feeding Gotham is an important study; it brings an impressive quantity of data to bear on a subject customarily argued qualitatively.  It is a testimony to Baics’ ingenuity that his work generates additional questions.  One suspects that events such as the 1825 completion of the Erie Canal and the city’s emergence as the nation’s financial center helped make the rich richer; its role as the primary hub for immigration helped make the poor poorer.  Baics data in the early period are derived from the markets; he cannot estimate the extent to which the poor patronized public markets versus street peddlers.  What he can say is that the poor who shopped at the market did so later in the shopping day and purchased lower quality goods or they relied on peddlers.  Thus, unequal access became worse after deregulation, but it would be interesting to learn by how much.  Further, there are several counterfactual questions that potentially could be explored.  For example, how much would it have cost to construct an ever-expanding system of public markets?  What effect would such a system have had on food prices and taxes?  Would New Yorkers have been better off had more of their taxes been spent on food regulation rather than, say, water supply and road construction?  One hopes Feeding Gotham motivates Baics to continue his research on this important topic; its relevance to the issue of “food justice” is evident.

Louis Cain is Adjunct Professor of Economics at Northwestern University and Professor Emeritus of Economics at Loyola University Chicago.  He is a co-editor of the Oxford Handbook of American Economic History (forthcoming).

Copyright (c) 2017 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 (February 2017). All EH.Net reviews are archived at

Subject(s):Economic Planning and Policy
Government, Law and Regulation, Public Finance
Historical Geography
Household, Family and Consumer History
Markets and Institutions
Geographic Area(s):North America
Time Period(s):19th Century