History seminars at the IHR

Economic and Social History of the Early Modern World, 1500-1800

Convenors: Julian Hoppit (UCL), Alejandra Irigoin (LSE), Anne Murphy (University of Hertfordshire), David Ormrod (University of Kent) and Nuala Zahedieh (University of Edinburgh)

Venue: Room N304, 3rd floor, IHR, North block, Senate House

Time: Friday, 5.15pm

Autumn Term 2015
DateSeminar details
25 September The economy of medieval English towns: property values and rents in Bristol, 1200-1500

Mark Casson (Reading)

9 October Money supply and the credit market in early modern economies: the case of 18th century Lisbon

Leonor Costa (Lisbon)

Leonor Freire Costa, Maria Manuela Rocha (Department of Social Sciences, History _ GHES), Paulo Brito (Department of Economics, UECE) University of Lisbon, School of Economics and Management.

The long-term decrease in interest rates during the early modern period is an issue in economic history. After the seminal work of North and Weingast, a large body of literature has been focused on the institutional arrangements that allowed for less friction in financial markets. In this paper we bring to the forefront macroeconomic variables. We address the private credit market and interest rates in Lisbon in the eighteenth century for discussion. This case contributes to illuminate the effects of three sorts of events that can be called upon when analyzing the partial equilibrium of the credit market: a) colonial monopolies in mining regions, and their consequences on the rise of money supply;  b) The massive destruction of capital caused by the 1755 earthquake, which represents an unpredictable external shock; c) the enactment of a 5%  legal ceiling, which in this case was regulated after the earthquake.
 The main question is whether the liquidity driven by the accumulation of a colonial rent affected the partial equilibrium functioning of the short term credit market. If the answer is yes, how significant was this variable and how did it respond to the massive destruction of capital after 1755?
We built a time series for the market interest rates based on notarial deeds, and explored available time series of Portuguese money supply. We took the number of hearths in Lisbon before and after the earthquake as a proxy for the stock of wealth. A partial equilibrium model was put forward for the determination of the market interest rates consistent with the aforementioned events. In particular, interest rates are expected to decrease with the supply of loanable funds and to incorporate the wealth and informational role resulting from variations in the stock of real estate (measured by the number of hearths) and pledged as collateral. An assessment of the severity of the (disequilibrium) credit rationing generated by the 5% ceiling imposed on interest rates should be a corollary of the model.
We concluded that the inflow of gold clearly generated a liquidity effect which by itself explained the downward trend in interest rates up until around 1780. However, the huge variations experienced by wealth after the earthquake also explain the steadiness of interest rates in a period when the inflow of money started to recede. For the whole period during which the 5 % ceiling on interest rates was in force we did not find any evidence of disequilibrium credit rationing: the notional interest rate predicted by our model was very close to the 5% legal ceiling.  
Our conclusions highlight the role played by monetary variables in the functioning of credit markets in early modern economies. The non-existence of a central bank and the lack of a monetary policy in the modern sense, provide us with an actual example of a non-sterilized money shock experiment. This is the closest we can get to a textbook example of the impact of liquidity changes on interest rates, which is harder to perceive when the money supply is controlled in accordance to monetary rules or other macroeconomic stabilization policies.

23 October Trustworthy or unpredictable? The Dutch discourse on Great Britain's public credit

Lina Webber (Amsterdam)

6 November The costs of a contract: how did "wages" really work in early modern London?

Judy Stephenson (LSE)

20 November Contaminated empires. The transnational foundations of the British transatlantic slave trade

Alejandro García-Montón Ph.D in History and Civilization (European University Institute)

“Contaminated Empires: The Transnational Foundations of British Transatlantic Slave Trade”
The ‘Company of Royal Adventurers Trading into Africa’ (1660-1672) is largely acknowledged as a foundational experience for British transatlantic slave trade. From a ‘domestic’ perspective, the ‘Royal Adventurers’ has been understood as another expression of the Restoration’s mercantilist policies. However, this paper suggests that we can tackle the ‘Royal Adventurers’ as a reaction to the 1662 reorganization of Spanish slavery markets. From this perspective, the ‘Royal Adventurers’ appear to be an inter-imperial instrument to access the Spanish American bullion markets by supplying slaves, rather than a venture designed to keep the profits of intra-imperial slave trade in the hands of a few.
By exploring the previous hypothesis, this paper aims at offering a narrative in which the historical transformation of imperial slavery circuits in the Atlantic world was not a self-contained and ‘nationally’ inward looking process, as frequently claimed. Instead, it was a trans-‘nationally’ entangled one in which empires contaminated each other through interaction, reaction and reciprocal adaptation of/to each other, from their centers to their peripheries.