Echoes Dispatches From Economic History

This month marks 250 years since Barings Bank, one of the first significant international investment banks, opened its doors.

Much of Barings’s early success can be attributed to its willingness to invest in the development of the U.S. in the late 18th and early 19th centuries, despite the nation’s newly established credit and undeveloped economy. Without Barings’s involvement, the U.S. would probably be a very different place - - geographically and economically -- from what it is today.

Early in 1933, the Wall Street Journal announced that a "profitless year for agriculture" had at last come to a close. Commodity prices had fallen 50 percent on average from 1931 to 1932. A quarter of the population, 32 million Americans, worked in the agriculture industry, yet their share of national income was half that size.

Many farm families began to ignore mortgage payments and property taxes, and rural banks holding farm mortgages risked insolvency. As a result, foreclosures rose steadily in late 1932, despite the underfunded efforts of Federal Home Loan Banks to stem the tide.

The New York Times recently reported on the rage for standing desks among executives, and particularly on a model that features a treadmill.

The icon of the genre is the Steelcase Walkstation, retailing at $4,399; there’s also a model that includes a chair for $4,799. (In the 1980s, the high-water mark for executive workstations was reached with the reclining Jefferson Chair, the designer Niels Diffrient’s sumptuous $6,500 leather-upholstered lounge chair plus ottoman with platform for monitor and keyboard, inspired by seating at Monticello, Thomas Jefferson’s home in Virginia.)

The Big Picture on banking in 19th-century England
Norges Bank on the Bank of England during the gold standard era
Central European University on sovereign debt in Latin America from 1820 to 1913
History News Network on how understanding historical forms of slavery can improve working conditions today
Munich Personal RePEc Archive on U.S. Civil War debt
Hagley Museum and Library on the history of the Pennsylvania Railroad
Free Exchange on 30 years of U.S. geographic divergence

Read more from Echoes online.

As the U.S. government lurches from crisis to crisis in resolving its long-term debt problems, Congress has debated a number of bad ideas, from indiscriminate spending cuts to minting a $1 trillion platinum coin. Plenty of countries have taken even less honorable roads to resolution, from devaluing their currency to outright default.

But arguably no country can match either the ingenuity or despicableness of the British when they tackled their own fiscal woes in the early 1700s. Faced with a ballooning national debt, English policy makers combined a complex debt-for-equity swap with promotion of the trans-Atlantic slave trade.

One of the more interesting ironies of history is that the man who laid the foundation for modern quantitative finance began his career as a Marxist revolutionary.

Jacob Marschak may not be a household name today, but he inspired a number of financial practitioners and thinkers, from Milton Friedman to Harry Markowitz, and his insights are now the backbone of trading strategies and computer algorithms worldwide.

It was one of the best-organized work stoppages in U.S. history. It was also one of the oddest, for the strike that briefly crippled the women’s clothing industry in New York 100 years ago this week was backed by factory owners as enthusiastically as by the union.

Work in New York’s garment factories didn’t pay much in 1913. The women who sewed seams on dresses and underwear, working on a piece-rate basis, typically took home less than $5 for a 56-hour week. And bosses in many shops reclaimed part of that pay by fining workers for showing up late or for “damage” to the goods.

On New Year’s Day in 1933, Joseph Barker, the dean of the Columbia University School of Engineering, announced the "formation of a research group of unparalleled magnitude" to come up with solutions to the economic crisis.

Widely publicized "cure-alls" for the Great Depression based on "unsound, unscientific reasoning" had multiplied as the crisis deepened. Barker said his team would undertake the "scholarly study of the cold, factual data relating to the causes of this depression."

In February 2011, Facebook Inc. (FB) announced that it would move its headquarters to the former campus of Sun Microsystems Inc. in Menlo Park, California.

The site was first envisioned as providing work space for about 3,000 employees. Then, in August, Facebook said it would expand with Frank Gehry-designed office space for an additional 2,800 workers. The rebuilding is well under way, with 2,000 employees on site; merchants, from gourmet eateries to hair salons, have set up on-campus outlets intended for Facebook employees only. “It is the 21st century company town,” the Silicon Valley futurist Paul Saffo told the Los Angeles Times.

Economix on why the unemployment rate is so high
Real Time Economics on the Fed's historic error
Slate on the black-market origins of the U.S. condom industry
Origins on the legacy of the Morrill Land Grant Act
History News Network on the new age of austerity
Paul Krugman on Japan's return to the future
The Financial Times on the London Underground's 150th birthday
The Atlantic on how the TV business got rich off the Internet

Read more from Echoes online.

Today, more than half of American families own stock, up from about 5 percent at the turn of the 20th century. Thanks to the Internet and smartphones, investors today can place trades instantly from almost anywhere.

But widespread access to stock ownership -- for better and for worse -- arguably began with another technology, one as revolutionary in its day as the Internet is today.

The recent announcement that Wall Street’s most iconic institution, the New York Stock Exchange, would be acquired by Atlanta-based IntercontinentalExchange Inc. (ICE) seemed weighted with symbolism.

For one thing, it represented another marker in the decline of New York City as the center of global finance. It also suggested that the world of trading and exchanges was entering a uniquely modern age of technology-driven consolidation. You may recall, for example, the mergers that the NYSE conducted with Archipelago Holdings Inc. (2006), Euronext NV (2007) and the American Stock Exchange (2008).

After a year of economic crisis and political change, buoyant crowds gathered in New York’s Times Square on New Year's Eve to celebrate 1933’s arrival. That evening, a Youngstown, Ohio, lawyer named Benjamin Roth penned a cautiously hopeful line into his diary: "We bid farewell to 1932 without regret and welcome 1933 with a fervent prayer for better days."

The questions everywhere were the same: Has the Great Depression bottomed out? Will the New Year and the new administration restore prosperity? Or will nothing stop the relentless tide of lost jobs, home and farm foreclosures, factory bankruptcies, and bank failures?

No sooner had the House of Representatives finished listening to the reading of the president’s veto message than the chamber erupted in outrage.

Representative Theodore Hunt of Louisiana jumped to his feet and thundered, “This abominable veto just brought into the House is the very height of tyranny and usurpation.” Amid cries for impeachment, one Ohio congressman shouted, “The time for revolution has come!”

Chris Blattman on six decades of economics publishing
Business Insider on how the Rothschilds created modern finance
FBI on the Communist Party's infiltration of the film industry
The New York Times on lessons from the Soviet Union's withdrawal from Afghanistan
The Big Picture on the origin of the "Keep Calm and Carry On" poster
The Economist on the biggest fraud in history

Read more from Echoes online.

Tipping at Christmas and New Year’s is a long-standing American custom. We tend to give a little extra around the holidays to those who provide personal, often intimate, services -- the people who deliver our mail, cut our hair, clean our houses, care for our children, and open the doors to our apartment buildings.

We can thank newsboys for popularizing this tradition centuries ago. The “carriers” who delivered the first American newspapers to subscribers were typically printers’ assistants. Like many in today’s service industries, they often worked for low wages, or only for room and board, and relied on yearly tips as crucial supplements to their income.

Ever wonder why we celebrate New Year’s Eve with champagne? The answer dates back at least 1,500 years. And it involves a mix of history, location and -- not least -- skillful marketing.

In the late fifth century, King Clovis, the reigning monarch of northern France, was fighting to defend his territory. Legend has it that he promised his wife, the Burgundian princess Clotilde, that if he won his next battle, he would convert to Christianity. He won, and in 496 he was baptized in a church in the city of Reims, in the heart of France’s Champagne region.

Commodity prices fell drastically in 1932, with wheat, cotton, oil and especially coal deeply affected by oversupply and shrunken demand. The resulting struggle between coal managers eager for a profit and miners desperate for a fair wage was symptomatic of an industry torn apart by the worsening economic crisis.

You’ve got to hand it to Lucy van Pelt. She called it as she saw it. “Look, Charlie, let’s face it,” she barked in “A Charlie Brown Christmas.” “We all know that Christmas is a big commercial racket. It’s run by a big eastern syndicate, you know.”

As we conclude yet another season of that commercial racket, we are tempted to think that Christmas had once been a pure holiday, full of wonder and free of capitalistic corruption. Yet there is little evidence that such a day ever existed -- and certainly not in the U.S. In fact, the American Christmas ascended to its central place on the national calendar as a result of an intense marriage between sentiment and commerce, an example of healthy, if uneasy, codependency.

In this age of extreme weather, blizzards seem more and more frequent, with increasing costs to the U.S. economy.

There is no shortage of smart solutions to minimize the impact. Sometimes, however, the expense of beating the weather can exceed the benefits, as the backers of district steam heat in New York City found out more than a century ago.