Routledge Handbook of Major Events in Economic History

472 Pages·2013·4.043 MB·English

by  Randall E. Parker, Robert Whaples (eds.)

Routledge Handbook
of MajoR events in
econoMic HistoRy
The Routledge Handbook of Major Events in Economic History aims to introduce readers to the
important macroeconomic events of the past two hundred years. The chapters endeavour
to explain what went on and why during the most significant economic epochs of the
nineteenth, twentieth and early twenty-first centuries and how where we are today fits
in this historical timeline. Its short chapters reflect the most up-to-date research and are
written by well-known economists who are authorities on their subjects.
The book is divided into four sections. Part I presents topics from the pre-1919 period
and focuses on the experiences of the First and Second Banks of the United States, the
recurring financial panics and their role in the establishment of the Federal Reserve System,
the long deflation of the 1870s, the great merger wave, and the functioning of the classical
gold standard. It ends with a discussion of the tragedy and horror that was World War I.
Part II addresses the history of the interwar era (1919–1939) and World War II. The
economics of the 1920s and the Great Depression comprise the greatest share of chapters
in this section. It ends with a discussion of the tragedy and horror that was World War II
Part III looks at the post-World War II period and the transitional economic events that
make up the history of 1945 to the early 2000s. The great inflation of the 1970s to the
disinflation of the 1980s, the rise of China and India to the fall of Japan and the Soviet
Union, the rebuilding of Europe under the Marshall Plan and the advent of globalization
to the rise and fall of the Bretton Woods system and the Phillips Curve. The urban riots of
the 1960s and the history of oil shocks, shocks that have played such an important role in
the evolution of post-World War II business cycle disturbances, are also included.
Part IV contains topics of the contemporary era. The most recent economic issues
include world hyperinflations, the emergence of mass-market merchandisers, the panic
of 2008 and monetary policy responses, the Eurozone and its future, government bailouts
and the economics of entitlements, debt and deficits.
The Routledge Handbook of Major Events in Economic History was written with the intent of
presenting the professional consensus in explaining the economics driving these historical
events.
Randall E. Parker is Professor of Economics at East Carolina University, USA.
Robert Whaples is Professor of Economics at Wake Forest University, USA.
Routled ge
Handb o ok of
MajoR event s in
ec onoMic HistoRy
Edited by Randall E. Parker and Robert Whaples
First published 2013 by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
Simultaneously published in the USA and Canada by Routledge
711 Third Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2013 selection and editorial material, Randall E. Parker and
Robert Whaples; individual chapters, the contributors
The right of the editor to be identified as the author of the editorial
material, and of the authors for their individual chapters, has been
asserted in accordance with sections 77 and 78 of the Copyright,
Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or
reproduced or utilised in any form or by any electronic, mechanical,
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Trademark notice: Product or corporate names may be trademarks
or registered trademarks, and are used only for identification and
explanation without intent to infringe.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging in Publication Data
Routledge handbook of major events in economic history / Edited
by Randall E. Parker and Robert Whaples.
pages cm
1. Economics – History. I. Parker, Randall E., 1960– II. Whaples,
Robert. III. Title: Handbook of major events in economic history.
HB75.R6748 2013
330.9–dc23 2012031239
ISBN: 9780415677035 (hbk)
ISBN: 9780203067871 (ebk)
Typeset in Bembo
by HWA Text and Data Management, London
contents
List of figures ix
List of tables xii
Notes on contributors xiv
Preface xxiii
Part I
World War I and the pre-World War I era 1
1 Symmetry and repetition: patterns in the history of the Bank of
the United States 3
Eric Lomazoff
2 The banking panic of 1873 15
Elmus Wicker
3 Gold resumption and the deflation of the 1870s 24
Richard C. K. Burdekin and Pierre L. Siklos
4 The Great Merger Wave 32
Anthony Patrick O’Brien
5 The Panic of 1893 40
Mark Carlson
6 The Panic of 1907 50
Ellis W. Tallman
v
Contents
7 The founding of the Federal Reserve System 67
Mark Toma
8 World War I 77
Jari Eloranta
9 The classical gold standard 88
Kris James Mitchener
Part II
The interwar era and World War II 103
10 The 1920s 105
Martha L. Olney
11 The 1929 stock market crash 119
Harold Bierman, Jr.
12 Britain’s withdrawal from the gold standard: the end of an epoch 127
Michael Kitson
13 The Great Depression 138
Randall E. Parker
14 The microeconomics of the New Deal during the Great Depression 151
Price V. Fishback
15 The macroeconomic impact of the New Deal 165
Lee E. Ohanian
16 Monetary policy during the Great Depression 179
James L. Butkiewicz
17 World War II 191
Robert Higgs
Part III
Post-World War II era 201
18 The Marshall Plan 203
Nicholas Crafts
19 The riots of the 1960s 214
William J. Collins
vi
Contents
20 The great inflation of the 1970s 223
Robert L. Hetzel
21 Historical oil shocks 239
James D. Hamilton
22 The 1970s: the decade the Phillips Curve died 266
Arnold Kling
23 The rise and fall of the Bretton Woods System 275
Barry Eichengreen
24 Disinflation, 1979–1982 283
Allan H. Meltzer
25 The rise of China 293
Loren Brandt
26 The rise of India 303
Areendam Chanda
27 The bubble burst and stagnation of Japan 316
Etsuro Shioji
28 The demise of the Soviet Union 330
Richard E. Ericson
29 Development of trade institutions and advent of globalization
since the end of World War II 350
Teresa Gramm
Part IV
The contemporary era 365
30 World hyperinflations 367
Steve H. Hanke and Nicholas Krus
31 The financial crisis of 2007–2009 378
Gary Gorton and Andrew Metrick
32 Monetary policy in 2008 and beyond 389
W. Douglas McMillin
vii
Contents
33 Retail innovations in American economic history: the rise of
mass-market merchandisers 402
Art Carden
34 Government bailouts 415
Robert E. Wright
35 Government debt, entitlements, and the economy 428
John J. Seater
Index 443
viii
list of figuRes
6.1 Seasonal net cash flows to New York City banks 54
6.2 Seasonal average call money interest rate versus the path in 1907 55
6.3 Daily maximum call loan interest rate 59
6.4 Bankers’ balances versus clearing house loan certificates: New York
Clearing House member banks 59
6.5 Loans, deposits, and cash reserves of New York Clearing House banks 62
6.6 Annual growth rate of industrial production, 1863–1915 63
6.7 Real GNP during contractions taken relative to prior peak 64
8.1 Military burdens of Great Britain, France, Germany, Austria-Hungary,
and Russia, 1870–1913 80
8.2 Indices of real GDP, real military spending (ME), total population (POP),
iron and steel production (IRST), and military personnel (MP) as sixteen
country totals, 1870–1913 81
10.1 Real gross domestic product, 1900–1929 106
10.2 Unemployment rate, 1900–1930 107
10.3 Consumer price inflation rate, 1900–1930 107
10.4 National income by industry group, 1929 108
12.1 The rise and fall of the gold standard (number of countries on gold,
1919–1937) 129
13.1 Industrial production 1919:1–1939:12 139
13.2 M1, M2 and the monetary base 1919:1–1939:12 145
14.1 Per capita personal income and per capita federal grants in the state in
1967 dollars, 1930–40 152
15.1 Actual output and predicted model output with only productivity change:
1929–1939 168
16.1 Industrial production and M2 185
16.2 Consumer prices and M2 186
20.1 Effects of government expenditure on income determination 224
20.2 Inflationary gap 225
20.3 Phillips curve 228
ix
List of figures
20.4 Gross national product, actual and potential, and unemployment rate 229
20.5 Price performance and unemployment 230
20.6 Inflation and unemployment in the United States 232
20.7 Fed funds rate and inflation 233
20.8 Livingston Survey: predicted and subsequently realized one-year inflation 234
20.9 Real personal consumption expenditures and trend 234
20.10 Deviation of real PCE from trend, short-term real interest rate, and
inflation: 1966–1982 235
20.11 M1 step function and recessions: 1946–1981 236
21.1 Estimated oil production from Pennsylvania and New York, in millions of
barrels per year, 1859–1897 241
21.2 One hundred times the natural logarithm of the real price of oil, 1860–2009,
in 2009 U.S. dollars 241
21.3 Total U.S. vehicle registrations per thousand U.S. residents, 1900–2008 242
21.4 Annual oil production from the state of Texas in millions of barrels per day,
1935–2009 245
21.5 Dollar price per barrel of West Texas Intermediate, 1947–1973 245
21.6 Oil production after the Suez Crisis 247
21.7 Price of oil in 2009 dollars, 1967–74 248
21.8 Texas Railroad Commission allowable production as a percent of maximum
efficient rate, 1954–1972 249
21.9 U.S. field production of crude oil, 1920–2010 249
21.10 Oil production after the 1973 Arab–Israeli War 251
21.11 Monthly production rates (in millions of barrels per day) for five OPEC
Members 252
21.12 Oil production after the 1978 Iranian Revolution 253
21.13 Oil production after the Iran–Iraq War 254
21.14 Price of oil in 2009 dollars 254
21.15 Oil production after the first Persian Gulf War 255
21.16 Oil production after the Venezuelan unrest and the second Persian Gulf War 257
21.17 World oil production, 2003:M1–2010:M9 258
26.1 India’s GDP per capita, 1950–2009 304
26.2 India’s relative GDP per capita, 1960–2009 304
26.3 Sectoral shares in GDP, 1950–2009 311
27.1 Real GDP growth rate of Japan 317
27.2 Evolution of stock price index in Japan (TOPIX) 318
27.3 Evolution of land price index in Japan (six major cities, commercial use) 319
27.4 Call rate vs. CPI inflation rate in Japan 319
27.5 Bank lending in Japan, percentage change from a year ago 320
27.6 Japan premium 323
27.7 Public debt–GDP ratio in Japan 325
27.8 Population of Japan 327
29.1 World merchandise exports and gross domestic product, 1950–99 351
29.2 Trade by major product group (annual average percentage change in
volume) 352
31.1 Spreads on non-subprime-related AAA/Aaa asset-backed securities and
counterparty risk 381
31.2 Outstanding U.S. bond market debt 384
x