Procuring Promising Provisions: the British Patent System and the Navy Proviso, 1794–1831
Abstract: In 1794, the British State intervened in the patent system by introducing the Navy proviso, a legal proviso targeted at select patents compelling the patentee to supply their invention to the State on terms set by state-appointed adjudicators. This study employs new patent and archival data to examine the proviso’s origins, administration, and which […]
Financing Innovation: The Role of Patent Examination
Abstract: We examine how the design of the patent system shapes firms’ access to finance. We exploit a UK reform that introduced substantive examination into the patent application process, improving the quality of information available to investors about the value of firms’ innovation. Using a newly compiled dataset of officially listed corporations, we find that […]
Why are corporations terminated? A century of evidence from the Netherlands
Abstract: We identify all 196 Dutch exchange-listed corporations that halted their operations and ceased to exist between 1903 and 1996. We then explain these terminations using unique hand-collected accounting and governance data and regression techniques suited to long-run comparative analysis. Although Dutch bankruptcy laws remained unchanged across the twentieth century, patterns of corporate exit shifted […]
The CEO: The Rise and Fall of Britain’s Captains of Industry
The CEOs of Britain’s largest companies wield immense power, but we know very little about them. How did they get to the top? Why do they have so much power? Are they really worth that exorbitant salary? Michael Aldous and John Turner provide the answers by telling the story of the British CEO over the […]
Patently Peculiar: Patents and Innovation in the United Kingdom of the Netherlands
Abstract: We examine the accessibility and functioning of the patent system in the United Kingdom of the Netherlands, a state that existed between 1815 and 1830. The country’s patent law combined an examination process with significant government discretion over a patent’s duration and cost. Using our hand-collected database of all patent applications—granted, withdrawn, and rejected—we […]
Dividend Policy: An Empirical Analysis for Imperial Germany
Abstract: In the German Empire, corporations almost always paid a dividend to their shareholders. Dividends have been cut or increased in line with the development of profits. We demonstrate that the target dividend and the average dividend tended to be nearly the same. If the dividend paid deviated from the target, we measure an extraordinarily […]
Taking a Punt: Monetary Experimentation and the Irish Macroeconomic Crisis of 1955-56
Abstract: The 1955-56 macroeconomic crisis is a central event in modern Irish history. Yet, despite this centrality, its causes are not clearly understood. In 1955-6, Ireland, which had previously followed British interest rates in lockstep as part of its fixed exchange with the latter, briefly experimented with independent monetary policy. Our contribution is twofold. First, […]
Corporate taxes, leverage, and investment: evidence from Nazi-occupied Netherlands
Abstract: We examine the Netherlands around the Second World War, where the occupying Nazi regime overhauled the country’s corporate tax regime and introduced a profit tax of 55 per cent. We estimate that the new tax regime cost investors at least 300 million guilders, an amount equivalent to 5 per cent of Dutch GDP in […]
The Births, Lives And Deaths Of Corporations In Late Imperial Russia
Abstract: Enterprise creation, destruction and evolution support the transition to modern economic growth, yet these processes are poorly understood in industrialising contexts. We investigate Imperial Russia’s industrial development at the firm level by examining entry, exit and persistence of corporations. Relying on newly developed balance sheet panel data from every non-financial Russian corporation (more than […]
Is gold a safe haven for investors?
Summary: The price of gold has risen in recent years, highlighting the role of this precious metal as a stable investment. While the value of gold is resilient and protected from inflation, its stability is not guaranteed in times of crisis. Cite as: Philip Fliers, Is gold a safe haven for investors? Economics Observatory (2024) […]
Three Centuries of Corporate Governance in the UK
Abstract: As articulated by Adam Smith, one of the central issues facing companies is that managers will not run the business in the interests of its owners and will misuse resources. This ultimately has a detrimental consequence for the wealth of the nation. This survey reviews the nature and evolution of the corporate governance of […]
The Ends of 27 Big Depressions
Abstract: How did countries recover from the Great Depression? In this paper, we explore the argument that leaving the gold standard helped by boosting inflationary expectations, lowering real interest rates, and stimulating interest-sensitive expenditures. We do so for a sample of 27 countries, using modern nowcasting methods and a new dataset containing more than 230,000 […]
Banks and the Economy: Evidence from the Irish Bank Strike of 1966
Abstract: This paper studies a natural experiment in macroeconomic history: the Irish bank strike of 1966, which led to the closure of the major commercial banks for three months. We use synthetic control to estimate how the economy would have evolved had the strike not happened. We find that economic activity slowed, deviating by 6% […]
Do managers matter? Management practices in post-COVID Northern Ireland
Abstract: Northern Ireland has a persistent productivity gap to the rest of the UK. Northern Ireland, as with the rest of the UK and Europe, also has a long tail of low productivity SMEs and micro businesses. An important contributor to a firm’s productivity is its management. Managers make decisions regarding the allocation of labour […]
Managed decline? Muddling through with the Sterling (dis)agreements, 1968-74
Abstract: How do policy makers manage the decline of an international currency? This paper examines British policy towards the pound sterling’s international role in the years 1968-74. Using previously uncited government archival sources, we revisit the view that the ‘sterling agreements’ of 1968-74, bilateral contracts made between the UK and governments holding sterling, formed a […]
Aristocratic Amateurs to Fat Cats? British CEOs in the Twentieth Century
Abstract: This article uses a prosopographical methodology and a new dataset of 1,558 CEOs from Britain’s largest public companies between 1900 and 2009 to analyse how the role, social background, and career pathways of corporate leaders changed. We have four main findings: First, the designation of CEO only prevailed in the 1990s. Second, the proportion […]
The anatomy of a bubble company: The London Assurance in 1720
Abstract: The London Assurance Company (LA), which incorporated during the bubble of 1720, experienced more dramatic price movements in its shares than the South Sea Company. This paper examines how incorporating during the bubble affected its long run performance. We show that the bubble in the Company’s share price was partly attributable to changes in […]
Tracing Sustainability In The Long Run: Genuine Savings Estimates 1850 – 2018
Abstract: We introduce a new database of historical Genuine Savings (GS), an indicator of sustainable development promoted by the World Bank and widely used in contemporary economic research. GS derives from the theoretical work on wealth accounting, and addresses shortcomings in conventional metrics of economic development by incorporating broader measures of saving and investment, including […]
Was Marshall Right? Managerial Failure and Corporate Ownership in Edwardian Britain
Abstract: Alfred Marshall argued that the malaise of public companies in Edwardian Britain was due to the separation of ownership from control and a lack of professional management. In this paper, we examine the ownership and control of the c.1,700 largest British companies in 1911. We find that most public companies had a separation of […]
Financing industrial corporations in a developing economy: panel evidence from Imperial Russia
Abstract: This article explores the financing of early industrial corporations using newly constructed panel data from Imperial Russian balance sheets. We document how corporate capital structures and dividend payout policies reflected internal agency issues, information asymmetries with external investors, lifecycle considerations, and other frictions present in the Russian context. In particular, we find that widely […]
The Highs and the Lows: Bank Failures in Sweden through Inflation and Deflation, 1914-1926
Abstract: This paper revisits the Swedish banking crisis (1919-26) that materialized as post war deflation replaced wartime inflation (1914-18). Inspired by Fisher’s ‘debt deflation theory’, we employ survival analysis to ‘predict’ which banks would fail, given certain ex-ante bank characteristics. Our tests support the theory; maturity structures mattered most in a regime of falling prices, […]
Dating business cycles in the United Kingdom, 1700–2010
Abstract: This paper constructs a new chronology of the business cycle in the United Kingdom from 1700 on an annual basis and from 1920 on a quarterly basis to 2010. The new chronology points to several observations about the business cycle. First, the cycle has significantly increased in duration and amplitude over time. Second, contractions […]
Why did shareholder liability disappear?
Abstract: Why did shareholder liability disappear? We address this question by looking at its use by British insurance companies from 1830 until its complete disappearance by 1975. We explore three explanations for its demise: (1) regulation and government-provided policyholder protection meant that it was no longer required; (2) it had become de facto limited; and […]
Business Establishment Opposition to Southern Ireland’s Exit from the United Kingdom
Abstract: After more than a century of political and economic integration, Southern Ireland exited the United Kingdom in 1922. By identifying the leading business firms of the era and the political and religious allegiances of their owners, this paper explores the perspective of the Southern Irish business establishment on the issues involved. While the mass […]
The birth of inflation targeting: why did the ERM crisis happen?
Abstract: In September 1992, the UK was forced to withdraw from the exchange rate mechanism of the European Monetary System, as it was unable to keep the value of the pound above the limit specified by the agreement. There are lessons from three decades ago for today’s bout of high inflation. Cite this article: John […]
Sticky wages and the Great Depression: evidence from the United Kingdom
Abstract: How sticky were wages during the Great Depression? Although classic accounts emphasise the importance of nominal rigidity in amplifying deflationary shocks, the evidence is limited. In this paper, I calculate the degree of nominal wage rigidity in the United Kingdom between the wars using new granular data covering millions of wages. I find that […]
Business Creation and Political Turmoil: Ireland versus Scotland before 1900
Abstract: What effect does political instability in the form of a potential secession from a political union have on business formation? Using newly collected data on business creation, we show that entrepreneurial activity in Ireland in the late nineteenth century was much lower than Scotland, and this divergence fluctuated over time. Several factors may have […]
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