A Marcus Wallenberg Symposium International Conference at the Stockholm School of Economics, September 13-14, 2018
Thursday September 13:
08:30-09:00: Welcome and introduction, Lars Strannegård, President of the Stockholm School of Economics, Elise Dermineur and Håkan Lindgren
09:00-10:00 Keynote 1 Carole Shammas
Why Did Finance Professionalize?
10:00-10:30 Coffee break
10:30-12:30 Session 1: Early Modern Financial Markets
Chair: Chris Briggs
Paper 1 Joost Jonker and Oscar Gelderblom, Growing apart together: patterns of private debt in the northern and southern Low Countries, 1500-1780
The Habsburg Emperor Charles V ruled over the entire Low Countries and made strenuous efforts to weld them closer together, legislating on numerous fiscal, legal, and economic matters, notably on financial instruments. When the country split in the following Dutch Revolt of the 1570s, their financial markets evolved very differently for various reasons, so by 1780 the two were like chalk and cheese. Using a wealth of newly collected data, the paper analyses patterns of private debt in the low countries and shows why some forms remained the same, whereas others were to be found in one country, but not in the other.
Paper 2 Erik Bengtsson, Wealth in Stockholm, 1650-1700
This paper investigates the development of wealth and its distribution in Stockholm in 1650 and 1700, based on a new probate inventories sample. We have 587 inventories from 1699-1701, which together represent 1700, and a similar number for 1650. We will answer the research questions: (i) how wealthy were Stockholm´s citizens, (ii) what kind of wealth did they possess? Stockholm was an expansive city. Population grew by 67 per cent between our two sample years, and it was an important trade hub not the least with exports of iron, copper and other goods. Stockholm was also the political and bureaucratic heart of the Swedish “Great Power”, and as such at the heart of political battles between high nobility, low nobility and burghers.
We describe the gross and net wealth of the Stockholm population as well as its indebtedness. We compare the wealthiest social groups – the merchants and the nobility – with the middling and lower social groups. Inequality was severe, with a large share of the population with no wealth at all, and large fortunes in the hands of merchants and manufacturers. Borrowing was widespread, with outstanding debts equaling about 50 percent of gross wealth in our Stockholm 1700 sample of 585 probate inventories. However, our results indicate that the top merchants during the Carolingian period were not yet as rich as they would become during the “Age of Liberty” after 1718.
Paper 3 Marja Erikson, Credit, debt and farmland prices: freeholders in central Sweden, 1770-1870
This paper analyzes the relationship between the indebtedness of Swedish landowning peasant farmers, their activities in the land market and land prices during the eighteenth and nineteenth centuries. In the studied area - three parishes in central Sweden - farmer families produced surpluses of rye and barley for the market in Stockholm and nearby mining area. To chart the freeholders´ credit, debts, activities in the land market, and land prices, I have used probate inventories, title deeds and mortgages. From the 1810s, the indebtedness of the freeholders grew rapidly up until 1860. The main reason was land acquisition, while some factors had an impact on the increased demand for credit: the prices of farm land had been rising since the late eighteenth century and remained high thereafter. Land prices closely followed the grain prices until 1820. On average, the households made larger land acquisitions than before, which required more capital. Moreover, in 1815 Riksbanken (the Swedish National Bank) started to offer beneficial mortgage loans, which was an important factor that helped the land market, but which led to even larger amounts of credit and debts among the freeholders.
Commentator 1: Craig Muldrew
Commentator 2: Gilles Postel-Vinay
Commentator 3: Mats Morell
13:30-15:30 Session 2: Inequality and Wealth Accumulation
Chair: Hans Sjögren
Paper 1 Livio di Matteo, Mortgages in Canadian wealth portfolios: 1870-1930
While the late nineteenth and early twentieth centuries saw Canadian financial system growth, the evidence suggests that private mortgage lending remained a major personal investment vehicle. Historical probate wealth micro data for Ontario and Manitoba show the real value of mortgages rose over time peaking just before the First World War and then declined. Regression results suggest that mortgage asset holding was positively and significantly related to age, urbanization, high occupational status, and being a widow. At the same time, mortgages were negatively and significantly related to the share of wealth held in all other financial assets net of mortgages, somewhat negatively related to the growth of bank branches, and there was a significant negative time trend.
The growth of the financial sector appears a competitive factor that ultimately shifted demand away from private mortgages as a financial asset. Moreover, a decline in agricultural employment and the rise of a larger industrial middle class were also factors in the decline of private mortgages as a major financial asset. Mortgages particularly marked the wealth portfolios of the top ten percent of the wealth distribution and a decline in their share of wealth over time also affected mortgage demand.
Paper 2 Håkan Lindgren, Methodological issues when estimating inequality from probate inventories: undervaluation and negative wealth
This paper is a contribution to the methodological discussion regarding the use of probate inventories to estimate long term changes in household wealth and wealth inequality in pre-industrial Sweden. Through a micro based analysis of one region in south-eastern Sweden, this paper discusses in detail the possibilities and limitations of the source material when estimating the wealth of the living population based on the estate inventories of the deceased.
The source materials used in this article consist of more than 3,000 probate inventories from the City of Kalmar and its rural hinterland. The study shows the importance of including negative wealth when discussing variations in wealth distribution over time. A large number of heavily indebted households in the city increased measured inequality dramatically in the first half of the nineteenth century, only to plunge post-1845. Foreign debt detained mainly by merchant houses in Hamburg, Lübeck and Copenhagen were to be blamed for the level of negative wealth in the 1810s and 1840s.
In pre-industrial peripherical economies, no matter if the scale is on a local, regional or national level, capital influx may have resulted in structural deficits and long-term indebtedness in the private sector. It is thus key to use of negative wealth to measure long-term distribution in private wealth, as in the case of the City of Kalmar when its economy developed and indebtedness was reduced.
Paper 3 Anders Perlinge, From private affairs to banking concerns. Personal credits and wealth in Stockholm during the change of inter-human relations, with special regard to the 1878/79 crisis
This paper proceeds from a study in the financial situation among private households in Stockholm when its first private commercial bank was founded in 1856. It concerns an unexplored area of the cityʼs financial history: what was the private credit market like during this transitional period? The focus is on the interplay between individuals and their interaction with old and new institutional players in 1878–1880. The research questions address the process of institutionalisation; how interpersonal relationships related to the composition of financial assets in this context; and what kind of impact Sweden´s general economic development had on the private and institutional credit market sector.
Particular attention is paid to the Jewish business community in Stockholm and the wealth of unmarried women, the latter constituting a substantial number of the city´s inhabitants. The development of the credit markets between the 1850s and the 1870s illustrates that the private sector functioned as a kind of trade barometer with an intrinsic slow progression. Still, in the 1870s private operators could play a decisive role in the market, being able to absorb and to make further capital available.
Commentator 1: Philip T. Hoffman (paper 1)
Commentator 2: Laurence Fontaine (paper 2 and 3)
Commentator 3: Patrick Svensson
15:30-16:00: Coffee break
16:00-17:30: Roundtable: The “Market” as a Concept
Participants: Jaser Abbas, Montserrat Carbonell Esteller, Bruce Dalgaard, Peter Ericsson, Susanna Fellman, Laurence Fontaine, Martin Iversen, Erik Lakomaa, Martin Shanahan
Moderator: Kristina Lilja
Friday September 14:
09:00-10:30: Session 3: Bankruptcy and Failure
Chair: Jan Ottosson
Paper 1 Tawny Paul, Failure and Insecurity: The Debtors´ Prisons of Eighteenth Century England
Credit in Britain is widely celebrated for facilitating business and for providing opportunities for growth and wealth accumulation. However, it also had a dark side: debt. During the eighteenth century, the vulnerability of credit and the prevalence of debt contributed to increasing rates of business failure. Julian Hoppit has therefore argued that failure had a strong relationship with growth. But why were so many people failing, and was failure an inevitable feature of economic growth? While Hoppit and others have used bankruptcy records to trace rates of failure amongst businessmen and entrepreneurs, another measure can be found in the debtors´ prisons. In eighteenth century England, as many as one in ten were incarcerated for debt during their lifetimes, and this institution provides insight into failure amongst a broader population.
Drawing on data from the London Gazette and on an unused archive of debtors´ schedules (inventories of wealth drawn up under Parliamentary Insolvency Acts), this paper addresses rates of incarceration and structures of failure amongst a broad population of middle trades and craftspeople. It reconstructs credit networks and patterns of wealth holding amongst prisoners in order to explain why individuals failed, and to describe how the loss og wealth was managed by households. In beginning to uncover the broad world of failure through the lens incarceration, it argues for insecurity as a defining feature of the eighteenth century´s economic culture.
Paper 2 Klas Nyberg, Credit and trust: Bankruptcies in eighteenth-century Stockholm
By the end of the early-modern period, credit and creditworthiness were still concepts that had complex social and cultural meanings, besides their obvious economic significance. In this paper I ask how the concept of credit changed, in the wake of the reformation of the institution of bankruptcy. This paper outlines and problematises the research problem of how the early modern concept of the credit market was affected by the early modernisation of the preindustrial economy. Our studies of the situation in Stockholm have shown how a new modus operandi was established in the handling of bankruptcies, as part of a comprehensive revamping of the existing legislation during the late eighteenth century. The new legislation changed the way in which bankruptcies were managed by local authorities, leading up to amore structured and time-efficient system, where the average time from application to verdict in a bankruptcy case were substantially shortened, and where new checks and balances removed legislative ambiguities and loopholes.
Commentator 1: Per Hallén
Commentator 2: Ann Carlos
10:30-11:00: Coffee break
11:00-12:00: Keynote 2 Philip Hoffman
Big Dark Debt
13:00-15:00: Session 4: Wealth and Debt Accumulation in Sweden
Chair: Maths Isacson
Paper 1 Axel Hagberg, Household Assets and Liabilities in Sweden 1800-1900
Research in financial history has mostly focused on the development and growth of the modern banking system through official statistics, from data gathered in order to control the evolving banking system. Yet an important and lively private credit market existed in Sweden just as in other north-western European countries, even before the development of what we usually refer as the “modern banking system”. However, the absence of estimates of the informal provision of credit has resulted in an incorrect measurement of the financial sector and its growth during the nineteenth century.
In this paper, the financial market is explored by looking at the households, using data drawn from Swedish probate inventories. Swedish probate inventories, because of their homogeneity over long time, present a unique material in an international context. Using inverted mortality rates, financial data collected from probate inventories can be used to make new estimations of the financial market and its structure. The intent is to present a fair picture of the size and changing structure of the Swedish credit market during the century.
Paper 2 Tom Kärrlander, Where were the banks? An analysis of the capital market in Malmö 1843-47 and 1863-67
Commercial banks’ activities during the nineteenth century has already been thoroughly investigated. This paper maps the entire capital market in Malmö, the largest city in the south of Sweden. It deals with lending, borrowing, deposits, and securities markets, if any. It has a special focus on the promissory note market. The reason is that this section of the market mirrors money transactions which are not directly tied to trade and commerce. The sources are the probate records of private individuals during the captioned two periods. It includes all probate records during the period under review. The results, to be presented in detail in a final paper, show a well-developed promissory note market, an active institutional lending sector and a surprisingly embryonic banking market. Women played an important role in the promissory note market, while those who ran important businesses seem to have generated investment capital, either as an ongoing business or as the result of the sale of the business. Other observations, in line with earlier research, indicate that promissory note lending within families was common.
Paper 3 Bengt-Åke Berg, Institutional funds as lenders before the coming of credit institutions
Before the formal credit institutions (commercial banks, savings banks and mortgage banks) various forms of not-for-profit funds were important lenders. The paper offers a survey of these institutions. One group consisted of national funds for fire insurance, pensions for military officers and civil servants, and charities. Another group is made up by parish-based funds that gave credit to the rural population. The loans in the first group were mainly as mortgages and to some extent made on bonds and shares. The loans in the second group were made almost entirely on name securities. Although these institutions were non-for-profit the interest income was important for their activities.
Comentator 1: Bruce Dalgaard
Commentator 2: Martin Shanahan
Commentator 3: Patrik Winton
15:00-15:30: Coffee break
15:30-17:00: Roundtable: Women and Early Financial Markets
Participants: Lili-Anné Aldman, Martin Almbjär, Elise Dermineur, Rodney Edvinsson, Sofia Gustafsson, Tiina Hemminki, Christopher Pihl, Cathryn Spence, Maria Ågren.
Moderator: Anne McCants
17:00-18:00: Discussion, Conclusion and Future Research
Moderators: Elise Dermineur and Anders Perlinge