Echoes Dispatches From Economic History

Philip Scranton

When Brazil Dumped Coffee to Save Its Economy

over 1 year ago
Brazil's Constitutionalist Revolution, 1932

The Great Depression deepened an ongoing Brazilian political crisis that had intensified during the 1920s and resulted in a military coup and the rise to power of Getulio Vargas in 1930. Civil war broke out in 1932 as Constitutionalists from Sao Paulo rejected Vargas's provisional government.

Although ultimately unsuccessful, the rebellion against Vargas would mark a moment of transition for Brazil, and offer a grim preview of how economic shocks would shake political structures across the world in the years to come.

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Kirsten Salyer

Weekly Links

over 1 year ago

Economist's View on the economies of ancient Greece and China
Bank of Japan on independent central banking
Naked Capitalism on the world's worst central banker
Marginal Revolution on austerity in the U.K. in the 1920s
American Historical Association on the Oct. 3 presidential debate

Read more from Echoes, Bloomberg View's economic history blog.

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Echoes: Libor’s Descent From 1797 Bank Rate

The London interbank offered rate -- which is set daily by asking banks what they would charge to lend to other banks -- has formally existed since the 1970s, when the acronym Libor was first coined.

As a concept, however, it goes all the way back to 1797. It was known as “the bank rate,” and it referred to the one that the Bank of England would charge for an emergency loan. In effect, this rate became a barometer of market conditions, measuring the anxiety of borrowers and lenders alike.

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Robert E. Wright

How a Corporation Legally Bought an Election

over 1 year ago
Echoes: 10/4

Recent changes in campaign-finance laws, prompted by the Supreme Court’s decision in the Citizens United case of 2010, have some people worried that corporations can now legally buy a presidential election.

Of course, directly paying citizens to vote for a certain candidate seems unlikely. Ballots are secret and can’t easily be traded, and voting contracts couldn’t be monitored for compliance, much less enforced in court. Under certain conditions, however, companies can almost buy votes outright -- and it has happened before.

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Echoes: 10/3

Labor unrest appears to be on the rise in China. Last month, as many as 2,000 workers skirmished with hundreds of police and security guards on the campus of the Taiwanese company Foxconn Technology Group. This 21st-century version of a company town within the industrial city of Taiyuan houses 79,000 workers who live in company-owned dorms, eat in company-owned cafeterias and put in long days on assembly lines.

Although it isn’t yet clear exactly how the riot started, resentment over poor conditions and aggressive guards almost certainly played a role. Such complaints are widespread in China’s company towns. They have an even longer history in the U.S., where such towns proliferated through the 19th and early 20th centuries.

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Echoes: 10/2

It is a delicious bit of irony that the last name of a compulsive tightwad has entered the national vocabulary as a one-word descriptor for one of America’s most generous philanthropic awards. Artists and scientists and academics can now win “a MacArthur” just as they win a Pulitzer, a Fulbright or a Guggenheim.

Yesterday, the newest batch of MacArthur fellowships was announced by the John D. and Catherine T. MacArthur Foundation. The 23 winners of these “genius awards” -- including the novelist Junot Diaz and the mandolin player Chris Thile -- will each be given no-strings grants of $500,000 over five years to “advance their expertise, engage in bold new work, or, if they wish, change fields or alter the direction of their careers.”

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Philip Scranton

Babe Ruth Takes a Pay Cut

over 1 year ago
Echoes: 10/1

By the time the New York Yankees and the Chicago Cubs squared off for the 1932 World Series, it had been a tough year for Major League Baseball.

The season began well enough. On opening day, 25,000 “shivering enthusiasts” gathered to watch the New York Giants, the favorite of the National League, collapse in a “humiliating defeat,” to the Philadelphia Phillies, as the New York Times put it. That afternoon, the Yankees crushed the defending champions, the Philadelphia Athletics.

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1837 Pauperized Middle Class

The promise of upward social mobility is central to the American Dream, and the rags-to- riches story is a staple of American literature.

Yet, as more and more Americans slip down the socioeconomic ladder, it is worth recalling that many 19th- century novelists also grappled with the paradox of business failure in a land of opportunity.

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Zara Kessler

Weekly Links

over 1 year ago

The John Carter Brown Library on "minding" one's business in early America
The University of Oxford on the underperformance of the American health system from 1970 to 2010
The Economist on how monetary policy brings down debt ratios
Reuters on the decline of labor
Project Syndicate on strategic commitment and democracy's burning ships

Read more from Echoes, Bloomberg View's economic history blog.

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Echoes: 9/27

Unless you find yourself at a flea market, rummage sale or some other place where second- hand goods are exchanged, you probably don’t haggle. Few of us would consider dickering about the price of goods in retail establishments, and bargaining is certainly out of the question at chain stores.

This wasn’t always so. Nineteenth-century customers haggled and bartered over just about everything, managing to bring order to a seemingly chaotic commercial system. Customers lacking hard currency (a common problem) routinely exchanged eggs, butter or even services for dry goods as disparate as flour and pieces of china. The price of goods also depended on how one was paying -- with cash or on credit -- and whether one had a favorable relationship with a particular store clerk.

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Echoes: 9/26

In 1912, as in 2012, issues of personal wealth and corporate power were at the heart of the presidential campaign.

Food prices were soaring and average families feared for their living standards as they replaced meat and butter with potatoes and margarine. Hard-pressed workers, often putting in 56-hour weeks on dangerous jobs, couldn’t help but envy the conspicuous affluence of a distant elite.

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Echoes: 9/25

The man who knocks on the door is polished and friendly. His suit is fashionable, his briefcase looks important. And the things he pulls out of it are impressive: large sheets of bonds and coupons to be redeemed, signed by the heads of important banking houses and credit institutions.

The contracts are in clear terms and, he assures you, guaranteed by the government. They are secured by land, the safest asset in the world. Best of all, several times a year, the bond gives you a chance of winning a huge cash prize. How can you afford not to buy?

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Philip Scranton

How Maine Scared the Republican Party

over 1 year ago
Echoes: 9/24

In early September 1932, New Hampshire Republican Senator George Moses concluded that President Herbert Hoover’s re-election was certain. A “hard fight” lay ahead, he told the New York Times, but he predicted Hoover could count on a minimum of 288 Electoral College votes, 22 more than a majority.

Such conservative optimism was short-lived. Hoover’s challenger, Democratic New York Governor Franklin Roosevelt, soon announced a 20-day, 20-state tour across the upper Midwest, down the Pacific Coast and back through Denver, Milwaukee and Detroit.

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Kirsten Salyer

Weekly Links

over 1 year ago
Echoes: As Occupy Wall Street Fades

Two Occupy Wall Street slogans merit close scrutiny. The first -- “We are unstoppable! Another world is possible!” -- is a popular chant, heard in every recent protest march. The second -- “The only solution is world revolution” -- is featured prominently on posters, picket signs and websites.

These mottos permeated this week’s demonstrations commemorating the one-year anniversary of the group’s takeover at Zuccotti Park in New York. Both call for transformative social change, displaying an optimism undeterred by the dashed hopes of revolutions past.

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Uploaded by UUID:6697267 at 9/20/2012 12:00 PM

The president denounces the tax code as “an outrage, one riddled through with special privileges and inequities, that violates our most fundamental American values of justice and fair play.”

His Treasury secretary agrees that the tax system is “too complicated, it’s grotesquely unfair, and it’s a drag on the economy because it discourages competition.”

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Echoes: 9/18

Media debacles are a recurrent nightmare for presidential candidates. Yet few have ever confronted a more devastating publicity firestorm than the Republican candidate James G. Blaine did on a fateful day in October 1884.

Not even Mitt Romney -- who is now facing the blowback from some arrogant remarks that he made in private at a fundraiser with high-rolling supporters -- has had a day quite as damaging as the one “the Plumed Knight” (as Blaine was known in the press) suffered in the final days of his presidential campaign.

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Philip Scranton

Japan's Chinese Puppet State

over 1 year ago
Echoes: 9/17

On Sept. 15, 1932, Imperial Japan and the new state of Manchukuo, the renamed Manchuria, signed a one-page “defensive alliance,” the New York Times reported. The document authorized Japan to provide “both the internal and external defense of the region it had seized earlier that year."

Japan claimed the government it had established was free and independent, but world opinion was almost unanimous in judging Manchukuo a “puppet” state. The Economist asked how the League of Nations, the U.S. or the Soviet Union would respond to this “naive and barbaric Japanese insolence.”

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Lesley Jacobs Solmonson

London Gin Craze Had Roots in Nascent Consumer Society

over 1 year ago
Echoes: 9/12

Gin has always been big business in England. In the 18th century, as London’s infamous “Gin Craze” unfolded, the spirit was at the center of a debate that helped define the country’s politics and economics -- and created a commercial demand that persists to this day.

The privileged of the 1700s sipped genever, the “original gin” imported from Holland. Desperate to keep up with their betters, the lower classes demanded a gin of their own. As a result, from 1720 to 1751, a storm of unrest swirled around the production, distribution and sale of rotgut booze.

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Echoes: 9/13

The recent public outcry over the behavior of the banking industry has led the U.K. government to create a Parliamentary Commission on Banking Standards to investigate the culture of the industry and report on lessons to be learned.

While they await submissions of evidence, the commission members might contemplate the outcome of an 18th-century inquiry with similar aims. Its object was the Bank of England.

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About Echoes

Echoes is Bloomberg View's economic history blog. It is edited by Stephen Mihm, an associate professor of history at the University of Georgia and the author, with Nouriel Roubini, of "Crisis Economics: A Crash Course in the Future of Finance," and of "A Nation of Counterfeiters: Capitalists, Con Men and the Making of the United States."