Quotulatiousness

April 3, 2022

King James I and the problem of gold and silver thread in England

Filed under: Britain, Economics, Europe, Government, History — Tags: , , , , , — Nicholas @ 03:00

In the latest Age of Invention newsletter, Anton Howes began to research what appeared to be a minor economic issue that very quickly took over his time going deep down the gold and silver market rabbit hole:

A hammered silver sixpence of James I dated 1603 from the first coinage with a thistle mintmark. Obverse features a right facing crowned bust with the numerals VI behind and the inscription JACOBVS*DG*ANG*SCO*FRA*ET*HIB*REX. The reverse has a shield with the royal arms and the date 1603 above. The reverse inscription is EXERGAT* DEVS*DISSIPENTVR*INIMICI.
FindID 510696 – https://finds.org.uk via Wikimedia Commons

When England’s Parliament met in 1621, it was mainly supposed to vote King James I the funds to fight a war. His daughter’s domain, the Palatinate of the Rhine, had just been invaded, and the European Protestant cause was under grave threat. As I set out two weeks ago, however, the House of Commons had seized the chance to pursue a scandal. Jealous of the Crown’s challenge to their status as local power-brokers, and hoping to embarrass the king’s favourite, the Marquess of Buckingham, MPs opened an investigation into Sir Giles Mompesson’s patent to license inns.

When it came to inns, I argued that the case against Mompesson was flimsy (making me perhaps the only person to have defended him for over four hundred years). He appears to have been a trusted and able bureaucrat, the source of his downfall being his sheer effectiveness. But the flimsiness of the case against him was not enough to stop the political witch-hunt. Next on the list was a project he had administered for making gold and silver thread.

It sounds obscure, and I was fully expecting to write up a short overview of a niche industry that just happened to be thrust into the limelight of 1620s politics. That was a month ago, when I first started drafting this piece. But pulling on the golden thread revealed a desperate, decade-long battle between the City and the Crown, over who would get to control the financial stability of the realm. I’m sorry for the delay in publishing it, but I hope I’ve made it worth the wait.

January 14, 2022

Industry with 1% profit margins accused of earning “record profits”

Filed under: Business, Economics, Media, Politics, USA — Tags: , , , — Nicholas @ 03:00

Joe Lancaster on Senator Elizabeth Warren’s renewed assault on the top-hatted, monocle-wearing robber barons of the grocery business:

“Piggly Wiggly” by afiler is licensed under CC BY-SA 2.0

… Warren could hardly have picked a worse industry to use as an example: Grocery stores consistently have among the lowest profit margins of any economic sector. According to data compiled this month by New York University finance professor Aswath Damodaran, the entire retail grocery industry currently averages barely more than 1 percent in net profit. In its most recent quarter, Kroger reported a profit margin of 0.75 percent, during a time in which Warren claims that the chain was “expanding profits” due to its “market dominance.”

In actuality, for much of the last year, grocery stores have seen enormous boosts in revenue, but not increased profitability, for the simple reason that everything has been costing more: not just products, but transportation, employee compensation, and all the extra logistical steps needed to adapt to shopping during a pandemic. Couple that with persistent inflation — which Warren also recently blamed on “price gouging” — and it is no wonder that things seem a bit out of balance.

Warren has had an itchy trigger finger for antitrust laws for some time. In 2019, as part of her presidential platform, she called for using the laws to forbid retailers from selling their own products. This would affect industry leaders like Amazon and Walmart, but ironically, it would have a devastating impact on grocery stores as well: Grocers increasingly rely on their own proprietary goods to stock cheaper alternatives alongside name brands. This provides not only less expensive options for consumers, but lower costs to the stores themselves. Store brands also help fill gaps created by external supply shortages.

December 4, 2021

When King James VI became King James I and VI

Filed under: Britain, History — Tags: , , , , — Nicholas @ 03:00

In his latest Age of Invention newsletter, Anton Howes discusses how the King of Scotland succeeded to the English throne as well:

King James I (of England) and VI (of Scotland)
Portrait by Daniel Myrtens, 1621 from the National Portrait Gallery via Wikimedia Commons.

It’s late March 1603, and an exhausted messenger arrives in Edinburgh bearing a sapphire ring. He has ridden for over two days straight, over hundreds of miles, and his hair and clothes are matted with blood — on the way he had fallen from his horse, a hoof striking him directly in the head. It’s a miracle he’s alive, but he knows it has been worth it. He is the very first to tell you that your childless first cousin twice removed — the killer of your mother, whom you never knew — is finally dead. You, King James VI of Scotland, are James I of England as well.

[…]

James’s accession was a frenzy. From the very moment of Elizabeth’s death, her entire patronage network was turned on its head. Her chief ministers, the Privy Council, were relatively safe. Some of them had been corresponding with James for years. But they could only look on, anxiously, as a rush of would-be cronies went north to meet their new king. The exhausted messenger with the sapphire ring, Sir Robert Carey, was just the first. Carey had been related to Elizabeth I on her mother’s side — he was her first cousin once removed. (Carey’s grandmother was the “other Boleyn girl”, played by Scarlett Johansson in the 2008 film — although there’s no solid evidence, it’s not totally impossible that Carey was actually related to Elizabeth on her father’s side instead …) But that family connection meant nothing now that the queen was dead.

The sudden reset of the source of all patronage meant that the earlier the access to the new king’s person, the greater the chance of gaining his favour. Carey may have angered the Privy Council by riding ahead of their formal letters to James, but his exertion won him an on-the-spot appointment as a gentleman of the bedchamber, and his wife became a lady in waiting to James’s queen. The Careys were soon charged with the care of the royal couple’s younger sickly child, and when that child eventually became Charles I, Carey was made Earl of Monmouth. Not a bad result for a head wound and a two days’ ride, though I’m sure the horses would disagree. An old proverb about England was that it was “a paradise for women, a purgatory for servants, and a hell for horses” — something that James’s accession really put to the test. One teenage noblewoman reported how she and her mother killed three horses in a single day, pushing them hard despite the heat, in their rush to meet the new queen.

Just as courtiers flocked to James, however, the king wanted to win friends and allies too. So he handed out favours like confetti. Before he had even reigned a single year, he had created 934 knighthoods — already more than the 878 that Elizabeth I, her generals, and her lord deputies in Ireland had created over the course of her entire 45-year reign. One morning, during his journey down to London, James knighted more people than Elizabeth had in her first five years — all before he’d even had his breakfast. The sheer volume of new knighthoods prompted Francis Bacon — one of about 300 to be knighted in London ahead of the coronation — to call it a “divulged and almost prostitute title”.

The same went for peerages. Elizabeth, over her long reign of almost half a century, had created only 18 new titles. James, before he had even been crowned, had already created 12 — mostly turning knights into lords, and raising some lords into earls. Along with the honours came grants of land, annual pensions, and one-off gifts — not only to James’s new English courtiers, but to his old Scottish favourites too. James’s arrival was an explosion of largesse. (Not all were happy about the relative loss of favour, of course […] at least one pro-invention courtier got involved in a treasonous plot against the new king and ended up losing his head.)

James’s largesse even extended to policy. As he triumphantly marched into London, he issued a proclamation to immediately suspend all of Elizabeth’s patent monopolies, to be re-granted pending review. (This did not apply to patents for trading corporations or guilds.) Rather than leaving the validity of patents to be tested in the common-law courts, at great legal cost to those affected, he would have his Privy Council systematically examine them first, only allowing them if they were in the public interest. He characterised it as a continuation — even a “perfecting” — of Elizabeth’s partial measures a couple of years earlier, which we discussed in Part II. With his proclamation also condemning various other unpopular things, like high court fees, his new subjects were overjoyed.

But the honeymoon was not to last.

November 27, 2021

King James I and his hatred of tobacco smoking — “so vile and stinking a custom”

Anton Howes recounts some stories he uncovered while researching English patent and monopoly policies during the Elizabethan and Stuart eras:

… some of the most interesting proclamations to catch my eye were about tobacco. Whereas tobacco was famously a New World crop, it is actually very easy to grow in England. Yet what the proclamations reveal is that the planting of tobacco in England and Wales was purposefully suppressed, and for some very interesting reasons.

James I was an anti-tobacco king. He even published his own tract on the subject, A Counterblaste to Tobacco, just a year after his succession to the English throne. Yet as a result of his hatred of “so vile and stinking a custom”, imports of tobacco were heavily taxed and became a major source of revenue. Somewhat ironically, the cash-strapped king became increasingly financially dependent on the weed he never smoked. The emergence of a domestic growth of tobacco was thus not only offensive to the king on the grounds that he thought it a horrid, stinking, and unhealthy habit — it was also a threat to his income.

What I was most surprised to see, however, was just how explicitly the king admitted this. It’s usual, when reading official proclamations, to have to read between the lines, or to have to track down the more private correspondence of his ministers. Very often James’s proclamations would have an official justification for the public good, while in the background you’ll find it originated in a proposal from an official about how much money it was likely to raise. There was money to be made in making things illegal and then collecting the fines.

Yet the 1619 proclamation against growing tobacco in England and Wales had both. The legendary Francis Bacon, by this stage Lord High Chancellor, privately noted that the policy might raise an additional £3,000 per year in customs revenue. And the proclamation itself noted that growing tobacco in England “does manifestly tend to the diminution of our customs”. Although the proclamation notes that the loss of customs revenue was not usually a grounds for banning things, as manufactures and necessary commodities were better made at home than abroad, “yet where it shall be taken from us, and no good but rather hurt thereby redound to our people, we have reason to preserve”. Fair enough.

And that’s not all. James in his proclamation expressed all sorts of other worries about domestic tobacco. Imported tobacco, he claimed, was at least only a vice restricted to the richer city sorts, where it was already an apparent source of unrest (presumably because people liked to smoke socially, gathering into what seemed like disorderly crowds). With tobacco being grown domestically, however, it was “begun to be taken in every mean village, even amongst the basest people” — an even greater apparent threat to social order. James certainly wasn’t wrong about this wider adoption. Just a few decades later, a Dutch visitor to England reported that even in relatively far-flung Cornwall “everyone, men and women, young and old, puffing tobacco, which is here so common that the young children get it in the morning instead of breakfast, and almost prefer it to bread.”

[…]

Indeed, policymakers thought that the domestic production of tobacco would actively harm one of their key economic projects: the development of the colonies of Virginia and the Somers Isles (today known as Bermuda). Although James I hoped that their growth of tobacco would be only a temporary economic stop-gap, “until our said colonies may grow to yield better and more solid commodities”, he believed that without tobacco the nascent colonial economies would never survive. Banning the domestic growth of tobacco thus became an essential part of official colonial policy — one that was continued by James’s successors, who did not always share his more general hatred of smoking. Although the other justifications for banning domestic tobacco would soon fall away, that of maintaining the colonies — backed by an increasingly wealthy colonial lobby — was the one that prevailed.

November 25, 2021

QotD: Corporate coercion can be just as dangerous as state coercion

So many libertarians […] have a simplistic, dare I say dualistic notion about bad-things-done-by-private-business and bad-things-done-by-the-state. One is met with “so start up a rival company” the other with “an outrageous example of state overreach that must be opposed politically.”

And in an ideal world, yes, that makes sense. We do not live in anything resembling an ideal world.

In an era when three (two really) credit card companies and a handful of payment processors have an off-switch for pretty much any on-line business they take a dislike to (unless they are called Apple or Amazon), as more and more of the economy goes virtual, what we have is turn-key tyranny for sale to the highest bidder, and the highest bidder is always going to be a state. I am uncertain what the solution is, but as we do not live in a “free market”, not convinced “so go set up your own global credit card and payment processing network” adds anything meaningful to the discussion. It is a bit like saying when the local electric provider turns off the power in your office (or home) because they disapprove of what you are doing “so go set up your own electric supply company”, as if that would be allowed to happen.

Perry de Havilland, “This is what so many libertarians cannot understand …”, Samizdata, 2021-08-22.

October 23, 2021

The English Statute of Monopolies gets far more credit than it actually deserves

The Statute of Monopolies (1624) is often said to have been critical in helping to start England on the road to the Industrial Revolution, but in the latest Age of Invention newsletter Anton Howes argues it is far more complicated than it seems:

Letters Patent Issued by Queen Victoria, 1839. On 15 June 1839 Captain William Hobson was officially appointed by Queen Victoria to be Lieutenant Governor General of New Zealand. Hobson (1792 – 1842) was thus the first Governor of New Zealand.
Constitutional Records group of Archives NZ via Wikimedia Commons.

One of the most frequently mentioned landmarks in the history of intellectual property is the Statute of Monopolies, passed by the English parliament in 1624. I’ve often seen it lauded as the beginning of the system of patents for invention, or the first patent law. I remember giving a talk a few years ago where I downplayed the role of formal institutions in encouraging the Industrial Revolution, prompting an outraged economist in the audience to point to the law as a sort of gotcha — “here’s a better explanation: with patents you incentivise invention, and the Brits had just invented patents”.

Which is all to illustrate that the Statute of Monopolies is often fundamentally misunderstood. So what, exactly, did it actually do? It’s a tale of opportunism, corruption, and court intrigue, with some actual innovation inbetween. The whole saga ended Francis Bacon’s political career, led to a major constitutional crisis, and set the scene for how inventors were to behave and act for well over a century. In this first part, I’ll give the context you’ll need to really appreciate what was going on, and I’ll publish the rest in the weeks to come.

First off, the Statute of Monopolies was certainly not the first patent law. Venice’s senate had enacted a law on monopolies for invention as early as 1474. But even then, we shouldn’t be looking for statutes at all. The history of patents does not begin in 1474, but much earlier, with plenty of monopolies over new inventions having already been granted by the ruling grand council of Venice, and by the authorities of other Italian cities like Florence. The key thing to recognise about early patents is that they were not a creation of parliaments or their statutes, but of those in charge. They were the creation of sovereigns, a creature of kings and queens (or in the case of republics like Venice, of governing councils).

As regular readers of this newsletter might remember, patent monopolies for invention had already had long history in England, well before 1624. Patents in general were a very ordinary tool of English monarchs, used to communicate their will. By issuing letters patent, monarchs essentially issued public orders, open for everyone to see. (Think “patently”, as in clearly or obvious, which comes from the same root.) Monarchs used letters patent to grant titles and lands, appoint or remove people as officials, extend royal protections to foreign immigrants, incorporate cities, guilds, even theatre troupes — in general, just to rule.

And, eventually, English monarchs copied the Venetians by issuing letters patent to grant temporary monopolies to particular people, to encourage them to make discoveries, publish books, or introduce new industries or inventions to the realm. It’s only over the passage of centuries that we’ve come to refer to patents for invention — a mere subset of letters patent, and really even a mere subset of patent monopolies for all sorts of other creative work — as simply patents. Intellectual property was thus a ruler-granted privilege, created in the same way that a town gains the official status of a city, or a commoner becomes a knight. English monarchs began granting monopolies for discovering new territories and trade routes from 1496, for printing certain books from 1512, and for introducing new industries or inventions from 1552 (with one weird isolated exception from as early as 1449).

October 14, 2021

The quasi-monopolies of the “web giants”

Arthur Chrenkoff runs afoul of automated “community standards” enforcement on social media, getting locked out of his Twitter account for something that any actual human being would be able to instantly decide was not at all any kind of violation of normal human interactions online or in-person. Of course, if you’ve been in this position yourself, you won’t be surprised to find that launching an appeal of the bot’s action does not get immediate response … and sometimes never gets any attention from a human. He’s aware of this, and he’s still of the belief that this does not call out for any kind of government intervention:

“Automotive Social Media Marketing” by socialautomotive is licensed under CC BY 2.0

I remain broadly sympathetic to the free market argument that competition will, in time, cure any problems that business activity throws up from time to time, such as market domination or underhand practices. The mighty will be brought down low, new players will offer new products, consumer preferences will change, creative (or destructive) equilibrium will be restored. We can all argue, of course, to what extent free market and free competition exist in any particular setting at any particular time. If “real socialism” has never been tried, “real free market” (as opposed to capitalism, which is not necessarily the same thing) might be equally rare in practice. It is certainly true that comparing the lists of top 50 biggest companies one hundred, 50, 20 years ago and today will indicate a lot of economic change, but might not tell us very much about the reasons for that change, which can be quite complex.

The tech giants might not be historically unique as far as their size and power are concerned, but they’re not the norm either. They are not exactly monopolists, but their domination of their particular sections of the market elevates them from the domain of mere companies to something akin to public utilities. Google, Facebook and YouTube, for example, account for 80 per cent of digital advertising in Australia. There are alternatives to all these providers but they are so tiny by comparison as to defeat their main purpose for many users, which is to provide the biggest possible reach and exposure to the world. If you get demonetised or banned by YouTube, other video-sharing platforms can give you only a fraction of the traffic and the eyeballs, which impoverishes you literally and the internet users metaphorically, since they are now less likely to be exposed to the broad range of content. There are other social networks, but only Facebook has “everyone” on it, including your grandma, school friend from primary, and that couple you’ve met on the trip to Spain. Sure, if you get banned from Facebook, you can still try to keep in touch with all these people via many separate channels but it’s so much more difficult, disjointed and time consuming. For that same reason, Facebook’s Marketplace has a much better reach than other platforms that are focused exclusively on online ads. If Marketplace continues to shadow ban me, I can try Craigslist or Gumtree or Locanto, but – certainly in the categories I’m interested in – they all have significantly smaller audiences.

The traditional response to bad customer experience has been “try somebody/something else”. You don’t like Facebook – or Facebook doesn’t like you? Try another similar service. But I’m not sure if most of my friends would be able to name even one alternative to FB, and the chances they are on it are even slimmer. So telling people to stop whining and use an alternative to the tech giants is akin to telling someone “Oh, you can’t have a mobile (cell) phone? So what, no one is stopping you from writing a letter!” It’s the same but different. This is the consequence of the domination of the internet by the Googles and the Facebooks. And the internet now does play an essential role – for better or worse – in our lives and work. Hence the comparison to public utilities. Facebook might not be quite like electricity or running water, but it’s very close to, say, phone service. Yes, you can opt for another social network, but compared to Facebook this would be like a phone company that only makes it possible for you to contact one in twenty people instead of just about everyone, and even then maybe only once a week, at a time predetermined by the provider. It’s a service of sorts, but so inferior in every way to the main game in town as to be incomparable.

I’m not offering any solution to this problem. Many, both on the left and the right, are increasingly of a mind that, like Standard Oil of more than a century ago, the tech behemoths of today need to be broken down into smaller and less powerful units. That could solve some problems but won’t solve many others. Like mine, for example; a somehow “smaller” Twitter and Facebook can still be unresponsive and unaccountable. And as we know from other areas of economy, greater involvement and control by the supposedly impartial government does not guarantee better outcomes either. Big government, like big business, is run by human beings who, quite apart from their own characteristics as individuals, work within a particular culture, which has its own values, agendas and preferences. Government is a monopolist too in many ways, and for all the politics, is not necessarily responsive and accountable either.

September 25, 2021

Will Mars become the equivalent to Earth that India and the East Indies once were for Europe?

Filed under: Economics, Europe, History, India, Space — Tags: , , , , , — Nicholas @ 03:00

In the latest Age of Invention newsletter, Anton Howes goes a long way in both time and space away from his normal Industrial Revolution beat to consider what might happen as humans attempt to colonize Mars:

The first true-colour image generated using the OSIRIS orange (red), green and blue colour filters. The image was acquired on 24 February 2007 at 19:28 CET from a distance of about 240 000 km; image resolution is about 5 km/pixel.
Photo taken by the ESA Rosetta spacecraft during a planetary flyby.

The other week I attended an unconference, which had a session on the implications of establishing colonies on other planets. Although this was largely meant to be about the likely impact on Earth’s natural environment — what will be the impact of extracting raw materials from asteroids and other planets? — some of the discussion reminded me of the challenges faced by the long-distance explorers, merchants, and colonists of four hundred years ago. There are quite a few parallels I can see between travelling to Mars, say, in a hundred years’ time, and travelling between continents in the age of sail.

For a start, there’s the seasonality and duration of the voyages. European ships headed for the Indian Ocean had to time their voyages around the monsoon season; trips across the Atlantic were limited to just half the year because of hurricanes. Round-trips took years. Similarly, the departure window for a voyage from Earth to Mars only comes around once every 26 months, and even the most optimistic estimates place eventual journey times at about 4-6 months. Supposing that Mars can be permanently settled, any colony there will likely be extremely dependent on the regular arrival of resupply craft. There’s only so long that any group can survive in a hostile environment on their own.

[…]

The Portuguese had once been the only Europeans to trade directly into the Indian Ocean, but the structure of their trade — essentially a state-run monopoly with some licensed private merchants — was unable to compete with the arrival of the Dutch. The initial Dutch forays into the Indian Ocean in the 1590s had originally been financed by lots of different companies, often associated with particular cities — similar to the proliferation of billionaire-led space exploration companies today. But the Dutch soon recognised that such a high-risk trade would only be able to survive if it came with correspondingly high rewards — rewards that could only be guaranteed by eliminating domestic competitors (and if possible, foreign ones too). They therefore amalgamated all of the smaller concerns into a single company with a state-granted monopoly on all of the nation’s trade with the region. In this, they actually copied the English model, but then outdid them in terms of the organisation and financing of that company […].

Are we likely to see a similar move towards state-granted monopoly corporations when it comes to space colonisation? I suspect it depends on the potential rewards, and on the strength of the competition. There is certainly precedent for incentivising risky and innovative ventures in this way, through the granting of patent monopolies. Patents for inventions in the English tradition originally even had their roots in patents for exploration. I would not be surprised if such policies end up being used again by countries that are late-comers to the space race, perhaps by granting domestic monopolies over the extraction of resources from particular planets or moons. Although direct state funding can help in being first, like they did for Spain and Portugal in the fifteenth and sixteenth centuries, state-granted monopolies for private actors may again end up being the ideal catch-up tool for laggards, as they were for the English and the Dutch.

How the monopolies are managed will also matter. The English East India Company, for example, was initially more focused on rewarding its shareholders than it was on investing in the full infrastructure with which to dominate a trade route. The Dutch company, by contrast, from the get-go was part of a more coordinated imperial strategy — one that sought to systematically rob the Portuguese of their factories and forts, to project force with the aid of the state. Indeed, if there’s one big lesson for the geopolitics of space, it’s that far-flung empires can be extremely fragile, with plenty of opportunities for late-arriving interlopers to take them over.

Although it’s difficult to imagine space colonies being able to become self-sufficient any time soon, it seems likely that those controlled by particular companies or countries may occasionally be persuaded — by bribes or by force — to defect. What’s to stop them when they’re hundreds of millions of kilometres away from any punishment or help? Ill-provisioned factors, forts, or colonies happily switched sides to whoever might provision them better. As I mentioned last week, such problems curtailed the ambitions of other would-be colonial powers, like the Duchy of Courland and Semigallia. When the Dutch turned up in the Indian Ocean, many of the Portuguese forts they threatened simply surrendered.

I bow to Anton’s far greater historical knowledge in most things, but state monopolies in the 16th to 19th centuries were very different creatures than their potential modern equivalents, and the much more comprehensive degree of state control of the economy now would probably mean that a state monopoly over extraterrestrial activities would be a worst-possible outcome. The greater the powers in the hands of the state, in almost every case, the worse all state-controlled activities have become. The incentives of civil servants are vastly different than those of individuals or businesses and are farcically incompatible with the risk-taking necessary on a dangerous frontier.

August 29, 2021

The competing English and Dutch East India companies

In his latest Age of Invention newsletter, Anton Howes considers the odd fact that although the Dutch were the last major seafaring power to extend to the East Indies, they quickly became the most powerful European traders and colonialists in the region:

By the mid-seventeenth century, although the trans-Atlantic trades were still almost entirely in the hands of the Spanish, the European trade to the Indian Ocean had come to be dominated by the Dutch — which is quite surprising, as they had arrived so late. The high-value exports of the Indian Ocean — particularly pepper — had anciently arrived via the Red Sea, the Persian Gulf, or overland, and then been bought up in Egypt or Syria by the Venetians and Genoese, who then sold them on to the rest of Europe. It was then the Portuguese who had supplanted that trade in the late fifteenth century by discovering the direct route to the Indian Ocean around the Cape of Good Hope. The Portuguese monopolised the new sea route around Africa for a century, almost totally undisturbed by other Europeans, entrenching their position by building forts — occasionally with the permission of local rulers, but often without.

The Portuguese seem to have spread the rumour in Europe that they had effectively conquered the entire region, presumably to dissuade others from even trying to break their monopoly. Even as late as the 1630s, when other nations were already regularly trading there, foreign writers took the time to mock such assertions. As the Welsh-born merchant Lewes Roberts put it, the Portuguese “brag of the conquest of the whole country, which they are in no more possibility entirely to conquer and possess, than the French were to subdue Spain when they possessed of the fort of Perpignan, or the English to be masters of France when they were only sovereigns of Calais.” Quite.

[…]

But for all their tardiness, the Dutch arrival in the Indian Ocean was dramatic. The English may have been the first to threaten the Portuguese monopoly, but in the whole of the 1590s they sent a mere two expeditions out east, and in 1600-10 sent only a further eight (seven by the newly-chartered East India Company (EIC), with a monopoly over English trade with the region, and another voyage licensed to break that monopoly in 1604 by the king, which unhelpfully spoiled the company’s relations with local rulers by turning pirate and plundering Indian and Chinese ships). What the English sent out over the course of twenty years, the Dutch exceeded in just five. Between just 1598 and 1603, after the successful return of de Houtman’s first voyage, they sent out a whopping thirteen fleets — and this despite their merchants not even pooling their efforts like the English had until the very end of that period, when in 1602 the various small and city-based Dutch companies were merged to form a single, national joint-stock monopoly, the Verenigde Oost-Indische Compagnie (VOC). The founding of the VOC accelerated the divergence. Between 1613 and 1622 the EIC sent out a paltry 82 ships compared to the VOC’s 201.

The sheer quantity of Dutch ships heading for the Indian Ocean meant that they were soon dominant amongst the European merchants there, capturing forts from the Portuguese, founding further bases of their own, and able to forcibly keep the English out — sometimes by attacking the English directly, other times by simply threatening any of their would-be trading partners. The steady stream of Dutch ships also allowed them to resupply and maintain their factors — the key infrastructure of long-distance commerce, as I explained in last week’s post for subscribers. They were able to have a presence, and project force, in a way that the English could not. By 1638, Lewes Roberts, despite often lauding England’s commercial achievements, and being an EIC official himself, had to concede that in the Indian Ocean “the English nation are the last and least”.

That English weakness was reflected in how EIC merchants had to comport themselves in the region so as to have any share in the trade at all. Despite the EIC’s later reputation for bloodthirsty rapaciousness, in the early seventeenth century they were highly reliant on good relations with the locals. Whereas the Dutch could often afford to use force and bear the repercussions, the English more or less only held on in the early days by ingratiating themselves with local rulers — often by finding common cause against the aggressive and domineering Dutch. The infrequently-supplied English factors were often heavily indebted to local merchants too, including the Indo-Portuguese — a group that they often married into, for access to social networks and support. As the historian David Veevers argues in a new overview of the early EIC (a relatively pricey academic book, but compellingly argued and juicy with detail), the English often went further than just friendliness or integration, subordinating themselves to local rulers too. Of the few early forts that the English managed to establish, for example, that at Madras in 1640 was only built because the local ruler encouraged it, treating the English there as his vassals.

March 30, 2021

QotD: Static societies and disruptive outsiders

Filed under: Books, Britain, Economics, Government, History, Japan, Quotations, USA — Tags: , , , , — Nicholas @ 01:00

In 1981, the social scientist Mancur Olson published his magisterial The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities. Olson had already won acclaim for The Logic of Collective Action, which explained why some groups received an outsize slice of the political pie. In his new book, Olson turned to the question of why nations fail. His thesis: nations lost dynamism when insiders managed to stack the rules against disruptive outsiders.

Stable societies with unchanged boundaries, Olson observed, “tend to accumulate more collusions and organizations for collective action over time.” Instead of accepting rules that encourage overall growth, these collusive organizations — trade groups and labor unions were paradigmatic examples — fight to keep what they have, slowing down “a society’s capacity to adopt new technologies and to reallocate resources in response to changing conditions,” thus reducing economic efficiency. Decline follows.

Olson pointed to Japanese stagnation under the Tokugawa shogunate, when, “before Admiral Perry’s gunboats appeared in 1854, the Japanese were virtually closed off from the international economy.” Ruling Japanese society, he writes, “were any number of powerful za, or guilds, and the shogunate or the daimyo often strengthened them by selling them monopoly rights.” The guilds “fixed prices, restricted production and controlled entry in essentially the same way as cartelistic organization elsewhere.”

A second example: Great Britain, “the major nation with the longest immunity from dictatorship, invasion and revolution” and, consequently, Olson explained, suffering “this century a lower rate of growth than other large, developed democracies.” In Olson’s view, the weak performance resulted from limits on change established by a “powerful network of special-interest organizations,” which included labor unions, industrial groups, and aristocratic cliques. By the 1970s, after the conservative government of Edward Heath fell in a losing battle with striking miners, many deemed Britain ungovernable. Olson contrasted the British situation with that of postwar Germany and Japan, where the chaos and destruction of wartime defeat wiped away established industrial and retail groups, leaving the field open to newcomers like Soichiro Honda or the Albrecht family (creators of international supermarket giant Aldi), who could work economic magic.

The word “ungovernable” was also used to describe New York in the 1960s and 1970s, when Mike Quill’s transit union ran roughshod over Mayor John Lindsay’s attempts to control public-sector wage growth. New York was a long-established city with lots of political collusion. The old Tammany Hall could broker deals to keep Gotham going, but Lindsay’s successor, Abe Beame, proved too weak to resist any special interest that wanted more spending or government favors. New York’s spending kept rising even as public services worsened, until bankruptcy loomed and public power wound up in the hands of the unelected Municipal Assistance Corporation. Thankfully, New York reformed itself economically, at least to some extent, under Mayors Rudolph Giuliani and Michael Bloomberg, as Britain did under Prime Minister Margaret Thatcher. Sufficiently strong leaders can buck entrenched insiders.

Edward L. Glaeser, “How to Fix American Capitalism”, City Journal, 2020-12-13.

February 2, 2021

The History of Hollywood

Filed under: Business, History, Media, USA — Tags: , , , , , , , — Nicholas @ 04:00

The Cynical Historian
Published 3 Sep 2020

This episode is about the history of Hollywood, and it’s quite a long one. This is part 9 in a long running series about California history.

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references:
Bernard F. Dick, Engulfed: The Death of Paramount Pictures and the Birth of Corporate Hollywood (Lexington: The University Press of Kentucky, 2001). https://amzn.to/3f2Yb0S​

Hollywood’s America: United States History Through its Films, eds. Mintz, Steven and Randy Roberts (St. James, N.York: Brandywine Press, 1993). https://amzn.to/2tZIoJT

Richard Slotkin, Gunfighter Nation: The Myth of the Frontier in Twentieth-Century America (New York: Atheneum Books, 1992). https://amzn.to/2KX0jI2

Kevin Starr, Inventing the Dream: California through the Progressive Era, (Oxford, U.K.: Oxford University Press, 1985). https://amzn.to/2VPTbVX​

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Wiki: By 1912, major motion-picture companies had set up production near or in Los Angeles. In the early 1900s, most motion picture patents were held by Thomas Edison’s Motion Picture Patents Company in New Jersey, and filmmakers were often sued to stop their productions. To escape this, filmmakers began moving out west to Los Angeles, where attempts to enforce Edison’s patents were easier to evade. Also, the weather was ideal and there was quick access to various settings. Los Angeles became the capital of the film industry in the United States. The mountains, plains and low land prices made Hollywood a good place to establish film studios.

Director D. W. Griffith was the first to make a motion picture in Hollywood. His 17-minute short film In Old California (1910) was filmed for the Biograph Company. Although Hollywood banned movie theaters — of which it had none — before annexation that year, Los Angeles had no such restriction. The first film by a Hollywood studio, Nestor Motion Picture Company, was shot on October 26, 1911. The H. J. Whitley home was used as its set, and the unnamed movie was filmed in the middle of their groves at the corner of Whitley Avenue and Hollywood Boulevard.

The first studio in Hollywood, the Nestor Company, was established by the New Jersey–based Centaur Company in a roadhouse at 6121 Sunset Boulevard (the corner of Gower), in October 1911. Four major film companies – Paramount, Warner Bros., RKO, and Columbia – had studios in Hollywood, as did several minor companies and rental studios. In the 1920s, Hollywood was the fifth-largest industry in the nation. By the 1930s, Hollywood studios became fully vertically integrated, as production, distribution and exhibition was controlled by these companies, enabling Hollywood to produce 600 films per year.

Hollywood became known as Tinseltown and the “dream factory” because of the glittering image of the movie industry. Hollywood has since become a major center for film study in the United States.
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Hashtags: #history​ #Hollywood​ #California

December 16, 2020

QotD: Distorting the history of America’s “Gilded Age”

Filed under: Economics, Education, Government, History, USA — Tags: , , , , — Nicholas @ 01:00

We study history to learn from it. If we can discover what worked and what didn’t work, we can use this knowledge wisely to create a better future. Studying the triumph of American industry, for example, is important because it is the story of how the United States became the world’s leading economic power. The years when this happened, from 1865 to the early 1900s, saw the U.S. encourage entrepreneurs indirectly by limiting government. Slavery was abolished and so was the income tax. Federal spending was slashed and federal budgets had surpluses almost every year in the late 1800s. In other words, the federal government created more freedom and a stable marketplace in which entrepreneurs could operate.

To some extent, during the late 1800s — a period historians call the “Gilded Age” — American politicians learned from the past. They had dabbled in federal subsidies from steamships to transcontinental railroads, and those experiments dismally failed. Politicians then turned to free markets as a better strategy for economic development. The world-dominating achievements of Cornelius Vanderbilt, James J. Hill, John D. Rockefeller, and Charles Schwab validated America’s unprecedented limited government. And when politicians sometimes veered off course later with government interventions for tariffs, high income taxes, anti-trust laws, and an effort to run a steel plant to make armor for war — the results again often hindered American economic progress. Free markets worked well; government intervention usually failed.

Why is it, then, that for so many years, most historians have been teaching the opposite lesson? They have made no distinction between political entrepreneurs, who tried to succeed through federal aid, and market entrepreneurs, who avoided subsidies and sought to create better products at lower prices. Instead, most historians have preached that many, if not all, entrepreneurs were “robber barons”. They did not enrich the U.S. with their investments; instead, they bilked the public and corrupted political and economic life in America. Therefore, government intervention in the economy was needed to save the country from these greedy businessmen.

Burton W. Folsum, “How the Myth of the ‘Robber Barons’ Began — and Why It Persists”, Foundation for Economic Education, 2018-09-21.

December 12, 2020

Trains and Oil | California History [ep.8]

Filed under: Business, Economics, Government, History, Politics, Railways, USA — Tags: , , , — Nicholas @ 02:00

The Cynical Historian
Published 4 Jul 2019

After a long hiatus, here is the return of the History of California series. For those who haven’t seen the previous episodes, here’s the playlist: https://www.youtube.com/playlist?list…

Today we’re going over the history of transcontinental railroads, monopolistic practices, and crude oil production in California.
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references:
eds. Richard Francaviglia and David Narrett, Essays on the Changing Images of the Southwest (Arlington: University of Texas at Arlington, 1994). https://amzn.to/2JwNiHk

William H. Goetzmann, Army Exploration in the American West, 1803-1863, new ed. (1959; Lincoln: University of Nebraska, 1979). https://amzn.to/2K8tslY

Paul Sabin, Crude Politics: The California Oil Market, 1900-1940 (Berkeley: University of California Press, 2005). https://amzn.to/2W16gtt

Jules Tygiel, The Great Los Angeles Swindle: Oil, Stocks, and Scandal During the Roaring Twenties (Berkeley: University of California Press, 1996). https://amzn.to/2ASH7Z0

Richard White, Railroaded: The Transcontinentals and the Making of Modern America (New York: W.W. Norton, 2011). https://amzn.to/2zkURO3
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https://www.patreon.com/CynicalHistorian

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Wiki: The history of the Southern Pacific stretches from 1865 to 1998. For the main page, see Southern Pacific Transportation Company; for the former holding company, see Southern Pacific Rail Corporation. The Southern Pacific was represented by three railroads. The original company was called Southern Pacific Railroad, the second was called Southern Pacific Company and the third was called Southern Pacific Transportation Company. The third Southern Pacific railroad, the Southern Pacific Transportation Company, is now operating as the current incarnation of the Union Pacific Railroad.

The story of oil production in California began in the late 19th century. In 1903, California became the leading oil-producing state in the US, and traded the number one position back-and forth with Oklahoma through the year 1930. As of 2012, California was the nation’s third most prolific oil-producing state, behind only Texas and North Dakota. In the past century, California’s oil industry grew to become the state’s number one GDP export and one of the most profitable industries in the region. The history of oil in the state of California, however, dates back much earlier than the 19th century. For thousands of years prior to European settlement in America, Native Americans in the California territory excavated oil seeps. By the mid-19th century, American geologists discovered the vast oil reserves in California and began mass drilling in the Western Territory. While California’s production of excavated oil increased significantly during the early 20th century, the accelerated drilling resulted in an overproduction of the commodity, and the federal government unsuccessfully made several attempts to regulate the oil market.
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Hashtags: #history #California #trains #oil

October 29, 2020

War, Cinema, and Cheese! | BETWEEN 2 WARS: ZEITGEIST! | E.01 – Harvest 1918

TimeGhost History
Published 28 Oct 2020

War, poverty, and disease continue to pummel the word in the wake of the Great War. But still, humanity carries on, not only surviving but creating a host of futuristic opportunities in the arts, the economy, and … cheese.

Join us on Patreon: https://www.patreon.com/TimeGhostHistory

Hosted by: Indy Neidell
Written by: Indy Neidell, Francis van Berkel, and Spartacus Olsson.
Director: Astrid Deinhard
Producers: Astrid Deinhard and Spartacus Olsson
Executive Producers: Astrid Deinhard, Indy Neidell, Spartacus Olsson, Bodo Rittenauer
Creative Producer: Maria Kyhle
Post-Production Director: Wieke Kapteijns
Research by: Indy Neidell, Francis van Berkel, and Spartacus Olsson.
Archive Research: Daniel Weiss
Edited by: Daniel Weiss
Sound design: Marek Kamiński

Colorizations:
Daniel Weiss – https://www.facebook.com/TheYankeeCol…
(BlauColorizations) – https://www.instagram.com/blaucolorizations
Dememorabilia – https://www.instagram.com/dememorabilia/

Sources:

From the Noun Project:
iron cross By Souvik Maity, IN
poverty By Phạm Thanh Lộc, VN
Skull_51748

Soundtracks from Epidemic Sound:
– “One More for the Road” – Golden Age Radio
– “Dark Shadow” – Etienne Roussel
– “Not Safe Yet” – Gunnar Johnsen
– “Rememberance” – Fabien Tell
– “Last Point of Safe Return” – Fabien Tell
– “Steps in Time” – Golden Age Radio
– “What Now” – Golden Age Radio
– “Sunday Worship” – Radio Night
– “Astray” – Alec Slayne
– “Break Free” – Fabien Tell

Archive by Screenocean/Reuters https://www.screenocean.com.

A TimeGhost chronological documentary produced by OnLion Entertainment GmbH.

From the comments:

TimeGhost History
1 day ago
Welcome back to Between Two Wars! Strap in for what is going to be an exciting ride through the massive cultural, social, economic, and technological shifts that take place after the Great War. We can’t guarantee this will always be a positive tale. These changes entail plenty of fear and suffering, and even ‘fun’ things like the Jazz Age have their darker sides.

But that doesn’t alter the fact that the interwar era is a time of promise where people envision modern futures to replace old pasts. There is everything to play for in this brave new world and a vision of progress all around in politics, culture, food, and more.

September 18, 2020

From innovation to absolutism — English inventors and the Divine Right of Kings

In the latest Age of Invention newsletter, Anton Howes looks at how innovations during the late Tudor and Stuart eras sometimes bolstered the monarchy in its financial battles with Parliament (which, in turn, eventually led to actual battles during the English Civil War):

King Charles I and Prince Rupert before the Battle of Naseby 14th June 1645 during the English Civil War.
19th century artist unknown, from Wikimedia Commons.

The various schemes that innovators proposed — from finding a northeast passage to China, to starting a brass industry, to colonising Virginia, or boosting the fish industry by importing Dutch salt-making methods — all promised to benefit the public. They were to support the “common weal”, or commonwealth. And to a certain extent, many projects did. The historian Joan Thirsk did much pioneering work in the 1970s to trace the impact of various technological or commercial projects, revealing that even something as mundane as growing woad, for its blue dye, could have a dramatic impact on local economies. With woad, the income of an ordinary farm labouring household might be almost doubled, for four months in the year, by employing women and children. In the late 1580s, the 5,000 or so acres converted to woad-growing in the south of England likely employed about 20,000 people. That may seem small today, but at a time when the population of a typical market town was a paltry 800 people, even a few hundred acres of woad being cultivated here or there might draw in workers from across the whole region. In the mid-sixteenth century, even the entire population of London had only been about 50-70,000. As Thirsk discovered, innovative projectors also sometimes fulfilled their other public-spirited promises, for example by creating domestic substitutes for costly imported goods, or securing the supplies of strategic resources.

But the ideal of benefiting the commonwealth could also, all too frequently, be elided with serving the interests of the Crown. Projectors might promise the monarch a direct share of an invention’s profits, or that a stimulated industry would result in higher income from tariffs or excise taxes. Increasingly, they proposed schemes that were almost entirely focused on maximising state revenue, with little evidence of new technology. They identified “abuses” in certain industries — at this remove, it’s difficult to tell if these justifications were real — and asked for monopolies over them in order to “regulate” them, then making money by selling licences. Last week I mentioned patents over alehouses, and on playing cards. They also offered to increase the income from the Crown’s property, for example by finding so-called “concealed lands” — lands that had been seized during the Reformation, but which through local resistance or corruption had ostensibly not been paying their proper rents. The projectors would take their share of the money they identified as “missing”. And they proposed enforcing laws, especially if the punishments involved levying fines or confiscating property. The projectors offered to find the lawbreakers and prosecute them, after which they’d take their share of the financial punishments.

Projectors thus came to present themselves as state revenue-raisers and enforcers, circumventing all of the traditional constraints on the monarch’s money and power. They provided an alternative to Parliaments, as well as to city corporations and guilds, in raising money and propagating their rule. Taking it a step further, projectors offered the tantalising possibility that kings like James I and Charles I might rule through proclamation and patents alone, without having to answer to anybody. They thus experimented with absolutism for much of 1610-40, only occasionally being forced to call Parliament for as briefly as possible when the pressing financial demands of war intervened.

In the process, with the growing multitude of projects — a few bringing technological advancement, but many merely lining the pockets of courtier and king — the designation “projector” became mud. It was as if, today, the Queen were to use her prerogative to grant a few of her courtiers monopolies on collecting all traffic fines, or litter penalties, to be rewarded solely on commission. Or if she were to award an unscrupulous private company the right to award all alcohol-selling licences (perhaps on the basis that underage drinking was becoming common). The country would soon be awash with hidden speed cameras and incognito litter wardens, and the price of alcohol would go through the roof. The people responsible would not be popular. A recent book by economic historian Koji Yamamoto meticulously charts the changing public perceptions of projects, describing the ways in which innovators then struggled, for decades, to regain the public’s trust.

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