Developments in finance have often been more readily associated with commercial and industrial activities than pastoral or rural ones. True, the former drives considerable demand for financial services but so too do the latter. Yet, while urban finance advanced considerably in the 18th century, rural economies were not as transformed by the advent of…
For centuries, the wealthiest families in Britain were the country’s largest landowners. As commercial activity grew from the 17th century onwards though, this tendency began to diminish, but only slightly. Later, the Industrial Revolution created many new fortunes outside the landowning aristocracy. Nonetheless, there was always some portion of new urban wealth that was…
The Great Depression is associated with the stock market mania that came to an end in the United States in 1929 but the ‘20s saw more than a bubble in stock prices, there was an excited frenzy in real estate too. The decade was known for an expansion of consumer credit that enabled the middle…
In the 1830s, Chicago was a small town whose future as a logistical and commercial center would have seemed doubtful. It was not even the largest city in its region and the local geography was, without improvement, not particularly remarkable. Yet, the town captured the interest of settlers and speculators as transformative waterway improvements…
Some building booms are powered by discoveries of natural resources. Plantations require irrigation works, oil wells require pipelines, and almost all resource booms stimulate the clearance of land, the construction of roads, railways, and ports, and the development of accompanying industries. Other building frenzies are the result of urbanization which allows some cities to…
The Great Fire of London destroyed most of the capital and, in fact, nearly the entirety of the portion of London within the walls, the City. Yet, London continued to grow. The 1666 fire sparked a building boom that was most pronounced in the western suburbs. However, prior to this, London had no building…
The Dutch Republic had the most developed financial system in Europe in the 17th and 18th centuries, a system which deployed huge surpluses earned in trade. However, there were limited investment opportunities in Holland so this system also helped develop Dutch colonies as investors in Holland invested their surpluses abroad. In Suriname, Dutch savings…
A 1920s bubble where prices rise quickly, encouraging hordes of new speculators into the market, overwhelms the only prudential safeguard available at this time, good sense. When the bust comes, the speculators left with devalued assets are ruined and even take down banks along with them. This could describe the nationwide stock market boom and…
Financial bubbles become so large because they have the potential to self-perpetuate. When expectations for future prices are based on a recent trend, the best performing investments in the near future will usually be the same as those which have performed well thus far. If encouraged by greater publicity, credit availability, loose regulation, or an…
The need for insurance becomes most apparent after a major disaster, so disasters tend to be nurturing of innovation in insurance. London’s Great Fire of 1666 was one such disaster. Not only did the destruction require the rebuilding of much of the city, it also prompted the development and proliferation of fire insurance, hitherto little…
