Collectively, mankind has never had it so good despite periodic economic crises of which the current sub-prime crisis is merely the latest example. Much of this success is attributable to the increasing efficiency of the world's financial institutions as finance has proved to be one of the most important causal factors in economic performance. In a series of original essays, leading financial and economic historians examine how financial innovations from the seventeenth century to the present have continually challenged established institutional arrangements, forcing change and adaptation by governments, financial intermediaries, and financial markets. Where these have been successful, wealth creation and growth have followed. When they failed, growth slowed and sometimes economic decline has followed. These essays illustrate the difficulties of coordinating financial innovations in order to sustain their benefits for the wider economy, a theme that will be of interest to policy makers as well as economic historians.
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1 Financial innovations and crises: The view backwards from Northern Rock by Jeremy Atack 1
2 An economic explanation of the early Bank of Amsterdam, debasement, bills of exchange and the emergence of the first central bank by Stephen Quinn and William Roberds 32
3 With a view to hold: The emergence of institutional investors on the Amsterdam securities market during the seventeenth and eighteenth centuries by Oscar Gelderblom and Joost Jonker 71
4 Was John Law's System a bubble? The Mississippi Bubble revisited by Francois R. Velde 99
5 Sir George Caswall vs. the Duke of Portland: Financial contracts and litigation in the wake of the South Sea Bubble by Gary S. Shea 121
6 The bell jar: Commercial interest rates between two revolutions, 1688-1789 by Marc Flandreau and Christophe Galimard and Clemens Jobst and Pilar Nogues-Marco 161
7 Comparing the UK and US financial systems, 1790-1830 by Richard Sylla 209
8 Natural experiments in financial reform in the nineteenth century: The Davis and Gallman analysis by Larry Neal 241
9 Regulatory changes and the development of the US banking market, 1870 1914: A study of profit rates and risk in national banks by Richard J. Sullivan 262
10 Anticipating the stock market crash of 1929: The view from the floor of the stock exchange by Eugene N. White 294
11 The development of "non-traditional" open market operations: Lessons from FDR's silver purchase program by Richard C. K. Burdekin and Marc D. Weidenmier 319
12 The interwar shocks to US-Cuban trade relations: A view through sugar company stock price data by Alan Dye and Richard Sicotte 345
13 Central bank reaction functions during the inter-war gold standard: A view from the periphery by Kirsten Wandschneider 388
14 When do stock market booms occur? The macroeconomic and policy environments