Cambridge University Press
978-1-107-03015-2 - The Foundations of Worldwide Economic Integration: Power, Institutions,
and Global Markets, 1850–1930
Edited by Christof Dejung and Niels P. Petersson
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The Foundations of Worldwide
Economic Integration
Power, Institutions, and Global Markets,
1850–1930
Edited by
CHRISTOF DEJUNG
University of Konstanz
NIELS P. PETERSSON
Sheffield Hallam University
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Cambridge University Press
978-1-107-03015-2 - The Foundations of Worldwide Economic Integration: Power, Institutions,
and Global Markets, 1850–1930
Edited by Christof Dejung and Niels P. Petersson
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Library of Congress Cataloging in Publication Data
The foundations of worldwide economic integration : power, institutions, and global
markets, 1850–1930 / [edited by] Christof Dejung, University of Konstanz, Niels P.
Petersson, Sheffield Hallam University.
pages cm. – (Cambridge studies in the emergence of global enterprise)
Includes bibliographical references and index.
isbn 978-1-107-03015-2 (hardback)
1. International economic integration – History. 2. International trade – History.
3. International finance – History. 4. International economic relations – History.
5. Globalization – Economic aspects – History. I. Dejung, Christof, editor of
compilation. II. Petersson, Niels P. editor of compilation.
hf1418.5.f68 2012
337.09′ 034–dc23
2012021038
isbn 978-1-107-03015-2 Hardback
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978-1-107-03015-2 - The Foundations of Worldwide Economic Integration: Power, Institutions,
and Global Markets, 1850–1930
Edited by Christof Dejung and Niels P. Petersson
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Contents
Tables and Figures
Contributors
page ix
xi
Foreword by Harold James
xv
1 Introduction: Power, Institutions, and Global Markets –
Actors, Mechanisms, and Foundations of Worldwide
Economic Integration, 1850–1930
Christof Dejung and Niels P. Petersson
part i: legal institutions and private actors
2 Legal Institutions and the World Economy, 1900–1930
Niels P. Petersson
3 Against Globalisation: Sovereignty, Courts, and the Failure
to Coordinate International Bankruptcies, 1870–1940
Jérôme Sgard
4 Credit Information, Institutions, and International Trade:
The United Kingdom, United States, and Germany,
1850–1930
Rowena Olegario
1
21
40
60
part ii: colonial markets and non-western actors
5 The London Stock Exchange and the Colonial Market:
The City, Internationalisation, and Power
Bernard Attard
6 The London Gold Market, 1900–1931
Bernd-Stefan Grewe
89
112
vii
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Contents
7 The Boundaries of Western Power: The Colonial Cotton
Economy in India and the Problem of Quality
Christof Dejung
133
8 The Colonised as Global Traders: Indian Trading Networks
in the World Economy, 1850–1939
Claude Markovits
158
9 The International Patent System and the Global Flow of
Technologies: The Case of Japan, 1880–1930
Pierre-Yves Donzé
179
part iii: the first world war and the consequences
for economic globalisation
10 Transnational Cooperation in Wartime: The International
Protection of Intellectual Property Rights during the First
World War
Isabella Löhr
11 The Resilience of Globalisation during the First World War:
The Case of Bunge & Born in Argentina
Phillip Dehne
205
228
12 Global Economic Governance and the Private Sector:
The League of Nations’ Experiment in the 1920s
Michele d’Alessandro
249
Index
271
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Contributors
Bernard Attard is Lecturer in Economic History in the School of Historical Studies at the University of Leicester. He is particularly interested
in international investment before the Great Depression, the political
economy of British overseas expansion, and the development of British
settler societies. He has published several book chapters and articles on
these subjects, most recently ‘Making the Colonial State: Development,
Debt and Warfare in New Zealand, 1853–78’, Australian Economic History Review (2012). He is co-editor of a forthcoming special issue of the
Journal of Imperial and Commonwealth History on Finance, Empire, and
the British World, and is currently writing a study of indebtedness and
imperialism in Queensland before 1930.
Michele d’Alessandro teaches Economic History at Bocconi University,
Milan. He has published two company history books and written about
the multinational operations of leading Italian banks in the first half of
the twentieth century. He is currently in the process of publishing his
PhD dissertation on the governance of international markets through the
League of Nations in the late 1920s and early 1930s.
Phillip Dehne is Professor of History at St. Joseph’s College, New York.
His book On the Far Western Front: Britain’s First World War in South
America (Manchester, 2010), the first history of this conflict zone far
from the European battlefields, expands the geographic parameters of
First World War studies and explains how early twentieth-century globalisation could both intensify and mitigate Britain’s total warfare. He is
presently working on a book that uncovers the activities of Lord Robert
Cecil at the Paris Peace Conference in 1919.
xi
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Contributors
Christof Dejung is Senior Lecturer and Researcher in the Department of
History and Sociology at the University of Konstanz, Germany. Recent
publications include ‘British Wartime Protectionism and Swiss Trading
Firms in Asia during the First World War’, Past & Present (2010), with
Andreas Zangger; ‘Bridges to the East: European Merchants and Business
Practices in India and China’, in Robert Lee (ed.); Commerce and Culture:
Nineteenth-Century Business Elites (Farnham, 2011) and Die Fäden des
globalen Marktes: Eine Sozial- und Kulturgeschichte des Welthandels
am Beispiel der Handelsfirma Gebrüder Volkart 1851–1999 (Cologne,
forthcoming).
Pierre-Yves Donzé is Associate Professor at Kyoto University. He was
born in Switzerland and studied history at the University of Neuchâtel,
where he obtained his PhD in 2005, before studying as a postdoctoral
Fellow in Japan and in the United States. He co-organised the session
‘Technology Transfer in the 20th Century: Institutions and Actors’ at
the XVth World Economic History Congress at Utrecht (2009) and has
recently published History of the Swiss Watch Industry from Jacques
David to Nicolas Hayek (Peter Lang, 2011). He is currently working on
an economic and business history of medical technologies in Japan from
a global perspective.
Bernd-Stefan Grewe is Professor of Modern History at the University
of Education in Freiburg, Germany. His research interests include environmental history (Der versperrte Wald, Köln, 2004), global and international history (Project: The Global History of Gold in the Twentieth Century), material culture (Luxury in Global Perspective: Objects
and practices, edited with Karin Hofmeester, Oxford, forthcoming) and
didactics of history.
Harold James is Professor of History and International Affairs in the
Woodrow Wilson School, Princeton University. His most recent works
are The End of Globalization: Lessons from the Great Depression
(Cambridge, MA, 2001, which is also available in Chinese, German,
Greek, Japanese, Korean and Spanish); Europe Reborn: A History 1914–
2000 (Harlow, 2003); and The Roman Predicament: How the Rules of
International Order Create the Politics of Empire (Princeton, 2006). In
2004 he was awarded the Helmut Schmid Prize for Economic History, and
in 2005 the Ludwig Erhard Prize for writing about economics. Professor
James is currently working on a book on the history of the corporation
in modern Europe, a study of the 1929 crash and a study of the history
of European monetary integration.
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Contributors
xiii
Isabella Löhr is Research and Teaching Assistant in the Department of
History at the University of Heidelberg. Her areas of research include
the history of intellectual property rights, the history of international
organisations and processes of globalisation and transnationalisation
in the nineteenth and twentieth centuries. Recent publications include
Die Globalisierung geistiger Eigentumsrechte. Neue Strukturen internationaler Zusammenarbeit, 1886–1952 (Göttingen, 2010) and, forthcoming, The Propertization of Culture and Knowledge: Global Governance
of Intellectual Property Rights, a special issue of the journal Comparativ,
co-edited with Hannes Siegrist.
Claude Markovits is Emeritus Senior Research Fellow at the Centre for
Indian and South Asian Studies, Ecole des Hautes Etudes en Sciences
Sociales, CNRS, Paris. His publications include The Global World of
Indian Merchants, 1750–1947: Traders of Sind from Bukhara to Panama
(Cambridge, 2000); Merchants, Traders, Entrepreneurs: Indian Business
in the Colonial Era (Basingstoke, 2008); and ‘La circulation de la main
d’œuvre commerciale dans le cadre d’un réseau marchand indien international au début du XXe siècle’, in A. Stanziani (ed.), Le travail contraint
en Asie et en Europe XVIIe-XXe siècles (Paris, 2010), 197–211.
Rowena Olegario is a Senior Research Fellow and Case Study Editor at
Said Business School, University of Oxford. She is the author of A Culture of Credit: Embedding Trust and Transparency in American Business
(Cambridge, MA, 2006). She is currently writing a history of credit in
America.
Niels P. Petersson is Senior Lecturer in history at Sheffield Hallam
University. His research interests include imperialism, globalisation and
more recently, transnational social history. Selected publications include
Anarchie und Weltrecht. Das Deutsche Reich und die Institutionen der
Weltwirtschaft, 1890–1930 (Göttingen, 2009) and, with Jürgen Osterhammel, Globalization: A Short History (Princeton, 2005).
Jérôme Sgard holds a PhD in Economics from Université de Paris-XNanterre. He is a Professor of Political Economy at Science-Po, affiliated
to the Centre d’Etudes et de Recherches Internationales (CERI). Before
that he was a senior researcher at CEPII, also in Paris, and an Associate Professor in Economics at Université de Paris-IX-Dauphine. During the 1990s he worked on economic reforms in Eastern Europe and
Russia (Europe de l’Est, la transition économique, 1997), and on financial crises in emerging economies (see L’Economie de la Panique, 2002).
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xiv
Contributors
Since then his research interests have focussed on the architecture and
crisis of markets as seen from the perspective of their microregulators: judges, arbiters and bureaucrats. This covers, for instance, the
case of IMF policies vis-à-vis sovereign debts; private bankruptcies in
nineteenth-century France; or the development of early industrial policy
in eighteenth-century France.
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Foreword
Harold James
Describing the very dynamic global trade of the second half of the nineteenth century and the early twentieth century has become a standard
part of the repertoire of economic historians. I like to think in terms of
globalisation cycles, with long periods of increased interchange of goods
and flows of people, capital and ideas. But then something happens, and
globalisation is interrupted. Many people feel that there has been too
much interaction, and they draw back from the global setting and look
instead for protected areas in which they can be safe from global threat
and global devastation. Politics looks for national rather than international solutions to pressing problems and concerns, and international
cooperation becomes tense and difficult, if not impossible. At each stage
in the globalisation cycle, we tend to extrapolate and to think that this
particular phase will last forever: whether it is the confident upswing or
the stagnation and anger of the downward movement of the cycle.
The breakdown of globalisation has often been studied, and it is usually
seen as a consequence of the interplay of policy responses that seek to
limit the extent of international connectedness. By contrast, many people
think of the integration or upswing phases as happening automatically,
as a result simply of the unplanned magic of myriad market interactions.
But are the ups and downs of globalisation as clearly separable as such
a model would suggest? The reactions that bring about the downturn have
their origins in the upswing phase. Globalisation is not only a process that
occurs somewhere out there – in an objective and measurable world of
trade and money. It also happens in everyone’s minds, and that part of
globalisation is often more difficult to manage. To understand both the
process and our reactions to it, we need a historical sense. If we want to
xv
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Foreword
understand why it is sometimes threatened, we need to know what makes
it work, what drives it. This is what this fine book provides.
The chapters collected here show how much the establishment of globalisation follows from choices, plans and strategies. Integration does not
in fact simply come out of nothing. Complex transactions and relations
in a globalised society and economy require an element of certainty that
is provided by a simple capacity to make equivalences.
The most obvious form of this security is the stability that is provided
by a secure monetary standard, and globalisation upswings have always
had a widely recognized and shared international measure of value. The
late nineteenth century was characterized by Charles de Gaulle in retrospect as the époque du trois pour cent, the absolute confidence that
government and other high-quality bonds would produce a stable and
predictable return of 3 per cent. The foundational belief is that market
prices send an intelligible signal, and it has political implications. Markets
limit the capacity of governments to behave badly. Yet markets are also
not purely automatic mechanisms, but depend on a host of conventions
and institutions. What ideas and what interests drove the participants,
and what was the relationship between ideas and interests? This is the
question that already fascinated Max Weber at the height of the late
nineteenth-century era of globalisation.
The confidence that was at the core of the globalisation belief in universal connectedness led many people to extend credit and take larger
and larger risks. In short, the expectations aroused by globalisation set
off credit booms, and the downswing of deglobalisation came with the
disappointment of bubbly expectations and then with financial collapse.
Raised expectations produced the sense that anything and everything was
possible; in other words, euphoria ensued that lacked rational foundations. The power of markets in this case meant that alternative disciplinary
methods, in the form of state regulation or in the imposition of a complex
nonstate system of authority in a corporation, also began to be eroded.
There was then a universal questioning of every type of value.
One of the most fascinating problems occurs when trying to determine how the trust or confidence arises that allows people to undertake
risky transactions over long geographical distances, often across multiple
political and judicial settings. It may stem from more information about
business partners, made available through new organisations, through
highly complex business corporations, credit agencies or official institutions that transmit and translate market signals into usable or reliable
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information. Weber gave an answer in terms of religious ideas and religious communities, in particular the gathered Protestant congregations of
Northern Europe and North America. How do all of these institutional
ways of managing space and time reduce transaction costs? How far do
public authorities shape the institutional possibilities, and what kinds of
cooperation are possible among states that see themselves in competition
with each other? What are states doing when they manage their relations
with each other and they work on international agreements?
The chapters in this collection also raise the intriguing question of
how separable the globalisation and deglobalisation phases are from each
other. Can we be in a period of deglobalisation while imagining that the
world is ever more globalised? Do crises also produce countervailing
forces? Finally, one of the greatest paradoxes is that it is military conflict
that usually ends globalisation cycles and unleashes the backlash. The
globalised world of the eighteenth century broke apart with the wars of
the French Revolution and Napoleon, and the First World War gave a
bad shock to the assumptions of early twentieth-century globalisers. Yet
military activity and the imperialism of which it is an expression are also
social processes that are transnational and globalised. The authors in this
volume rightly do not see the First World War and its aftermath as simply
a break in globalisation but rather as a turning of its direction and even
as an element of continuity. Violence, as well as economic interaction, is
contagious and spills over from country to country and from continent
to continent.
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