Great Wave Read online

  Praise for The Great Wave

  “This year’s best book for investors . . . . Too often, historical perspective on Wall Street means going back a decade or two. Mr Fischer instead traces inflation data from medieval times forward, finding evidence of repeated long patterns of rising prices, followed by long periods of stability. In the process he demolishes some theories of what causes inflation . . . the thesis is both believable and fascinating, and so is the book.” Floyd Norris, New York Times annual survey of books in business and economics, 22 December 1996

  “Very persuasive . . . a major work that deserves the attention of all historians.” Nancy Gordon, History, Spring 1997

  “Economists can read this book with interest and profit . . .. Fischer is a consummate stylist and meticulous in his attention to details.” Rondo Cameron, Journal of Economic Literature, Fall, 1997

  “Phenomenal scope and erudition . . .. Fischer’s history of inflation is a thoroughly good read. He should send the Treasury a copy.” Mark Archer, The Sunday Telegraph, 16 March 1997

  “Fascinating reading. Fischer is no sensationalist trying to crank out a pseudo-economic best-seller, but a serious economic historian . . . a book worth chewing on and digesting.” Barton Biggs, Morgan Stanley Dean Witter Investment Perspectives, July 9, 1997

  “Important . . .. Fischer’s scholarship is admirable.” Larry Elliott, The Guardian, 4 March 1997

  “Superbly written . . . you’ll never glare at a price tag in quite the same way again.” Kay Davidson, San Francisco Examiner, 19 February 1997

  “Informative and compelling. . . . A panoramic view of the role of prices and the pernicious effects of inflation down through the ages.” Stanley W. Angrist, Wall Street Journal, 19 December 1996

  “A brilliant, bold analysis of the relationship between economics—the prices of things—and human welfare over 800 years. . . . It also allows us to observe an audacious and prodigiously learned historian’s mind at work.” William McFeely, Boston Globe, 17 Nov. 1996

  “Sumptuous in detail, charming in prose and provocative in implications . . . Historians will contrive careers out of Fisher’s data.” Andrew Allentuck, Toronto Globe and Mail 14 Dec. 1996

  “A provocative and thoughtful tour through history.” The Economist, 19 July 1997

  “This is a fascinating book; it is also an important one . . .. Fischer succeeds in demonstrating that there are recurrent waves of price revolutions in human history . . .. His is a powerful piece of historical analysis and ought to become part of everyone’s framework of understanding.” William Rees-Mogg, New Statesman and Society, 14 March 1997

  “The best explanation for the wild gyrations at the heart of today’s popular culture I’ve yet seen.” Nathan Greenfield, Ottawa Citizen, May 4, 1997

  “Similar to more popular and populist works that spring up like daffodils and last about as long . . .. The Great Wave, in contrast, is the real thing, backed by solid research, not the author’s political leanings . . .. Fischer’s work offers a cautionary story that is readily understandable and surprisingly compelling.” Bill Peschel, The Herald, Feb 16, 1997

  “Intriguing. . . . Mr. Fischer looks at a thousand years of European history, and documents with fascinating detail long periods of rising prices that are accompanied by social upheaval and even war, followed by long periods of stable prices accompanied by social calm.” Alan Murray, Wall Street Journal, 10 February 1997

  “Important . . .. combining vivid narrative with shrewd dissections of quantitative evidence . . . He has described the past and present in ways that inspire interesting questions and offer novel insights into our condition. Can a historian make a finer contribution?” Thomas Archdeacon, New York Times Book Review, 5 January 1997

  “Delightful . . . truly a delightful book . . .. Fischer’s insights, thought-provoking hypotheses, and engaging writing style make The Great Wave a book worthy of our attention.” Dudley Poston, Sinet, August, 1997

  “Wise, worthy, and mostly convincing . . . the strength of Fischer’s narrative is the way he manages to intertwine details of everyday life and familiar aspects of history with the complex story of the economic underpinnings of the times.” Alan Earls, Boston Book Review

  “Fischer is nothing if not an expert storyteller. He has an unerring instinct for the main narrative line; he decorates with an abundance of detail . . . his book lays out with gentlemanly thoroughness the great questions that fairly leap out of the numbers.” David Warsh, Boston Globe

  “Tantalizing . . .. A bold thread coursing through the weave of eight centuries of economic history.” William P. Kucewicz, Markets, April 1997

  “Fascinating . . . detailed familiarity with Fischer’s ground-breaking book, and responses to the difficult questions it raises ought to be required of any investment manager claiming knowledge of the future path of inflation.” Malcolm Mitchell, Investment Policy, July-August, 1997

  “Very readable . . . in an interesting and informative way, the author reminds us of the real consequences that economic policy has in each person’s life.” Michael Wald, Bureau of Labor Statistics, Monthly Labor Review, April 1997

  “Meticulously assembled price records from Mesopotamia to the modern day . . . the conclusion is optimistic.” Edward Whitehouse, Financial Times, London, June 5, 1997

  “Informative and readable . . . Fischer combines a lively narrative with cogent analysis and sound advice. Essential for scholarly collections, this fine book will also be appreciated by lay readers.” David Keymer, Library Journal November 1, 1996

  “Fascinating historical facts and anecdotes . . . avoids the fog that obscures much academic writing.” David R. Francis, Christian Science Monitor, 24 April 1997

  “Fischer is well known for providing new insights into important but seemingly commonplace topics. This he does again in The Great Wave.” William L. Urban, Magill Book Reviews, 1997

  “Absorbing narrative . . . economic theorists have long suggested that economic events are cyclic. But in Fischer’s discerning analysis there have been four great price revolutions in western history.” David Rouse, Booklist, October 1, 1996

  “A bold overview of how ordinary men and women have been protagonists in a drama that was (in retrospect) nothing less than the modernization of economic life.” Robert Heilbroner, Civilization, 1996

  “Fascinating . . .. Although his main purpose—and greatest contribution—is to describe price revolutions, Fischer also takes a stab at explaining why they occur. he boldly declares some preeminent scholars to be embarrassingly wrong. No economist or historian will agree with everything he says. Many will vehemently disagree. But most will learn a great deal.” Lexington Herald-Leader, January 26, 1997

  “Monumental . . . History shows that periods of deflation can be periods of prosperity, too. Here’s a strategy for investing in an era of prosperous deflation. Evidence? David H. Fischer’s monumental history of price movements, The Great Wave.” Thomas Easton, Forbes Magazine, November 16, 1998

  THE GREAT WAVE

  Price Revolutions and the Rhythm of History

  David Hackett Fischer

  Oxford University Press

  Oxford New York

  Athens Auckland Bangkok Bogotá Bombay

  Buenos Aires Calcutta Cape Town Dar es Salaam

  Delhi Florence Hong Kong Istanbul Karachi

  Kuala Lumpur Madras Madrid Melbourne

  Mexico City Nairobi Paris Singapore

  Taipei Tokyo Toronto

  and associated companies in

  Berlin Ibadan

  Copyright © 1996 by David Hackett Fischer

  First published by Oxford University Press, Inc., 1996

  198 Madison Avenue, New York, New York 10016

  First
issued as an Oxford University Press paperback, 1999

  Oxford is a registered trademark of Oxford University Press

  All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of Oxford University Press.

  Library of Congress Cataloging-in-Publication Data

  Fischer, David Hackett, 1935–

  The great wave: price revolutions and the rhythm of history /

  David Hackett Fischer.

  p. cm. Includes bibliographical references and index.

  ISBN 0-19-505377-X

  ISBN 0-19-512121-X (Pbk.)

  1. Prices—History. 2. Business cycles—History.

  3. Economic history. I. Title.

  HB231.F48 1996

  338.5’2—dc20 95-52161

  9 8 7 6 5 4 3 2 1

  Printed in the United States of America

  For my parents, with love

  Norma and John Fischer

  CONTENTS

  PREFACE

  “Something Like a Seismograph,”

  INTRODUCTION

  Great Waves in World History

  THE FIRST WAVE

  The Medieval Price Revolution

  The Crisis of the Fourteenth Century

  The Equilibrium of the Renaissance

  THE SECOND WAVE

  The Price Revolution of the Sixteenth Century

  The Crisis of the Seventeenth Century

  The Equilibrium of the Enlightenment

  THE THIRD WAVE

  The Price Revolution of the Eighteenth Century

  The Revolutionary Crisis

  The Equilibrium of the Victorian Era

  THE FOURTH WAVE

  The Price Revolution of the Twentieth Century

  The Troubles of Our Time

  CONCLUSION

  From the Past to the Future

  APPENDICES

  A. Price Revolutions in the Ancient World

  B. The Crisis of the Fourteenth Century: A World Movement?

  C. The Crisis of the Seventeenth Century: A Global Event?

  D. America and Europe: One Conjuncture or Two?

  E. Cycles and Waves

  F. Toward a Discrimination of Inflations

  G. Money of Exchange and Money of Account

  H. Nominal Prices and Silver Equivalents

  I. Returns to Capital: Interest Rates as Historical Indicators

  J. Returns to Labor: Real Wages and Standards of Living

  K. Measures of Wealth and Income Distribution

  L. Price Revolutions and Inequality

  M. Price Revolutions and Family Disintegration

  N. Price Revolutions and Personal Violence

  O. Economics and History

  NOTES

  BIBLIOGRAPHY

  Primary Sources for the History of Prices

  Secondary Sources

  ACKNOWLEDGMENTS

  CREDITS

  INDEX

  FIGURES

  Charts, Maps, and Graphs

  INTRODUCTION

  0.01 Prices in England: Three Series, 1201–1993

  0.02 Grain Prices in Europe: The Abel Series, 1201–1960

  THE MEDIEVAL PRICE REVOLUTION

  1.01 The Renaissance of the Twelfth Century

  1.02 The Price of Wheat in England: The Structure of Change

  1.03 The Price of Wheat in Italy, France, and England

  1.04 English Prices and Population Movements, 1160–1350

  1.05 Prices of Oxen, Wheat and Cheese: England, 1210–1325

  1.06 Price Relatives in England, 1261–1320

  1.07 English Monetary Fluctuations and the Price of Oxen

  1.08 Returns to Labor: The Fall of Real Wages, 1270–1340

  1.09 Returns to Land: The Rise of Rents, 1201–1350

  1.10 The Growth of Inequality in Tuscany, 1307–1427

  THE CRISIS OF THE FOURTEENTH CENTURY

  1.11 Harvest Fluctuations and Famines in England, 1260–1360

  1.12 Prices and Crime in Norfolk, England, 1300–1348

  1.13 The Black Death

  1.14 The Fall of Population in Essex

  THE EQUILIBRIUM OF THE RENAISSANCE

  1.15 The Fall of Population in Pistoia, 1244–1404

  1.16 The Abandonment of Farms in Denmark, 1361–1460

  1.17 The Damping of Harvest Fluctuations, 1400–1480

  1.18 The Price of Grain in England and Germany, 1360–1490

  1.19 Returns to Land in Italy and France, 1400–1460

  1.20 Returns to Labor: Real Wages in England and France

  1.21 Returns to Capital: The Fall of Interest Rates

  1.22 The Growth of Peasant Holdings in England

  1.23 The Renaissance of the Fifteenth Century

  THE PRICE REVOLUTION OF THE SIXTEENTH CENTURY

  2.01 Prices in Spain, England, and Germany, 1475–1660

  2.02 The Structure of Grain Prices in Modena, 1452–1610

  2.03 English Prices and Population Movements, 1541–1671

  2.04 Price Relatives in England, 1450–1650

  2.05 The Price of Energy in Andalusia, 1500–1660

  2.06 Returns to Labor: The Fall of Real Wages, 1480–1640

  2.07 Returns to Land: The Rise of Rent, 1500–1669

  2.08 Returns to Capital: Rising Interest Rates, 1500–1599

  2.09 American Treasure and Spanish Prices, 1500–1660

  2.10 Prices and Coinage of Money in France

  2.11 The Growth of Inequality in England, 1544–1627

  2.12 Harvest Prices, Famine, and Plague in England, 1480–1620

  2.13 Monetary Debasements and Consumable Prices in England

  THE CRISIS OF THE SEVENTEENTH CENTURY

  2.14 Instability in English Grain Prices, 1490–1650

  2.15 Prices and Property Crimes in Essex, England, 1566–1602

  2.16 The Fall of Population in Europe, 1600–1660

  2.17 The Crisis of the Seventeenth Century

  THE EQUILIBRIUM OF THE ENLIGHTENMENT

  2.18 The Price of Wheat in Three European Capitals, 1660–1730

  2.19 Staple Prices in America, 1658–1738

  2.20 Returns to Labor: The Rise of English Wages, 1640–1739

  2.21 Returns to Land: The Fall of Rent in France, 1650–1729

  2.22 Returns to Capital: The Fall of Interest Rates, 1600–1740

  2.23 Declining Inequality in England and Wales, 1670–1700

  2.24 The Decline of Violent Crime in Kent, 1670–1740

  2.25 The Spread of the Enlightenment

  THE PRICE REVOLUTION OF THE EIGHTEENTH CENTURY

  3.01 Prices in England, France and United States, 1720–1820

  3.02 The Structure of Change: The Price of Wheat in France

  3.03 Price Relatives in France, 1726–1789

  3.04 Price Surges in the American Energy Market, 1792–1820

  3.5 Prices and Population Movements in England, 1666–1820

  3.06 Arrivals of American Treasure in Europe, 1503–1805

  3.07 Europe’s Supply of Precious Metals by Place of Origin

  3.08 Returns to Capital: The Rise of Interest Rates in Britain

  3.09 Returns to Land: The Rise of Rent and Real Estate

  3.10 Returns to Labor: The Fall of Real Wages

  3.11 Price Movements and Births Outside Marriage

  3.12 The Growth of Inequality

  THE REVOLUTIONARY CRISIS

  3.13 Harvest Fluctuations and English Grain Prices, 1760–1830

  3.14 Prices, Crime, War and Depression in England, 1740–1810

  3.15 Revolution and the Price of Bread in Paris, 1788–1790

  3.16 The Revolutionary Crisis

  3.17 Hyperinflation in the American and French Revolutions

  THE VICTORIAN EQUILIBRIUM

  3.18 Consumable Prices in England, 1812–1914

  3.19 Wholes
ale Prices in Europe and America, 1820–1896

  3.20 Returns to Labor: The Rise of Real Wages, 1800–1896

  3.21 Returns to Land: Rent and Real Estate, 1800–1880

  3.22 Returns to Capital: Falling Interest Rates, 1815–1900

  3.23 Distribution of Wealth and Income, 1850–1913

  3.24 Prices and Population: Rates of Change, 1761–1891

  3.25 Prices and Population: Absolute Magnitudes, 1801–1871

  3.26 Money and Prices in the United States, 1820–1856

  3.27 Annual World Production of Silver and Gold

  3.28 Crime in Chicago, London and Stockholm, 1830–1900

  3.29 Bastardy in Britain, 1840–1920

  3.30 Alcohol in America, 1810–1900

  3.31 The Victorian Equilibrium

  THE PRICE REVOLUTION OF THE TWENTIETH CENTURY

  4.01 Prices in the United States, 1896–1996

  4.02 Structure of Change, U.S. Prices, 1896–1992

  4.03 Slow Beginnings, 1890–1914

  4.04 Prices and Money Supply, the United States, 1875–1914

  4.05 World Population Growth and U.S. Consumer Prices

  4.06 Equality in the United States: Mixed Trends, 1890–1970

  4.07 The Rise of Real Wages: United States, 1900–1960

  4.08 Price Movements and World War I, 1914–1918

  4.09 Hyperinflation after World War I, 1921–1923

  4.10 Deflation, Depression, and World War II, 1920–1945

  4.11 Price Controls in the United States, 1942–1946

  4.12 Hyperinflations after World War II, 1947–1949

  4.13 Price Controls in the United States, 1950–1953

  THE TROUBLES OF OUR TIME

  4.14 Inflation and Capacity Utilization in the United States

  4.15 Inflation and Unemployment in the United States

  4.16 The Price of Fuel Oil in the United States, 1960–1992

  4.17 World Inflation Rates, 1979–1980

  4.18 Price Relatives in the United States, 1967–1976

  4.19 Returns to Labor: Falling Real Wages, 1960–1990

  4.20 Returns to Real Estate: Rising Home Prices, 1966–1993

  4.21 Returns to Capital: The Rise of Interest Rates, 1900–1990

  4.22 The Growth of Inequality in the United States, 1968–1995

  4.23 Crime and Prices in the United States, 1965–1995

  4.24 Drugs, Drink, and Inflation in the United States, 1960–1993