Finance-led growth? The role of the stock market in Swedish industrialization, 1863-1938

Project leader: Peter Hedberg
Project member: Lars Karlsson (Ekonomisk historia, Uppsala universitet)
Duraion: 2018 -
Funding: Handelsbanken’s Research Foundation (Jan Wallanders och Tom Hedelius stiftelse)

This project relates to the literature on the relationship between economic growth and financial development. Recent research suggests that stock market financing may have been equally, or even more important than bank credit during the European industrialization phase of the late 19th and early 20th century (van Nieuwerburgh et al., 2006; Lehmann-Hasemeyer & Streb, 2016). The main purpose of this project is to examine the contribution of the Swedish stock market to GDP growth between 1863 and 1938. During this period, Swedish agriculture and industry were in transition. As they leapt forward they became increasingly dependent on access to good credit, which elevated the importance of the financial system (Schön, 2002). This process has been thoroughly examined in the literature in several respects, yet the importance of the pre-WWII stock market for Swedish industrialization remains largely unexplored. By employing up-to-date methods, using trade and price data from the Stockholm stock exchange (SSE), which have recently become available, we hope to make a contribution to the international research on the relationship between financial development and economic growth, and to provide a more complete picture of the growth in (and importance of) financial markets in Sweden during this formative period of its economic history.

The project is organized in three interrelated parts. Part one deals with the question of the stock market’s contribution to growth, while part two examines the development of stock market efficiency, and part three deals with the impact of financial market regulation.

The Business of Identity. Money and Identification in Twentieth Century Sweden

Project leader: Orsi Husz
Duration: 2018 - 2021
Funding: Vetenskapsrådet

The concept of identity has become omnipresent in the social sciences and humanities. Yet the most obvious aspect of how society handles identities has rarely been explored, namely the actual practice of identification. The few existing historical studies of documented identity direct their focus towards the efforts of bureaucratic states to make their citizens ‘legible’ and controllable, especially in relation to mobility and crime. However, in the emerging consumer society of the 20th century the most prevalent situations requiring identification have been the economic transactions of daily life. Moreover, such financial identifications (e.g. today’s digital BankIDs) have often been used for other purposes than commercial transactions. There are, in short, strong economic interests involved in the infrastructures of identity. This project studies the changing interconnections between everyday finances and identification, or, in more abstract terms, between money and identity. I will explain why Swedish banks gained such an important role in the management of identities (unique in international comparison) by analysing how material devices for identification (such as the Post Office’s and the banks’ ID-cards and credit cards) were developed and how they replaced earlier forms of identifications. By applying a cultural theoretical perspective I aim to show how social/cultural identities and the infrastructures of identification shape each other in the business of identity.

Uses of the Past in International Economic Relations (UPIER)

Project leader: Mats Larsson, Catherine Schenk (Oxford University), Mary O’Sullivan (Université de Genève), Stefano Battillossi (Universidad Carlos III)
Project member: Åsa Malmström Rognes (Ekonomisk historia, Uppsala universitet)
Duration: 2016-2019
Funding: EU-HERA

The main objective of UPIER is to build an understanding of how both policy-makers and market actors use the past as a foundation for their decisions, how they create and discriminate among different interpretations of the past to fit their preconceptions and how they are conditioned by the experiences of their predecessors.  Through careful archival research and case studies we also seek to trace the intergenerational transfer of interpretations of the past and how the past is used within a range of institutions across Europe.  The project will therefore break new ground for our understanding of how the past is used in the context of international economic relations, particularly at times of crisis. We also hope to refresh the research agenda in economic history in the European Research Area to engage with the uses of the past.  The methodology of the project is primarily historical interpretation of archival evidence.  We do not seek to explain economic phenomena, but rather to explore the historical question of how policy-makers and bankers created and used interpretations of the past. The project comprises four inter-connected work packages. The first deals with the Great Depression and conditionality headed by Mary O’Sullivan. The second concerns sovereign debt and is headed by Catherine Schenk. The third examines regulatory traditions and is headed by Mats Larsson and this research is undertaken at the Department of Economic History at Uppsala University. The fourth package analyses history and the euro-crisis in Southern Europe. Stefano Battilossi is in charge.
There are five post doctoral fellows and two doctoral candidates working in the project alongside the four team leaders. All publications are listed on the project website.

The intimate relationship. A cultural economic history of everyday finances

Project leader: Orsi Husz
Duration: 2018 - 2019
Funding: Riksbankens Jubileumsfond (RJ Sabbatical Grant)

In most western societies today it is nearly impossible to manage one’s life without a bank account. Formal financial institutions are in many ways involved in our daily life and in the allocation of almost every penny we earn, spend, borrow, invest or simply transfer to each other. Although savings accounts were common already in the 19th century in Sweden, a close everyday relationship between banks and ordinary people started to develop in the late 1950s. The proposed book explores the cultural problems and changes that this transition necessarily involved –already before de so called financialisation since the 1980s. This is a story about class: how did workers start to use check accounts offered by commercial banks, something that only the most privileged held before? And a story about gender: why and how were finances and banking redefined in a more feminine and domestic frame? It is also about moralities and the attempts to de-stigmatize consumer credit when credit cards were introduced. And lastly about financial knowledge (financial literacy) and the practices and negotiations concerning what ordinary people should know about everyday finance and who should advise them. A research stay at the University Paris-Nanterre will intensify my dialogue with colleagues – historians and economic sociologists – with whom I have been collaborating on these questions over the past years. It also opens for comparative insights, joint grant applications and educational exchanges.

Open Economy Forces and the Welfare State – International Trade, Capital Flows, and Social Policy 1920–2010

Project leader: Henric Häggqvist
Duration: 2017-2020
Funding: Jan Wallanders och Tom Hedelius Stiftelse 

The project aims to investigate the links between openness in various forms and the growth of the welfare state over the 20th century. While it has been claimed that small and open economies to a larger degree have opted for policies of domestic compensation (Katzenstein, 1985) the overall result in earlier research has been inconclusive. Some studies find negative effects of forces of globalization on the welfare state, while others have found that openness has increased social spending. It has furthermore been shown that the effect may differ depending on the type of welfare programs (Lindert, 2004; Espuelas, 2012). One of the main goals of the project is therefore to try to find out what the causal mechanisms in these effects may be. It will do so by conducting longitudinal cross-country studies that look at aggregate social spending as well as by type of welfare program (pensions, health, welfare, unemployment benefits, and education).

The Impact of Tariffs on the Swedish Economy: Fiscal Policy, Efficient Protection, and Trade Flows, 1783-1914

Project leader: Henric Häggqvist
Duration: 2017-
Funding: Jan Wallanders och Tom Hedelius Stiftelse 

The aim of the project is to estimate and analyze the effect tariff policy on the Swedish economy between 1783 and 1914. This will be done in three main fields of study: 1) the importance of tariffs for fiscal policy and government revenue; 2) whether tariffs provided efficient protection to certain sectors of the economy and as such retarded or promoted economic growth and development; 3) the impact of tariffs on the structure and development of exports and imports and their geographical distribution.

The changed role of credit in household economy during the first half of the 20th century

Project leader: Tony Kenttä
Project members: Kristina Lilja, Dan Bäcklund (Economic History, Uppsala University)
Duration: 2017 - 2020
Funding: Handelsbanken

This project studies how wage-earner household used credit to handle their household economy during the first half of the 20th century. Especially the relationship between credit and the need to stabilise income and expenditure flows we will try to elucidate. One thought behind the project is that credit can create both poverty as well as wealth, and that there was a transition during the studied period from small loans for necessary consumption to wealth-engendering credit (such as real estate mortgages). The source material consits of living cost surveys of 1913-1952, which are analysed with quantitative methods.

Masters of flavor: Food invention in high-industrial Sweden

Project leader: Ingemar Pettersson
Project members: Daniel Normark (Economic History, Uppsala University)
Duration: 2017-2020
Funding: Riksbankens jubileumsfond

The purpose of the project is to examine how scientists and engineers analyzed and designed sensory properties of food – the "flavor" in other words – in twentieth century Sweden when food industries developed rapidly. We focus particularly on the field of sensory science which applied methods and techniques from for scientific areas such as chemistry, psychology, medicine and statistics for understanding smells, tastes and textures and how humans perceive them. This type of sensory research became increasingly important for food invention in the period and was used in laboratories, research institutes and test kitchens connected to the food industry in Sweden. The project aims to expand our knowledge of how tasting became a scientific venture and our main method is to do “biographies” of a range of food products and how their flavor characteristics were formed by different technoscientific practices. The method allows us to answer important questions about the human senses, science and technology, economic change and how the intersections of these areas were reconfigured in the course of food industrialization in the twentieth century. How were intrinsically subjective sensory appreciations turned into scientific objects? How, and why, were flavor standardized? What was "good" flavor – and who had the authority to make such judgments? How did food producers gain knowledge of consumer preferences? What social and economic mechanisms of industrialization prompted the scientification of tasting?

The crash in the Allmänna savings banks 1929

Project Leader: Mikael Wendschlag
Duration: 2016-2020
Funding: Handelsbankens forskningsstiftelser

The project is about the crash in the Allmänna savings banks in 1929 and the extensive white-collar crimes that caused it. This crash is comparatively unknown in Swedish financial historical research although it in many ways is unique and had significant institutional consequences. The crash is unique in so far that a large number of bankers where charged and convicted for their crimes. Another unique aspect of the crash is that it led to the largest deposit losses in any Swedish bank failure. As a direct consequence of the crash, several bank runs occurred against other banks – something that is a rare event in Swedish financial history. From an institutional perspective, the crash led to the creation of a new banking supervisor, the Savings Bank Inspectorate, as well as to stricter savings bank regulation.

The church as a parish banker. Church endowments used for credit in agricultural Sweden 1750-1870

Project leader: Sofia Murhem
Project members: Göran Ulväng (Economic History, Uppsala University)
Duration: 20115-2019
Funding: Jan Wallanders och Tom Hedelius Stiftelse

The project aims at analysing a little known, but extensive - in the number of borrowers, number of loans and the size of the loans - institutional creditor and financier in rural Sweden in the 18th and 19th century, i.e. the church and its endowments. The project makes a significant contribution to our understanding of the transformation of agrarian societies and the central role played by credit. 

Growth, Tradition and Renewal: The Economic History of Stockholm since 1945

Project leader: Tom Petersson
Project members: Camilla Elmhorn (Economic History, Stockholm University),
Carina Gråbacke (Gothenburg Research Institute, Göteborgs universitet), Jonathan Metzger (Royal School of Technology, Stockholm), Mats Larsson, Jan Ottosson, Karin Ågren, (Economic History, Uppsala University)
Duration: 2013-2019
Funding: Handelsbankens forskningsstiftelser, Åke Wibergs forskningsstiftelse

From an economic perspective, today's Stockholm is by far Sweden's most important metropolitan area. Those economic activities that are considered to be of special importance for the country's future international competitiveness, such as information technology, pharmacology, bio-technology and finance, are to a large extent concentrated in Stockholm. In a time of accelerating globalization, when capital, manufactured goods and, to some degree, people are increasingly free to move across national boundaries, Stockholm's role as the center of the Swedish economy has become increasingly evident. The development of Stockholm since World War II is a clear indication of the transformation of Sweden from an industrial to a service and information society. In fact, already during the inter-war period, Gothenburg as the country’s most important industrial center replaced Stockholm. Shortly thereafter, Malmo also passed Stockholm in terms of industrial activity. Instead the Capital experienced an increasing concentration of corporate headquarters, new service firms and, not least, government administration. Together with the traditional manufacturing activities that were able to recreate themselves, such as telecommunications and pharmacology, Stockholm has experienced something of an economic metamorphosis during recent decades. In other words, it can be said that Stockholm has led the way in the third (and fourth) industrial revolution of the Swedish economy. The intent of the project, "Growth, Tradition and Renewal: The Economic History of Stockholm since 1945" is to describe and explain, from an historical and comparative perspective, how the Stockholm region has handled the change from an industrial to a service and information based economy. The goal is to produce an integrated series of monographs that will provide a comprehensive picture of Stockholm's economic development during the post-war period.

Fire Insurance in rural Sweden 1734 – 1850. Organization, property and arguments

Project leader: Göran Ulväng
Project members: Sarah Linden Passay (Economic History, Uppsala University)
Duration: 2018 - 2021
Funding: Handelsbankens forskningsstiftelser

The purpose of this research project is to analyze how fire insurance was organized in the Swedish countryside, and how this organization changed, during the agrarian revolution in the 18th and 19th centuries, when compulsory collective solutions in general were replaced with more individual and voluntarily kind of organizations. Fire insurance was very important for the peasants and was one of the main problems to solve, and in a time of rapid economic growth, increasing investments in dwellings and farm buildings, and stronger individual property rights, the older collective solutions were put under pressure.      
The emergence of modern fire insurance was of major importance to economic growth in Europe and the United States, since lower insurance costs furthered accumulation of capital. The international research on fire insurance has rarely focused on rural areas before 1850. This is partly due to fire insurance not being provided by private companies at this time, and partly due to shortages of source material.
The Swedish case is unusual firstly since the Crown formally regulated fire insurance but gave the peasants possibility to influence the organization regionally and locally, and secondly since private fire-insurance companies had no influence before the second half of the 19th century. Thus there are good possibilities to analyze how peasants in areas with different economical and social structure, and without competition from private companies, chose to organize their fire insurance.
This research project will thus be not only an important contribution to international fire-insurance research, but also to insurance theory generally, and especially questions about collective and individual needs, and ways of organizing risks, costs and compensations.  The project will thus contribute to development on the theories on collective action and public goods.  

Born to become a leader? Generation shifts and gender patterns in the Swedish business dynasties 1880-1980

Project leader: Therese Nordlund Edvinsson
Duration: 2019-
Funding: Handelsbankens forskningsstiftelser

The project aims to investigate how children were introduced to the family business dynasties in Sweden from a gender perspective. By examining the leading family companies, the intention is to study how the education of future leaders changed over time, as well as investigating whether the generation shift could strengthen the gender system. Several dynasties rested on a patriarchal basis with a male heir.

Outside the boardroom: Women, children and family business 1890-1950

Project leader: Therese Nordlund Edvinsson
Duration: -2017-
Funding: Torsten Söderbergs stiftelse

The aim of the project is to examine how family life was organized and combined with business at a time when women had a limited insight into the business sphere. The project focus on business dynasties in Gothenburg during the period 1890-1950.

Financial Market Regimes, Bank Effiency, and Economic Growth in Sweden, 1866-2016

Project leader: Peter Hedberg
Project members: Lars Karlsson, Henric Häggqvist (Ekonomisk historia, Uppsala universitet)
Duration: 2016 -
Funding: Handelsbanken's Research Foundation (Jan Wallanders och Tom Hedelius stiftelse)

In the literature, there is a strong consensus that financial market development in Sweden occurred regime-wise by successive extensions of the regulatory set up, and it has been argued that the market terms and conditions of banking changed radically as the regulatory regimes changed. Since the performance of financial intermediaries can determine the pace and the resilience of a country’s economic growth rates, and can therefore be considered a cornerstone of economic development, it is plausible to assume that both the efficiency of the Swedish banking industry as well as the role, function, and importance to Swedish economic growth changed alongside the regulatory regimes. In this project we examine if and how regulatory changes affected the efficiency of the Swedish commercial banks, and in which ways bank efficiency made impact on Swedish GDP growth rates. By constructing a high quality database from balance sheet data, excerpted from the official bank statistics, we will be able to analyze the long-run development of the Swedish commercial bank efficiency both in aggregate terms as well as decomposed, and with regard to individual banks, by using a Malmquist productivity growth index based on efficiency scores from Data Envelopment Analysis (DEA). Focus is placed on the Swedish commercial banking industry, between 1866 and 2016.

The Pattern of Swedish Corporate Finance in the 20th Century

Project leader: Peter Hedberg
Project members: Lars Karlsson (Ekonomisk historia, Uppsala universitet)

This project adds to the research on the role and function of corporate finance to industrial growth and progress in Sweden during the 20th century. The financial structure of economies is closely correlated with their level of development. As the financial system develops, firms are provided with a greater variety of financial services and hence, firms may choose the financing strategies they regard as the most efficient. In the corporate finance literature, factors such as firm size and age, orientation of business, cost structure (e.g. corporate tax rates) etc. belong to the most commonly stressed determinants of financing choices. Currently, however, very little is known about how such factors influenced the finance strategies of Swedish firms during the 20th century. By taking departure from a perhaps naïve but yet unanswered question of i) how and why Swedish firms have chosen their sources of finance, and ii) how this has changed across time, we examine the corporate finance strategies of 300 large- and small-scale firms in Sweden between 1911 and 2000. In a second part of the project, we also study the financing choices of start-up firms in the electrical engineering industry during the early 20th century, and examine whether different finance strategies yielded different outcomes in terms of subsequent firm growth and profit.

The Market of Self-Realization. Swedish Correspondence and Distance Education, 1890s-1970s

Project leader: Orsi Husz
Project members: Nikolas Glover, (Economic History, Uppsala University), Håkan Forsell (History, Stockholm University)
Projektperiod: 2014-2018
Projektfinansiär: Handelsbankens forskningsstiftelser

Correspondence education filled a gap between two educational systems in twentieth century Swedish society: the old school and university system during the century's first part and the expansion of primary education, the advent of adult education and regional university campuses in the latter part. Correspondence schools offered courses to millions of people who otherwise, by economic and geographical reasons, would have been excluded from vocational or higher education. The largest companies had until the 1960s more students than for example the study circles of the working class movement (ABF) at the same time. But this type of school is almost absent in depictions of modern Swedish educational history. The project's aim is to problematize and deepen the lines of development of the “knowledge society” by studying the history of correspondence education in Sweden from ca 1900 to the 1970s. Long before the human capital theory got its breakthrough in the 1960s, correspondence education marketed “knowledge” with a focus on knowledge-intensive occupations and in terms of investment, financial gain and employability. Correspondence schools promoted self-realization and vocational learning, individual dreams and business standards in a complex association. The project asks how the logic and spirit of a "self-made (wo)man" could blend in well with a society that otherwise often are portrayed in terms of collective solutions and learning associations during the twentieth century.

En fråga om arv: Humankapital och förmögenhet som förutsättning för social mobilitet, Sverige 1880-1950

Project leader: Kristina Lilja
Project membersJonas Söderqvist och Dan Bäcklund (Economic History, Uppsala University)
Duration: 2014-
Funding: Jan Wallanders och Tom Hedelius Stiftelse

The aim is to study the interplay between wealth and investments in human capital (HC) and explain their effects on social mobility in Sweden 1880-1950. What impact did family wealth have on investments in children’s education and how did these investments affect children’s wealth and social status as adults? Which social mechanisms can explain the outcome in short- and long-term social mobility? The project, consequently, connects to the debate about whether the democratization of the educational system was important for the development of a more equal society and also promoted economic growth as human resources were better used (Goldin & Katz 2009; Piketty 2014). In this project the term HC is restricted to formally organised education, theoretical as well as vocational.

Savings in the wardrobe - Changes in the value and life cycle of clothes, 1790-1910

Project leader: Pernilla Jonsson (Economic History, Stockholm University)
Project members: Kristina Lilja (Economic History, Uppsala University) och Ylva Sjöstrand (Stockholm University)
Duration: 2014-
Funding: Jan Wallanders och Tom Hedelius Stiftelse

The purpose of this research is to problematize commodities as storage of values and the life-cycle of goods in a long-term perspective. Recycling and second-hand trade are not new concepts. Before cheap fabrics and the industrial production of ready-made clothes paved the way for a throwaway culture, clothes took up a large part of the household budget (Shammas 1990; Weaterhill 1988). This made clothes important as assets in a society with a shortage of liquidity. Clothes could be used as a store of value and medium of exchange (Lemire 2005). How easy their value could be realized was dependent on the existence and organization of second-hand markets.

The aim is to study how clothes are valued and the recycling of clothes in relation to changes in production, consumption and social dynamics in Sweden 1790–1910. The starting point is before cotton became common and mechanical weaving was introduced in Sweden. In 1910, Sweden was on the edge of consumerism and a modernized society.