Part 1: The details (56 points. 2.0 pts each unless noted.)

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1 Part 1: The details (56 points. 2.0 pts each unless noted.) 1. In approximately what year did the Black Death arrive in Europe? ( 20 years) 2. What does Karl Persson believe regarding the Black Death and its effect on European development? Check any and all blanks that apply. The Black Death led directly to the Protestant Reformation. The Black Death, while bad for Europe, was much worse in China, India, and the Muslim world. The Black Death decreased absolute living standards in Europe, but increased Europe s living standards relative to China, India, and the Muslim world. The Black Death, in the long-run, likely helped Europe s long-run economic development. Had the Black Death not occurred, Europe in, say 1550, would be less economically advanced than Europe actually was in 1550 (after the Black Death had occurred). The Black Death slowed Europe s long-run economic development. Had the Black Death not occurred, Europe in, say 1550, would be more economically advanced than Europe actually was in 1550 (after the Black Death had occurred). 3. What in the world is Smithian Growth? a. growth based on industrial production b. growth in which one invention spurs or facilitates other inventions in rapid succession c. growth due to markets becoming larger, and sophisticated with little change in technology d. growth due to significant technological changes in how a staple crop is produced 4-5. It s 1100 AD and Ali and Usman wish to form a business with each other. Both live in Egypt. 4. What is the (Muslim) name of the type of business they will likely form? 5. Ali dies. He s always wanted his son to take over the business. What happens to Ali s and Usman s business? a. It has to be dissolved and reorganized as a new business if it is to survive. b. Ali s son inherits all of Ali s shares and the business continues on as before. c. The business is dissolved. Further, the government keeps all the business assets as a death tax. d. The government receives 50% of the firm s assets as a death tax. Ali s son inherits all of Ali s shares of the now smaller company. Uzman also keeps his shares in the now smaller company. e. The government receives assets equal to 50% of Ali s shares as a death tax. The company, accordingly, writes of 50% of Ali s shares. Ali s son inherits the remaining half of Ali s shares. Usman s ownership is unaffected It s 1650 AD. Thijs and 19 of his colleagues wish to form a business with each other. All 20 live in the Dutch Republic. 6. What is the (1650 AD) name of the type of business they will likely form? 7. Who will have limited liability? a. None of the partners b. A few of the partners c. All of the partners 2

2 8. In what type of activity will their business likely engage? a. the manufacture of textiles b. the manufacture of metals and metal products, especially iron and iron products c. trade with distant (from England) lands d. collecting taxes for the English government 9. Thijs dies. He s always wanted his son to take over the business. What happens to the business? a. It has to be dissolved and reorganized as a new business if it is to survive. b. Thijs son inherits all of Thijs shares and the business continues on as before. c. The business is dissolved. Further, the government keeps all the business assets as a death tax. d. The business survives after the government takes its tax from all the partners. e. The business survives after the government takes its tax from Hans shares. # s 10 14: Indicate ( ) whether each characteristic best describes the inheritance system of Christian Western Europe or the Islamic world during the Middle Ages through the Early Modern Period (about 600 AD 1800 AD)? Characteristic 10. It s more difficult to keep large estates together. 11. The bequestor only has a choice of where 1 /3 of his inheritance goes. The other 2 /3 is required by law to go to a large number of specified relatives. 12. This inheritance system generally gives fewer assets to women (relative to the other inheritance system). 13. This inheritance is best characterized as multigeniture. 14. This inheritance system is best characterized as primogeniture. Christian W. Europe Islam 15. Approximately, when did the Muslim Middle East develop/adopt its first Joint Stock companies? a AD (CE) b AD (CE) c AD (CE) d AD (CE) e AD (CE) f AD (CE) g AD (CE) 16. How did one get a charter to start a Joint Stock Company in Britain around the year 1855? 17. How did one get a charter to start a Joint Stock Company in Turkey around the year 1855? 3

3 18. Roughly, when did British (or English) Joint Stock Companies get (full) Limited Liability? a AD (CE) b AD (CE) c AD (CE) d AD (CE) e AD (CE) f AD (CE) 19. Which region has the most advanced or modern system of chartering new businesses? a. France d. The Southern U.S. b. Great Britain e. The Northeastern U.S. c. The Ottoman Empire f. Mexico 20. Did the above region (# 19) have general chartering? a. Yes. b. No Bank, benk, bink, bonk, bunk, baby! 21 23: The Financial Intermediation Fairy comes to visit. He takes you on a tour of money lending operations in the year 1700 AD (CE). It s cool but you really need to get back to 2012 AD in time for your hot date. Speed up the tour by correctly answer the following questions. First you visit Mustafa, a Muslim who runs a relatively long-lived money lending operation in the Muslim world. Mustafa s father established the organization shortly before his death. 21. The organization that Mustafa runs is not a partnership. What is the name for type of organization Mustafa is running? 22. Where did the organization originally get most of the money it lends out? 23. Several of Mustafa s friends and business acquaintances, would like to get in on Mustafa s lending operation. They wants to contribute new cash to the business, retain a share of the ownership, and have a claim on the profits. Can they do so? Briefly, why or why not? Next, you visit Karl, an Dutchman who runs a relatively long-lived money lending operation in the Christian world. Karl s father established the organization shortly before his death. 24. Where does Karl s organization get most of the money it lends out? 4

4 ECON European Economic History The Industrial Revolution John Lovett 25. Several of Karl s friends and business acquaintances, would like to get in on Karl s lending operation. They wants to contribute new cash to the business, retain a share of the ownership, and have a claim on the profits. Karl is ok with organizing a brand new business if he has to. Can they do so? Why or why not (ex. what business structure would they choose)? 26. One of the reasons Economic Historians are interested in the rise of banking is that: a. Banks, if government owned, are largely used to finance wars. If one can figure out why European banks were mostly privately owned, one can figure out (in part) why European wars were less destructive than those in other lands. b. Banks allow those without ideas for new ventures to provide funds for those with ideas for new ventures. c. It is almost impossible for long distance trade to take place without banks providing funding. Banks therefore were absolutely critical in encouraging specialization and trade. d. Bank, benk, bink, bonk, bunk is a favorite drinking song among Economic Historians. 27. According to Timur Kuran, what is one reason the Islamic inheritance system differed from that of Western Europe? a. Typical family assets in Europe s were financial assets. These are easy to divide up. Typical family assets in the Muslim world s assets are one or two slaves, something much harder to divide. b. Islam s Quran specifies a very specific inheritance system. The New Testament Christian Bible does not say much about inheritance. c. The Roman Catholic Church specified a very specific inheritance system. Timur Kuran argues that the Church specified this system to guarantee itself a continuing source of income. d. The Roman Catholic Church specified a very specific inheritance system. Timur Kuran argues that the Church specified this system to reduce conflict within rich families in Europe. 28. Which of the following is an explanation, according to Timur Kuran, as to why business structures evolved differently in the Muslim world than they did in Western Europe? a. The Quran banned usury whereas the Christian Bible portrayed it as a just reward. To get around the usury ban, the Muslim world stressed partnerships over borrower-lender relationships. b. Western Europe s feudal system discouraged partnerships between those of different classes, but encouraged associations of those from the same class. c. The Quran, and early Islam in general, put great stress on reducing sources of factionalism and conflict between Muslims. d. The early Muslim world had significant contact with both India and China. The Muslim world adapted Indian and Chinese business forms while Europe had to evolve its own forms. 5

5 ECON European Economic History The Industrial Revolution John Lovett Part 2: (Short Essay) The Fall 2014 exam will not have a short essay section Answer 1 of the 2 following questions on the attached paper. (15 pts) 1. How, according to Persson, did population growth affect development during the eras before modernity? How does Persson s view on population compare with other views on population during the eras before modernity? 2. What is Polygamy? During the Middle Ages through the Early Modern Period (about 600 AD 1800 AD) was polygamy more common in Western Europe or the Muslim world? Explain how and why polygamy may have affected the relative rates of economic growth of the two regions. Part 2: (Long Essay) Answer 1 of the 2 following questions on the attached paper. (30 pts) 3. Draw and explain a graphical model of Persson s vicious cycle. Explain why the curves are shaped as they are. Explain how and why the curves can shift. Illustrate an economy moving through the vicious cycle. What is a historical example of an economy going through such a viscous cycle? 4. Briefly, describe how the inheritance system in the Muslim world differed from that of Western Europe. Briefly describe how and why the different inheritance systems may have affected the relative rates of economic growth of the two regions. Finally (and not briefly), describe some arguments as to why the inheritance system of the Muslim world differed from that of Western Europe. 6

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