by Liam Brunt (Norwegian School of Economics) and Edmund Cannon (University of Bristol)
This blog is based on the authors’ article which has recently been published on The Economic History Society, and it is available on early view: https://onlinelibrary.wiley.com/doi/10.1111/ehr.13133.
Until recently, grain provided a high proportion of calorific intake for most of the population and the price of grain was therefore a major determinant of welfare. Economists including Adam Smith thought that the market determined the price of grain and hence bread. Grain price data are widely available and, for some countries and time periods, they are the only good price information that exists. These three facts have spawned a large academic literature analysing historical grain markets using price data. Unfortunately, prices alone do not allow us to identify many aspects of grain markets. In this paper we use a different source of data to understand English grain markets between 1750 and 1850. In particular, we wish to improve our understanding of carryover (or inter-year storage), because this can alleviate the effects of a bad harvest in subsequent years.
We collected data on carryover from fourteen farmers’ accounts or ‘corn books’. These farms are unrepresentative: they were relatively large, and their owners were likely rich because they possessed the farms for a considerable time. Further, farm sizes were unequally distributed, so a high proportion of total acreage belonged to large farms.
Figure 2 below illustrates storage behaviour using the Whitaker family farm in Bratton, Wiltshire. For each harvest we divide the total wheat output into wheat sold before the next harvest (in black), the wheat sold shortly after the next harvest (‘short-term carryover’, in white) and the wheat sold more than five months after the next harvest (‘long-term carryover’, in red). It can be seen that nearly every year was characterised by short-term carryover and some years had long-term carryover.
Similar patterns of storage can be found in other farms. This suggests that it was farmers who were responsible for carryover. We do not know whether other agents in grain markets (such as grain dealers,) also engaged in inter-year storage. Our findings are consistent with contemporary observers who noted:
[T]here are a set of wealthy farmers who have it in their power to retain a part of their growth in those natural and best of granaries, their ricks. Was it otherwise, as the Corn Laws now stand, we might often, even with a most plentiful harvest, be in the utmost danger of famine. (‘An Inquiry into the connection between the present price of provisions and the size of farms’ in the Annals of Agriculture, 1796).
For some of our farms we know how the wheat was stored. Consistent with the above quote, many farmers, including the Whitaker family, kept a high proportion in ricks — or ‘stacks’ — (Figure 3).
In summary, farmers stored much of their wheat in stacks, and there was both short and long-term carryover. These findings have important consequences for our understanding of storage.
First, attempts to estimate storage using barn capacity are unlikely to be successful because significant amounts of grain were stored in stacks which were relatively cheap to build (compared to barns).
Second, in ‘Corn at interest’ (American Economic Review, 1984), McCloskey and Nash suggested that carryover was small. Their argument is based on the strong seasonal pattern in grain prices, whereby prices are at their lowest immediately after the harvest. Hence farmers who sold wheat in the autumn (September-December) would typically do so at a loss compared to the price that they could have received if they had sold earlier (June-August). Our data show that inferring storage patterns from prices alone would be misleading because farmers did undertake short-term carryover.
One possible reason for carryover is that farmers engaged in speculation (in the article we provide some evidence from the Whitakers family). However, we also find that older wheat sold at a higher price than newer wheat, complicating our interpretation of market prices: the average price observed in a market depended upon the premium on old wheat and the proportion of old wheat being sold.
Furthermore, most of the wheat leaving the farms in our sample was sold directly to millers, rather than going to a dealer in a registered market. This observation is consistent with the findings of Fairlie (Economic History Review, 1969), that approximately 25 per cent of total output passed through the market. However, the level and pattern of prices in our private sales tracks closely those of the local market, meaning public prices are still useful.
To contact the authors:
Liam Brunt, Liam.Brunt@nhh.no
Edmund Cannon, Edmund.Cannon@bristol.ac.uk