The course will explore the history of finance
and capital markets from antiquity to the modern times. It will focus on innovations in the
technology of finance: from the Mesopotamian
origins of financial instruments, to the mathematical development of compound
interest calculations, the beginnings of paper money and related instruments,
the appearance of bond markets in the Late Middle Ages, the origins of mutual
funds in Northern Europe, the development of government bond markets, financial
innovations associated with the American Revolution, the globalization of capital before World War
1 and the political consequences of unfettered capitalism.
Through the course the students will be
introduced to mathematical methods and algorithms used historically to solve
financial problems, from Mesopotamian mathematical tablets to Chinese problems
to medieval calculations to the mathematical advances of the enlightenment. The
course uses two methodologies: the
analysis of documents, and the analysis of quantitative financial data.
The course will take advantage of Yale
collections in financial history at the Yale Babylonian Collection and the Beinecke Rare Book Library.
Students will have a chance to study documents in the newly formed SOM/Beinecke History of Finance Collection. Enrollment will be limited due to space constraints .
The structure of the course will closely follow
the volume edited by Goetzmann and Rouwenhorst:
The Origins of Value.
Additional references by volume contributors will be added to the
reading list, including journal articles.
Each meeting will focus on collection materials,
reading and a discussion of student research.
will write two papers. The
first is a study of a document or financial contract in their area of
interest. The second is a brief
statistical analysis of historical financial data on a question of their own
design. Finally, a
term paper analyzing some feature of capital market history in depth, using primary
documentary or quantitative material.
Students are encouraged to use primary data when available, including
market databases. Two students will be
asked to prepare a document or dataset for discussion in each of the classes.
Pre-requisites: Preference is given to students
with reading knowledge in another language, as many of the primary sources are
not in English. These languages include
Latin, Ancient Greek, Literary Chinese, Dutch, French and Italian. Some
facility with mathematics is desirable.
Previous course experience in economics and/or finance is desirable. EPE
majors are given priority.
The course will meet Monday,