«Der Open-Access-Publikationsserver der ZBW – Leibniz-Informationszentrum Wirtschaft The Open Access Publication Server of the ZBW – Leibniz ...»
The authors mentioned above also list prices on rye and barley prior to 1552. However, this information is more fragmented and based on a wider range of sources. Reliable price information is only available for 1502, 1510, 1525, 1531, 1532, 1538, 1539, 1545 and 1546.11 Missing observations has been filled with geometric interpolations, and for the period 1502the CPI index is based on an unweighted geometric average of the percentage development in the corn prices stated above.
Due to the nature of the price material and the simple calculation method the CPI data for the period 1502-1660 can only be expected to give a rough picture of the general price development in Denmark. Especially prior to 1552 the annual fluctuations in the series are hard to interpret due to interpolations.
Following the death of Professor Holdt in 1867, the University of Copenhagen arranged a competition in relation to the open position as professor in economics. The contestants were given one year to deliver a dissertation on the price development in Denmark since 1492. Scharling and Falbe-Hansen were the only participants in the competition and the publications, op.cit., represent their contributions. Scharling won the competition and thereby the professorship, whereas Falbe-Hansen joined the staff of Statistics Denmark instead. However, in 1877 FalbeHansen obtained a professorship in economics at the University without the need to participate in a new competition, cf. Hansen (1976a, 1976b).
Cf. page 233 in Scharling (1869).
This assumption seems plausible. For the period 1660-1712 the correlation coefficient between the annual increases in corn prices in Sjællands Stift and Denmark as a whole was 0.95.
On page 39 in Falbe-Hansen (1869) information on the prices of corn in 1467 is also stated. However, FalbeHansen notes that these prices - related to the payment of the 1467 tax - are probably fixed at a too low level in order to encourage payment of the tax in cash rather than in kind.
1660-1712 For the period 1660-1712 consistent information on the price development in Denmark is still limited. For this period the CPI index is based on the farm gate prices on rye, barley and oats reported in Statistics Denmark (1904). The CPI is compiled as an unweighted geometric average of the percentage development in 27 individual price series on the three corn products mentioned above.
The price material in Statistics Denmark, op.cit., consists of average winter prices used for the assessment of tithes in 6 dioceses12 and there are no missing observations. The basic fixing rules for these prices were stated by regulation, and Statistics Denmark notes that although minor differences in the methods of calculation might have occurred from region to region this source of error is believed to be of insignificant importance.13 Statistics Denmark furthermore notes, that although the farm gate prices used for the assessment of tithes might have differed from market prices, they are still representative for the price development of at least a part of the farmers households budget expenditures during the pre-1712 period.14 Part of the land rent was e.g. often paid in grain15, and grain probably constituted a larger share in the average consumer basket than in later periods. The Danish mint and price historian, Axel Nielsen, also finds the price material in Statistics Denmark (1904) to be of a high quality suitable for historical studies, including his own study on prices in Denmark 1650-1750, cf.
Nielsen (1904, 1906).
1712-1800 For the period 1712-1800 the new consumer price index is based on the outcome of the Danish Price History Project which was initiated in 1939 and completed in 2004. Two comprehensive studies from this research project have been published, cf. Friis & Glamann (1958) and Andersen & Pedersen (2004).
Andersen & Pedersen, op.cit., presents annual weighted averages on purchase and sales prices 1661-1800 for a wide range of commodities based on accounting records from 19 Danish estates and manors16 in the Danish countryside. The prices are free market prices from actual transactions17, and a large number of the goods covered were common in private consumption. Even though manors were large economic units compared to ordinary Sjælland, Fyn, Aalborg, Viborg, Aarhus and Ribe.
Cf. page 108 in Statistics Denmark (1904).
Cf. page 109 in Statistics Denmark (1904).
Cf. e.g. Henriksen (2006).
On Zealand: Giesegaard, Bregentved, Gisselfeld, Herlufsholm, Holsteinborg, Fuirendal, Sorø, Løvenborg, Gaunø and Juellinge. On Funen: Taasinge, Frederiksgave and Erholm. In Jutland: Frijsenborg, Fussingsø, Støvringgaard, Støvringgaard household accounts, Lindenborg and Odden.
Transactions involving payment in kinds (e.g. manorial dues) are excluded.
households, the purchase prices on consumption goods reported in this study is probably the closest that one can come to transaction-based consumer prices for the pre-1800 period Denmark outside Copenhagen based on sources currently available. None of the estate accounts contains data for the entire period since 1660. Especially for the pre-1700 period the price series are relatively few and fragmented, but for the period 1712-1800 they are fairly complete.
Friis & Glamann, op.cit., presents the Magistrate’s official prices (assizes) of bread and meat in Copenhagen in the period 1684-1800. Thestrup (1971) has compared a selection of these official prices with information on transaction prices from five Danish estates, the Asiatic Company and the merchant Niels Ryberg. The overall impression is that the official prices track the transaction prices quite well.18
Utilising the data in Andersen & Pedersen (2004) and Friis & Glamann (1958) individual price series for 50 representative commodities divided into 10 consumption groups were established, cf. table 2. Missing observations in the individual price series were filled by geometric interpolation. For each of the 10 consumption groups a price index was subsequently compiled based on an unweighted geometric19 average of the percentage development in the individual prices within the group. The total CPI for 1712-1800 could then be compiled as a Laspeyres type index utilising the budget weights shown in table 2.
These budget weights are based on the composition of private consumption expenditures in 1844 in the Danish national account statistics compiled by Hansen (1983). The 10 commodity groups represented 81 per cent of the private consumption expenditures in 1844. The year 1844 is the earliest year for which Hansen, op. cit., offers a detailed commodity breakdown in his historical national-account calculations. It seems to be a fairly representative choice of base year due to the absence of war, epidemics, major domestic and international crises etc.
The items within the private consumption not covered by the CPI in the period 1712-1800 are transport, services, durable goods and rent.
1800-1815 This period causes a number of special problems for the construction of a Danish CPI. During the Napoleonic Wars the huge central-government budget deficits was to a large extent financed by a massive issuing of kurant-denominated bank notes. The result was a period with hyperinflation and a collapse of the Danish monetary system.
By a monetary reform in January 1813 the two existing note-issuing banks within the Danish monarchy were closed and a new temporary state-owned bank, the Rigsbank, was established. The Rigsbank was granted the privilege to issue rigsbankdaler-denominated bank notes with the status of being the sole legal tender within Denmark, Norway and in the Royal Duchies Schleswig and Holstein. At the same time Kurantbank notes in circulation was written down by being exchanged for the new Rigsbank notes at the ratio 6 to 1. The same ratio was applied to kurant-denominated central-government debt.20 The monetary reform were therefore given the nickname the “bankruptcy of the state”.21 However, the market value of Kurantbank notes vis-à-vis silver was far below par just before the monetary reform. By the monetary reform in 1813 kurantbank notes were thus by and large written down according to market rates.22 The bakers normally adjusted the weight of different kinds of bread in line with fluctuation in the corn prices in order to make a profit when they had to sell bread at the officially fixed prices. However, the price series for bread in Friis & Glamann, op.cit. are calculated for bread of a fixed weight.
A geometric average has been chosen at this stage of the calculations in line with the recommendation in ILO et al. (2004).
If the creditor called the loan. Kurant-denominated central-government debt could be converted at the ratio 1 to 1 if the creditor was willing to declare the bond irredeemable and accept a certain cut in interest-rate payments.
Another reason for the nickname the “bankruptcy of the state” was the fact that the Kurantbank had been owned by the central government since 1773. The Danish monetary reform in 1813 is described in more details in e.g.
Hansen & Svendsen (1968) and Hansen (1990).
Cf. page 248 in Olsen (1962).
The Rigsbank could not initially ensure convergence towards the par value vis-à-vis silver of the new rigsbankdaler notes. The market value of rigsbankdaler notes reached a low point equivalent to 9 per cent of the par value in the middle of September 1813. The Rigsbank began to withdraw notes from circulation in 1814, but the market value of rigsbankdaler notes did not pass a level above 30-40 per cent of the par value in the nearest following coupe of years. The weakness of the rigsbankdaler notes in these years should be viewed in light of the reestablishment of Schleswig-Holstein as a separate currency area within the Danish monarchy in October 1813 and the separation of Denmark and Norway after the peace settlement in Kiel in January 1814. These events limited the area of circulation for the rigsbankdaler notes but without a corresponding reduction of the bank notes in circulation.
The regulation from 1813 on the Riksbank included a promissory clause stating that the Rigsbank would be restructured into a private joint stock company. This promise was fulfilled when the Nationalbank was established in 1818. Parity of the rigsbankdaler notes vis-à-vis silver coins was first achieved in 1838.
Price information for the period 1800-1815 is scarce. For this period, the CPI index is based on 60 individual farm-gate price series on 10 representative commodities reported in Statistics Denmark (1904). As mentioned above this price material consists of prices used for the assessment of tithes and the information covers 8 dioceses23. In the background material prices are quoted in kurantdaler for the period from 1800-1812 and rigsbankdaler for the period 1813-181524. However, in order to avoid artificial break in series the prices quoted in rigsbankdaler been converted to kurantdaler at the ratio 1:6 – otherwise the price index would show a large fictive deflation in 1813 just because of the technical replacement of one currency unit by another.
The 60 price series on the 10 representative commodities were divided into 5 consumption groups, cf. table 3. For each of the 5 consumption groups a price index was subsequently Sjælland, Bornholm, Fyn, Lolland-Falster, Aalborg, Viborg, Aarhus and Ribe.
Data for Ribe Stift is also quoted in rigsbankdaler in 1812.
compiled based on an unweighted geometric average of the percentage development in the individual price series within the group. The total CPI for 1800-1815 could then be compiled as a Laspeyres type index utilising the budget weights in table 3 based on the composition of private consumption expenditures in 1844 in the national account statistics compiled by Hansen (1983). The 5 commodity groups represented 49 per cent of the private consumption expenditures in 1844.
Due to the nature of the price material, the simple calculation method and the occurrence of hyperinflation, the CPI data for the period 1800-1815 can only be expected to give a rough picture of the general price development in Denmark in this period.