Ingrid Henriksen

Avoiding lock-in: Cooperative creameries in Denmark, 1882 1903

The paper investigates the initial phase of the cooperative organisation of agricultural processing firms in Denmark. It argues that the variations observed can be explained within the framework of the theory of industrial organisation. The focus is on the success of cooperative creameries. In 1903, twenty years after the first establishments, the owners of about 80 per cent of all Danish milch cows supplied their product to a cooperative. The success of cooperatives within other fields of production was smaller by comparison. The point is that dairying cooperatives, given the existing technology of gathering information and of preserving and transporting a perishable product, were ideally suited to overcome the problems of potential lock-in and of asymmetric information.

The Scandinavian Currency Union 1875–1914

The Scandinavian Currency Union is sometimes considered the most successful of the monetary unions established in Europe during the latter half of the nineteenth century.2 Following Bartel (1974: 703): ‘It was an important precursor to the attempts at international monetary cooperation which were to come after the Second World War.’ This chapter offers a re-examination of the Union, its background and its working until its breakdown under the strains of the First World War. The findings of the present analysis are more ambiguous than the above statements when it comes to evaluating the Union. While clearly successful as a currency union, its performance as an economic union was less convincing.

The role of technology and institutions for growth: Danish creameries in the late nineteenth century

We consider the relative contributions of changing technology and institutions for economic growth through the investigation of a natural experiment in history: the almost simultaneous introduction of the automatic cream separator and the cooperative ownership form in the Danish dairy industry from around 1880. Using a new database of statistics from creameries and the tool of stochastic frontier analysis, we find that both institutions and technology were important for the success of the Danish dairy industry and, by implication, the growth and early development of the Danish economy.

Law and Peace: Contracts and the Success of the Danish Dairy Cooperatives

We consider the successful early emergence of cooperative creameries in Denmark in the late nineteenth century within the framework of the ‘new institutional economics’ presented by Williamson (2000). Previous work has focused on the social cohesion of the Danes, but we demonstrate that this was not sufficient for the success. The Danish legal system, which we compare to that of other countries, was also of crucial importance, along with the way in which rules were monitored and enforced. Of particular importance was the Danish cooperatives’ use of contracts, which we explore with evidence from a variety of primary and secondary sources.

The Strange Birth of Liberal Denmark: Danish Trade Protection and the Growth of the Dairy Industry Since the Mid‐Nineteenth Century

The usual story of the “first era of globalization” at the end of the nineteenth century sees Denmark as something as an outlier: a country which, like Britain, resisted the globalization backlash in the wake of the inflow of cheap grain from the New World, but where agriculture, rather than going into decline, in fact flourished. Key to the success of Danish agriculture was an early diversification towards dairy production. We dispute this simple story which sees Denmark as something of a liberal paragon. Denmark’s success owed much to a prudent use of trade policy which favoured dairy production. Moreover, this favouritism continued even after a more general movement to free trade in the 1860s. Using micro-level data from individual dairies, we quantify the implied subsidy to dairy production from the tariffs, and demonstrate that this in many cases ensured the profitability of individual dairies.

Why Danish Credit Co-operatives were so unimportant

Denmarks credit cooperatives were introduced relatively late and were never as important to the Danish financial system as credit cooperatives in several similar European countries. This experience stands in contrast to the experience of other cooperative enterprises in Denmark, most notably cooperative creameries. We argue that the Danish experience does not reflect a lack of need for such institutions or an inability to adapt them to Danish conditions. Rather, in the 1860s rural Danish people had succeeded in adapting another form of financial institution, the savings bank, to serve the needs of the small borrowers who elsewhere were the main clientele of the credit cooperative. Thus much of the need for cooperatives had been satisfied by another institution. The Danish experience illustrates both the adaptability of financial institutions and the sensitivity of cooperatives to competition for their niche in the financial system.

Diffusion of new technology and complementary best practice: a case study

During the late nineteenth century, technologies to measure the quality of the milk in butter production became available, enabling creameries to pay suppliers of raw milk according to quality. Having identified the advantages to the creameries in terms of incentive provision, we demonstrate that the diffusion among the cooperative creameries was relatively slow, particularly relative to other technologies adopted by the same creameries over the same period, with a large number ‘dragging their feet’. We also observe that late adopters often do not choose the most up-to-date technology and that early adopters who later upgrade their technology in many cases do not choose the current best practice. We consider a number of reasons for the observed patterns, which are at odds with the co-operative creameries being seen as technologically ‘savvy’. A proper implementation created both winners and losers among suppliers, and the size of these widened with newer versions of the technology. We show that the slow and inappropriate implementation can be explained by the need to get the technology accepted by a sufficient number of suppliers.

Peasants and the market

Abstract What independent significance for the development of the eighteenth century Danish economy can be imputed to increasingly market-orientated behaviour by the peasant population? The question is worth raising because a major involvement in the market economy forms the prerequisite of the dissolution of previous allocation and production systems in agrarian society. This may be illustrated by considering an institution such as the village open field system. Raaschou-Nielsen1 tells us that three authors, viz. Fenoaltea, Dahlman and Persson, each offer a different explanation of the origins and existence of the open field system while apparently in agreement that its dissolution is intimately bound up with the growing importance of the market. Economic historians of differing standpoints have likewise seen a link between the breakdown of the manorial system based on villeinage labour and the extension of the market2 (cf. further below).

Historical experience with monetary unions: the case of Scandinavia 1875Â…1914

Economic and Monetary Union in Europe brings together contributions from leading specialists which explain and evaluate the most important implications of economic and monetary union. The book examines theoretical aspects of monetary integration, illustrates the historical lessons to be learned from these and discusses the resulting policy consequences.