Cost–distance ratio in change: transmission rates of commercial correspondence in the North and Baltic Sea region, 1732–1808

ABSTRACT

Postage accounts kept by merchants active in North and Baltic Sea trade are used to track the development of transmitting costs of remote information. As a long-run aggregated trend in terms of the real price, the postage stayed approximately at the same level until 1770s and decreased substantially thereafter. War factor proved to have had a variable influence. Increased demand on information exchange, driven by booming trade in this period, arguably promoted lower-cost transmission. The present paper also reveals that, over time, international postage was increasingly a function of geographical distance and, due to the changes in means of transmission and also due to the specific tariff policy of national Posts, there was significant cost–space convergence regarding domestic transmission while the same trend was much less dominant at an international level.

KEYWORDS:

• Market integration
• information costs
• postal system
• Baltic trade
• early modern period

JEL CODES:

• B520
• M41
• N73
• N93

Acknowledgements

I thank Enn Küng, Jaak Valge, Klas Rönnbäck, Madlena Mahling, Robert Davis, Igor Mosyagin, the Editor, and the anonymous referees for the critics and useful hints. All remaining errors are solely my responsibility. I gratefully acknowledge the support from the Faculty of Arts and Humanities of the University of Tartu.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 Many authors in the field of market history use these approaches together without defining their exact relation (e.g. McCusker, 2002). Although Casson (2001, p. 279) finds that most transaction costs are information costs, he adds that the converse does not apply. He finds important information costs which are not transaction costs. Kulkarini and Heriot (1999) see transaction cost economics and the information cost approach as complementary but not entirely overlapping. They highlight some relevant trade-offs between these costs with respect to three transaction parameters – asset specificity, frequency, and uncertainty.

2 The National Archives of Estonia (NAE), Thomas Clayhills & Son archive (fond 4924), EAA.4924.1.681 to 686, postage account books.

3 The Brockhaus lexicon for trade, published in 1819, noted that merchants and commissioners often kept such account books (Brockhaus, 1819, p. 354).

4 NAE, Th. Clayhills& Son archive, EAA.4924.1.2577 to 2578 and 2599 to 2601, copy books of sent letters.

5 The decadic average rye price in Tallinn raised 5.3 times in between 1730 and 1800 (Vinnal, 2012).

6 One silver ruble coin contained 20.75 grams pure silver from 1731 to 1763 and 18 grams thereafter. The so-called banco or assignat ruble was introduced by the government in 1769. Its ratio to the silver ruble was near 1:1 until 1787 and decreased continuously after that. By the year 1808 it was about 2:1. In this study I use exchange rates provided by Mironov, available in the Global Price and Income History Group database (Russia Ag content ruble 1535–1913, retrieved from http://gpih.ucdavis.edu/Datafilelist.htm#Europe).

7 However, his data reflect the price dynamics only in nominal terms.

8 The share of these cases distributes over the benchmark periods accordingly (starting from the earliest): seven, six, three, one, two, and one percentage.

9 In contrast, Finnish scholars have argued, that sending letters with shipmasters over the Baltic Sea to Western Europe was still a common practice even in the early nineteenth century (e.g. Ojala, 2002, p. 195). Probably this was because of the more sea-locked position of Finland.