The Long Run Development in the Eighteenth Century
Two price series are shown in Figure 12.1. One is the Sealand official price series for rye in the eighteenth century; the other is based upon a somewhat broader basket of foodstuffs (Statistiske Meddelelser 4, 15, 1; Thestrup 1991).
The trend in both price series is clearly rising after 1740 and with an unchanged wage rate; this would mean a declining real wage index, which is in sharp contrast to the traditional view of a rise in the standard of living of the Danish population at least after the mid-1770s. The price series during the Napoleonic wars are less informative because of hyper inflation in the years up to 1814. In order to solve this puzzle, it is necessary to have a closer look at the background of the long-run changes in rye prices.
Figure 12.1 Price indices, 1700-1800
The rise in grain prices in the second half of the eighteenth century was not just a Danish experience. The most likely explanation is that, in spite of increasing food production due to agricultural reforms, the total European population was growing still more rapidly and created a heavy demand for basic foodstuffs, but this explanation need not necessarily be valid for every corner of Europe. There may have been areas with slower growth in population which nevertheless experienced increasing prices because their grain markets were integrated into the larger European market.
This was the case in Denmark. Estimates of the development in production and population during the reform years indicate an increasing surplus of rye not used on the farm for own consumption and fodder. This surplus could be sold at more and more profitable prices, which would clearly have improved the standard of living of the new group of owner-occupiers selling their surplus products on the open market. This group of surplus producers became at the same time an ever-increasing proportion of the population because this development acted as a strong incentive for the remaining tenants to buy their farms, freeing them from several payments in kind which were substituted by fixed monetary payments of interest and instalments on loans.
Taxes paid directly by the farmers to the revenue officers were also now gradually coming to be paid in money and were not rising with the price level until after 1800.Among the tradesmen in the towns, the merchants were no doubt also gaining from this development. They were normally middlemen in the expanding market for grain exports; also many master artisans profited from the increasing purchasing power of the farmers.
The servants, journeymen, and others who lived in the households of their employers continued receiving most of their income in kind and were therefore only marginally influenced by the price rise. Perhaps employers with rising production and income may have even given their servants a better diet than in earlier years when their economic situations had been less satisfactory.
It is consequently most likely that any decline in the standard of living due to stagnant wages and rising prices was limited to a small minority of money wage earners, and that the majority of the population followed the path expected by non-quantitative historians of a rising standard of living.
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