I have never been particularly interested in genealogy, however, that has changed after my dad recently sent me a picture of Sven Persson. Sven Persson was my great-great grandfather.
I had seen the picture before and I knew that I have Swedish family roots – Sven was born in Hjärsås, Skåne, Sweden on July 26 1861 – but I have not really thought much about it before, but seeing the picture of Sven (and his family) again triggered something in me probably because I realized that the story of Sven is closely related to some key historical economic and monetary events in Scandinavia and indeed in the world.
I must admit that I have not done a lot of research (yet) into Sven’s story, but I know enough to tell the story of the economic realities he lived under and I believe his life to a very large extent was shaped by these events. In this post I will try to tell that story – in the light of economic and monetary events in the world and Scandinavia during the years Sven lived.
Sven – The typical immigrant from Skåne (Scania)
I think what triggered me to look into Sven’s story was his immigrant background and particularly the fact that I pretty fast realized that Sven likely came to Denmark in the early 1880s. I already knew that during that period a lot of Swedes came to Denmark to work.
In fact in the early 1880s nearly 10% of the population in Copenhagen where Swedish. So while many Danes today would say that the level of immigration to Denmark is unprecedented in size that is not really true. 130 years ago the story was much the same as today and the discussions about immigration was quite similar – the Swedes are stealing the jobs from Danes, they push down salaries and they are more criminal than Danes. Not much have changed in that sense regarding the debate over immigration.
So why did Sven come to Denmark? Well, we of course don’t know, but if Sven was a normal Skåning (a inhabitant of Skåne in Southern Sweden) then he would have come for economic reasons.
Research (see here) done on Swedish emigration to USA during the 1880s shows that both “pull” and “push” factors were important for the decision of Swedes to emigrate to the US. Hence, Swedes both ran away from poverty in Sweden and for economic opportunities in the US. It hard not to believe that the same factors motivated Swedes – including my great-great grandfather – who emigrated to Denmark in the 1880s.
This is what the Danish economic historian Richard Willerslev has to say about number of Swedish immigrants to Denmark (my translation from Danish, cf. page 228):
After some years of stagnation the immigration to Denmark once again picked up and remained steady at a very high level from the mid-1870s and toward 1890.
Now compare that with the relative development in real GDP in Denmark and Sweden.
(S0urce: Angus Maddison’s “Dynamic Forces in Capitalist Development”)
It is fairly easy to see that there was a sharp relative decline in the level of Swedish real GDP compared to Denmark. This of course coincides with the sharp increase in Swedish immigration to Denmark. Sweden’s relative decline came to an end in 1882-1883 – coinciding with the stagnation in the Swedish emigration levels (at a high level).
So what I about Sven? I am not entirely sure when Sven emigrated to Denmark, but public records show that he left his native city of Hjärsås in 1880. The public record I have found on Sven is that he married the Dane Bertine Kirstine Frederiksen on November 14 1890. Hence, we can conclude that Sven came to Denmark between 1880 and 1890 and most likely in the early 1880s.
This makes Sven into a very “average” immigrant. He was in his early twenties and an unskilled labourer with a poor background (his farther Per Jeppsson was an unskilled farm worker).
Currency union and the asymmetrical shock to the Swedish economy after 1873
So how do we explain Sweden’s relative decline compared to Denmark in mid-1870s? We need two explanations – one for the absolute decline in real GDP growth and one for the relative decline in real GDP.
Around 1871-73 a massive transformation of the global monetary system started and the process that lasted only a few years meant the end of bimetalism as a monetary standard and the total global domination of the gold standard. A number of factors contributed to ending bimetalism and establishing the gold standard’s global dominance.
Milton Friedman has pointed to the U.S. Coinage Act of 1873 as the major contributing factor of this transformation of the global monetary system (See here). This was the so-called Crime of 1873. There was a similar European – or a German-French – Crime of 1873 driven by among other things the German decision to introduce the gold standard in 1871.
No matter what the explanation is for the triumph of the gold standard over bimetalism in the early 1870s the result was a global deflationary shock as demand for gold spiked. That kicked of what has come to be known as the worldwide Long Depression normally said to have lasted from 1873 to 1879.
The graph above clearly shows that Sweden was hit by the Long Depression, which coincided with a sharp increase in Swedish emigration to Denmark.
1873 also happen to be the year the Scandinavian Currency Union was established between Denmark, Sweden and Norway. The SCU was based on the gold standard. Prior to that the three Scandinavian countries had been on different bimetalistic standards.
The fact that a wide difference in growth between Denmark and Sweden emerged in the second half of the 1870s can be interpreted as an asymmetrical shock and I believe that it is this asymmetrical shock – growth was higher in Denmark than in Sweden – that fundamentally caused my great-great grandfather Sven and thousands of other Swedes to emigrate to Denmark during the 1870s and 1880s. The size of the asymmetrical shock in my view also shows that the SCU was indeed not an optimal currency area. Had it been then Sven likely would never have come to Denmark.
I have not spend much time studying the reasons for this asymmetrical shock, but I overall have three hypotheses that might explain the differences in growth.
First, the Danish krone might have been undervalued at the unset of the currency union, while the Swedish krona might have been overvalued.
Second, sectoral differences might have played a role – with the Swedish agricultural and mining sector being harder hit by the global deflationary shock than the dominant Danish economic sectors. This also includes the relative importance of the UK and German economies for the economies of Denmark and Sweden.
And finally the third explanation might be differences in fiscal policy. Denmark undertook major railway and defense investments in those years. I should stress this is hypotheses.
I would obviously appreciate comments from my readers on these hypotheses and links to relevant research.
The Great Depression and the death of Sven
I don’t know much about the life of Sven in Denmark. But he got married and he (likely) got four children. He likely continued to work as an unskilled worker in Denmark, where he died at the unset of the Great Depression on October 4 1929.
So we can say that my great-great grandfather was brought to Denmark because of a depression and he lived in Denmark until the unset of another depression.
Monetary policy failure surely can have great impact on the life of people – including on the decision to live in one or the other country. My family heritage is proof of that.
PS if you want to have a look at my very incomplete family tree please have a look here.