New evidence on the causes of the fluctuations in ocean freight rates in the 1850s : harvest failures, business cycles, and the Crimean War

Abstract

This paper takes a critical look at the hypothesis that the Crimean War was the main cause of the surge in ocean freight rates in the first part of the 1850s. The analysis is based on newly constructed monthly data on world freight rates in the 1850s. A new type of freight rate index, referred to as a repeat sailings index, is presented, which is similar to a type of index frequently applied to house prices. An econometric model of the determination of freight rates is estimated on monthly data from the 1850s, from which it is possible to disentangle the effects on freight rates due to the various demand and supply factors, including the Crimean War. It is found that harvest failures, business cycles, the supply of tonnage and the Crimean War all significantly affected freight rates in this period. The Crimean War may have accounted for a quarter of the surge in freight rates in the years prior to the outbreak of the War; once the War broke out in March 1854, however, it was of less importance.