Visualizing History 

‘Dots represent city-level 1918 influenza mortality and manufacturing employment growth around the 1918 Flu Pandemic. Green (red) dots are cities with non-pharmaceutical intervention (NPI) days above (below) the median fall 1918.’


From the Archives

The American (Spanish) Influenza Epidemic of 1918 – 1919

A digital encyclopedia with hundreds of primary sources covering the Spanish Influenza in America.

Sunday Reads

While it feels like years ago, on March 1st I published a Sunday Reads focused on Pandemics & Markets. The markets and nation were just beginning to face the reality of COVID-19, and what global impact this could have at a socio-economic and health level.

As someone that is deeply passionate about history it was incredible to watch the speed and intensity with which people suddenly turned to history in the midst of a shocking event like Coronavirus. A tangible way to prove this is recognizing the amount of people that now have a solid understanding of a major historical event like the 1918 Spanish Flu. Just check out these Google Trends!

Well since that March 1st post there has been no shortage of wild events pertaining to COVID-19. Whether it be the Fed buying high yield ETFs and municipal bonds, countries entering Shelter-in-Place, to major retailers filing for bankruptcy, Coronavirus has flipped the world on its head. Historians have been pumping out papers as a result of all these developments and consequently it seemed like an opportune time to revisit this topic of Pandemics & Markets.

Same Issues, Different Pandemic

As news of the Spanish Flu began to spread, a September 28, 1918 issue of The Commercial and Financial Chronicle regrettably stated:

‘An epidemic of Spanish influenza has checked business to some extent, but is not expected to be lasting. The Department of Health of this city has just voted $25,000 to fight influenza, which it calls pneumonia in epidemic form. It is said to be in reality the old-fashioned grippe [flu].’
In hindsight we all know how inaccurate this prediction turned out to be, but it is mind boggling to think about how someone could think this so shortly before the Spanish Flu took the world by storm.

Well, this quote inspired me to do a little further digging into what, if any, of the major themes and questions we’re asking today were also prevalent during the Spanish Flu of 1918. Turns out there is a lot in common! I’ve provided some brief snippets on two of the major themes / questions:

Retail Sector

With lock downs and social-distancing in effect, areas of the economy that are reliant upon things like foot traffic and have been crushed. Writing about this week’s data release, Bloomberg reported:

U.S. retail sales and factory output registered the steepest declines on record in April, illustrating a recession so deep that it will likely take years to fully recover. Revenue at retailers and restaurants fell 16.4% from the prior month, almost double the 8.3% drop in March which was previously the worst in data back to 1992, according to a Commerce Department report released Friday. That compared with the median projection for a 12% decline.’

As a comparison, here are some snippets I’ve found from sources in 1918 discussing the impact of Spanish Influenza on the Retail sector:

What Investments Perform Well in Pandemics?


The Reopening & Business Responses

From an economic standpoint, perhaps the most important question right now is how consumers and businesses will react once restrictions are lifted. Like today, however, there were business owners in 1918 that defied the government’s quarantine orders and re-opened for business prematurely.

Awful Advertisements

As if COVID-19 wasn’t bad enough in itself, we’ve also had to deal with an onslaught of terrible advertisements from corporations trying their damnedest to force a connection between their products and efforts to fight COVID-19.

Well, turns out movie theaters employed a similarly cringey tactic in 1918!

And now, let’s dive into this week’s links!

Pandemics & Epidemics: Financial and Economic Effects

The excerpt below is from the Museum of American Finance’s collection on Pandemics & Epidemics: Financial and Economic Effects:

‘During the first seven weeks of 2020, despite ominous news from China, Italy and Iran about the spread of the COVID-19 virus, US stock indexes hit new all-time highs. Then, in little more than a month, the market crashed. By March 23, the Dow Industrials dropped 37%; the S&P 500, 34%; and the NASDAQ Composite, 30%. It seemed that the markets suddenly realized that the virus’s spread to the United States would cause widespread business shutdowns, closings of schools and universities, and stay-at-home orders from public officials. More than 20 million American workers, a seventh of the labor force, would apply for unemployment benefits between mid-March and mid-April. All of that happened. A major recession, if not a depression, seemed imminent.

Then, in response to the crisis, the Federal Reserve, Congress and the Trump administration implemented a number of unprecedented monetary and fiscal measures to alleviate the public-health and economic crises. By mid-April, as the numbers of infections and deaths from the virus mounted daily, the markets staged a sharp recovery. In less than a month, from the March lows the Dow rose 30%, the S&P 29% and the NASDAQ 26%. Justified or not—only time will tell—the markets’ collective wisdom seemed to think that the virus would soon go away and the government’s drastic measures would soon bring a sharp economic recovery.

Is this what typically happens during epidemics and pandemics? Because they don’t occur often anymore, most people have not experienced them and don’t have a clue as to what is typical. But they have happened often enough in history, which can offer some guidance. Here, seeking that guidance, we examine a number, but by no means all, of the epidemics and pandemics that have occurred over the course of US history.’

The exhibition covers a combination of 5 pandemics and epidemics in the United States:

1798 Yellow Fever Epidemic

‘Outbreaks of yellow fever were an almost annual occurrence in the decade 1795-1804 and reached epidemic proportions in New York similar to Philadelphia’s outbreak five years earlier from July to October 1798. Some 2,100 of the city’s population of about 35,000 died of the fever that year. The toll included prominent citizens such as Anti-Federalist Melancton Smith and printer Thomas Greenleaf. Street vendors hawked “Coffins—coffins of all sizes.” Many of the dead were buried in mass graves on what is now the site of Washington Square Park, which then was on the outskirts of the city.’

1832 Cholera Epidemic

‘When cholera broke out in 1832, New York City’s population had increased to 250,000, many of them recent immigrants living below 14th Street. The epidemic killed some 3,500, a mortality rate equivalent to more than 100,000 when applied to the city’s current population. When it peaked in Manhattan in July, President Andrew Jackson was in the process of vetoing Congress’s bill to re-charter the second Bank of the United States and completely repaying the US national debt.’

1858 Scarlet Fever Epidemic

‘Scarlet fever, nee scarlatina, killed 2,089 people, almost all younger than 16 years old, in Massachusetts between December 1858 and December 1859. According to the 1860 Census, the population of the state was about 1.2 million, of whom about 350,000 were under 16. Some of the children were employed, but the labor force exceeded 450,000, so the shock was more emotional than economic.’

1918 Spanish Flu

‘This worldwide pandemic was quite different from earlier localized epidemics. Across the world, the flu killed about 40 million people, or 2% of the world’s population. Since it is estimated that a third of that population became infected, the death rate for those infected was about 6%.’

1957 Asian Flu Pandemic

‘This pandemic began in China in late 1956 or early 1957, and by the summer of 1957 it began to spread around the world. Ultimately, it would kill an estimated 1-2 million people. By October, it was in full swing in the United States. The first wave that fall affected mostly school children, and some schools were closed. But few children died. A second wave in early 1958 was more deadly, affecting in particular pregnant women and elderly people with pre-existing conditions. Estimated US deaths ranged from 70,000 to 116,000.’

What Happened to the US Economy During the 1918 Influenza Pandemic? (Webinar)

Presentation Slides (PDF)

Paper: What Happened to the US Economy During the 1918 Influenza Pandemic? A View Through High-Frequency Data

‘Burns and Mitchell found a recession of “exceptional brevity and moderate amplitude.” I confirm their judgment by examining a variety of high-frequency data. Industrial output fell sharply but rebounded within months. Retail seemed little affected and there is no evidence of increased business failures or stressed financial system. Cross-sectional data from the coal industry documents the short-lived impact of the epidemic on labor supply. The Armistice possibly prolonged the 1918 recession, short as it was, by injecting momentary uncertainty. Interventions to hinder the contagion were brief (typically a month) and there is some evidence that interventions made a difference for economic outcomes.’

Lessons from the “Spanish Flu” for the Coronavirus’s Potential Effects on Mortality and Economic Activity

The National Bureau of Economic Research provided an excellent summary of this article in it’s May Digest:

‘An estimated 40 million people, or 2.1 percent of the global population, died in the Great Influenza Pandemic of 1918–20. If a similar pandemic occurred today, it would result in 150 million deaths worldwide…

The flu spread in three waves: the first in the spring of 1918, the second and most deadly from September 1918 to January 1919, and the third from February 1919 through the end of the year. The first two waves were intensified by the final years of World War I; the authors work to distinguish the effect of the flu on the death rate from the effect of the war. The flu was particularly deadly for young adults without pre-existing conditions, which increased its economic impact relative to a disease that mostly affects the very young and the very old.

The researchers analyze mortality data from more than 40 countries, accounting for 92 percent of the world’s population in 1918 and an even larger share of its GDP. The mortality rate varied from 0.3 percent in Australia, which imposed a quarantine in 1918, to 5.8 percent in Kenya and 5.2 percent in India, which lost 16.7 million people over the three years of the pandemic. The flu killed 550,000 in the United States, or 0.5 percent of the population. In Spain, 300,000 died for a death rate of 1.4 percent, around average. There is no consensus as to where the flu originated; it became associated with Spain because the press there was first to report it.

There is little reliable data on how many people were infected by the virus. The most common estimate, one third of the population, is based on a 1919 study of 11 US cities; it may not be representative of the US population, let alone the global population. The researchers estimate that in the typical country, the pandemic reduced real per capita GDP by 6 percent and private consumption by 8 percent, declines comparable to those seen in the Great Recession of 2008–2009. In the United States, the flu’s toll was much lower: a 1.5 percent decline in GDP and a 2.1 percent drop in consumption.

The decline in economic activity combined with elevated inflation resulted in large declines in the real returns on stocks and short-term government bonds. For example, countries experiencing the average death rate of 2 percent saw real stock returns drop by 26 percentage points. The estimated drop in the United States was much smaller, 7 percentage points. The researchers note that “the probability that COVID-19 reaches anything close to the Great Influenza Pandemic seems remote, given advances in public health care and measures that are being taken to mitigate propagation.” They note, however, that some of the mitigation efforts that are currently underway, particularly those affecting commerce and travel, are likely to amplify the virus’s impact on economic activity.’

Pandemics Depress the Economy, Public Health Interventions Do Not: Evidence from the 1918 Flu

(Above Graph:Dots represent city-level 1918 influenza mortality and manufacturing employment growth around the 1918 Flu Pandemic. Green (red) dots are cities with non-pharmaceutical intervention (NPI) days above (below) the median fall 1918.’)

One of the most important questions and debates these days is over social distancing and shelter-in-place guidelines. What is the tradeoff between public health policy and economic health? Scores of retail businesses and small business owners are getting crushed by these guidelines, and in many instances it is leading to social unrest. This paper looks at the historical evidence for how public health interventions affect the economy:

‘What are the economic consequences of an influenza pandemic? And given the pandemic, what are the economic costs and benefits of non-pharmaceutical interventions (NPI)? Using geographic variation in mortality during the 1918 Flu Pandemic in the U.S., we find that more exposed areas experience a sharp and persistent decline in economic activity. The estimates imply that the pandemic reduced manufacturing output by 18%. The downturn is driven by both supply and demand-side channels. Further, building on findings from the epidemiology literature establishing that NPIs decrease influenza mortality, we use variation in the timing and intensity of NPIs across U.S. cities to study their economic effects. We find that cities that intervened earlier and more aggressively do not perform worse and, if anything, grow faster after the pandemic is over. Our findings thus indicate that NPIs not only lower mortality; they may also mitigate the adverse economic consequences of a pandemic.

Housing Markets in a Pandemic: Evidence from Historical Outbreaks

Cholera Prevention Man

As we all continue trying to navigate through these uncertain times with volatile markets, I will continue to share any new articles I find that provide historical context on financial markets and pandemics. This week I’ve included a fascinating article on the impact of pandemics on urban housing markets through case studies on 19th century Paris and 16th/17th century Amsterdam.

The results show that during an epidemic, housing prices fall roughly 5.5% a year, and then fall a further 4.1% after the epidemic. However, the positive news is that these declines are short-lived, with both Amsterdam and Paris displaying quick bounce-backs following their respective epidemics. The authors state that ‘real house prices and rents grew in the decades around the epidemic by almost one percent per year – significantly above their historical average.’


As the chart below demonstrates, Amsterdam was no stranger to the plague during the 16th and 17th centuries. The most severe plague in this period killed a staggering 10% of the city’s population, and it’s possible that the real figure is even higher due to under reported data.

As it turns out, the citizens of Amsterdam had a very similar experience to what we’re living through right now in terms of social distancing. The best example is found in the ‘Plague Law of 1558’, which forbid the population from ‘visiting markets, inns, and churches during epidemics, as well as any other place where many people gathered.’ 

Additionally, many industries were shut down by the government in efforts to prevent spreading the disease. The description below sounds exactly like the problems facing hotel chains, restaurants, airlines, and other affected industries today:

‘After the 1617 epidemic, owners of inns complained that they lost most of their income because travelers avoided the city due to the epidemic. In the 1635 epidemic, Amsterdam merchants halted all orders from the textile industry in Leiden because they were afraid of the spread of the plague. In Hoorn, a town nearby Amsterdam, a chronicler wrote in 1656 that all businesses and artisans have shut down by now, and people have not much else to do than to help the sick.”

However, a positive takeaway from the city’s unfortunate battle with an epidemic is that the economic impact was short-lived, and did not stunt Amsterdam’s long-term growth .

‘The frequent plague outbreaks do not seem to have prevented Amsterdam’s growth over the longer term. Between the late 16th century and the late 1660s, the period of the most severe epidemics, Amsterdam rose to prominence and established itself as the merchant capital of the world. Its population rose from about 30,000 in the 1580s to over 200,000 in the 1660s, and in their landmark work on the Dutch economy, De Vries and Van der Woude classified this period as the first round of modern economic growth.” So while plague outbreaks vaged the city over the shorter-term, migration towards Amsterdam stayed very high, resulting in significant population growth over time.


The first outbreak of cholera in Paris occurred in March 1832, and killed more than 11,500 people in the first month alone. Eventually, the outbreak killed roughly 2.5% of the city’s population. In 1849, cholera returned and claimed the lives of another 1.5% of Paris’ population. In some areas of the city with higher population density, cholera killed up to 6% of the neighborhood’s community. The exhibit below shows the death rate per 1000 inhabitants by sections of Paris:

If there was a silver lining, however, it was that the worst hit areas of Paris (which were essentially slums) were cleared away and rebuilt to higher sanitary standards following the first cholera outbreak in 1832.

‘When Count de Rambuteau came to power in Paris in 1833, he proclaimed that his mission was to provide “air, water and shadow” to all citizens in Paris, and started clearing unhealthy housing in the worst-affected central areas of the city, as well as introducing public urinals to improve sanitation…

The epidemic in 1849 confirmed the validity of Rambuteau’s approach: mortality levels were still much higher in the working-class areas in the cities on the left bank but had gone down in the historical city center, where much of the slum housing had been cleared . This confirmation paved the way for massive renovations: the Hausmann renovations that took place in the late 1850s and 1860s destroyed a large part of the unhealthy medieval Paris and gave Paris the image it still has today.’

As far as the outbreaks’ impact on housing prices, for the 1832 outbreak:

‘Between 1832 and 1836, high-mortality areas fall significantly in prices relative to low-mortality areas, with a relative price drop of 7.3%. Reassuringly, this drop is more significant in areas profoundly affected by cholera in 1832 compared to 1849. Until the mid-1840s, house prices between high and low mortality areas remain at relatively stable levels, except for a slight but insignificant jump in 1840.’