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The corpus of Jewish legal writings contains many discussions of economic issues and ideas. Yet, aside from a small group of scholars, historians of economics have tended to ignore the texts of Jewish law. As Ephraim Kleiman (1997) points out, the sheer size and inaccessibility of the Jewish law corpus presents a major barrier. Economic ideas are scattered across a vast amount of material. The canonical text of Jewish law is the Talmud, which spans 2,700 folio pages and two million words. Hundreds of commentaries have been written on the Talmud (or parts of it). There are three major codes of Jewish Law (based on the Talmud and selected commentaries), plus commentaries on the codes and lesser known codes (based on the major codes). About one million responsa (questions and answers in Jewish law) are known to exist; these are collected in hundreds of books. Today, new commentaries and responsa appear each year, in addition to multiple rabbinic journals. In order to understand these materials, the scholar must be well versed in Hebrew, Aramaic, and the reading of the Talmud.

During the 19th Century, U.S. railroads relied primarily on debt issues to finance their growth. This policy contributed to major financial crises, beginning in 1857, 1873 and 1893. Nevertheless, railroads failed to reduce their leverage over 1900-1929, and suffered severe consequences during the Great Depression. In order to explain this puzzle, I focus on several key political-legal developments that originated around 1885. These are: (a) Changes in the bankruptcy process; (b) the emergence of large institutional investors, whose holdings came to be restricted by state laws; and (c) an increase in the power of federal railroad regulators, who refused to grant essential rate increases. I construct a counterfactual in order to measure the effects of regulatory policy. I find that railroads would have paid significantly higher dividends, had rates kept up with inflation over 1910-1916.

The theory of "financial fragility" emphasizes the role of weak balance sheets in propagating and magnifying macroeconomic shocks. I use a new panel dataset to investigate the relationship between financial fragility and real activity on U.S. railroads during 1929-1940. First, I formulate a flexible accelerator model of maintenance expenditures and employment. Then, using the model as a benchmark, I ask whether a firm's degree of leverage, bankruptcy status, and size affect the responses of employment and maintenance expenditures to changes in operating revenues. My results provide strong support for the predictions of the financial fragility theory. Leverage and bankruptcy status had the greatest effect during the worst years of the Depression and their impact differed systematically by firm size. Firm leverage had a large negative effect and generally affected small firms only. That is, firms whose fixed interest burdens were heavier than average exhibited lower than average annual growth in maintenance and employment; in general, this was true of small firms only. Bankruptcy effects were large and positive, and were present in large firms only. In other words, large firms that were in bankruptcy exhibited higher annual growth in maintenance and employment. Various categories of maintenance expenditure were not equally sensitive to financial effects; I find that highly indebted firms mainly used track maintenance to absorb revenue shocks. U.S. Government attempted to keep the railroads out of bankruptcy through loans from the Reconstruction Finance Corporation. I conclude that this policy was counterproductive.