Do you know who said the following: "A change in bank rate can call money from the other side of the moon"?
The Answer
[Answer provided by Ghislain Deleplace, University of Paris 8, France]
The exact maxim is: "7 percent will draw gold from the moon" (the fact that it is gold, and not money, is important, because this relies on an international capital flow in the form of gold, when the exchange rate has reached the import gold point). This maxim is quoted by R. Dornbusch and J.A. Frenkel in their paper "The Gold Standard and the Bank of England in the Crisis of 1847" (in M.D. Bordo and A.J. Schwartz eds. (1984) A Retrospective on the Classical Gold Standard 1821-1931, Chicago: University of Chicago Press: 254). They write: "The 1847 episode was probably responsible for the popular maxim that '7 per cent...'", but confess in a footnote that they "could note trace the exact origin of this maxim" (note 9 page 263). They add that "it was referred to by Lionel Robbins in a memorandum submitted to the (Radcliffe) Committee on the Working of the Monetary System, United Kingdom, Parliament 1960, p. 218. Robbins ascribes this maxim to 'a practical banker'".
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