Handbook of World Exchange Rates, 1590-1914

Published by EH.NET (December 2010)

Markus A. Denzel, Handbook of World Exchange Rates, 1590-1914. Surrey, UK: Ashgate, 2010. clii + 614 pp. $165 (hardcover), ISBN: 978-0-7546-0356-6.

Reviewed for EH.NET by Lawrence H. Officer, Department of Economics, University of Illinois at Chicago.

In 1962 a great historian of foreign exchange wrote: “There is everything to be said for compiling continuous series of exchange rates for all the important exchanges in the principal Foreign Exchange markets, at least from the sixteenth century, but preferably also for the late Medieval Period. The material is there, in public records and business archives. But to make it accessible is a task that only some well-endowed research department could undertake” (Einzig, 1970, p. xii).

In fact, the task was largely done and the results made public in the last decade of the twentieth century via a set of 11 volumes under the rubric Währungen der Welt (Currencies of the World). Markus A. Denzel, Professor at University of Leipzig and the author of Handbook of World Exchange Rates, 1590-1914, was one of the editors of all but the first volume of this set. The eleven-volumes of Währungen der Welt are a fantastic resource for the monetary historian and exchange-rate specialist; but, for most potential users, it has the twin defects of a language barrier and the sheer mass of data presented. Therefore, eight years ago, Denzel began work on the Handbook, the objective of which is to present the content of Währungen der Welt into one manageable volume and in English, thus correcting the defects. As the author states: “it was the central aim of this edition to act as an English anthology presenting the most important exchange rate series in the form of a handbook” (p. v).

But the author does more than simply condense the data series in the eleven German volumes into one English volume. Table 1 summarizes the various parts of the Handbook. Although over four-fifths of the book is devoted to exchange-rate series, there are over a hundred pages left over. A good part of the latter page group is devoted to two general histories, the first of which is a history of international “cashless payments,” beginning with the bill of exchange in Europe (specifically Italy) in the Middle Ages and concentrating on that Continent, but also with reference to Arabian, Armenian, Chinese, and Indian experiences. This is as detailed a history of international exchange instruments as could be found anywhere -- but here all in one place. Denzel continues the history beyond the bill of exchange to the telegraphic transfer and the check.

Table 1
Anatomy of the Handbook

use of handbook                                                             12 pages
history of foreign exchange and currency systems                89 pages
list of data sources                                                          12 pages
bibliography                                                                    30 pages
exchange-rate series (text and tables)                               614 pages
total substantive pages                                                    757 pages

Also impressive is the related history of currency systems, again beginning in the Middle Ages (with the various regional divisions of the pound). Coins and moneys of account are the subject, and paper money is also considered. Denzel correctly observes that banknotes began in Sweden, but does not mention the much earlier Chinese experience with paper money. There is a discussion of the classic gold standard (1870-1914) with its different types, and Denzel points out that only four countries (Britain, France, Germany, United States) had a “true” gold standard, meaning circulating gold coin and/or paper money and token coins convertible into gold.

The list of data sources and the bibliography are both remarkable. Data sources consist of four types: (1) unprinted sources, exchange-rate currents, and price currents, (2) newspapers, (3) merchant manuals, and (4) other printed sources. There is also an incredibly long list of merchant manuals underlying the Handbook in general, constituting 56 lines in small font (p. xx, note 37). The bibliography and footnote references demonstrate an extensive knowledge of the literature -- both of data sources and of historical analysis. Denzel discusses early currency and exchange-rate handbooks in various languages and notes modern predecessor handbooks that began with McCusker (1978) and Spufford (1986). The bibliography is fantastic, suffering only from the inexplicable omission of Einzig (1970). The only serious criticism of the Handbook is the lack of an overall index.

While the exchange-rate series text and tables are based mainly on Währungen der Welt, the Handbook series are not simply replications of Währungen der Welt series. Some data are taken from two relevant volumes of Quellen und Forschungen zur Historischen Statistik von Deutschland (“Sources and Research on Historical Statistics of Germany”); errors in Währungen der Welt and Historischen Statistik von Deutschland are corrected; and there is new source material for several countries (Australia, Canada, Italy, the Ottoman Empire, Russia, Uruguay).

The exchange-rate tables are presented in an individual-country framework. For each country, there are lists and/or discussions of data sources, location of exchange markets, data sources, concordances with the Währungen der Welt or Historischen Statistik von Deutschland series, and other available data (not tabulated in the Handbook). Also, a history of the country’s currency units and international exchange instruments is presented, as well as a list of historical references. The exchange-rate series are arranged according to the domestic city of quotation, with separate series for each foreign city. The denomination is the domestic price of foreign currency, that is, the number of units of domestic currency per unit of foreign currency. However, the foreign-currency unit is generally not the basic unit (for example, one pound sterling) but rather a multiple of that unit (for example, 100 pounds sterling).

Generally, only series for the most important domestic market are provided; but there are exceptions. In particular, exchange rates for multiple domestic markets are presented for the period prior to currency standardization or integration of domestic markets. Again unlike Währungen der Welt, domestic exchange series are generally not shown; but as usual there are exceptions (for example, domestic exchange of Boston, New Orleans, and San Francisco on New York).

Different from the monthly series in Währungen der Welt with concomitant annual averages, the Handbook shows only annual averages. A criticism common to each work is that the annual average pertains only to one observation per month, with beginning-of-month the preferred day; whereas a true monthly average would incorporate all market days during the month. For each year, Denzel shows the number of months used to compute the annual figure. While each series begins with the earliest year for which data are available, the last year is 1914 and July the last month -- so at most seven observations underlie the observation for that year. (Only one country, Poland, has an earlier final year -- see Table 3 below.)

A unique usance (period of time for payment of bill of exchange) is selected for a given series -- the dominant usance, with the shortest usance taken if dominance cannot be established -- whereas Währungen der Welt has alternative series (varying with usance). For example, Währungen der Welt provides the New York on London rate in several alternative series: 60 day exchange rate, sight exchange rate, and cable-transfer exchange rate. The corresponding Handbook series is unique: the 60-day rate for 1783-1879, followed by the cable-transfer rate.

Denzel chooses market quotations over official rates and exchange rates (for bills of exchange) over “money rates” (exchange of coin). So he is not concerned with parity rates as such (although he does pay attention to parity), and exchange rates are deliberately expressed as absolute levels rather than deviations from parity. He states that money rates are tabulated in cases when exchange rates are quoted in inflationary paper currency; but he does not correct the New York on London paper exchange rate during the greenback period and also for other periods of suspension of specie payments.

Table 2 shows the regional coverage of the Handbook’s exchange-rate series. The emphasis on Europe (including Britain) is apparent, with almost two-thirds of country specific pagination devoted to that region. The regional bias is primarily a result of history (especially the 1914 end-year).

Table 2
Regional Coverage of Exchange-Rate Series

Region        No. of  Countries    Pages (Text and Tables)
                                                Number    Percent of Total
Europe                  13                       398                65
America                  8                         94                15
Asia                       8                         86                14
Oceania                  2                        18                  3
Africa                      2                        18                  3
Total                     33                       614              100

Table 3 lists the 33 domestic countries for which the Handbook provides data series. The ordering is according to number of country-specific pages devoted to the country. One again sees the European emphasis, with only two non-European countries in the top ten. It is interesting that just eight countries account for half (50.7 percent) of the total country pagination.

Table 3
Exchange-Rate Series: Country-Specific Text and Tables

Country                          Range of Observations        No. Pages
Italy                                          1590-1914                   88
Germany                                    1657-1914                   64
England/Great Britain                   1590-1914                   54
Netherlands                                1593-1914                   45
Thirteen Colonies/U.S.                 1660-1914                   32
France                                       1760-1914                   28
Hapsburg Monarchy                     1754-1914                   24
China                                        1764-1914                   22
Russian Empire                           1695-1914                   20
Sweden                                     1700-1914                   19
Argentina                                  1824-1914                   14
Switzerland                                1842-1914                   14
Brazil                                        1808-1914                   12
Canada                                     1757-1914                   12
Denmark                                   1696-1914                   12
Mauritius                                   1825-1914                   12
British India                               1819-1914                   11
Ottoman Empire                         1760-1914                   11
Australia                                    1822-1914                    9
Netherlands India                       1818-1914                    9
Japan                                        1861-1914                    8
Persia                                        1809-1914                    8
Straits Settlements                      1834-1914                    8
Cape Colony/South Africa             1811-1914                    7
Egypt                                         1869-1914                    7
Poland                                       1696-1812                    7
Jamaica                                     1675-1914                    6
Spain                                         1820-1914                    6
Chile                                          1827-1914                    5
Mexico                                       1886-1914                   5
New Zealand                               1841-1914                    5
Indochinese Union                      1888-1914                    3
Uruguay                                    1871-1914                    3

In sum, the Handbook is the result of a monumental undertaking with an overwhelmingly successful outcome. Scholars will be indebted to Denzel for years to come. The Handbook is admirable not only for its substance but also for the professionalism of its style and organization. Publication of the Handbook is an event which Paul Einzig would have applauded with gusto.

References:

Paul Einzig (1970), The History of Foreign Exchange, second edition. London: Macmillan.

John J. McCusker (1978), Money and Exchange in Europe and America, 1600-1775: A Handbook. Chapel Hill: University of North Carolina Press.

Peter Spufford (1986), Handbook of Medieval Exchange. London: Boydell and Brewer.

Lawrence H. Officer is Professor of Economics at University of Illinois at Chicago and Director of Research at MeasuringWorth.com. His most recent books are Everyday Economics: Honest Answers to Tough Questions and Two Centuries of Compensation for U.S. Production Workers in Manufacturing, both published by Palgrave Macmillan.

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