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The Monetary History of Gold: A Documentary History, 1660-1999

Author(s):Duckenfield, Mark
Reviewer(s):Officer, Lawrence H.

Published by EH.NET (December 2004)

Mark Duckenfield, editor, The Monetary History of Gold: A

Documentary History, 1660-1999. London: Pickering & Chatto,

2004. xix + 536 pp. ?99/$160 (hardcover), ISBN: 1-85196-785-0.

Reviewed for EH.NET by Lawrence H. Officer, Department of

Economics, University of Illinois at Chicago.

A Review Article

A new collection of historical documents is always welcomed by

scholars. This is especially so if the collection is

theme-oriented, so that specialists can acquire new information or

readier access to existing information. Therefore the present

volume, presented as a documentary history of gold, warrants

careful review. The editor, Mark Duckenfield, explains that the

project was financed by the World Gold Council?s Public Policy

Centre ?to raise awareness among journalists, scholars and the

informed public of gold?s role as a monetary asset? (p. xvii). This

review will be concerned solely with the book?s place in the

scholarly literature.

What is the World Gold Council? According to its website


?the World Gold Council is a non-profit association of the world?s

leading gold producers, established to promote the use of gold …

and its promotional activities cover markets representing some

three quarters of the world?s annual consumption of gold.? It is

interesting, therefore, that the volume contains no documents that

deal with gold production, gold consumption, or gold investment.

Indeed, these categories do not even enter the index, which, at

over eleven pages, is not short. Only in one editorial passage does

the editor discuss the role of gold as an investment. Duckenfield

sees gold and the stock market as investment alternatives, and

observes that ?the stock market?s decline since 1999, as well as

the increase in international tensions as a result of the terrorist

attack on the World Trade Center in New York on 11 September 2001

and the second Gulf War in 2003, brought a resurgence in the gold

market as investors returned to gold as a traditional safe-haven in

troubled times? (p. 327). He explicitly states that ?gold … [is]

a non-interest bearing asset.? Notwithstanding the sponsorship,

this is a book that adopts a scholarly viewpoint and can be

appreciated by historians.

In this review the book is placed in context with existing

collections of historical documents that have the same,

gold-oriented, theme — in whole or in part. These books are listed

in Table 1, in chronological order; full citations are provided in

the references at the end of this review.

Table 1

Pages Devoted

Exclusively to Historical Documents




Percent of Book

U.S. Senate (1879)



Horton (1887)



Laughlin (1896)



Huntington and Mawhinney (1910)



Shrigley (1935)



Krooss (1969)



Duckenfield (2004)



a Includes index.

In terms of absolute size Duckenfield is in the middle of the

pack, fourth out of seven in total pagination. With 100-percent

devotion to documents, the book?s relative size in this respect is

shared by only two other collections: Huntington and Mawhinney

(subsequently referenced as ?Huntington?) and the massive,

four-volume work of Krooss. Considering the other books in Table 1,

what else is in them apart from historical documents and associated

editorial commentary? U.S. Senate contains proceedings of the

International Monetary Conference of 1878. These are presented as

contemporary recording rather than historical documentation;

therefore these proceedings are not included in the

historical?document pagination. Horton and Laughlin are each mainly

a monetary treatise. Shrigley offers non-document information,

quantitative and qualitative, on gold and the Bank of England (of

which, more below). It may be noted that S. Dana Horton, a U.S.

delegate to international monetary conferences, not only authored

and edited the historical documents in Horton (1887) but also had

been responsible for the historical documents included in U.S.

Senate (1879).

Table 2 summarizes the anatomy of Duckenfield and the six other

works. In Table 1 all historical documents are included to obtain

the page count; in Table 2 only those documents that fall within

categories covered by Duckenfield are incorporated. (These are

called ?pertinent documents,? in this review.) Some judgment on the

part of this reviewer is involved. For example, Duckenfield has one

document pertaining to the greenback period as a suspension of

specie payments; documents under that category are included for the

other works. An opposite example: Duckenfield has a document on

goldsmith banking; this reviewer judges that insufficient to

incorporate the category ?commercial banking.? Again, measured by

number of documents, Duckenfield is fourth among the seven


Table 2

Anatomy of Duckenfield

and Related Works





No. of



Editorial Commentary:













U.S. Senate






















































a Of type in Duckenfield volume.

b Also ?Miscellaneous? and ?Monetary Union.?

c Except for one subsection.

d Except for one section.

e Except for one document.

f Also ?Latin Monetary Union.?

g ?Acts? only. Excluded are ?Revised Statutes,? of

which 162 are pertinent.

h Excluded are documents in categories omitted by

Duckenfield: government financing, commercial banking, U.S. central

banking, U.S. paper money (except for greenback period).

I Of which only two are of type in Duckenfield


j ?Acts? and ?Revised Statutes.?

k Basis: by topic.

l By Paul A. Samuelson.

All the collections except Shrigley are divided into sections,

some chronological, some by country, some by topic, as Table 2

shows. Only two of the works have systematic subsections. Within

sections and subsections, ordering is uniformly chronological.

Regarding editorial commentary, Duckenfield is unique, and deserves

praise, for having editorial introductions in all three

manifestations: for the entire volume, by section, and for the

individual documents within each section. Because entries in a

collected volume of documents generally are excerpts rather than

the entire documents, this reviewer appreciates Duckenfield?s

practice of calling attention to non-reprinted parts of


The three sections of Duckenfield warrant discussion, here in

the context of editorial commentary. The introduction to the first,

?The Rise of the Gold Standard, 1660-1819,? is concerned entirely

with British monetary history. Duckenfield observes England?s

movement from bimetallism to a de facto gold standard in 1717. He

notes the interruption of the Bank Restriction Period in this

process. It is reasonable to confine discussion to Britain, because

it was the only country on a gold standard well into the nineteenth

century. However, it would have been in order to discuss the

bimetallist systems of other countries.

The second section, ?The Heyday of the Gold Standard,

1820-1930,? has a broader introduction, including topics such as

the expansion of the gold standard, the price specie-flow

mechanism, the U.S. shift from an effective silver to an effective

gold standard (with the interruption of the greenback period), the

deflation of 1873-1896, and London as the center of the gold

standard. The end of the classical gold standard with World War I

is noted, as is the return to the standard after the war.

Duckenfield discusses the issue of convertibility but can be

criticized for ignoring that of credibility (of countries?

commitment to convertibility at the existing mint price), which

underlay the success of the classical gold standard.

In his introduction to the third section, ?After the Gold

Standard, 1931-1999,? Duckenfield sees a weak institutional

structure as the cause of instability of the interwar gold

standard. ?Domestic social tensions? and the ?prospect of

substantial budget deficits? drove countries off the gold standard.

War and ?new social realities? meant that political and economic

institutions that supported the gold standard could not overcome

political demands that occurred during the Great Depression. Again,

reference to the issue of credibility, now the lack thereof, in

government?s commitment to convertibility would have been in


The introduction also discusses the International Monetary Fund,

the role of the dollar, and the ?Triffin dilemma? (the trade-off

between liquidity and confidence). On the U.S. suspension of gold

convertibility in 1971, Duckenfield writes: ?Ironically, although

it was the weakness of the dollar relative to gold that brought

about the collapse of the Bretton Woods system, it was gold that

was removed from its primary position as a monetary asset while the

devalued dollar became even more crucial to the smooth operation of

the international economy? (pp. 326-327). It can be argued, rather,

that it was U.S. commitment to a fixed dollar price of gold that

artificially made gold the first?class monetary asset.

Table 3 divides the pertinent documents of each work into

chronological sections (pre?1820, 1820-1930, post-1930)

corresponding to the Duckenfield partitioning, except that Horton?s

original partitioning is retained, because it is so close to that

of Duckenfield chronologically. Of course, the four documents

antedating Shrigley lack the third (post?1930) section, because of

the date of publication.

Table 3

Number of Pertinent

Documents — by Type and Time Period





No. of Documents



U.S. Senate


























































a Although the title of the book states the full

period as 1660-1999, one document (in an appendix) pertains to the

year 2004.

What are the components of official versus private documents?

Official documents consist of country and international items.

Country official documents include acts, resolutions,

announcements, reports, memoranda, communications, statements,

declarations, representations, speeches, notes on petitions,

parliamentary diaries, proclamations, mint correspondence, and

press conferences. International documents (all official) consist

of treaties, conventions, resolutions, agreements, press releases,

communiqu?s, and decisions. Private documents include treatises,

books, pamphlets, diaries, discourses, petitions, speeches,

reports, correspondence, memoirs, newspaper articles, and


As one would expect in collections of documents, the vast

majority of documents are official, in all the works. Duckenfield

is unique in having private documents constitute a significant

proportion — over one-third the total number — of documents in

the pre-1820 period.

Table 4 offers an alternative division of pertinent documents –

by country (Britain, United States, other countries), with

international as a separate category. For private documents, the

subject country is taken. For official documents, the country

category is the country of the official document rather than the

subject country or countries. All seven works concentrate on

Britain and/or the United States. Huntington and Krooss deal only

with the United States, Shrigley only with Britain. Laughlin has

U.S., other-country, and international — but not British –

documents; while Horton includes only British and international

documents. The only works with documents in each category are the

earliest and latest: U.S. Senate and Duckenfield. As would be

expected, U.S. Senate has somewhat more U.S. than British documents

overall (but not for the pre-1820 period).

Table 4

Number of Pertinent

Documents — by Country and Time Period




Number of Documents


United States

Other Countries


U.S. Senate




























































































One would predict a balanced British/U.S. division on the part

of Duckenfield, given that neither the book-title nor the sponsor

is specific-country oriented. Then one would be disappointed,

because a British emphasis is present in every period. The

asymmetry is apparent in several ways:

1. There are nine documents of the Bank Restriction Period but

only three from the greenback period and nothing on other U.S.

suspensions of specie payments.

2. There is an entry for the Bank of England charter, but not

for the Federal Reserve Act.

3. There are more entries for Acts of Parliament than for U.S.


4. The British Coinage Act of 1870 is reprinted in full; not so

the U.S. Coinage Act of 1873, which admittedly is a longer Act.

In fairness to Duckenfield, it should be noted that, while

Winston Churchill?s famous Budget Speech of 1925 returning the

United Kingdom to the gold standard is excerpted, William Jennings

Bryan?s at least equally famous ?Cross of Gold? Speech is reprinted

in full. Also, there are many entries involving U.S. abandonment of

the gold standard in 1933-1934.

Notwithstanding the generally British orientation of

Duckenfield, Horton is the better source for material on the

history of the guinea — perhaps the most famous coin in British

history, and, along with the (new) sovereign introduced in 1817,

one of the country?s two most important coins. Only seven of

Horton?s 31 documents on the guinea are included in Duckenfield.

The guinea is notable as a coin for two reasons. First, its initial

value of 20 shillings corresponded to the pound sterling.

Interestingly, the guinea was not the first coin with this

property; that distinction belongs to the old sovereign, introduced

in 1489. Second, the fineness of 11/12th was firmly established

with the guinea (and continuing with the new sovereign); but again

the guinea was not the first coin with that fineness (that honor

belonging to the crown in 1526).

Shrigley, totally specialized on Britain, has a specific theme

within gold. She writes: ?The purpose of this collection of

documents is to show the official position of gold as a marketable

commodity from the Incorporation of the Bank of England to the Gold

Standard (Amendment) Act of 1931? (p. vii). Of her 20 documents, 12

are not in Duckenfield.

Table 5 breaks down the ?other-countries? category of Table 4

into specific countries. Duckenfield does not provide a rationale

for his concentration on Switzerland in the 1920-1930 and post-1930

periods in this respect, nor for inclusion of material on countries

such as Chile and Yugoslavia post-1930. It is also arguable that

France and Germany deserve greater attention than all three works

give these countries.

Table 5

Number of Pertinent

Documents — by ?Other Country? and Time Period





Number of Documents





U.S. Senate






































a Italy, Austria.

b Chile.

c Yugoslavia.

Table 6, similarly, partitions the ?international? category of

Table 4. Duckenfield can perhaps be criticized for neglecting the

international monetary conferences of the nineteenth century. Yet

he deserves praise for including the, post-World War I, Treaty of

Versailles — relevant because of the gold-denomination of the

monetary obligations imposed on Germany.

Table 6

Number of Pertinent

International Documents — by Organization and Time Period




Number of Documents


International Monetary


Latin Monetary


Bank of International


International Monetary



Central Banks




U.S. Senate



















a Treaty of Versailles.

b Tripartite Agreement, Smithsonian Agreement.

Duckenfield deserves praise on a number of counts. First, for

some documents, the contents of appendices are listed. (Indeed,

that is sometimes the full text of the entry.) These contents can

be useful references for the scholar. Second, Duckenfield makes use

of generally neglected sources: Bank of England archives and the

House of Lords Record Office. Third, some documents may be new to

historians. Examples: a ?confidential telegram? (one of many) sent

on September 20, 1931, from the Bank of England to domestic and

foreign correspondents; the Rothschild letter on fixing the price

of gold in 1939, just prior to World War II.

A serious limitation of the Duckenfield volume is the neglect of

quantitative information. Only three documents have a quantitative

aspect: the original Articles of Agreement of the IMF, which

contains the list of country quotas; the IMF Executive Board

decision on the Smithsonian Agreement which lists exchange rates

for member countries; and, perhaps most interesting to historians

because probably not available elsewhere, three documents from the

Bank of England?s Archives providing data on gold holdings of

countries occupied by Germany, in 1940. In contrast, the documents

in U.S. Senate contain many useful tables on U.S. exchange rates,

gold and silver prices, and coinage.

Shrigley presents several useful time series (which are not

included in the list of her documents, in Tables 2-4): the annual

gold-silver market price ratio, 1867-1932; the London market price

of gold, annual 1870-1932, daily 1919-1925; and the London market

price of silver, monthly 1833-1933. The last is an insert at the

end of the book, and includes also annual data on silver coined in

England, the amount of bills and telegraphic transfers drawn in

England on Indian governments, exports of silver to the East,

imports of silver, average Bank Rate, and remarks (generally

historical). It is a large and impressive table, which,

unfortunately, because not attached to the volume, may be missing

from many copies. Not a time series, but nevertheless useful, is a

list of Governors of the Bank of England from inception to 1920,

along with dates of service.

In conclusion, the Duckenfield volume is a useful addition to

collections of historical documents on gold, and would be best

utilized by scholars in conjunction with existing works of a

similar ilk.


Horton, S. Dana (1887). The Silver Pound and England?s

Monetary Policy since the Restoration, together with the History of

the Guinea, illustrated by contemporary documents. London:


Huntington, A. T., and Robert J. Mawhinney, eds. (1910). Laws

of the United States Concerning Money, Banking, and Loans,

1778-1909. National Monetary Commission, Senate Document No.

580, 61st Congress, 2nd session. Washington:

Government Printing Office.

Krooss, Herman E., ed. (1969). Documentary History of Banking

and Currency in the United States, four volumes. New York:

Chelsea House in association with McGraw-Hill.

Lauglin, J. Laurence (1896). The History of Bimetallism in

the United States. New York: D. Appleton.

Shrigley, Irene, ed. (1935). The Price of Gold: Documents

Illustrating the Statutory Control through the Bank of England of

the Market Price of Gold, 1694-1931. London: P.S. King &


U.S. Senate (1879). International Monetary Conference?held?in

Paris, in August 1878, under the auspices of the Ministry of

Foreign Affairs of the Republic of France. Senate Executive

Document No. 58, 45th Congress, 3rd session.

Washington: Government Printing Office.

Lawrence H. Officer is Professor of Economics at University of

Illinois at Chicago. As Editor, Special Projects, EH.Net, he has

recently completed ?What Is Its Relative Value in U.K. Pounds,? a

calculator available on the EH.Net website (

Copyright (c) 2004 by EH.Net. All rights reserved. This work may

be copied for non-profit educational uses if proper credit is given

to the author and EH.Net. For other permission, please contact the

EH.Net Administrator (; Telephone:

513-529-2229). Published by EH.Net (December 2004). All EH.Net

reviews are archived at

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: WWII and post-WWII

Monetary History, Exchange Rates and Financial Markets: Essays in Honour of Charles Goodhart, Volume Two

Author(s):Mizen, Paul
Reviewer(s):Jonung, Lars

Published by EH.NET (March 2004)


Paul Mizen, editor, Monetary History, Exchange Rates and Financial Markets: Essays in Honour of Charles Goodhart, Volume Two. Cheltenham, UK: Edward Elgar, 2003. xi + 281 pp. $95 (cloth), ISBN: 1-84376-086-X.

Reviewed for EH.NET by Lars Jonung, DG ECFIN, European Commission.

In November 2001 the Bank of England arranged a two-day festschrift conference to honor Charles Goodhart — his dual career as a distinguished monetary economist and as a prominent central banker. The proceedings of the conference are now published in two volumes, the first one focusing on the theory and practice of central banking, the second one on monetary history, exchange rate arrangements and the regulation of financial markets. For researchers in economic history, the second volume is the more interesting one — although the first one contains much about the evolution of central banking in recent decades.

As a rule, to review a festschrift is similar to the task of reviewing a smorgasbord for a culinary magazine: there are many but disparate dishes to consider. Often the festschrift is composed of a set of chapters lacking a unifying theme, except being devoted to the scholar honored by the festschrift, and held together mainly by a common binding.

This is not the case of Monetary History, Exchange Rates and Financial Markets. It is well organized according to fields to which Charles Goodhart has made significant contributions. And these fields are many as he is “the Samuel Johnson of monetary policy” according to one of the participants of the conference.

Virtually all of the contributors start out from the work of Goodhart. Then the trip takes off in one of two directions: either his work is taken as a source of inspiration and pushed further, or it is scrutinized in a way that may surprise readers, steeped in the continental European tradition that the task of the festschrift is to heap praise on someone who is taking the great step out of academia and into retirement. But the criticism — all given by Americans (who else?) — pays tribute to Goodhart. His work stimulates response and rebuttal. These chapters challenge his views and interpretations and in so doing, raise the academic standard of the volume far above that of the orthodox festschrift.

In the first chapter (“The Role of History of Economic Thought in Modern Macroeconomics”) David Laidler starts by complimenting Goodhart for not being a “modern macroeconomist,” as that species lacks the proper understanding of the history of economic ideas. Laidler makes a strong case for his choice of accolade, demonstrating how a number of prominent “modern” economists are misjudging or misusing economic thought and historical evidence. Today the prevalent use of models and techniques has reduced the pay-off of drawing on history — the history of the economy as well as of economic thought. The question remains: which are the driving forces behind this evolution? One guess is that many of the fashionable macro-models are ill-suited for empirical testing or do not stand out as worthy explanations of historical events. So the easy way out is to turn away from the past.

The second chapter by Michael Bordo and Anna Schwartz (“Charles Goodhart’s Contributions to the History of Monetary Institutions”) is an account of Goodhart’s analysis of the evolution of central and commercial banking. They pay great respect to his work, but object to his opinion that “markets fail more readily than … policy-makers and regulators.”

In chapter 3 (“Crises Now and Then: What Lessons from the Last Era of Financial Globalization?”) Barry Eichengreen and Michael Bordo start from Goodhart’s comparison of the recent Asian financial crisis and the banking and currency crises during the classical gold standard, arguing that his view is “too simple.” Bordo and Eichengreen base their conclusions on an impressive number of calculations of the output loss and recovery time from crises under various monetary regimes. I advise those who want to sort out the arguments to consult footnote 51 – the longest one in the volume. Here the problems associated with estimating the output losses caused by crises are summarized in a concise way.

In chapter 4 (“Exchange Rate Regimes in Theory and Practice”), Andrew Crockett reviews the current literature on the choice of exchange rate regime. He is not quite happy with the mainstream view that the world is moving towards a bipolar case: viable and sustainable exchange rate regimes are found either among monetary unions or in fully floating exchange rates cum inflation targeting. He finds it a bit too simplistic — at the end offering no alternative interpretation but some common sense qualifications.

The next three chapters are inspired by Goodhart’s work on foreign exchange markets and the microstructure of foreign exchange trading. Takatoshi Ito (“Is Foreign Exchange Intervention Effective? The Japanese Experiences in the 1990s”) presents quantitative estimates of the Japanese intervention policy. This premier study — Ito was the first to get the data — shows convincingly that the interventions have been a highly profitable venture.

Mintao Fan and Richard Lyons (“Customer Trades and Extreme Events in Foreign Exchange”) and Richard Payne (“Trading Activity, Volatility, and Transactions Costs in Spot FX Markets”) push the work of Goodhart further by using new sets of high frequency data from the exchange markets. They all stress the importance of orders flowing from the final customers. These customer orders represent the catalyst behind exchange rate movements.

The three last contributions deal with financial regulation. Surveying both the theory and the empirical record for Europe, Japan, the U.S. and Canada, Elena Carletti and Philipp Hartmann (“Competition and Stability: What’s Special about Banking?”) reject the idea that competition is a threat to stability in the commercial banking sector.

Inspired by Goodhart’s work on financial supervision, Andrew Sheng and Tan Gaik Looi (“Is There a Goodhart’s Law in Financial Regulation?”) test the application of Goodhart’s law to financial regulation and find it most helpful. Their chapter also contains an annex setting out Goodhart’s policy conclusions on regulation. The final contribution by Michael Foot (“Working with Market Forces”) is a most sensible plea for financial regulation to be based on a market-oriented approach.

The editor has succeeded nicely in the difficult task of organizing the festschrift in a constructive way. The selection of commentators contributes to that. The volume ends with some comments by Charles Goodhart. I wish he could have been given more of an opportunity to respond — now it is being done indirectly through the commentators serving as his medium. All in all, I expect this festschrift to have a half-life much longer than the average one. It deserves it.

Lars Jonung is presently co-editing a volume on the internalization of asset ownership in Europe, forthcoming from Cambridge University Press. In 2003 he published The Demand for Money with Michael D. Bordo, as well as an anthology on the Swedish record of inflation targeting, 1993-2003 (in Swedish).


Subject(s):Markets and Institutions
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: WWII and post-WWII

International Financial History in the Twentieth Century: System and Anarchy

Author(s):Flandreau, Marc
Holtfrerich, Carl-Ludwig
James, Harold
Reviewer(s):Mason, Joseph R.

Published by EH.NET (March 2004)


Marc Flandreau, Carl-Ludwig Holtfrerich, and Harold James, editors, International Financial History in the Twentieth Century: System and Anarchy. Cambridge: Cambridge University Press, 2003. x + 278 pp. $60 (cloth), ISBN 0-521-81995-4.

Reviewed for EH.NET by Joseph R. Mason, Department of Finance, Drexel University.

This book, while not always fun to read, is, however, fascinating. In ten chapters, the essays lay out some of the important principles underlying path dependence between nineteenth and twentieth century international financial institutions. The essays are arranged in an order that demonstrates first the sophistication of late nineteenth century institutions and by the end the relative backwardness of what many consider to be sophisticated modern-day institutions. The essays in the book weave in and out of different academic disciplines, combining history, history of economic thought, and political economy in a way that offers a unique perspective of path dependence.

Flandreau and James sum up the book’s argument succinctly in the introduction. There, they assert:

… modern advocates of monetary reform are just the latest offspring of a long and venerable tradition dating back to the nineteenth century…. The past has lessons that are relatively cheap to learn, and, as we shall see, they are telling and compelling.


Put simply, these lessons are: (1) attempts at international coordination or control rarely work; (2) such attempts are most unstable when they are politicized as a result of unstable international politics; (3) the markets are themselves possible only on the basis of powerful institutional, political, and social forces (pp. 2-3).

Those are important and powerful lessons. I feel, however, that Flandreau and James reach a bit too far when they attempt to draw a globalization analogy out of the history of international monetary order. The authors characterize the interwar period as the bottom of a U-shaped trend of globalization. The present set of essays, however, seems to show that the extremes of the U-shape were lower than previously believed, i.e., that there was less coordination in the nineteenth century and today than was previously believed. Hence, it may be more appropriate to characterize the interwar period as one of transition toward a new hegemony or a new coordination mechanism rather than a low point in globalization per se.

Nonetheless the set of essays contained in the book is extraordinary. Chapter One, written by Marc Flandreau, describes how, under the previously perceived order of the classical gold standard, there existed significant sovereign risk that could detract from monetary order. Global financial centers grew immensely after 1840. This growth was due to better capabilities of screening borrowers and pricing risk, along with faster information flows arising from the growth of the telegraph, which was capped by the completion of cables between London and the Continent (1852) and Europe and America (1866).

Evidence for substantial sovereign risk in the era comes from records of the Service des Etudes Financi?res (SEF) as part of Cr?dit Lyonnais in 1871. The SEF was initially established to organize the vast amounts of information and data into a reference unit accessible to those making credit decisions for the bank. While from its inception in 1871 through about 1879 the SEF was underfunded and understaffed, and as a result only marginally effective at this task, by 1889 the SEF had achieved notoriety as the premier think tank for research into credit risk and international affairs (which at the time were highly correlated).

During its heyday, the SEF produced country ratings that relied critically upon adjusting sovereigns’ own reports of fiscal health for various known accounting irregularities and fudges, and for probabilities of sovereign risk of default. Hence, Flandreau effectively demonstrates that gold standard discipline was not absolute, nor did contemporary investors believe that was the case. Furthermore, disciplined investors routinely estimated default risk during the gold standard era in ways that are strikingly similar to modern rating mechanisms.

Still, there was ample room for investment outside the government sector during the gold standard era. That is the subject of Chapter Two, written by Mira Wilkins, regarding foreign direct investment between 1880 and 1914. Wilkins has poured a phenomenal amount of work into first appropriately defining, and then setting about to estimate a concept akin to what we now call foreign direct investment. A great deal of difficulty stems from not only utilizing vastly different corporate forms in the gold standard era, but also, of course, in the paucity of data from that era. At the end of the chapter Wilkins offers seven conclusions, the seventh of which I found the most intriguing for the purpose of the book: although “… the gold standard reduced the risks of losses based on currency fluctuations; it did not reduce commercial or political risks.” Hence, without nationalized industry business faced substantial risk even in the face of gold standard discipline.

Transitional essays begin with Stephen Shuker’s chapter on the Gold-Exchange Standard. Shuker’s essay offers intriguing insights into the politics of the interwar era and illustrates how resistance to the costs of moving the monetary center from Britain to America resulted in trade blocs that would later define the boundaries of World War II. This essay also points out the many problems inherent in building monetary order on the basis of “conference diplomacy.” Hence the primary difference in stability across the gold and gold standard eras was not one of inherent discipline, as countries routinely broke the “rules of the game” in both eras, but that the pressures left by WWI had already changed the rules in ways that economists at the time may not have recognized.

Kenneth Mour? continues the interwar theme in his chapter, which extends his book, Managing the Franc Poincar? (1991), back in time prior to 1928. Moure describes how, during the period 1914-1928, French politicians locked themselves into a policy of restoring and maintaining the franc’s link to gold.

Beginning as early as 1915, France urged its citizens to exchange gold for paper bank notes “without losing any part of their savings, without running any risk, without having to pay more for anything they wish to buy” (p. 97). The government even mobilized the Catholic Church, appealing to Christian principles, to encourage the exchange. By the end of WWI and lasting until 1928, however, France was in no position to exchange the paper back into gold as promised. For almost fourteen years, then, French citizens were told that France would reestablish her link to gold. Hence, France had little choice but to remain tied to gold once conversion was complete, even in the face of the Great Depression that gripped the world a short while later.

Robert Skidelsky’s chapter begins two essays devoted to the Bretton Woods era. Skidelsky skillfully describes how many of Keynes’ most important contributions owed to his experiences as a British citizen during and after the Great Depression. Hence, Keynes usually wrote from a vantage point of reestablishing Britain’s hegemony. Because the U.S. did not seem to want the role, Keynes was often of the opinion that the U.S. should contribute significant sums to attain this goal. A reluctant U.S., however, was not forthcoming until a shared threat, in the form of the Cold War, motivated it to take a leading role in the New World Order.

Jakob Tanner, on the other hand, describes how difficult it was for the neutral countries, including Sweden, Switzerland, Portugal, Spain, and Turkey, to play any part in helping shape that New World Order. Since the neutrals did not help win the war, and in fact may have in some ways interfered with victory, they were not looked kindly upon in the immediate post-war era. Hence, these countries were not invited to Bretton Woods, and could only join the arrangements in 1946. Those countries, however, being small and relying substantially upon foreign exports for economic growth, were acutely affected by the outcome at Bretton Woods.

The next two chapters deal with issues related to German reconstruction. The chapter by Charles Kindleberger and Taylor Ostrander analyzes the roots of the 1948 German monetary reform. This essay is fascinating on a number of different levels. First it shows just how costly and difficult managing a defeated nation’s postwar economy can be. Myriad resources were devoted to keeping order, planning succession governments, and establishing new monetary arrangements, all the while fighting inflationary pressures and, toward the end of the period, the Cold War. Second, and central to the essay provided here, the essay shows just how difficult it is to reestablish a currency rate that balances inflation, trade, and growth in a volatile country under military occupation. The main point is that the occupying forces often had to take steps that were impossible for an infant government to impose without losing credibility to an extent that insurrection or even war might ensue.

The chapter by Werner Abelshauser builds upon Kindleberger and Ostrander, pointing out that World-class Wars lead to world-class financial commitments long after the battlefields are quiet. Abelshauser demonstrates how military expenditures play a key role in international financial relations. These expenditures began with costs of the German occupation of around one billion dollars per year lasting into the 1960s (chiefly borne by the U.S. and U.K.). By 1960, the costs of the Cold War, Korea, and NATO nuclear armaments forced the U.S. and U.K. out of Germany and into exorbitant spending programs devoted to high-tech weaponry. Those weapons programs led to diplomatic agreements (and disagreements) about how to spread the financial burden of defense and to broader monetary coordination.

Eric Helleiner’s chapter on global money poses the question of whether the world is moving toward or away from a global currency. Some have suggested that the gold standard represented a means by which regional currencies were aggregated to national currencies. National currencies based on the gold standard were thought to be uniform, leading toward a global monetary standard. However, earlier essays revealed that the “rules of the game” in the gold standard era were often violated. Furthermore, once nations took control of their moneys they quickly used coins and currencies as nationalist tools, reflecting national icons, traditions, and pride. Although such movements may be taken as barriers to a global money standard, today a number of nations operate on the basis of substantial dollar-denominated trade. Hence, the market may in fact be driving the world to a de facto monetary standard without central coordination. If that is indeed the case, Friedrich Hayek would be pleased.

The last chapter, by Louis Pauly, characterizes twentieth century international relations not by the absence of gold standard “rules of the game,” (which many have argued were often absent in the nineteenth century anyway) but by the presence of a new means of coordinating monetary arrangements: “conference diplomacy.” Beginning with the League of Nations in the early 1920s, diplomats convened large assemblies of “the right sort of people” who could think intelligently about world economic difficulties and settle on arrangements to ameliorate those difficulties.

These early conferences are the basis of the institutions we know today, GATT, the IMF, the World Bank, etc. But while the minds have changed, the important issues of the day are remarkably similar to those considered in the earliest conventions. Pauly attributes this constancy to the philosophical nature of the debate. It is not economic principles that are being debated, but principles of “contestable markets, efficiency, and fairness” (pp. 254-5). In fact, Pauly notes that even the conclusions of the 1997 WTO meeting of the world’s leading trade ministers — we hereby create a working group, “to study issues raised by Members relating to the interactions between trade and competition policy, including anti-competitive practices, in order to identify any areas that may merit further consideration,” — are uncomfortably similar to the final goals of the Geneva Conference of 1927. Hence Pauly ends his essay with the perhaps disturbing insight:

We do not need to rediscover as the League of Nations did that the important question concerning the universal evolution of deep structural standards is not “efficient and fair for what,” but “efficient and fair for whom.” Symmetry in the distribution of the adjustment burdens associated with global economic interdependence was a key principle of the Bretton Woods system, albeit one honored mainly in the breach. In the post-Bretton Woods environment, it remained a normative ideal. It would seem wise to bring that principle back to center stage before accelerating the movement to articulate and enforce international standards of industrial organization and business practice (pp. 262-3).


Of course, much of the detail on monetary arrangements found in this book is described in Barry Eichengreen’s Globalizing Capital (1996), but that type of detail is not the main contribution. In my opinion, the main contribution is in drawing analogies in history and politics that can contribute perspective on the institutions of the past and help guide decisions in the future. In that regard, I think nearly every essay in the collection has succeeded.

Joseph Mason is the author of numerous articles including, “Do Lender of Last Resort Policies Matter? The Effects of Reconstruction Finance Corporation Assistance to Banks during the Great Depression,” Journal of Financial Services Research, August 2001, pp. 77-95. Find out more at

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: WWII and post-WWII

Monetary Regimes and Inflation: History, Economic and Political Relationships

Author(s):Bernholz, Peter
Reviewer(s):Siklos, Pierre

Published by EH.NET (July 2003)

Peter Bernholz, Monetary Regimes and Inflation: History, Economic and Political Relationships. Cheltenham, UK: Edward Elgar, 2003. xi + 210 pp. $85 (cloth), ISBN: 1-84376-155-6.

Reviewed for EH.NET by Pierre Siklos, Department of Economics, Wilfrid Laurier University.

“But I beg of you not to despise monetary history; for I am sure that the monetary policy of a nation is often unintelligible without some understanding of the queer institutional jungles out of which it has sprung.” — D. H. Robertson

The study of monetary economics has, of late, largely left behind any pretensions of caring about the role of monetary aggregates. Typically, the conduct of monetary policy is about setting an interest rate instrument in response to some measure of output and inflation. However, as Peter Bernholz reminds us, inflation in historical terms is still largely about the behavior of the money supply and the varieties of political and other institutions from which monetary policy emanates. The book does not restrict itself to studying the perverse cases of hyperinflation (i.e., inflation rates of fifty percent or more on a monthly basis) where the power of excessive money growth is easy for everyone to see. Instead Bernholz devotes considerable space to attempting to understand what drives policy makers to permit moderate rates of inflation. The definition of moderate inflation is never sufficiently clear but this should not be held against the author. A difficulty of course is that what might be considered moderate in one country could be deemed as excessive in another. Hence, five to ten percent inflation rates would be intolerable in Germany while many Latin and South American countries might consider such an inflation performance to be stellar.

In any event, it is refreshing to see that the interaction of money and politics is not dead and that a good deal of what drives the inflation process across countries and over time can be explained in these terms. Following a general overview of the historical experience with inflation from Roman times to the present Bernholz next considers how inflation is generated under a metallic monetary regime. While the basic analysis will be familiar to all who are interested in metallic monetary standards the book instead highlights what can go wrong especially when politics put pressure on the rulers or policy makers to “beat” the system resulting in inflation. Next, Bernholz considers what he refers to as “moderate” inflation that arises under a paper money standard. Once again the long historical view is taken going all the way back to the first known paper money inflation, namely the one that took place in China under the Ming Dynasty. Once again the message is that there are varieties of moderate inflation rates and these can be explained by political events that drive politicians and institutions to generate more or less inflation than might be economically desirable. A separate chapter asks how moderate inflations are ended and, not surprisingly, the answer is complicated since the menu of available options, from outright institutional reforms to the adoption of a currency board arrangement, are available to policy makers. Indeed, history appears to teach us that policies leading to the end of mild bouts of inflation involve a sequence of policies and that the sequence need not be the same for all countries. Hence, there is no ‘one size fits all’ solution to ending inflation.

Two separate chapters deal with hyperinflations (chapters 5 and 8) and, while much of the material has been covered elsewhere, Bernholz does bring a fresh perspective on the conditions needed to successfully end a hyperinflation even though it is never entirely clear how success is precisely measured. Nevertheless, it is useful to know that there appears to be a threshold level of institutional reforms necessary before a successful end to hyperinflation is declared, even if this reviewer disagrees with the characterization that the ending of the first Hungarian hyperinflation (post World War I) belongs to the successful category while the end to the second Hungarian hyperinflation (post World War II) should be viewed as being unsuccessful. The category of “least” successful ends to high inflation all took place during the 1990s and cast a shadow on the role of the IMF, in particular, as an outside force for good advice on how to conduct monetary policy.

Finally, Bernholz devotes one chapter (chapter 6) to explaining, in both formal terms and in historical terms, that inflation produces forces that lead the public to favor or discard alternative media of exchange. There is, of course, a large literature on the currency substitution phenomenon, and Bernholz does a fine job explaining the operation of Gresham’s Law (i.e., currency substitution under fixed exchange rates) and what he refers to a Thier’s Law (i.e., currency substitution under a floating exchange rate system). Here the volume suspends a direct role for institutional factors and instead highlights society’s continued strong desire for a stable currency as most conducive to providing good economic performance.

All in all, Peter Bernholz has provided us with a highly interesting and illuminating account of the vast sweep of monetary history in easy to read historical terms. The writing is crisp and the knowledge of monetary history is breathtaking. Students of monetary history will no doubt find this a fascinating and useful volume.

Pierre Siklos is Professor of Economics at Wilfrid Laurier University, co-editor of the North American Journal of Economics and Finance, and Associate Director of the Viessmann Centre on Modern Europe. Recent publications include “Inflation and Hyperinflation” The Oxford Encyclopedia of Economic History (2003); “Foreign Exchange Market Intervention in Two Small Open Economies: The Canadian and Australian Experience” (with Jeff Rogers, former MABE student), Journal of International Money and Finance, 22 (June 2003); and The Changing Face of Central Banking: Evolutionary Trends since World War II (Cambridge University Press, 2002).

Copyright (c) 2003 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (; Telephone: 513-529-2851; Fax: 513-529-3308). Published by EH.Net (July 2003). All EH.Net reviews are archived at

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

A History of the Federal Reserve, Vol. I: 1913-51

Author(s):Meltzer, Allan H.
Reviewer(s):Wood, John H.

Published by EH.NET (June 2003)

Allan H. Meltzer, A History of the Federal Reserve, Vol. I: 1913-51. Chicago: University of Chicago Press, 2003. xiii + 800 pp. $75 (hardcover), ISBN: 0-226-51999-6.

Reviewed for EH.NET by John H. Wood, Department of Economics, Wake Forest University.

Allan Meltzer has given us a thorough history of the Federal Reserve’s monetary policy from its founding in December 1913 to the Treasury-Federal Reserve Accord in the spring of 1951. Several excellent descriptive and critical studies of various parts of this period of the Fed are available, led by a considerable portion of Friedman and Schwartz’s Monetary History. But Meltzer advances our understanding of the Fed in two respects that that I explore in this review: First, he considers all the significant episodes of monetary policy, usually in more detail than can be found elsewhere. This book must be the starting point for future studies of Federal Reserve monetary policy, not only for the period covered by the book, but also for the succeeding fifty years because the Fed’s organization and most of its beliefs and procedures were developed in the earlier period. The second main contribution is an extension of the first. Meltzer makes unequalled use of the unpublished minutes, correspondence, and other internal papers of the Federal Reserve Board and the Federal Reserve Bank of New York. He takes us further behind the scenes of policymaking.

This review seeks to locate the book in the literature on the Fed, a task made easier by Meltzer’s recognition of previous work and the absence of radically new interpretations. He supports the positions that have been associated with monetarist criticisms by Friedman and Schwartz and his work with Karl Brunner since the 1960s, especially the Fed’s lack of understanding of its role in the economy and its obsession with financial markets, commercial bank free reserves in particular. His support is in the form of information about the ideas, institutions, and personalities behind actions and inactions that are well known. We are told that the inflation and deflation of 1919-21, the Great Depression of 1929-33, the recession of 1937-38, and the post-World War II inflation would have been avoided or greatly moderated if the Fed had make money grow at a constant rate, as Friedman proposed (1959, 92) or as adjusted for velocity and inflation as Meltzer proposed (1984). Whether or not we accept these conclusions, Meltzer enables us to increase our understanding of the Fed’s intentions, or rather the intentions of different parts of an institution that was at war with itself.

The new material may be the book’s most important contribution to research because it adds to the information available for the study of the policy preferences of different interests in the Federal Reserve and their effects on decisions. Internal conflicts often involved battles for control between the Board in Washington and the regional Reserve Banks. The Federal Reserve Act of 1913 was vague about control. The powers of the Fed — particularly discounting and open-market operations — were vested in the Banks under the Board’s supervision. The extent of this supervision — broad or, as the Banks complained, amounting to the micro-management of a central bank from Washington — was the main source of these conflicts, which spilled over into policy decisions. It is also possible that policy differences between the Board and the Banks, especially New York, were partly due to the knowledge and interests arising from their political and economic environments. Given the importance attached to these differences, I would like to have seen more attention paid to their possible reasons beyond institutional grasps for power. It is no surprise to find the Board more sympathetic to (or under the thumb of) the Treasury during the latter’s pressures for continued bond supports after the two world wars. Less expected, perhaps, was the Board’s greater skepticism of market forces. Its preference for controls over interest rates helped to rationalize its support for Treasury low-interest programs. But the Board also differed from New York in believing that controls could control stock speculation in 1928-29 without impinging on “legitimate” credit. Havrilesky (288-331) found that the Banks’ greater reliance on interest rates continued in the second half of the century. Might those, like the New York Fed, who are immersed in the financial markets repose more trust in their operation, specifically in the efficacy of interest rates as rationing devices, compared with credit controls? On the other hand, this tack may not be appealing to monetarists who already find the Fed too sensitive to markets and interest rates. Meltzer finds that a good deal of the Board’s criticism of the New York Bank after the Crash was motivated more by concern for control than different perceptions of economic relations (289).

Meltzer confirms the charge that the Fed neglected to develop a model, or guide, to policy. This neglect can be interpreted with more sympathy than Meltzer and other critics have shown, although they recognize the Fed’s difficulties, because important conditions assumed by the Fed’s creators quickly disintegrated with war and its aftermath. They were adrift without a destination, compass, or anchor. The great inflow of gold caused by European inflations and other disorders divorced the Fed’s actions from the historic central bank concern for its reserve. The Fed’s timid support of credit during the Great Depression may have been partly due to a desire to preserve the gold standard (Eichengreen; Meltzer is doubtful, 405), but its interest in price stability between 1921 and 1929 prevented it from taking full advantage of its more-than-ample reserves.

We must also realize that prevalent economic models did not imply the countercyclical policy to which economists were converted a decade later. An influential theory that implied “liquidation” in depression stemmed from the belief that deflations are reactions to inflations that had been driven by speculations in inventories and fixed assets. These should be allowed to return to normal levels. Deflations must be allowed to run their course (Hayek; Treasury Secretary Mellon, discussed by Meltzer, 400). Attempts to force money into paths “where it was not wanted” merely sow the seeds of future inflation. We can see where this policy was conducive to long-run price stability under the gold standard — price indexes in 1933 still exceeded those of 1914. Even if Meltzer, like Friedman and Schwartz, is right that the Fed should have tried for constant money growth or at least a stable price level, the application of such a policy would have required remarkably prescient theoretical sophistication by a group of committees of mainly conventional businessmen unused to abstractions.

Irving Fisher was a notable exception in his resistance to conventional sound money. But his “compensated dollar” plan for stabilizing the price level by adjusting the price of gold (182) was ridiculed as “a rubber dollar” (Hoover, 119) and dismissed by the New York Fed’s Benjamin Strong as the work of “extreme quantity theorists” (Chandler, 203).

Meltzer’s criticisms of the Fed, like Friedman and Schwartz’s, are meant to be lessons for policy. In its theoretical and policy implications, the book is mainstream monetarism, deserving of the usual plaudits and criticisms: money and output are correlated, so that money must be important, but no convincing evidence of the direction of causation is offered.

Prospective buyers should note that the book is not about Federal Reserve activities that are not directly part of monetary policy. Check clearing and other parts of the payments system, on which most Fed employees work, are ignored, and the structure and regulation of banking receive little attention. The last omission is more the Fed’s than Meltzer’s. The Fed recognized the weakness of the banking system as evidenced by the high failure rate of banks during the 1920s, but it did not work towards an improvement — unlike President Hoover (121-25), who tried unsuccessfully for a system of larger and stronger banks. When Board Chairman Marriner Eccles (266-69) sought measures similar to Hoover’s in 1936, he was rebuffed by President Roosevelt. The Fed’s lack of attention to the banking structure is striking in light of England’s experience, where the encouragement of amalgamations after the Panic of 1825, which was attributed to the fragility of small banks, contributed to the decline in the frequency and severity of panics as the nineteenth century progressed (none after 1866). On the other hand, the Fed might have followed Congress in taking the banking structure as given because the protection of local banks had been a political condition of the Federal Reserve Act.

Returning to the Fed’s model, or lack thereof, Meltzer agrees with his predecessors that monetary policy was an irregular mix of the gold standard rules of the game, the real bills doctrine, and a concern for price stability that seemed important only when inflation threatened. The place of the real bills doctrine in Fed thinking is unclear. The Federal Reserve Act has been interpreted as a legal implementation of the doctrine by its limitation of private discounting to real bills of exchange, that is, short-term lending secured by inventories. This had always been regarded as sound practice for commercial banks, and the Fed favored it in aggregate because lending for productive purposes was more conducive to economic activity and price stability than “speculative” lending on securities. But favoring real bills is not the real bills “doctrine,” as Meltzer would have it. The doctrine’s fallacies had often been shown, particularly the indeterminacy of the price level when credit is linked to expected prices (Thornton, 244-59), and monetary policy (as opposed to rhetoric, for example, Senator Glass; Meltzer, 400) did not suggest that the Fed believed it. If it had, there would have been no role for interest rates. In the closest it came to expressions of policy guides, in the Board’s 1923 Annual Review and statements by Benjamin Strong (Chandler, 188-246), the Fed indicated less fear of inflation from real bills than other lending. But it depended on interest rates to rein in excessive borrowing, whatever the purposes. Whether credit was “excessive” tended to depend on what was happening to the price level, although this connection was cloudy in Fed statements at least partly because it did not wish to be held responsible for price stability. The reasons for the Fed’s opposition to an official goal of price stability probably included its constraints on the pursuit of other goals, such as the alleviation of financial stress, and the fact that its proponents in Congress (especially James Strong of Kansas) were most interested in restoring agricultural prices to previous heights.

Touching on Meltzer’s relations to other controversies: He continues to differ from Friedman and Schwartz (692) in his argument (with Brunner, 1968, and agreed by Wicker, 1969, and Wheelock, 1991) that the Fed’s actions during the Great Depression would have been approximately the same if Benjamin Strong (who died in 1928) had continued at the helm of the New York Bank. Meltzer believes that Strong’s “attachment” to commercial bank borrowing from the Fed and free reserves as policy guides continued after 1928, and were responsible for its failure to increase credit between 1929 and 1933 and its doubling of reserve-requirements ratios in 1936-37. This position dates at least from the 1960s, when he and Brunner assisted Congressman Patman’s investigation of the Fed that initiated the work leading to the book under review.

It was a common belief in government and Congress that “international cooperation,” specifically the creation of inflation in the interests of European currencies (Hoover, 1952, 6-14), interfered with domestic goals. Meltzer agrees with Hardy (228-32) and Friedman and Schwartz that the accusation is unsupported. Quoting the latter: “foreign considerations were seldom important in determining the policies followed but were cited as additional justification for policies adopted primarily on domestic grounds when foreign and domestic considerations happened to coincide” (279).

I do not think that Meltzer’s treatment of bank failures during the Great Depression adequately reflects Wicker’s (1996) investigations that seriously undermine Friedman and Schwartz’s interpretations and suggest that the name “runs” is inappropriate. The three banking crises of 1930-31 identified by Friedman and Schwartz (and accepted by Meltzer, 323, 731) involved mostly small banks that were insolvent. Farm and real estate prices had fallen drastically, and banks failed because their customers failed. The frequency of failures in the “crisis periods” was only slightly greater than in the period as a whole, and were geographically concentrated. None became national in scope or exerted pressure on, not to say panic in, the New York money market. The first consisted largely of the collapse of the Caldwell investment banking firm of Nashville, Tennessee, which controlled the largest chain of banks in the South and was heavily invested in real estate. There is no evidence of contagion. The “crisis” of mid-1931 was concentrated in northern Ohio and the Chicago suburbs, where small banks had multiplied with the real estate boom. The crisis of September-October 1931was wider, but concentrated in Chicago, Pittsburgh, and Philadelphia.

This brings us to Meltzer’s (and Friedman and Schwartz’s) criticism of the Fed’s failure to apply Bagehot’s proposal that the central bank act as lender of last resort. That is, as holder of the nation’s reserve it should stand ready to supply the cash demanded in times of panic. Meltzer contends that “Most of the bank failures of 1929 to 1932, and the final collapse in the winter of 1933, could have been avoided” (729) if the Fed had applied Bagehot’s rule. However, as he (283-91) and Friedman and Schwartz (335-39) recognize elsewhere, the New York Fed actively assisted the financial markets during and after the Crash, and withdrew when there was no evidence of panic in New York, that is, “once borrowing and upward pressure on interest rates” declined (Meltzer, 288). I find Meltzer convincing when he suggests that this “was consistent with the Riefler-Burgess [free reserves] framework,” as opposed to Friedman and Schwartz’s argument that New York eventually yielded to the Board’s opposition to its open-market purchases. “The dispute was mainly about procedure, not about substance,” Meltzer (289) argues. “They [the Board] disliked New York’s decision to act alone.” It appears to this reviewer that the Fed’s actions as described by Meltzer and Friedman and Schwartz, generally conformed with Bagehot’s advice to relieve illiquidity in the money market in times of panic. He had not recommended the rescue of insolvent banks in the hinterlands that did not threaten the money market. This includes at least the beginnings of the nationwide closures of 1933 that were precipitated by the Michigan governor’s decision to close the banks in his state to protect them from the possibility of a run when the failure of Ford’s bank in Detroit (which was also heavily invested in real estate) was announced.

I end with comments that are more differences of emphasis than of substance: The Fed’s irrelevance in planning postwar financial arrangements is interesting, although Meltzer may exaggerate its significance. He wrote: “In the 1930s, the Treasury replaced the Federal Reserve as the principal negotiator on international financial arrangements” (737). In fact, governments have always, directly and firmly, controlled monetary arrangements. Their seizures of the details of monetary policy in the U.S. and U.K. in the early 1930s were remarkable, but the U.S. government’s control of changes in the monetary system as exemplified by the devaluation of 1933, Bretton Woods in 1944, and the Nixon suspension of 1971 had also been the practice of Parliament, which decided (with more or less advice from the Bank of England) suspensions, resumptions, legal tender, and other trade and financial arrangements. The irrelevance of the Fed in the negotiation of post-World War II financial agreements was shared by the Bank of England. Their places in the row behind finance ministers during negotiations continued an age-old practice. It is interesting in light of the high visibility of central banks in the operation of monetary systems that the structures of those systems belong to governments. Without defending the Fed, which ought to have behaved better within the framework that it was given, the real failure to respond to the catastrophe should be laid at the feet of the government. Herbert Hoover was more active than he is often given credit for, but he departed from tradition in leaning on the “weak reed” that was the Federal Reserve (1952, 212; Meltzer, 413).

Meltzer suggests that the Great Depression was not considered a failure of monetary policy at the time (727). He refers to the Federal Reserve and economists, and I agree. But this was not true of the public or of substantial parts of Congress (which he acknowledges on p. 427). Carter Glass was a powerful defender of the Fed in the Senate, but the House passed the Goldsborough Bill directing the Federal Reserve “to take all available steps to raise the present deflated wholesale commodity level of prices as speedily as possible to the level existing before the present deflation” by a vote of 289-60 in 1932, before it was watered down into a meaningless resolution in the Senate. The 72nd Congress (1931-33) introduced more than fifty bills to increase the money supply, which came closer to passage as the depression worsened (Krooss, 2662). It would be difficult to imagine a more damaging commentary on Woodrow Wilson’s idealistic expert (read “remote”) institution than Chicago Congressman A.J. Sabath’s question to Chairman Eugene Meyer in 1931: “Does the board maintain that there is no emergency existing at this time” (letter entered into the Congressional Record, Jan. 19) — or a similar lack of sensitivity of legislators in a democracy. The monetary authority supplanted by the Fed — the Treasury with an attentive Congress — might have done no better. But the sharp actions in 1865 (when Congress reversed its decision to retire the greenbacks after voters complained) and 1890 and 1893 (when it increased and then reduced the monetization of silver during recession and then gold flight) suggest that it would not have stayed on the sidelines if it had not been inhibited by (and waiting for) its expert creation. This is not (necessarily) a plea for free banking, but at least for monetary authorities that are closer to the effects of their actions.

I would have liked to see Meltzer subject the Fed’s existence to a little scrutiny, and to consider what kinds of institutions might have better responded to events or (this is surely an oversight) been more likely to adopt his preferred policy model. My guess is that he, Friedman and Schwartz, and most of the rest of the economics profession share Woodrow Wilson’s desire for experts: The Fed should be independent but use the right model.


Karl Brunner and Allan H. Meltzer. The Federal Reserve’s Attachment to the Free Reserve Concept. For Subcommittee on Domestic Finance, The Federal Reserve after Fifty Years. House Committee on Banking and Currency. Washington, 1965.

Karl Brunner and Allan H. Meltzer. “What Did We Learn from the Monetary Experience of the United States in the Great Depression?” Canadian Journal of Economics, May 1968.

W. Randolph Burgess. The Reserve Banks and the Money Market. New York, 1927.

Lester V. Chandler. Benjamin Strong, Central Banker. Washington, 1958.

Marriner Eccles. Beckoning Frontiers. New York, 1951.

Barry Eichengreen. Golden Fetters: The Gold Standard and the Great Depression, 1919-39. New York, 1992.

Milton Friedman. A Program for Monetary Stability. New York, 1959.

Milton Friedman and Anna J. Schwartz. A Monetary History of the United States, 1867-1960. Princeton, 1963.

Charles O. Hardy. Credit Policies of the Federal Reserve System. Washington, 1932.

Thomas Havrilesky. The Pressures on American Monetary Policy. Boston, 1993.

Freidrich A. Hayek. Prices and Production. London, 1931.

Herbert Hoover. Memoirs: The Great Contraction, 1929-41. New York, 1952.

Herman E. Krooss, editor. Documentary History of Banking and Currency in the United States. New York, 1969.

Allan H. Meltzer. “Overview,” in Federal Reserve Bank of Kansas City, Price Stability and Public Policy, 1984.

Winfield W. Riefler. Money Rates and Money Markets in the United States. New York, 1930.

Henry Thornton. An Inquiry into the Nature and Effects of the Paper Credit of Great Britain. London, 1802.

David C. Wheelock. The Strategy and Consistency of Federal Reserve Monetary Policy, 1924-33. Cambridge, 1991.

Elmus Wicker. “Brunner and Meltzer on Federal Reserve Monetary Policy during the Great Depression,” Canadian Journal of Economics, May 1969.

Elmus Wicker. Banking Panics of the Great Depression. Cambridge, 1996.

John Wood’s main research interest is a history of the ideas and behavior of British and American central bankers since 1694. Recent articles include “Bagehot’s Lender of Last Resort: A Hollow Hallowed Tradition,” Independent Review (Winter 2003), and “The Determination of Commercial Bank Reserve Requirements” (with Cara Lown), Review of Financial Economics (December 2002).

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

From Gold to Euro: On Monetary Theory and the History of Currency Systems

Author(s):Spahn, Heinz-Peter
Reviewer(s):Schenk, Catherine R.

Published by EH.NET (May 2002)

Heinz-Peter Spahn, From Gold to Euro: On Monetary Theory and the History of

Currency Systems. Berlin and Heidelberg: Springer-Verlag, 2001. ix + 220

pp. $59.95 (cloth), ISBN: 3-540-41605-6.

Reviewed for EH.NET by Catherine R. Schenk, Department of Economic and Social

History, University of Glasgow.

Peter Spahn, Professor at Hohenheim University, Stuttgart, has produced a

succinct, indeed sometimes breathless, overview both of the evolution of

monetary theory and the experience of fixed or stable exchange rate systems

from the Gold Standard to the Euro. The pace is rapid. The theoretical chapters

set up the role of money in the economy in seventy tightly argued pages. The

empirical review of the gold standard, the Bretton Woods system, the European

Monetary System and the European Monetary Union, each of which has generated

many books on their own, altogether take only ninety pages. Its very brevity,

however, is perhaps the book’s strength since it provides the reader with a

broad conceptual framework within which to assess the strengths and weaknesses

of stable exchange rate regimes. The general argument of the book is that

exchange rate regimes since 1870 can be seen as part of a process culminating

in the single currency EMU in a bipolar Euro-dollar world. The lesson of

history is that fixed exchange rate regimes fail because of the ultimate

primacy of internal over external stability. When these two policy goals

diverge, the foreign exchange rate is abandoned and the system collapses. Only

by eliminating exchange rates as policy targets (through currency union or

floating rates) can this dichotomy be resolved.

There is some effort to make up for conceptual shortcuts by providing ‘Boxes’

focused on key definitions and theories, which may help the usefulness and

accessibility of the book for advanced undergraduates and postgraduates. There

are also helpful summaries of each section of the book, although no concluding

chapter to pull the ideas finally together. Readers should also be warned that

they will find almost no discussion of the experience of floating exchange


Part I of the book provides a critique of both neo-classical and Keynesian

theories of money, and emphasizes the social and political role of money in

low-trust societies such as Europe. Part II introduces the development of

monetary policy through the establishment of the Bank of England and surveys

the Currency and Banking School controversy. Spahn here introduces the

importance of reputation and credible redemption that will be major themes of

his analysis of exchange rate standards. Spahn views the return to gold

convertibility in 1821 as an unnecessary and serious mistake that destabilized

the English monetary system. Likewise, he argues later that the continued use

of gold as an anchor in the gold standard and the Bretton Woods system

contributed to their weakness.

Having established the evolution of the money in England, the book turns a

sharp corner, and the second half is devoted to analyzing exchange rate

standards. The link between the first and second halves of the book might have

benefited from being more explicit to provide a more cohesive argument. Part

III is the most innovative and detailed section. Spahn applies game theory to

provide a stylized view of the operation of the pre-war Gold Standard. He

departs from Eichengreen by using a model in which the actors have different

policy priorities with respect to internal versus external equilibrium. In this

case England, as the key currency country where maintaining internal

equilibrium was less important than in other countries, emerges as a

Stackelberg follower rather than the leader.

By the end of the nineteenth century, these policy preferences were changing

and the twentieth century witnessed the increased importance of internal

stability, especially price stability and employment as primary targets — what

Spahn terms the move from the Gold Standard to the Wage Standard. For him, it

is this new balance of priorities that undermines the credibility and therefore

the stability of future efforts to sustain stable exchange rate regimes. The

familiar tale of the failed structure of the Bretton Woods system is detailed

in Chapter 6. For Spahn a major error was the continued use of gold in the US

dollar exchange system that fatally undermined it. Spahn notes that during the

Bretton Woods era “political considerations began more and more to dominate

attitudes towards currency matters” (p. 143). There is, however, very little

account of the practical politics of the 1940s and 1960s that prevented a

pragmatic solution to the role of gold in these decades. The drawn out and

acrimonious discussions aimed at identifying and resolving the flaws in the

system hardly get a mention beyond reference to France’s disruptive

accumulation of gold in the 1960s. The Bretton Woods era was a highly complex

period of international negotiation and conflict on a variety of strategic,

political, economic and monetary fronts that complicated the process of

managing the global exchange rate regime. As Spahn hints, this was a ‘golden

age’ in terms of the impressive growth experience of many countries, in spite

of rather than because of the operation of the international monetary system.

The important role of politics is again stressed in the following chapter on

the reasons behind the development of the European Monetary System. In terms of

the economic evolution of the system, Spahn models the way that the Deutsche

Mark became the key currency of the EMS because Germany was the most

stability-oriented country. He is then critical of the anti-inflationary policy

pursued by the Bundesbank that eventually drove the system apart, again because

of the ultimate supremacy of national over international policy goals. These

conclusions are not very original, but they are expressed using more formal

modeling and game theory than in usual narrative accounts.

The final chapter deals with the European attempt to eliminate the flaws of a

key currency system that plagued the gold standard, Bretton Woods and the EMS.

Like the EMS, European Monetary Union was prompted mainly for political rather

than economic purposes. Economically, Spahn predicts that the adoption of price

stability as the primary goal of the European Central Bank may deliver poor

prospects for growth and employment, especially for particular regions. The

benefits of currency union in terms of the ‘de-politicization’ of monetary

policy and the efficiency gained by no longer targeting exchange rates may be

undone by the transfers necessary to soften the impact on regional ‘losers.’

His final lesson of the experience of exchange rate standards is that they

cannot provide a shortcut to internal equilibrium by forcing countries to

converge with sounder economies. In his words, “monetary stability has to be

built at home,” it cannot be achieved through exchange rate targets (p. 189).

‘Home’ has just become a much bigger space for Europeans. It remains to be seen

whether it is too big and the rooms too distinct to allow the European Central

Bank to ‘build’ stability.

Dr. Catherine R. Schenk is Senior Lecturer in Economic History at the

University of Glasgow. Her most recent book is Hong Kong as an International

Financial Centre (Routledge, 2001). She is currently working on the reform

of the international monetary system in the 1960s and on British management of

the decline of sterling in that decade.

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: WWII and post-WWII

Defining Global Justice: The History of U.S. International Labor Standards Policy

Author(s):Lorenz, Edward C.
Reviewer(s):Perlman, Mark

Published by EH.NET (March 2002)

Edward C. Lorenz, Defining Global Justice: The History of U.S. International

Labor Standards Policy. Notre Dame, IN: University of Notre Dame Press,

2001. x + 318 pp. $54.95 (cloth), ISBN: 0-268-02550-09; $27.95 (paper), ISBN:


Reviewed for EH.NET by Mark Perlman, Department of Economics, Emeritus,

University of Pittsburgh.

Defining Global Justice is by a social historian who chronicles in an

unusual and intriguing way the rise and eventual sequential transformations of

the International Labor Organization from an agency originally intended to

standardize and enforce internationally what industrialized nations were coming

to believe to be workers’ rights to an agency that is, at its best, no more

than ‘an adult education program.’ His approach involves tracing the

private-public interest groups that first created the International Labor

Organization and then maintained an interest in the United States for American


It is one of the lesser ironies of our times that few who hear of the rioting

whenever there is a global economic conference realize that a great deal of the

history of economic thought has been tied up with profound differences about

optimal policies regarding trade among nations. That fact is not the best

evidence that can be adduced about the real costs of the economic profession’s

degrading of that sub-field but perhaps it is the most recent.

Since this review is primarily directed at economists rather than historians it

is useful to start with a digression summarizing the history of the

profession’s perception of the underlying problem, i.e. applications of the

static theory of the benefits of free trade to a dynamic world.

Laisser-Faire vs. Mercantilism

The Physiocrats’ “laisser-faire, laissez-passer” really applied to trade within

France. It was Adam Smith who best popularized free trade among nations. And

even Smith, himself, must have had profound doubts about that program as a

national policy since he subsequently gladly accepted appointment as Collector

of Customs in Scotland, a traditional family sinecure, where he distinguished

himself by strenuously collecting all the duties owed — something his own

familial predecessors had pursued only lackadaisically.

David Ricardo gave Free Trade Doctrine its major theoretical thrust, albeit his

model, neglecting transportation costs (to say nothing of costs of

information), was of a static nature. Nonetheless, the Doctrine became the

dominant program argued by the leading British social thinkers such as John

Stuart Mill. Indeed so strongly did Alfred Marshall feel about the issue that

he intervened — certainly unusually, if not actually improperly, in the

selection of his successor and promoted the candidacy of a very junior pro-Free

Trade, Arthur Cecil Pigou, over the more conventional candidacy of Herbert

Somerton Foxwell, who was skeptical about the social costs of the Doctrine.

In recent decades what is left of the alternative doctrine in Britain was

Professor Kaldor’s suggestion that the British Free Trade Doctrine was at best

a special case for Protection – at a point when one’s own nation is

head-and-shoulders ahead of all others from the standpoint of technology, then

a policy of universal Free Trade makes dominant sense. Kaldor’s view, whatever

its actual source, also can explain the famous Menger-Schmoller Methodenstreit,

which although phrased in terms of deduction versus induction, was most

probably about Menger’s fear of Prussian protective-trade policy crippling

Austrian economic development. This is the explanation offered by Joseph

Schumpeter — who, by the by, shared Menger’s fear of Austria being

economically exploited by its very much larger and more economically developed

northern neighbor.

Labor and the Closing of Borders

In order to put the problem in its bitterest context, we turn to the questions

not of the international mobility of products nor even the international

mobility of capital, but of the international mobility of labor. Although there

are many theories of why and how labor suffers from the industrialization

process the two dominant ones are theories of exploitation on the shop floor

(by the employer who owns the capital) and exploitation in the market place by

the appearance of cheap foreign goods and/or cheap ‘foreign’ labor. The first

of these (exploitation on the shop floor) was enunciated by Marx and very much

broadened first by John A. Hobson and then vastly popularized by Lenin, both of

whom stressed that capitalists would forever be looking for both cheaper labor

and unexploited product markets — first at home and then abroad. The second

theory (exploitation in the product and labor-factor markets) was developed at

the University of Wisconsin by John R. Commons who saw as a data-derived

generalization (explaining American unionism) a record of workers’ efforts to

keep up product prices so that their wages would not suffer. Commons’s

price/wage relationship, implemented by workers’ opposition to ‘cheap goods’

(meaning imports into any local market) and ‘cheap labor’ (meaning greenhorns

and green hands), was consistent with his views about curtailing immigration,

particularly from Eastern and Southern Europe. It is perhaps an anomaly that

his successor as a labor historian, Selig Perlman (himself, an immigrant from

Tsarist Russia), recast the Commons theory into its present form — namely that

American workers with a history of political experience and self-organization

came to view (and thus to justify) their jobs as a collective property right;

and for good reason they had been more confident of the method of collective

bargaining than the method of legal enactment. Perlman’s representative

unionists grasped with both hands the principle of unions being the protector

of a collective job-right — right to ownership being probably as American a

cultural tradition as any.

Thus it was that within the economics profession the policy issue of

international mobility of products and factors often separated deductive

(theorist) economists from inductive (in this case labor) economists. Each

group went its own way; the former usually proving deductively (but without so

specifying that it was a static model) the overall advantages of free trade in

goods and services as well as the advantages of easy movement of the factors of

production, while the latter embraced the idea that such competition should be

regulated by a series of international conventions designed to improve the

living standards of workers in backward economies with the intended result that

the urge to migrate from backward economies to industrialized ones would be

mitigated. As is all too well-known, interest in turn-of-the-twentieth-century

labor problems (also known as Commons’s Institutionalism) all but died in the


The Book at Hand

1. Lorenz’s Approach. Thus it is that the book under review may seem to most of

today’s professional economists as an anachronism. But its author, Edward C.

Lorenz, who teaches history at a relatively small Michigan college, seems

blissfully unaware of the rigid graduate-school-head-start-school conventions

found in most college’s economics departments’ curricula. The consequence is,

as already noted, both a novel and very interesting history of real-life

battles regarding international labor standards and an important reminder that

within the traditions of our profession there once thrived a strong concern

about standards of human dignity. And if that tradition is now moribund amongst

us, it thrives elsewhere in our country.

The treatment, arranged into eight chapters, is chronological. The narrative

starts with Lorenz discussing the evolution of international reform movements

growing out of private organizations. More important than his list of names

(not that names like Robert Dale Owen, Daniel Legrand, Karl Marx, etc, are not

in themselves interesting) is his development of an empirical thesis about

inter-faction cooperation such that in the end welfare reformers, advocates of

factory acts, trade unionists, and most important clerics and academics managed

both to popularize Progressive reform in the years prior to World War I and to

reorient American policy anent the ILO during the New Deal years and most

recently during the decade when Soviet hegemony was imploding. Briefly put,

most of these factions were steered by elite groups who had both agendas and a

capacity for organizing grass root support. Among them were not only

intellectual ‘do-gooders’ such as social workers like Jane Addams, but also

influential Roman Catholic and Protestant clerics (the one influenced by

Rerum Novarum, the other by ideas similar to Rauschenbusch’s Social

Gospel), and that says nothing about the quondam power of John R. Commons’s and

others’ American Association for Labor Legislation.

Eventually these activities ripened so that when the League of Nations was

established a separate body, the International Labor Organization, was also

created. The League was a legislative body made up of national governmental

delegations, each named by a member country. By way of contrast the ILO was

made up of governmental delegations of which two were named by each government

and one each from each country’s labor groups (meaning unions) and one from

industry (meaning industrial confederations). In short, the ILO was

tripartitism in practice, certainly a concept originally formulated by men like

John R. Commons. A secretariat (under an elected Secretary-General) was set up

in Geneva. He exercised the Prerogative between annual conferences where the

delegates assembled to fraternize and pass conventions pertaining to minimum

standards for industrial life. He also had a secretariat , the principal

nominal duty of which was to collect relevant data (in the tradition of the

American Bureau of Labor Statistics).

2. The American Record. In any event, in 1919-20 the Congress rejected American

membership both in the League of Nations and the International Labor

Organization. But that was hardly the end of the story. Frances Perkins,

Franklin Roosevelt’s Secretary of Labor, and Isador Lubin (her Commissioner of

Labor Statistics) had always been sympathetic to American membership in the

ILO, and the total collapse of the American textile in New England gave them

(and eventually even the Congress) sufficient reason to reconsider the earlier

refusal. In 1935 the Americans joined — even though it was clear that many

Americans, particularly those who favored isolationism and the freedom of

contract provisions found in the fifth and fourteenth amendments, continued to

fight against participation. Even the American unions (the AFL) were split

about membership — one faction arguing the traditional line about collective

bargaining, not the method of legal enactment, being the way to go, observed

all too tartly that any conventions that the ILO was liable to vote would be

much weaker than American unions had already or should achieve through

bipartite bargaining.

During World War II the ILO removed its headquarters to the Western Hemisphere.

Its biggest achievement (as part and parcel of the multipartite negotiations

that included the Bretton Woods Agreement) was a program voted in Philadelphia

in 1944 including planks referring to:

1. Programs of minimal income security 2. Health insurance for all workers 3.

Social security for members of nations’ armed forces. 4. Organized programs for

the demobilization of World War II veterans 5. Publicly paid-for employment

exchanges 6. Public works to relieve cyclical unemployment 7. Agreement that

all these programs would be extended to colonial territories.

After the war employer resistance to the ILO, if anything, increased — a

‘Bricker’ Constitutional Amendment was repeatedly proposed to formalize the

point that no international treaty could in any way supplant the aforementioned

two Constitutional Amendments. Nonetheless between the efforts of

internationally-minded reform groups and a more-or-less indifferent labor union

attitude American membership was maintained, albeit that during the Eisenhower

Administration the United States did try to direct the ILO secretariat to pay

more attention to statistics-gathering and less to policy statements.

But what eventually in 1975-77 managed to all but end American participation

was a growing realization that the Secretariat was clearly too friendly to the

newly-joined Communist countries and that the annual conferences were becoming

vociferously critical of American foreign policy choices. Increasingly American

unions despaired of getting the ILO to condemn the slave labor conditions in

Communist countries and they moved to persuade some in Congress that the ILO

was becoming a Soviet partisan. When the ILO voted to give the Palestine

Liberation Organization observer status Congress eventually stopped the ILO

appropriation, and President Ford gave notice of American withdrawal.

However, within a couple of years (1978) not only was a Pole elected Pope, but

in Poland a shipbuilders’ union, Solidarity, emerged as the leader in

disrupting the Soviet hegemony. And the new Carter Administration had turned

strong programmatic attention to human rights violations. These, together,

served to crumble any further labor resistance to membership in the ILO, and

the Americans appeared once more on the Geneva scene. Since that time the

positions of various private public interest groups have shifted. The clerics,

particularly some leading Roman Catholics, continue to take a very strong

interest in labor problems throughout the world. Economists, however, have

become enamored by abstraction and few, if any, write about labor problems any

more. Yet, among other academics, particularly those in law faculties, the old

concerns remain viable. And given the growing importance of multinational

corporations, business’s attitudes have become far more sophisticated; they no

longer oppose international conventions, as such, they merely object — in the

name of freer trade — to the conventions being enforced.

3. Conclusion What Lorenz chronicles is the long experience within the United

States of various groups’ interests not only in the ILO (with all the vagaries

of its choices reflecting the growth in number of Communist and then liberation

governments) but even more in trying to formulate American international

policies setting those civilized standards. Thus it is a history of the

transformation of Roman Catholic doctrine about the role of unionism (as seen

several encyclicals — specifically Rerum Novarum [1891],

Quadragesima Anno [1931], and Centesimus Annus [1991]), a record

of the American Federation of Labor’s coping with left-wing radicalism seen not

only internationally but also domestically, and an account of a wide-variety of

transitory groups (e.g., even the American Enterprise Institute) intent upon

making the world a better place for workers.

The great virtue of Lorenz’s sympathetic treatment of protests against

consumerism-uber alles, is a concern about not only working conditions but also

much of the current impetus to emigration, the importance of which cannot be

swept away either by police protection (as in riot control) or intellectual

neglect (as in the professionalization of economics). No doubt cheap clothing

has its virtues; but it also has its costs. One cannot do better than recall a

few of the lines of Thomas Hood’s 1843 Song of the Shirt

1 With fingers weary and worn, 2 With eyelids heavy and red, 3 A Woman sat, in

unwomanly rags, 4 Plying her needle and thread–5 Stitch! stitch! stitch! 6 In

poverty, hunger, and dirt, 7 And still with the voice of dolorous pitch 8 She

sang the “Song of the Shirt!”

17 “Work — work — work 18 Till the brain begins to swim, 19 Work–work–work

20 Till the eyes are heavy and dim! 21 Seam, and gusset, and band, 22 Band, and

gusset, and seam, 23 Till over the buttons I fall asleep, 24 And sew them on in

a dream!

25 “O, Men with Sisters dear! 26 O, Men! with Mothers and Wives! 27 It is not

linen you’re wearing out, 28 But human creatures’ lives! 29

Stitch–stitch–stitch, 30 In poverty, hunger, and dirt, 31 Sewing at once,

with a double thread, 32 A Shroud as well as a Shirt.

89 –With fingers weary and worn, 90 With eyelids heavy and red, 91 A Woman

sat, in unwomanly rags, 92 Plying her needle and thread– 93 Stitch! stitch!

stitch! 94 In poverty, hunger, and dirt, 95 And still with a voice of dolorous

pitch,– 96 Would that its tone could reach the Rich!– 97 She sang this “Song

of the Shirt!”

4. A Troubling Postscript Yet, the lure of cheap goods has been irresistible,

and multinational corporations have learned to give lip-service (if no teeth

are involved) to international labor standards. The ILO bureaucracy is safe,

talk is endless, and little really changes.

Moreover, there is no proof that raising wage-costs (with loss of employment

opportunities) in developing countries would not work in the direction of

greater emigration. If the division that now threatens war between most Islamic

nations and the West suggests anything, it is that the culture of democratic

representation envisaged by those who first agitated for, then created the ILO,

and afterwards ran it is not the culture of most of the poorest national

economies. Wilson’s dream of making the world safe for democracy (and

democratic institutions) was punctured in 1920; it flew briefly during and

after World War II, and then again after the implosion of the Soviet economies.

But now the idea of representative democracy and such things as free trade

unions are stuff of the Western world — perhaps a recurrent dream for others,

but not one easily made a reality.

Mark Perlman is University Professor of Economics (Emeritus) at the University

of Pittsburgh. His The Character of Economic Thought, Economic Characters,

and Economic Institutions Selected Essays was published by the University

of Michigan Press, 1996.

Subject(s):Labor and Employment History
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: WWII and post-WWII

Western Capitalism in China: A History of the Shanghai Stock Exchange

Author(s):Thomas, W. A.
Reviewer(s):McElderry, Andrea

Published by EH.NET (December 2001)

W. A. Thomas, Western Capitalism in China: A History of the Shanghai Stock

Exchange. Aldershot: Ashgate, 2001. xii + 328 pp. $74.95 (hardback), ISBN:


Reviewed for EH.NET by Andrea McElderry, Department of History, University of


W. Arthur Thomas of the University of Liverpool has written a very

straightforward descriptive history of the securities market in Shanghai from

the late nineteenth century to the present. The study centers on securities

trading in Shanghai’s International Settlement where the listed securities

were almost exclusively those of foreign companies and organizations. Along

the way Thomas provides glimpses of life in the International Concession and

sketches of its foreign residents. In the final two chapters on Chinese stock

markets, Thomas gives a useful summary of the Chinese government bond market

until 1940, which was the main activity on the Chinese stock exchanges, and

of the ins and outs of today’s emerging markets in Shanghai and Shenzhen.

Thomas begins with a brief account of the development of foreign trade in

China and of the foreign community in Shanghai. Crucial to both was the

formation of the International Settlement in Shanghai as a result of the

Treaty of Nanking, 1842 (which ended the Opium War) and subsequent agreements

between Chinese and foreign governments. In the International Settlement,

foreign residents lived under the jurisdiction of their own courts and at

least some of them elected their own Municipal Council since “there were

strict property qualifications attached to the franchise” (p. 20). Western

banks and trading houses located in the Settlement and it quickly became a

“flourishing emporium.”

The bulk of the book is an account of securities trading centered in the

International Settlement. Thomas’s main source of information is the weekly

share list and related material published in the Settlement’s English-language

newspaper, the North China Herald. In spite of “an extensive search of

libraries and other depositories,” Thomas did not find any records of the

Shanghai Stock Exchange founded in 1904 or the earlier Shanghai Sharebrokers’

Association, formed in 1898. The first share list appeared in 1866 and by then

Shanghai’s International Settlement had developed the conditions conducive to

the emergence of a share market: several banks, a legal framework for

joint-stock companies, and an interest in diversification among the

established trading houses (although the trading houses themselves remained


The supply of securities came primarily from local companies. In the early

days, banks dominated private shares but, by 1880, only the Hong Kong and

Shanghai (the local bank, so to speak) remained. Shipping, insurance, and

docks persisted to 1940 but were overshadowed by industrial shares after the

Treaty of Shiminoseki, 1895, which permitted Japan, and by extension other

nations who had treaties with China, to establish factories in Shanghai and

other treaty ports. Rubber plantations became the staple of stock trading

beginning in the second decade of the twentieth century. Fixed securities

balanced the “risky” shares of local companies, both in terms of dividends and

capital value. Those of the Shanghai Municipal Council and local utilities,

such as the Shanghai Waterworks, enjoyed the most consistent favor.

Shanghai had no shortage of people who were willing to risk investing in local

companies. Thomas has gleaned information about the foreign investors from

reports of company meetings in the North China Herald. Individuals,

most connected in one way or another with Shanghai’s foreign trading

companies, provided the main “supply” of investors in the early days. From the

mid-1890s, with the expansion of commercial activity and the introduction of

manufacturing, “the securities of local companies became attractive trade

investments for the corporate sector” (p. 83). Information on Chinese

investors comes largely from Yen-p’ing Hao’s work on compradors and Chinese

business development in the late nineteenth century. (See, Yen-p’ing Hao,

Commercial Revolution in Nineteenth Century China: The Rise of Sino-Western

Mercantile Capitalism, University of California Press, 1986, and The

Comprador in Nineteenth Century China: Bridge between East and West,

Harvard University Press, 1970.)

What stands out in chapters 7 through 9 detailing the fluctuations of the

market is the importance of rubber. In 1909-10 investment and speculation in

rubber plantations in Southeast Asia “produced a transformation in the share

list” (p. 145). By autumn 1910, 47 rubber companies were listed on the

Shanghai exchange. Not surprisingly, the boom did not last. Thomas details the

rise and subsequent crash of rubber shares, the general outlines of which are

known to those familiar with Shanghai financial history. What is not so well

known is that rubber recovered and remained a staple of the market until the

Japanese occupation of International Settlement in December 1941 brought an

end to the Shanghai Stock Exchange. For example, “a sharp and unexpected rise

in the price of rubber produced a big increase in share business” (p. 199) in

1925 after a major strike among Chinese workers in Shanghai. Rubber prices

collapsed in early 1928 on the heels of a crisis connected to Chiang Kai-shek

consolidating control over the Chinese part of Shanghai. Perhaps, Thomas

suggests, the fall in rubber prices was responsible for the ensuing enthusiasm

for greyhound shares. Greyhound racing had arrived in Shanghai in 1928 and

the shares in companies who ran the sport were briefly “the focus of all

activity” (p. 203). However, when “the flirtation with ‘the dogs’ had ended

the market returned to its main dealing medium, rubber shares” (p. 203).

Thomas’s study is the first account of foreign stock trading in Shanghai and,

as such, will be useful to those who examine various aspects of finance and

business in Shanghai and China. The book is also an addition to literature on

the history of stock trading. It would benefit from an analytical framework

grounded either in Chinese economic history or in comparative stock market

history. The latter is more realistic since the author is clearly not a China

specialist but is quite conversant with stock markets.

The book has a sense of having been written and published in a hurry.

Footnoting is inconsistent. At times, even quotations have no citations.

Material from the Cambridge History of China, one of the main secondary

sources on China, is sometimes cited by author but mostly cited only by volume

and page. Also the book, or at least the copy I have, needs some serious

copy-editing, especially for romanized Chinese words. Understandably spell

check doesn’t recognize the Chinese words, but even Hong Kong comes out

variously as Kong Kong and Honk Kong. More serious, Chinese names of authors

cited are sometimes, but not always, misspelled. For example, the frequently

cited works of Yen-p’ing Hao are often footnoted as Hoa. Less serious is the

lack of a standardized romanization system such as on page 138 where spellings

of Kang Youwei and the Kuang-hsu emperor come from two different systems.

Admittedly, the romanization of Chinese is a slippery slope and thus its

inconsistency can be put down as a quibble from a Chinese specialist who will,

no doubt, use the book as a reference.

Andrea McElderry’s publications on Chinese business history include a study

of Chinese stock exchanges, “Shanghai Securities Exchanges: Past and Present”

(Occasional Paper Series in Asian Business History #4), Brisbane: Asian

Business History Centre, University of Queensland, 2001.

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):Asia
Time Period(s):20th Century: Pre WWII

After the Galleons: Foreign Trade, Economic Change and Entrepreneurship in the Nineteenth-Century Philippines

Author(s):Legarda, Benito J.
Reviewer(s):Giraldez, Arturo

Published by EH.NET (November 2001)


Benito J. Legarda, After the Galleons: Foreign Trade, Economic Change and Entrepreneurship in the Nineteenth-Century Philippines. Madison WI: University of Wisconsin Center for Southeast Asian Studies, 1999. x + 401 pp. $22.95 (paperback), ISBN: 1-881261-28-x.

Reviewed for EH.NET by Arturo Giraldez, Department of Modern Languages and Literatures, University of the Pacific.

The title of Benito Legarda’s book is somewhat misleading because the time span covered in the work begins well before the nineteenth century. In fact, After the Galleons is an economic history of the Phillippine Islands from the time of the arrival of Miguel Gomez de Legazpi’s expedition in 1565 to the independence from the metropolis in 1898. Legarda studies the Philippines’ evolution from an archipelago inhabited by almost self-sufficient communities to the era when it became an agricultural export economy dependent on external trade to meet domestic needs. But, as the author remarks: “The nineteenth-century Philippine economy did not start from scratch. The preceding Age of Transshipment dated back to pre-Hispanic times, and, during the centuries when it was in effect, a process of administrative unification and geographic consolidation took place that laid the groundwork for the rise of national consciousness” (p. 5).

These sentences outline the plan of the book. Part 1 studies Philippine trade from before the Spaniards’ arrival until 1815. Part 2 focuses on the domestic exports and economic changes in the Islands. Part 3, “Entrepreneurial Aspects,” studies the establishment of merchant houses, their activities and innovations. Legarda follows Joseph A. Schumpeter’s ideas on entrepreneurial activity, paying detailed attention to the agents responsible for the “creative responses” in the economy. Businessmen and firms are introduced in relation to new technologies, activities and financial institutions.

Fifteenth-century Chinese and Muslim (Persian and Arab) merchants frequented the archipelago’s coastal areas, attracting a population that established settlements dependent on sedentary agriculture and craft production. These communities, called “barangays,” traded among themselves and with the rest of Southeast Asia and China. Slaves, beeswax and gold were exchanged for porcelain, iron, lead, tin, silks, etc. The early connection with China was going to have a crucial role in Philippine history. The presence of the Spaniards dramatically changed the position of the Philippines with respect to the Asian continent and placed the Islands as one of the crucial points in the global economy created by the galleon trade. From 1565 to 1815 the ships came and went from Manila to Acapulco — “it was the longest shipping line in history” (p. 32). American silver and predominantly Chinese silks were the commodities exchanged between Mexico and the Philippines. A Ricardian model explains the trade. The bimetallic ratio of silver and gold in 1560 was 13 to 1 in Mexico, 11 to 1 in Europe and in China was 4 to 1. “China was long the suction pump that absorbed silver from the whole world” (p. 31). Obviously there were periods of convergence of bimetallic ratios, but until the end of the nineteenth century China continued to be the main receiver of the world’s silver. Considering the price differential in silver prices: “The opportunities for arbitrage profits were staggering” (p. 31). And indeed, they were. Net profits oscillated between 100 and 300 percent. The Chinese brought the wares for the galleons but they also provided supplies for shipbuilding, materials to the military garrisons and foodstuffs to Manila’s citizenry. Also the junks brought artisans and tradespeople to the Islands. The Chinese have played a crucial role in the Filipino economy since the sixteenth century up to the present.

The eighteenth century witnessed plans and proposals to change the monopolistic framework of the galleon trade. After the British occupation of 1762-64, war frigates sailed between Cadiz in Spain and Manila carrying European merchandise. The Royal Philippine Company founded in Madrid (1785) was “encouraged to try Asian ventures,” (p. 58) and the port of San Blas on the Pacific coast was established in 1766 to trade with the Philippines, challenging Acapulco’s position as the only Mexican port in the galleon route. The regulation of libre comercio in 1778 allowed several Spanish ports besides Seville and Cadiz to trade with the colonies, which provided Mexico with new sources of merchandise.

Revolutionary changes did not happen in the eighteenth century — Philippine commerce was still a transshipping operation — but they sowed the seeds of future developments: foreign merchants arrived in Manila; local merchants could travel to other Asian ports; export trade of native products was stimulated and local textile manufactures were encouraged. “And the combined effect of the tobacco monopoly and the domestic operations of export producers, including the company, was the start of agricultural specialization in the Philippines” (p. 90). The tobacco monopoly was established by Governor Jose Basco y Vargas by decree in 1781, was implemented in 1783 and was the main source of fiscal revenue for Spain in the Philippines. There was also a “tentative use of bills of exchange in transferring funds through Canton” (p. 89).

The decades from 1820 to 1870 were crucial in the economic history of the world and produced significant changes in the economy of the country. An increase in trade and navigation in Asia accompanied the opening of the Suez Canal. Goods like sugar, fibers, coffee, etc. became the main export commodities. The Spanish government granted shipping subsidies. As a result of all of this, in the Philippines there was “a saltatory rise in the level of foreign trade” (p. 179). These events and trends were common to the Southeast Asian transformations from subsistence to export economies. However, the trajectory followed by the Islands was different from the Southeast Asian path. The economies of the region’s colonial powers tried to increase agricultural output pressuring the peasants to produce more goods for export and to develop plantation agriculture. According to Legarda in the period between 1820 and 1870: “Neither pressure on the peasantry nor the development of large-scale plantation agriculture was primarily responsible for transforming the Philippines from a subsistence to an export economy” (p. 186). Such a role was played by foreign businesses — “they formed the main nexus between the Philippine economy and the currents of world trade” (p. 211). The foreign merchants introduced agricultural machinery, advanced money on crops which stimulated the opening of new agricultural areas and consequently exports grew. There was an increasing commodity concentration of exports (sugar, abaca, tobacco and coffee) to the United Kingdom, China, British East Indies, United States and Spain [Tables 1 to 5]. Textiles dominated imports accompanied by a decline of local manufacturing and in 1870 rice became an import commodity. “Both trends had significant social and demographic repercussions” (p. 178) [Tables 6 to 13].

British and Americans were predominant in the foreign trade. The Chinese occupied the position of intermediaries between foreign western merchants and the domestic market. In spite of the dominant presence of foreigners in the Philippine economy “a native middle class was rising” (p. 213).

In order to raise funds the merchant houses issued notes taking deposits in local currencies from people of different economic backgrounds. This capital was given as an advance to finance agricultural operations. “Liquid wealth” reached Filipinos in the countryside, at the same time the merchants’ exercised control over the supply of export commodities (p. 256).

The Philippines’ economic landscape was different from Southeast Asia, i.e. Malaya and Indonesia. Western foreigners, public entities, and the Chinese joined rising domestic entrepreneurs. The Spanish government participated financially in the origination of utility companies (steam navigation, telegraphy); western investors entered some joint ventures with local capital (rice, sugar mills, textile industry, railroads and electricity), and domestic businessmen invested in the tranways and created the brewing industry. “But the crucial dichotomy between economic initiative and political authority stamped the Philippine case as being more in the East Asian tradition than the Southeast Asian mold” (p. 289).

This processes of economic integration in the world market had its drawbacks. Income disparities between regions and occupations became more marked. The domestic textile industry could not compete with foreign imports. During the 1880s, ‘the decade of death,’ the lower income groups became more susceptible to diseases due to an imbalance between commercial and subsistence agriculture and due to the arrival of epidemics (p. 335). The upside of these transformations was improvement in communications (telegraphy, mail, cable, steamship lines, electricity, railroads), in finance (foreign banks arrived to Manila), and in infrastructure. The funds of the Obras Pias, a church institution employed in the past to finance the galleon trade, were used to establish the Banco Espanol-Filipino in 1851 and the Monte de Piedad (a savings bank and a pawn shop) in 1882. In the same year with Obras Pias monies coming from the cargo of the galleon Filipino, a municipal water system was built in Manila (pp. 337-38).

Benito Legarda quotes Victor Clark who wrote: “A period of industrial development and expansion immediately preceded the insurrection that marked the beginning of the end of Spanish rule in the Philippines” (p. 339). The United States’ occupation of the country after the war produced increases in exports, innovations in technology, and much higher standards of living. The Philippines’ economy now would resemble more closely the Southeast Asian model. “The price of twentieth-century progress would be economic dependence” (p. 340).

Historians of the Philippines have produced excellent work. Benito Legarda’s economic history of the archipelago is an important addition to this body of literature. For historians of Asia and of the Spanish Empire After the Galleons is essential, but Legarda’s care in placing the Philippines in the context of with global economic trends makes the book an excellent addition to the field of “World History.” For economic historians and development experts, Legarda has written an important book. With clarity, rigor and avoiding unnecessary jargon, After the Galleons addresses questions and processes that are still affecting our times. Scholars, graduate students and advanced undergraduates in economics, history and other social sciences should read Legarda’s work. It is an indispensable book.

Arturo Giraldez, along with his colleague Dennis O. Flynn, is the editor of The Pacific World: Lands, Peoples and History of the Pacific, 1500-1900 an 18-volume series published by Ashgate/Variorum. With Dennis O. Flynn and James Sobredo, he has edited in 2001 European Entry into the Pacific, the fourth volume of the series.


Subject(s):International and Domestic Trade and Relations
Geographic Area(s):Asia
Time Period(s):19th Century

The History of the Bundesbank: Lessons for the European Central Bank

Author(s):de Haan, Jakob
Reviewer(s):Voth, Hans-Joachim

Published by EH.NET (August 2001)


Jakob de Haan, editor, The History of the Bundesbank: Lessons for the European Central Bank. London: Routledge, 2000. xiv + 161 pp. $90 (hardback), ISBN: 0-415-21723-7.

Reviewed for EH.NET by Hans-Joachim Voth, Department of Economics, Massachusetts Institute of Technology.

Few institutions vanish at the height of their powers and reputation. The Bundesbank, however, was one that did. In the early 1990s, Financial Times journalist David Marsh argued that it had “replaced the Wehrmacht as Germany’s best-known and most feared institution.” The Bundesbank’s demise as a policy-making institution marks a sharp discontinuity in the continent’s post-war economic history. On January 1, 1999, with the introduction of the Euro, the baton for setting interest rates in Europe passed to the European Central Bank (ECB). A number of volumes have consequently tried to capitalize on a bit of early nostalgia — a massive edited volume, put out by the bank itself, on Fifty Years of the Deutsche Mark (Oxford University Press, 1999), most prominently amongst them.

The volume edited by Jakob de Haan is the result of a workshop at the Germany Institute in Amsterdam in April 1998. While this is a fine contribution to contemporary debate on monetary policy, containing many valuable pieces of scholarship, one thing must be clarified at the outset — this is not a history of the Bundesbank, let alone “the” history of the Bundesbank. The contributors provide a number of comparisons between the ECB and the Bundesbank, and examine Bundesbank policy in the recent past with a view to deriving lessons for ECB policy. This is a thoroughly worthwhile exercise, and it is a pity that the publisher or the editor has decided to shun truth in advertising by picking such an embarrassingly grandiose title (perhaps to justify the obscenely high price?). Readers interested in an historical account of the German central bank’s policy should turn to the Fifty Years of the Deutsche Mark mentioned above.

What, then, are the lessons that the ECB should learn from the Bundesbank? In terms of its institutional setup, the similarities are striking. As Sylvester Eijffinger shows in his detailed and eloquent contribution, the Bundesbank and the ECB achieve almost identical scores for independence. In terms of transparency and accountability, however, both do worse than the Fed, the Bank of England, and the Banque de France. Neither publishes minutes of its meetings. Also, in terms of policy instruments, the long shadow of the Bundesbank clearly influenced the ECB. Minimum reserve requirements feature prominently in the bank’s arsenal of policy instruments, and money growth targeting (while not as central as with the Bundesbank) plays an unusually large role. Eijffinger argues that, despite these numerous similarities, the ECB may have a hard time earning a reputation on par with the Bundesbank. This is because legal independence is not enough to guarantee de facto autonomy in setting interest rate policy — cultural and social factors play an important role as well. This concern is echoed in Otmar Issing’s concluding comments, too. Acquiring a reputation requires inflicting a bit of pain in hard times, or so Eijffinger argues. The true test will only come when politicians and central bankers start to argue.

From the perspective of 2001, many of these caveats seem prescient. Also, the simple day-to-day management of central bank policy turned out to be more of a challenge for the ECB than many had expected. From the regular gaffes of its president Duisenberg to the general and mounting skepticism about the common currency in foreign exchange markets, the ECB has had a hard time filling the Bundesbank’s boots. Recent Italian attempts to tinker with the so-called “stability pact” (that limits member states’ deficits) reinforces the importance of Eijffinger’s point about the importance that legal independence may not be enough.

Given that inflation today throughout Europe (with the possible exceptions of Ireland, Spain, and Portugal) is still relatively low, why worry? Karl-Heinz T?dter and Gerhard Ziebarth, two economists at the Bundesbank, argue that only dead inflation is good inflation. Even low inflation of around two percent is, in their view, clearly dominated by price-stability. According to their calculations, these benefits are exclusively driven by consumption timing effects. Gross benefits might be as large as two percent of GDP, and the net effect could still amount to 1.4 percent. These results are for Germany, and it is somewhat disappointing that in a volume that aims to derive lessons for the ECB, no attempt is made to examine if the same results hold for the Euro area. Perhaps more worryingly, two standard objections to a policy of zero inflation — that this increases wage rigidity, and increases the likelihood of monetary policy being “trapped” because nominal interest rates cannot fall below zero — are dismissed too lightly. In a simple technical sense, the paper also falls short of the standards now common in the debate about monetary policy rules (for a state-of-the-art contribution, see David Vestin’s “Price Level Targeting versus Inflation Targeting in a Forward Looking Model” at

In many ways, Helge Berger’s and Friedrich Schneider’s article on Bundesbank behavior during political conflicts is the most impressive contribution in this volume. It is very much part of a recent trend in the literature to examine empirically how much of the Bundesbank’s tough-guy rhetoric was justified, given its actual behavior. Jordi Gal?, Mark Gertler and Richard Clarida showed that, despite “officially” targeting money growth, the Bundesbank since 1973 largely behaved as if it followed a modified Taylor-rule, targeting inflation and — horribile dictu — output. Berger and Schneider examine if the Bundesbank really never blinked in the face of political adversity, as common wisdom has it. Given that its independence could be taken away by parliament, this would hardly have been an optimal strategy. Berger and Schneider define policy conflicts as those cases when money growth provided a stimulus to the economy that was the opposite of the fiscal stimulus. By this definition, the federal government and the Bundesbank were pursuing contradictory policies about every other year of the post-war period. Berger and Schneider find that, for a broad range of specifications and policy instruments, the Bundesbank proved more “accommodating” when the government in Bonn tried to steer the economy in a different direction. This is a very interesting finding that questions one of the most persistent myths about the Bundesbank. However, some of the details of the estimation only lend qualified support to this conclusion; other results are a little odd. Berger and Schneider’s estimates of the reaction function, for example, imply that the Bundesbank reacted only mildly and rarely significantly to increases in inflation, while targeting output very strongly. This is at variance with the findings by Clarida, Gal? and Gertler (European Economic Review 42, 1998), who demonstrated that the Bundesbank targeted inflation to a greater extent than the output gap.

Readers will fully appreciate the contribution by Berger and Schneider once they have read the literature overview by Philipp Maier and Jakob de Haan. There is a voluminous literature on the extent to which the Bundesbank really was independent. Empirically sound analysis seems largely conspicuous by its absence, and much remains to be done until we know as much about direct and indirect political tinkering with monetary policy in Europe as we do about the Fed.

This edited volume contains good research summaries. Graduate students and researchers will find much that is of use, and some of the articles are important contributions in their own right. At the same time, crucial policy questions such as the possible adoption of inflation targeting by the ECB are never fully discussed, and it is difficult to claim that these seven essays represent an adequate history of the Bundesbank.

Hans-Joachim Voth is currently a visiting professor at the MIT economics department, and an associate professor at Universitat Pompeu Fabra, Barcelona. He is the author of Time and Work in England, 1750-1830 (Oxford: Oxford University Press, 2001), and a co-author of European Capital Markets (Houndsmills: Palgrave, 2000). His latest articles are “With a Bang, Not a Whimper: Pricking Germany’s Stockmarket Bubble in 1927 and the Slide into Depression” (Journal of Economic History, forthcoming) and (with S. Horrell, J. Humphries), “Destined for Deprivation? Human Capital Formation and Intergenerational Poverty in Nineteenth Century England” (Explorations in Economic History 38, 2001).

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Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):Europe
Time Period(s):20th Century: WWII and post-WWII