Published by EH.NET (November 2000)
Angela Redish, Bimetallism: An Economic and Historical Analysis.
Cambridge: Cambridge University Press, 2000. xii + 275 pp. $54.95 (cloth),
Reviewed by Lawrence H. Officer, Department of Economics, University of
Illinois at Chicago.
Any historian of monetary standards needs not only to read Bimetallism: An
Economic and Historical Analysis but also to keep a copy nearby. The book,
based on a number of previously published articles of the author (who is
Professor of Economics at the University of British Columbia), provides an
analytical and descriptive history of the monetary standard, primarily in
England and France, secondarily in the United States, with some attention
also to the countries of the Latin Monetary Union. Redish sees a dichotomy
between the economics literature, which is scanty on the details of a
commodity (metallic) monetary standard, and the historical literature, which
is overly detailed. “The book attempts to straddle the gap between these two
literatures, to allow for a more complex monetary system than the economists’
‘commodity money’ and to find generalities that are buried in the historians’
details” (p. 12). Redish succeeds admirably in this goal.
Chapter 1 outlines the themes of the book and offers a sweep of the
monetary-standard history of Western economies. Two important questions that
will be addressed are (1) why bimetallism evolved into the gold standard, and
(2) why the gold standard did not occur earlier than it, in fact, did. The
answers hinge on two elements not generally viewed as central to
monetary-standard determination: the role of small-denomination money, and the
technology of coining money.
Redish devotes chapter 2 to theoretical issues. She explains the need for
multiple denominations of a medium of exchange. For a commodity standard, this
means either multiple commodities (gold, silver, and copper coins) or a single
commodity with variously sized pure coin, various-fineness pure coin, or
convertible token coin. The latter, monometallic, standard has problems of
coin size (too small or too large) and of susceptibility to counterfeiting.
Therefore the former, multicommodity, standard was adopted. Its big problem is
divergence between the fixed mint ratio of gold and silver and the market
relative price of the metals. A good summary of the literature on Gresham’s
Law is provided. The author notes the traditional response of monetary
authorities to an undervalued coined metal: depreciate the undervalued metal.
Sometimes this policy was followed also to raise revenue for the monetary
Chapter 3 considers the historical experience of problems with
large-denomination coin. The bimetallic solution led to chronic
undervaluation. The English and French experience from the mid-fourteenth to
the early-nineteenth centuries is examined meticulously. Especially
praiseworthy is a new data set on mint price and mint equivalent (the
difference between which is seignorage), including the fineness and weight of
gold and silver coins issued in these countries. Running to 15 pages, this
tabulation will prove immensely useful to researchers. Other tables provide
details of great debasements of coinage in the countries.
The corresponding experience of England and France with small-denomination
coin is explored in chapter 4. Full-bodied coins had the problem of size (too
small if silver, too large if copper), while token coins could be replicated
and converted into full-bodied coins to the disadvantage of the monetary
authority, or, if not convertible, could be overissued by the authority. Again
there are useful tables and in this chapter, as elsewhere, the author exhibits
a strong understanding of both the contemporary and current literature.
Chapter 5, on the transition to the gold standard in England, is extremely
interesting and provocative. As Redish summarizes: “After centuries of
uncertainty about how to issue small-denomination coins, the early nineteenth
century saw the British government adopt the principles of a ‘sound’ token
currency. The raison d’?tre of bimetallism had been removed and England was on
the gold standard.” Very important in Redish’s view (and she persuades this
reviewer) was new technology for minting coin, which made token coins
difficult to counterfeit. Also pertinent was the willingness of the Bank of
England to convert silver coins (and bank notes) at par into gold.
In chapter 6, Redish studies the transition to the gold standard in France.
The French mint modernized later than the English. After the mid-nineteenth
century the Latin Monetary Union countries (France, Belgium, Italy,
Switzerland) switched from a de facto silver to a de facto gold standard.
Redish disputes the conventional wisdom that the Union was an attempt to
achieve international bimetallism. Rather, she argues that the Union
constituted an optimal currency area and its formation reflected contemporary
interest in economic integration.
The U.S. experience is discussed in chapter 7. This history has been much
discussed elsewhere. The author’s contributions are important, nevertheless.
She places the history in its international context, emphasizes the role of
mint technology, and provides an excellent analysis of legislative
developments. The U.S. experience is consistent with the author’s analysis, as
is that of the other countries examined. “In the United States, as elsewhere,
the use of token silver coins eliminated the medium of exchange basis for
bimetallism” (p. 234).
Chapter 8 is the concluding chapter. It not only summarizes the work but also
carries the history to the late nineteenth century and beyond, through
abandonment of the gold standard, to the current interest in currency unions
and currency boards. Fittingly, Redish observes that, at least in this
respect, history does not repeat itself. These developments do not mean a
return to the nineteenth century; the situation is different from the past.
In sum, Redish has produced a wonderful book that any scholar of monetary
standards will admire. Nevertheless, Redish’s work leaves some questions open.
First, the relationship between the monetary standard and the macroeconomy is
not addressed. There is some attention to the seignorage gain of the monarch
in comparison to normal revenue, but that is all. The impact of the monetary
standard on prices, wages, and output is not considered. Granted, that would
go beyond the author’s theme, but the issue is not unimportant. Second, data,
or lack thereof, on circulation (as distinct from issue) of large and
small-denomination coin are not discussed. Third, the author makes some
tantalizing observations that cry out for elaboration. For example, the
relationship of England with Brazil, a gold-producing country, as a factor
leading to England’s adoption of the gold standard, is mentioned only in
However, these are issues that can be explored in future research, and that
research will certainly benefit from Redish’s work. All in all, my reaction to
Bimetallism: An Economic and Historical Analysis is unqualified
Lawrence H. Officer, Professor of Economics at University of Illinois at
Chicago, is author of Between the Dollar-Sterling Gold Points: Exchange
Rates, Parity, and Market Behavior (Cambridge: Cambridge University Press,
1996) and co-editor of Monetary Standards and Exchange Rates (London: