Category Archives: Monetary History

A panel proposal that never was

The Virtues and Vices of Making Money in America

The functioning of a capitalist economy necessitates means of payment and vehicles for credit with which business can be conducted and expanded. The seasonality of agriculture, industrial production, and the nature itself of trade require money and credit to lubricate market exchange.

When talking about money in a historical perspective, instances of virtue follow very closely moments of vice. In the American case, for example, when the thirteen colonies became independent virtue was to be delivered in the promise of sovereign money issued directly in the continent. Nevertheless, the monetary experiments handled by the states in the period of Confederation led to a rather vicious situation, similar to countries enacting beggar-thy-neighbor trade policies. Virtue came again with institutional reforms adopted under the guidance of Alexander Hamilton and the rise of the First Bank of the United States, but soon concerned actors voiced the potential vice carried by the monopoly of issue. After the War of 1812-1815 the Second Bank of the United States emerged to guide the financial development of an industrializing nation, but this came with the cost of limiting the availability of money and credit for the ever-emerging peripheral regions of the country.

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“A fluid, ever-evolving, and organic process of improvement, misstep and improvement”: The Long Road to Monetary Union in the USA

A piece on the monetary unification in the United States.

The NEP-HIS Blog

Politics on the Road to the U. S. Monetary Union

Peter L. Rousseau (peter.l.rousseau@vanderbilt.edu), Vanderbilt University

URL: http://econpapers.repec.org/paper/vanwpaper/vuecon-sub-13-00006.htm

Abstract: Is political unity a necessary condition for a successful monetary union? The early United States seems a leading example of this principle. But the view is misleadingly simple. I review the historical record and uncover signs that the United States did not achieve a stable monetary union, at least if measured by a uniform currency and adequate safeguards against systemic risk, until well after the Civil War and probably not until the founding of the Federal Reserve. Political change and shifting policy positions end up as key factors in shaping the monetary union that did ultimately emerge.

Review by Manuel Bautista Gonzalez

In this piece published in NEP-HIS 2013-04-13, Peter Rousseau argues for the need to complicate the widely-held, simplistic view that political union is a necessary condition for…

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Mexican Silver in China, 19th century

On Chinese Monetary History, 1800-1949

The NEP-HIS Blog

Money and Monetary System in China in the 19th-20th Century: An Overview
Debin Ma (d.ma1@lse.ac.uk), Department of Economic History, London School of Economics (Great Britain)

URL: http://d.repec.org/n?u=RePEc:ehl:wpaper:41940&r=his

Abstract: This article provides an historical overview on the development of Chinese money and monetary regimes between about 1800 and 1950. It develops a simple conceptual framework based on the relative costs of assessing the inherent value of the currencies of different denomination. Based on this framework, I develop a historical narrative that ties important political and institutional changes with the evolving structural changes in the Chinese monetary regime marked by the vicissitudes in the use of copper, silver currencies and paper money in both the private and public financial sectors from the Opium War in mid-19th century to the end of the Civil War in the 1950s.

Review by Manuel Bautista González

China was the first country to have coins, or the first along with Lydia in…

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Early American Monetary History

On Puzzling Colonial Money

The NEP-HIS Blog

Chronic Specie Scarcity and Efficient Barter: The Problem of Maintaining an Outside Money Supply in British Colonial America

Farley Grubb (grubbf@udel.edu), University of Delaware (United States)

URL: http://d.repec.org/n?u=RePEc:dlw:wpaper:12-08.&r=his

Abstract: Colonial Americans complained that gold and silver coins (specie) were chronically scarce. These coins could be acquired only through importation. Given unrestricted trade in specie, market arbitrage should have eliminated chronic scarcity. A model of efficient barter and local inside money is developed to show how chronic specie scarcity in colonial America could prevail despite unrestricted specie-market arbitrage, thus justifying colonial complaints. The creation of inside fiat paper monies by colonial governments was a welfare-enhancing response to preexisting chronic specie scarcity, not the cause of that scarcity.

Review by:Manuel Bautista González

Farley Grubb

“Assuming money rather than explaining it allows economists to do money-price-output analysis without caveats” – Grubb 2012: 22

This paper distributed in NEP-HIS 2012-05-22 embeds institutional, regulatory and market constraints within a transactions cost model to account for the chronic specie scarcity affecting British colonial…

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The Challenges of International Economic Multilateralism

On International Policy Coordination

The NEP-HIS Blog

International Policy Coordination: The Long View

Barry Eichengreen (eichengr@econ.berkeley.edu), University of California at Berkeley (United States)

URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:17665&r=his

Abstract: This paper places current efforts at international economic policy coordination in historical perspective. It argues that successful cooperation is most likely in four sets of circumstances. First, when it centers on technical issues. Second, when cooperation is institutionalized – when procedures and precedents create presumptions about the appropriate conduct of policy and reduce the transactions costs of reaching an agreement. Third, when it is concerned with preserving an existing set of policies and behaviors (when it is concerned with preserving a policy regime). Fourth, when it occurs in the context of broad comity among nations. These points are elaborated through a review of 150 years of historical experience and then used to assess the scope for cooperative responses to the current economic crisis.

Review by:Manuel Bautista González

“The…

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“Pieces of eight” without nationality

“Pieces of eight” anticipated the American dollar as a global currency. And paper money has always been accompanied by concerns that it will fuel inflation. The highest-denomination banknote ever issued, it turns out, comes not from Zimbabwe, as you might expect, but from post-war Hungary, where notes were issued in 1946 worth 100,000,000,000,000,000,000 (100 quintillion) pengo. Nearby you can see a poster printed on Zimbabwean banknotes advertising the Zimbabwean, a newspaper, with the slogan “It’s cheaper to print this on money than paper”. At the time, it was.

via The British Museum’s new money gallery: From shells to mobile phones | The Economist.

Is Money Substitutive or Complementary? East Asian Monetary History in Global Perspective

Until the late 19th century nine out of ten humans across the world made use of multiple systems of money in everyday life. The importance of small denomination coinage, the imaginary usage of silver by weight, and the prevalence of local paper monies in East Asia show that, depending on the situation, money worked in complementary ways rather than substitutive. Economists, anthropologist, numismatist and historians, whose research covers Asia, Africa, the Americas and Europe will discuss this issue and help to explore why it is that a single unified currency cannot ever dominate the entire world.

via CEAS | Events.