Handbook of the History of Money and Currency

Preface......Page 5
Contents......Page 7
About the Editors......Page 11
Contributors......Page 13
1 Introduction: New Research in Monetary History - A Map......Page 16
Historical Origins of Money......Page 18
Money, Coinage, and the State......Page 21
Trade, Money Markets, and International Currencies......Page 25
Money and Metals......Page 28
Monetary Experiments......Page 30
Asian Monetary Systems......Page 33
Exchange Rate Regimes......Page 35
Monetary Integration......Page 37
Central Banking and Monetary Policy......Page 40
Aggregate Price Shocks......Page 43
References......Page 47
Part I: Historical Origins of Money......Page 57
2 Origins of Money and Interest: Palatial Credit, Not Barter......Page 58
Money´s Role in the Palatial Economies of Mesopotamia and Egypt......Page 59
Accounting and the Origins of Money......Page 61
Money and Prices......Page 62
The Two Ideologies of Monetary Origins......Page 64
Shortcomings of the Barter Theory of Monetary Origins......Page 65
The Monetary Role of Silver......Page 68
Archaic Money and Interest-Bearing Debt......Page 69
Classical Antiquity´s Changing Context for Money and Credit......Page 71
Summary: The Shifting Historiography of Money´s Origins......Page 74
References......Page 75
3 The Role of Money in the Economies of Ancient Greece and Rome......Page 79
Introduction......Page 80
Money and Coinage in the Archaic Mediterranean......Page 81
Money and Conquest in the Hellenistic World and Roman Republic......Page 83
Markets and Monetization......Page 86
The Value of Money in the High Roman Empire......Page 90
Transitions in the Role and Supply of Money in Late Antiquity......Page 92
Conclusion......Page 96
References......Page 97
4 Primitive and Nonmetallic Money......Page 99
Introduction......Page 100
Collecting the Odd and Curious......Page 101
Definitions and Discoveries......Page 103
Standards, States, and Power......Page 107
Back to Bridewealth......Page 110
Counting on Currency......Page 112
Conclusion......Page 114
References......Page 115
Part II: Money, Coinage, and the State......Page 117
5 Monetary System of the ``Ancient Régime´´ (Third to Eighteenth Centuries)......Page 118
Introduction......Page 119
Birth and Fall of the Monetary System of the Roman Empire......Page 120
The Crisis of the Roman Empire, Coins, and Units of Account......Page 123
From Anarchy to the Solidus (270-309)......Page 125
The Semi-floating System of Diocletian (274-305)......Page 126
The Solidus and Its Floating System......Page 127
Invasion and Settlement of the Barbarians (Fourth-Fifth Centuries)......Page 129
The Semi-floating System......Page 130
Dichotomy of the Coinage and Within Society......Page 131
The Semi-floating System: Ostrogoths (Fifth-Sixth Centuries)......Page 132
The Floating System: Visigoths......Page 133
The Floating System: Merovingians (Sixth-Eighth Centuries)......Page 134
The Floating System: England (Sixth-Ninth Centuries)......Page 136
The Semi-floating System: Umayyad and Abbasid Coinages (Seventh-Tenth Centuries)......Page 137
The Semi-floating Byzantine System (Fifth-Seventh Centuries)......Page 138
The Floating System: Disaggregation of the Islamic Coinage (Eleventh-Twelfth Centuries)......Page 139
Byzantium Moving Back to the Floating System (Eighth-Twelfth Centuries)......Page 140
The Byzantine Floating System (Twelfth-Fourteenth Centuries)......Page 141
Carolingian Restoration (Eighth-Tenth Centuries)......Page 142
Western Floating Re-monetization (Eleventh-Thirteenth Centuries)......Page 144
The Revival of a Monetary System (Thirteenth-Fourteenth Centuries)......Page 147
War and the Black Death: An Opportunity for Monetization (Fourteenth Century)?......Page 150
Famine (Fifteenth Century)......Page 152
Technological Improvements (Fifteenth-Eighteenth Centuries)......Page 154
Rolling Mill......Page 155
Money Changers and Their Registers......Page 156
Promissory Notes......Page 157
The New Metal......Page 158
Thalers: A European Standard......Page 159
Towards Stabilization......Page 162
Stabilization......Page 164
The Death of the Monetary System of the ``Ancient Régime´´: A Planned Death?......Page 165
Cross-References......Page 166
References......Page 167
6 Money, Law, and Institutions......Page 170
Introduction......Page 171
Sovereign Power over Money......Page 172
Incidents of the Sovereign Right......Page 174
Later Developments in the Sovereign Right over Money......Page 177
The Nominal Value of Money......Page 179
The Homogeneity of Money as a Construct of Law......Page 181
Money, Property, and Liquidity......Page 182
Law and the Construction of the Monetary System......Page 184
Bibliography......Page 186
7 Premodern Debasement: A Messy Affair......Page 188
Introduction......Page 189
The Principles of Debasement......Page 191
Asymmetric Information and Social Power......Page 192
Information Costs, Political Capacity, and Monetary Policies......Page 194
Mint Autonomy......Page 197
Silver Debasements and the Price of Gold......Page 198
Debasements and Counterfeits......Page 200
Conclusion......Page 205
Primary Sources......Page 206
Secondary Sources......Page 207
8 Gresham´s Law......Page 210
Introduction......Page 211
Copernicus and Oresme......Page 212
The Context of Gresham´s Law......Page 213
Costly Nonpar Exchange......Page 214
An Asymmetrical Monetary Selection Game......Page 215
Legal Tender Laws......Page 216
From Pure Coordination to Prisoner´s Dilemma......Page 217
Imperfect Information......Page 218
Continentals......Page 220
Assignats......Page 221
Bimetallism......Page 222
Bimetallism in the Antebellum United States......Page 223
Redeemable Banknotes......Page 224
Private Coinage......Page 225
Rolnick and Weber´s Challenge......Page 227
Cross-References......Page 228
References......Page 229
Part III: Trade, Money Markets, and International Currencies......Page 231
9 Money, Trade, and Payments in Preindustrial Europe......Page 232
Coin and Its Problems......Page 233
Managing Payment by IOU......Page 234
Deposit Banks......Page 235
Bank Lending and Overdraft......Page 236
Interfair Deposits......Page 237
Cambium Contracts and Letters Obligatory......Page 238
Bills of Exchange......Page 239
Organized Markets for Exchange......Page 240
The Instability of Deposit Banks......Page 241
Payments Systems Without Banks......Page 242
Settlement at Antwerp......Page 243
The Banco di Rialto......Page 245
The Bank of Amsterdam......Page 246
The Reduction in the Costs of Making Payment and Remittance......Page 247
The Facilitation of Multilateral Trade......Page 248
Means of Remittance and Payment as Short-Term Loans......Page 249
The Development of Liquidity Facilities into General Sources of Financing......Page 250
Integration of Financial Markets......Page 251
References......Page 252
10 Money Markets and Exchange Rates in Preindustrial Europe......Page 254
Introduction......Page 255
Bills of Exchange: Transfer and Credit Instrument......Page 257
European Money Market Integration......Page 258
Usury Regulation and Circumventions in Commercial Finance......Page 261
Bills of Exchange: Endorsement and the Joint Liability Rule......Page 264
The Geography of Money Before the Industrial Revolution......Page 266
Measuring the Cost of Capital in the Eighteenth Century Europe......Page 270
References......Page 275
11 International Money Markets: Eurocurrencies......Page 278
Introduction......Page 279
Multiplier Versus Portfolio......Page 281
International and Eurocurrency Banking......Page 284
Measures......Page 285
Growth Phases......Page 288
Eurocurrencies, Globalization, and Technological Innovation......Page 289
Brokers, Dealers, and Tiers......Page 291
Transaction Technology......Page 293
The Interbank Market......Page 294
Regulatory Arbitrage......Page 296
Petrodollar Recycling......Page 299
A ``Global Banking Glut´´......Page 300
The Eurodollar Premium......Page 301
US Banks´ Arbitrage......Page 303
Market Spreads......Page 304
Risk Factors......Page 306
The Crisis of Herstatt Bank 1974......Page 307
The Debt Crisis of 1982......Page 308
The Liquidity Crisis of 2007-2008......Page 309
Origins of Eurodollars and the British State......Page 310
The Failure of International Regulatory Coordination......Page 312
References......Page 317
12 The Asian Dollar Market......Page 324
Introduction......Page 325
The Legacy of the British Empire: An Entrepôt for Southeast Asia......Page 327
The Independence of Singapore and the Making of an International Financial Center......Page 329
The Role of Foreign Bankers: The Bank of America and the Idea of the Asian Dollar Market......Page 330
The Launch of a Regional Eurodollar Market in Singapore: The Asian Currency Unit and the Asian Dollar Market......Page 332
A Capital Market for Asia: Asian Bond Market......Page 337
Midterm Credit of Asian Dollars......Page 338
Singapore......Page 339
Conclusions......Page 340
References......Page 341
13 International Currencies in the Lens of History......Page 343
Introduction......Page 344
A Byzantine Arrangement......Page 346
The Italian Job......Page 349
Dutch Treat......Page 352
Conductor of the International Orchestra......Page 354
Interwar Interregnum......Page 357
Dollar Dominance......Page 360
Looking to the Future......Page 364
References......Page 366
Part IV: Money and Metals......Page 368
14 American Precious Metals and Their Consequences for Early Modern Europe......Page 369
From Precious Metals to Money......Page 370
Consequences for Second-Order Receiver Economies......Page 374
Consequences for First-Order Receiver Economies......Page 379
Conclusion......Page 384
References......Page 385
15 Rise and Demise of the Global Silver Standard......Page 389
The Spanish American Silver......Page 391
The Global Scope of Spanish American Silver......Page 394
Silver Specie......Page 395
World Silver: Bullion or Specie? Supply or Demand?......Page 400
The End of the Global Silver Standard......Page 404
Monetary Capacity......Page 406
Conclusion......Page 409
Cross-References......Page 411
Appendix......Page 412
References......Page 413
Part V: Monetary Experiments......Page 417
16 Experiments with Paper Money......Page 418
Introduction......Page 419
China......Page 420
Sweden......Page 421
England......Page 422
France......Page 425
Denmark......Page 428
Austria......Page 429
Russia......Page 430
Conclusion......Page 432
References......Page 434
17 Money and Prices in Colonial America......Page 435
Introduction......Page 436
What Is Money? What Is Not Money?......Page 438
Commodity ``Monies´´: Tobacco, Wampum, Beaver Pelts, Deerskins, Grain, Country Pay......Page 440
Paper Monies......Page 441
Prices and Money......Page 451
References......Page 456
18 Privately Issued Money in the United States......Page 459
Introduction......Page 460
Rise of Bank Notes......Page 461
Switch to National Bank Notes......Page 463
Clearinghouse Certificates......Page 464
Emergency Currency Under the Aldrich-Vreeland Act......Page 465
Decline of Private Currency......Page 466
Efficiency of Private Money......Page 467
Note Issue Paradox......Page 469
Clearinghouse Mechanisms......Page 471
References......Page 473
19 Money, Prices, and Payments in Planned Economies......Page 476
Marxist-Leninist Theory......Page 477
Hyperinflation......Page 479
Monetary Stabilization......Page 480
The Initial Stages of the Administrative-Command Economy (1926-1947)......Page 482
Monetary Reform......Page 486
Stable Money (1948-1965)......Page 489
Chronic Shortageflation (1966-1986)......Page 490
Loss of Monetary Control (1987-1991)......Page 491
Money as a Partial Equivalent......Page 495
Banking......Page 496
Money in Trade Between Administrative-Command Economies......Page 499
Conclusion......Page 500
References......Page 501
20 Complementary Currencies......Page 504
Introduction......Page 505
The Complementary Currency System of Early Modern Europe......Page 507
Unofficial, Low-Denomination Coins: Tokens, Méreaux, and Pseudo-Monies......Page 510
Interwar Period: Depression Scrips and Local Currencies......Page 511
Recent Developments: Community Currencies, Mutual Credit Schemes, and Corporate Barter......Page 513
Proposals for the Eurozone: Hard ECU, Parallel Currencies, and Grassroots Alternatives......Page 515
National and International Money between Complementarity and Substitutability......Page 517
Cryptocurrencies Versus Complementary Currencies......Page 520
Conclusions and Perspectives for Further Research......Page 521
References......Page 523
Part VI: Asian Monetary Systems......Page 526
21 Monetary System in Ancient China......Page 527
Introduction......Page 528
The Rise and Fall Theory of the Monetary Economy of Ancient China......Page 529
Criticism Against the ``Rise and Fall Theory´´......Page 531
Origins of Concurrent Currencies in Ancient China......Page 536
Multiple Money in Market......Page 539
The Social Meaning of Money Outside Market......Page 540
New Research Tasks......Page 543
References......Page 546
22 The Monetary System of China Under the Qing Dynasty......Page 550
Introduction: Sources, Periodization, Themes......Page 551
Copper Cash and Silver Sycee......Page 557
Qing Ambivalence to Paper Money......Page 559
The Xianfeng Resumption of Paper Money Issues: Background and Consequences......Page 561
Late-Qing Foreign and Indigenous Financial Institution......Page 563
Cross-References......Page 567
References......Page 568
23 The Monetary System of Japan in the Tokugawa Period......Page 572
Triple Standard System......Page 573
Prehistory: Sixteenth Century......Page 574
The First Issuance of Gold and Silver Currencies by the Tokugawa Shogunate: The Tokugawa Ieyasu and Hidetada Regime......Page 576
The Issuance of Kan´ei-tsuho: The Tokugawa Iemitsu Regime......Page 579
The Currency Integration Process: The Tokugawa Ietsuna Regime......Page 580
The Emergence of Paper Currency: Private and Domain Notes......Page 581
Standard Revision and Re-revision: The Tokugawa Tsunayoshi and Ienobu Regimes......Page 583
Shifting Policy to Increase Currency Supply: The Tokugawa Yoshimune Regime......Page 586
The Issuance of the Ryo System Unit´s Silver Currency: Tokugawa Ieharu Regime......Page 587
Various Small-Denomination Gold and Silver Currencies: Tokugawa Ienari Regime......Page 588
Treaty of Amity and Commerce Between the United States and the Empire of Japan, and Its Influence: The Tokugawa Iesada and Iem.........Page 590
Man´en Revision and the Fall of the Tokugawa Shogunate......Page 592
Conclusion......Page 594
References......Page 595
Part VII: Exchange Rate Regimes......Page 598
24 International Monetary Regimes: The Gold Standard......Page 599
Introduction......Page 600
Center Country......Page 601
Periphery......Page 604
Why the Scramble to Gold?......Page 605
Coin Standard......Page 606
Gold-Exchange Standard......Page 607
Gold Points and Gold-Point Arbitrage......Page 608
Spread, Gold-Point Estimation, and Gold-Effected Transfer of Funds......Page 609
Traditional Mechanism......Page 611
Monetary Mechanism......Page 612
Sources of Instability of the Gold Standard......Page 613
The Rules......Page 615
Discount-Rate Rule......Page 616
Was the Bank of England Supreme?......Page 617
Private-Sector Credibility in Convertibility......Page 618
Reasons Why Commitment to Convertibility Was So Credible......Page 619
Rareness of Violations of Gold Points......Page 620
Stabilizing Speculation......Page 621
Government Policies that Enhanced Gold-Standard Stability......Page 622
Experience of Periphery......Page 624
Performance......Page 626
Breakdown of Gold Standard......Page 628
References......Page 629
25 International Monetary Regimes: The Interwar Gold Exchange Standard......Page 632
Introduction......Page 633
The First Word War and Collapse of the Classical Gold Standard......Page 634
The Return to the Gold Standard: International Coordination Versus Individual Initiatives......Page 635
Restoring Pre-WW1 Gold Parities: The United States and United Kingdom......Page 636
Devaluing Before Stabilizing: France and Italy......Page 638
Post-hyperinflation Stabilization: Germany, Austria, and Hungary......Page 639
Peripheral Countries......Page 640
Staying Out: Spain and China......Page 641
What´s in a Word? The Gold Exchange Standard......Page 642
Legal Provisions......Page 643
The Significance of Foreign Exchange Reserves......Page 647
Exchange Rate Parities......Page 650
The Crisis in Central Europe......Page 651
The Fall of Sterling......Page 652
The Liquidation of Foreign Exchange Reserves......Page 653
The Collapse of the Gold Bloc......Page 654
The Gold Standard and Global Deflation......Page 655
Credibility and Cooperation......Page 656
The Role of France......Page 657
The Persistence of the Gold Standard......Page 658
Conclusion......Page 659
References......Page 660
26 International Monetary Regimes: The Bretton Woods System......Page 664
Introduction......Page 665
The Design of the Bretton Woods System......Page 666
The Long Path to Convertibility, 1946-1958......Page 668
The Bretton Woods System Under Convertibility, 1958-1968......Page 671
The Collapse of the Bretton Woods System, 1968-1971......Page 674
The Bretton Woods System and the Developing World......Page 675
An Assessment of the Bretton Woods System......Page 677
Cross-References......Page 682
References......Page 683
27 Currency Boards......Page 685
Introduction......Page 686
Criteria I: The Peg and the Anchor Currency......Page 687
Criteria II: Coverage Ratio and Convertibility......Page 688
Criteria III: Barriers to Change and Exit Options......Page 689
Near Currency Boards......Page 690
Fixed Versus Floating Exchange Rates......Page 691
Soft Versus Hard Pegs......Page 692
Case Studies......Page 694
From Rarity to Near Default Arrangement: The West African CBA as Template......Page 695
Durability and Credibility......Page 697
Cui Bono?......Page 698
The Big Picture......Page 699
Argentina......Page 700
An Ounce of Prevention Is Worth a Pound of Cure......Page 701
Do (Not!) Let Sleeping Dogs Lie......Page 702
The Euro Boards......Page 703
Estonia......Page 704
Lithuania......Page 705
Latvia......Page 706
Bosnia-Herzegovina......Page 707
Lessons from the Euro Boards......Page 708
Conclusion......Page 709
References......Page 710
Part VIII: Monetary Integration......Page 714
28 The Evolution of the Modern US Monetary and Payments System......Page 715
Introduction......Page 716
The Antebellum Payments System......Page 717
The Civil War Era: A Second (Monetary) Revolution......Page 721
From Banknote to Deposit Money......Page 725
The Evolution of a National (Correspondent) Banking System......Page 727
Conclusion: What Role the Fed?......Page 730
References......Page 735
29 Currency Unions......Page 742
Introduction......Page 743
Optimum Currency Areas (OCA)......Page 744
Criticism of the OCA Theory: The Role of the State and the Importance of Long-Term Capital Flows......Page 746
Reasons for Establishing Currency Unions......Page 749
The USA......Page 751
The Quest for Intranational Currency Unions in Nineteenth Century Europe......Page 755
The Latin Monetary Union......Page 756
The Scandinavian Currency Union......Page 758
The Economic and Monetary Union (EMU) and the Lessons from History......Page 759
References......Page 762
30 The Sterling Area 1945-1972......Page 766
The Sterling Area: Origins......Page 767
The Sterling Area in the Era of Controls 1945-1958......Page 769
The Sterling Area and International Monetary Cooperation 1959-1967......Page 778
The Sterling Area and the End of Bretton Woods 1968-1972......Page 780
Conclusions......Page 784
References......Page 785
31 Currency Blocs: The Yen......Page 786
Introduction......Page 787
An Early House-Call: Taiwan......Page 788
Korea: The First Monetary Laboratory......Page 790
World War I: Japan´s Balance-of-Payment Surplus, and Foreign Loans......Page 793
The 1930s: Manchuria......Page 797
From the Outbreak of the Second Sino-Japanese War (1937)......Page 800
Cross-References......Page 801
References......Page 802
32 European Monetary Integration......Page 804
Introduction......Page 805
The Relationship Between Money and the State......Page 806
The Theory of Optimum Currency Areas (OCA)......Page 807
European Monetary Integration in Europe at the End of the Second World War......Page 808
The Institutional Context: The European Economic Community and Monetary Integration......Page 809
The Evolution of the International Monetary System......Page 811
European Monetary Integration and the Single Market......Page 812
A Typology of Monetary Integration in Europe......Page 813
The European Unit of Account......Page 814
The Debate Over the Creation of a Parallel Currency......Page 815
The Snake: 1972-1978......Page 816
The European Monetary System: 1979-1992......Page 818
The Werner Report......Page 820
The Delors Report......Page 821
The Intergovernmental Conference, the Treaty of Maastricht, and German Reunification......Page 822
The Crisis of the ERM: 1992-1993......Page 823
Conclusions: European Monetary Integration After Maastricht......Page 824
References......Page 825
Part IX: Central Banking and Monetary Policy......Page 828
33 The Historical Evolution of Central Banking......Page 829
Introduction......Page 830
Conceptual Framework......Page 831
Central Banking in City States: Issues......Page 832
Venice......Page 833
Amsterdam and Hamburg......Page 836
Genoa......Page 837
Central Banking in Centralized Territorial Polities: Issues......Page 838
Naples, Austria, and Sweden......Page 839
England......Page 840
France......Page 842
The United States......Page 843
The European Union......Page 846
References......Page 847
34 The Evolution of Monetary Policy (Goals and Targets) in Western Europe......Page 851
The United Kingdom......Page 852
France......Page 859
Germany......Page 864
Conclusions......Page 871
References......Page 872
35 The Evolution of US Monetary Policy......Page 877
Introduction......Page 878
Defining the Monetary Regime......Page 879
Pre-World War II Monetary Policy......Page 880
Post-World War II Monetary Policy and Stop-Go......Page 889
The Great Moderation......Page 894
What Monetary Regime Did Volcker and Greenspan Create?......Page 901
The Great Recession......Page 903
Why Was Raising Inflation so Hard After the Great Recession?......Page 908
Cross-References......Page 914
References......Page 915
36 The Historical Evolution of Monetary Policy (Goals and Instruments) in Japan: From the Central Bank of an Emerging Economy .........Page 917
Introduction......Page 918
Building a Modern Monetary System (1882-1896)......Page 921
The Establishment of the BOJ......Page 922
Operations of the BOJ During Its Early Days......Page 923
The Adoption of the Gold Standard......Page 924
The First World War and Its Aftermath......Page 926
Japan During the Great Depression......Page 928
War Finance and Inflation (1937-1951)......Page 931
Financing High Growth (1952-1970)......Page 934
Deregulation and Decelerated Growth (1971-1990)......Page 937
New Challenges (1991-2017)......Page 941
Conclusion......Page 944
References......Page 945
37 The Historical Evolution of Monetary Policy in Latin America......Page 947
Introduction......Page 948
Antecedents to Central Banking and Monetary Policy......Page 950
The Creation of Central Banks......Page 951
The Beginnings of Countercyclical Monetary Policy......Page 954
Another Round of Monetary Doctoring in Latin America......Page 955
Monetary Policy During the Developmental Period......Page 957
The Causes of Inflation and the Monetary Policy Prescriptions......Page 958
The Change of Orientation in Monetary Policy......Page 963
The Adoption of Inflation Targeting......Page 967
Some Evidence on Latin American Inflation Targeting Regimes......Page 969
Cross-References......Page 972
References......Page 973
Part X: Aggregate Price Shocks......Page 975
38 Bullionism......Page 976
Introduction and Background......Page 977
Great Britain......Page 980
Sweden......Page 983
Conclusion......Page 984
References......Page 985
39 Money in Wars......Page 987
Long-Term Overview......Page 988
World War I......Page 992
World War II......Page 997
Conclusion......Page 1007
References......Page 1008
40 The Anatomy of Inflation: An Economic History Perspective......Page 1013
Introduction......Page 1014
Some Stylized Facts About Inflation......Page 1015
Inflation in the Commodity Currency Era......Page 1021
The Road to Inflation Targeting......Page 1022
The Link Between Inflation and Relative Price Variability......Page 1027
Extraordinary Spells of Inflation: Hyperinflations......Page 1029
Development......Page 1030
Ending......Page 1033
Conclusion......Page 1034
References......Page 1035
41 Deflations in History......Page 1039
Introduction......Page 1040
The Historical Record......Page 1042
Price-Level Targeting......Page 1047
Consumer Prices Versus Producer Prices......Page 1050
An Alternative Commodity-Based Standard?......Page 1058
Cross-References......Page 1059
References......Page 1060
Index......Page 1063