A Retrospective on the Classical Gold Standard, 1821-1931 by Michael D. Bordo, Anna J. Schwartz

By Michael D. Bordo, Anna J. Schwartz

This can be a well timed evaluate of the choicest protecting the one hundred ten years of its operation till 1931, while Britain deserted it in the course of the melancholy. present dissatisfaction with floating charges of trade has spurred curiosity in a go back to a commodity commonplace. The reports during this quantity have been designed to realize a greater knowing of the ancient optimum, yet in addition they throw gentle at the query of no matter if restoring it this day may possibly support remedy inflation, excessive rates of interest, and occasional productiveness development. the quantity contains a overview of the literature at the classical most advantageous; stories the adventure with gold in England, Germany, Italy, Sweden, and Canada; and views on overseas linkages and the soundness of price-level tendencies less than the best. The articles and commentaries replicate robust, conflicting perspectives between hte individuals on problems with important financial institution habit, purchasing-power an interest-rate parity, self reliant financial guidelines, financial development, the "Atlantic economy," and traits in commodity costs and long term rates of interest. it is a considerate and provocative ebook.

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Sample text

Finally the operation of central banks under the gold standard with respect to rules of the game was reconsidered by Sayers, Bloomfield, and Lindert. 4 A Retrospective The development of the literature on the traditional approach can be viewed from a number of perspectives. I briefly sketch out the elements of two of them: the first, that the interpretation of the gold standard by each school reflected the policy concerns of the time; the second, that the evolution of the interpretation of the gold standard has many of the characteristics of a Kuhnian scientific revolution.

179) This suggests that the distinction between the terms of trade and the direct-expenditure mechanisms rests on the distinction between tradedand nontraded-goods prices. The excess-money-induced expenditure falls on both traded and nontraded goods. To the extent the expenditure affects nontraded goods, their prices rise, inducing the substitution of traded goods. To the extent it affects traded goods whose prices are determined abroad, it leads to a direct specie outflow. Presumably, the effect on nontraded-goods prices will be short-lived-until substitution and the decline in the domestic money supply consequent upon the specie outflow have caused the relative prices of traded and nontraded goods to return to their initial equilibrium.

French investors responded to official regulation and pressure by buying Russian government loans for railroad construction-of military value, in the eyes of both governments. Germany's foreign investments also were directed to achieve national-security goals. The ensuing war destroyed not only the gold standard but also the investments. The gold standard flourished before World War I possibly because of the special position of sterling and London. That position was threatened even before the war when Paris and Berlin became important rivals of London.

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