Send us your blog post, blog address, address of other great sites or suggestions by email.

Monday, August 26, 2013

The bullionist controversy

Despite the importance and renown of the bullionist controversy for the emergence of monetary and banking thought in the early nineteenth century, there is no fully satisfactory account and analysis. A good chronological account can be found in Frank Whitson Fetter, Development of British Monetary Orthodoxy, 1797–1875 (Cambridge: Mass.: Harvard University Press, 1965), which should be supplemented by the classic analytical discussion in Jacob Viner, Studies in the Theory of International Trade (New York: Harper & Bros, 1937), Chapters III-IV Also see the brief but valuable treatment in Chi-Yuen Wu, An Outline of International Price Theories (London: George Routledge & Sons, 1939), still the best published history of theories of international money and prices. Edwin Cannan's ‘Introduction’ to the Bullion Report, both contained in The Paper Pound of 1797–1821 (2nd ed., London, PS. King & Son, 1925), is a classic discussion of the events of the restriction era.
Also useful is Lloyd W. Mints, A History of Banking Theory in Great Britain and the United States (Chicago: University of Chicago Press, 1945), which is however marred by his exclusive concentration on the evils of the real bills doctrine; and Charles Rist, History of Monetary and Credit Theory From John Law to the Present Day (1940, A.M. Kelley, 1966), which on the contrary, suffers from devotion to the real bills doctrine, at least under a gold standard.
By far the best treatment of the bullionist writers is by Joseph Salerno, ‘The Doctrinal Antecedents of the Monetary Approach to the Balance of Payments’ (doctoral dissertation, Rutgers University, 1980). Salerno's paradigm of classifying the variants of bullionists is a path-breaking one, from which all future discussion must start. His emphasis is on the international monetary aspect of the controversy.
Jacob H. Hollander's path-breaking article, ‘The Development of the Theory of Money from Adam Smith to David Ricardo’, Quarterly Journal of Economics, 25 (May 1911), pp. 429–70, is still indispensable. The Dictionary of National Biography's articles on the various writers and statements involved in the controversy often provide excellent background information.
Henry Thornton's contribution has been well served, perhaps too much so, by later historians. In particular, see F.A. von Hayek's extremely favorable ‘Introduction’ to the reprint of Thornton's Inquiry (New York: Farrar & Rienhart, 1939). Also see David A. Reisman, ‘Henry Thornton and Classical Monetary Economics’, Oxford Economic Papers, n.s. 23 (March 1971), pp. 70– 89. For a biography, see Standish Meacham, Henry Thornton of Clapham, 1760–1815 (Cambridge, Mass.: Harvard University Press, 1964); and on his banking activities, see E.J.T. Acaster, ‘Henry Thornton – the Banker, Part I’, The Three Banks Review, no. 104 (December 1974), pp. 46–57. For an opposing position, see Salerno, ‘Doctrinal Antecedents’. On Francis Horner, see Frank W. Fetter, ‘Introduction’ to Fetter (ed.), The Economic Writings of Francis Horner (London: London School of Economics, 1957). And on John Wheatley, see Frank W. Fetter, ‘The Life and Writings of John Wheatley’, Journal of Political Economy, 50 (June 1942), pp. 357–76. Salerno, ‘Doctrinal Antecedents’, has single

handedly brought back into focus the notable achievements of Peter Lord King, in elaborating the complete bullionist position.
Thornton's crucial role in provoking David Ricardo into a mechanistic bullionism in opposition to the former's muddled approach, is brought out in the excellent and important article by Charles F. Peake, ‘Henry Thornton and the Development of Ricardo's Economic Thought’, History of Political Economy, 10 (Summer 1978), pp. 193–212. Also see Salerno, ‘Doctrinal Antecedents’. On Ricardo, see also R.S. Sayers, ‘Ricardo's Views on Monetary Questions’, Quarterly Journal of Economics (1953), in T.S. Ashton and R.S. Sayers (eds.), Papers in English Monetary History (Oxford: The Clarendon Press, 1953), pp. 76–95. David Weatherall, David Ricardo, has a considerable discussion of Ricardo's monetary views. On the bullion committee report itself, see Fetter, Development; Frank W. Fetter, ‘The Bullion Report Reexamined’ (1942), in Ashton and Sayers, Papers, pp. 66–75, and especially the definitive Frank W. Fetter, ‘The Politics of the Bullion Report’, Economica, n.s. 26 (May 1959), pp. 99–120.
On the resumption of specie payment, see, in addition to many of the above sources, Cecil C. Carpenter, ‘The English Specie Resumption of 1821’, Southern Economic Journal, 5 (July 1938), pp. 45–54. Salim Rashid makes a notable contribution in uncovering the important influence of Edward Copleston on the return to gold, in Salim Rashid, ‘Edward Copleston, Robert Peel, and Cash Payments’, History of Political Economy, 15 (Summer 1983), pp. 249–59.
On the response to banking and the panic of 1819 in the United States, see Rothbard, The Panic of 1819. Also see Mark Skousen, Economics of a Pure Gold Standard (1977, 2nd ed„ Auburn, Ala.: Ludwig von Mises Institute of Auburn University, 1988). On Jefferson, also see Luttrell, ‘Thomas Jefferson’, and on Busch and Storch, see the interesting discovery of Peter Bernholz, ‘Inflation and Monetary Constitutions in Historical Perspective’, Kyklos, 36, no. 3 (1983), pp. 406–9.
We are fortunate to have the Swedish controversy of the mid-eighteenth century era of fiat money brought recently to our notice. For an illuminating survey, see Robert V. Eagly (ed.), The Swedish Bullionist Controversy (Philadelphia: American Philosophic Society, 1971), in his ‘Introductory Essay’. The remainder of the book translates Pehr Niclas Christiernin's 1761 tract for the first time, Summary of Lectures on the High Price of Foreign Exchange in Sweden. Also see the lengthy and fascinating article by Carl G. Uhr, ‘Anders Chydenius, 1729–1803, A Finnish Predecessor to Adam Smith’, Western Economic Journal, 2 (Spring 1964), pp. 85–116

Austrian Perspective on the History of Economic Thought (2 volume set)

No comments:

Post a Comment