International Financial History in the Twentieth Century: System and Anarchy (Publications of the German Historical Institute)

The essays in this book examine the long history of the international financial system in terms of the current debate about globalization and its limits. In the nineteenth century, international markets existed without international institutions. In the interwar years, attempts (largely unsuccessful) at designing a genuine international trade and monetary system were made at the same time (coincidentally) that the system collapsed. In the post-1945 era, the intended design effort was infinitely more successful. The development of large international capital markets since the 1960s, however, increasingly frustrated attempts at international control. Cover......Page 1 Half-title......Page 3 Series-title......Page 5 Title......Page 7 Copyright......Page 8 Contents......Page 9 Contributors......Page 11 Preface......Page 12 Introduction......Page 13 THE CLASSICAL GOLD STANDARD......Page 15 THE INTERWAR CATASTROPHE......Page 20 THE POSTWAR BOOM......Page 22 1 Caveat Emptor......Page 29 The Founding of the SEF: Speculations......Page 32 The First Years of the Service, 1871–1889......Page 35 The Rise of the SEF, 1889–1914......Page 38 The Public Debts Unit......Page 44 The Glory and the Power: SEF Propaganda During the Belle Epoque......Page 45 Fiscal Concerns, Statistical Doubts, and the Making of a Framework of Analysis......Page 47 “Une méthode rationnelle”......Page 50 Toward Quasi-Cardinal “Ratings”......Page 53 CONCLUSIONS: MARKET OPINION AND WILLINGNESS TO LEND......Page 60 APPENDIX: ESTIMATING THE LYONNAIS GRADING FORMULA......Page 61 2 Conduits for Long-Term Foreign Investment in the Gold Standard Era......Page 63 PORTFOLIO INVESTMENTS: GOVERNMENT BONDS TRADED ON FOREIGN MARKETS......Page 68 PORTFOLIO INVESTMENTS: RAILROAD BONDS TRADED ON FOREIGN MARKETS......Page 71 GENERALIZATIONS ON THESE PORTFOLIO INVESTMENTS......Page 72 OTHER PORTFOLIO INVESTMENTS......Page 73 DIRECT INVESTMENTS: FREE-STANDING COMPANIES......Page 74 DIRECT INVESTMENTS: CLASSIC MULTINATIONAL ENTERPRISES......Page 82 DIRECT INVESTMENTS: THE MIX AND THE NUMBERS......Page 84 CONCLUSION......Page 85 3 The Gold-Exchange Standard......Page 89 I......Page 91 II......Page 94 III......Page 98 4 The Bank of France and the Gold Standard, 1914–1928......Page 107 THE PROMISE TO RETURN TO GOLD, AUGUST 1914–JUNE 1924......Page 108 THE CARTEL DES GAUCHES AND THE CRISIS, 1924–1926......Page 116 RETURNING TO GOLD, 1926–1928......Page 129 INTRODUCTION......Page 137 THE POLITICAL ECONOMY OF THE 1930S......Page 141 KEYNES AND THE INTERNATIONAL MONETARY ORDER......Page 146 KEYNES AND SCHACHT......Page 153 ARTICLE VII......Page 158 THE UPSHOT......Page 159 CONCLUSION......Page 162 6 Bretton Woods and the European Neutrals, 1944–1973......Page 165 FROM THE STARTING POINT IN 1944 TO THE BREAKDOWN IN 1971–1973......Page 166 THE BRETTON WOODS CONFERENCE AS A CHALLENGE FOR SWITZERLAND......Page 172 7 The 1948 Monetary Reform in Western Germany......Page 181 BACKGROUND......Page 184 EARLY GERMAN THOUGHT......Page 186 INITIAL U.S. AND U.K. EXPLORATIONS......Page 187 BASIC IDEAS......Page 192 CONCLUSIONS......Page 202 REFERENCES......Page 204 I......Page 209 II......Page 211 III......Page 216 IV......Page 220 V......Page 223 9 Denationalizing Money?......Page 225 THE GOLD STANDARD ANDTHE “NATIONALIZATION OF MONEY”......Page 226 The Cosmopolitanism and Individualism of Economic Liberalism......Page 234 Popular Sovereignty and National Currencies......Page 237 TOWARDA DENATIONALIZATION OF MONEY?......Page 242 CONCLUSION......Page 248 OVERVIEW......Page 251 ANALYTICAL CONTEXT......Page 253 THE LEAGUE OF NATIONS AND INDUSTRIAL ORGANIZATION AND BUSINESS PRACTICE......Page 259 THE POSTWAR ECONOMIC ORDER......Page 267 TOWARD A NEW ORDER?......Page 271 Index......Page 277 The essays, written by leading experts, examine the history of the international financial system in terms of the debate about globalization and its limits. In the nineteenth century, international markets existed without international institutions. A response to the problems of capital flows came in the form of attempts to regulate national capital markets (for instance through the establishment of central banks). In the inter-war years, there were (largely unsuccessful) attempts at designing a genuine international trade and monetary system; and at the same time (coincidentally) the system collapsed. In the post-1945 era, the intended design effort was infinitely more successful. The development of large international capital markets since the 1960s, however, increasingly frustrated attempts at international control. The emphasis has shifted in consequence to debates about increasing the transparency and effectiveness of markets; but these are exactly the issues that already dominated the nineteenth-century discussions. The essays in this book, written by some of the leading experts in the field and covering over a hundred years of economic history, examine the history of the international financial system in terms of the current debate about globalization and its limits Caveat emptor: To those who forget the maxim, each new financial crisis brings an opportunity to relearn their lesson. Edited By Marc Flandreau, Carl-ludwig Holtfrerich, Harold James. Includes Bibliographical References And Index.