The Anatomy of an International Monetary Regime : The Classical Gold Standard, 1880-1914

Widely considered the crowning achievement in the history of international monetary relations, the classical gold standard (1880-1914) has long been treated like a holy relic. Its veneration, however, has done more to obscure than to reveal the actual nature of the era's monetary system. In The Anatomy of an International Monetary Regime, Giulio M. Gallarotti addresses the nature of the classical gold standard in its international context, offering the first comprehensive and systematic treatment of the subject. Three fundamental questions are essential to the discussion: How did the regime originate? How did it work? Why did it persist? Gallarotti uses an interdisciplinary approach that draws upon politics, economics, and ideology to explain the answers. He challenges traditional assumptions about the period, arguing that cooperation among nations or central banks was not a principal factor in either the origin or stability of the system, and that neither the British state nor the Bank of England were the leaders or managers of the gold standard. Rather, a decentralized process involving the status of gold, industrialization and economic development, the politics of gold, and liberal economic ideology provided converging incentives for starting and maintaining the system. Gallarotti's study presents the most comprehensive and interdisciplinary examination available of the nature of monetary relations in the four decades before World War I. His important, revisionist view will alter the way we think about a crucial period in the growth of the international monetary system. It will be essential reading for scholars and students of economic history and policy. Contents......Page 12 1 Introduction......Page 16 The Organization of This Book......Page 27 2 The Classical Gold Standard as an International Monetary Regime......Page 29 General Overview of the Gold Standard......Page 31 Liquidity and Reserves......Page 40 Adjustment......Page 47 Exchange Rates......Page 55 Capital Controls......Page 58 Confidence......Page 62 Institutional Synthesis of the Gold Standard......Page 67 3 Cooperation under the Gold Standard......Page 71 Cooperation among National Governments under the Gold Standard......Page 73 The Conference of 1867......Page 75 The Conference of 1878......Page 79 The Conference of 1881......Page 85 The Conference of 1892......Page 89 Central Bank Cooperation under the Gold Standard......Page 91 4 British Hegemony under the Gold Standard......Page 99 The Goals of the British State......Page 101 The Principal-Agent Link: The Bank of England as an Agent of British Hegemony......Page 106 Great Britain and the International Monetary Conferences of 1867, '78, '81, '92......Page 110 5 Hegemony and the Bank of England......Page 124 Indirect Hegemony: The Bank of England and Central Banking in Great Britain......Page 126 Acknowledging Public Responsibility......Page 127 Managing the British Monetary System......Page 132 Acknowledging Public Responsibility......Page 144 International Reserve Management and Lender of Last Resort......Page 146 Managing the International Monetary System......Page 148 Managing International Crises......Page 152 6 The Origin of the Gold Standard......Page 154 The Ideology of Gold......Page 156 Industrialization and Economic Development......Page 160 The Politics of Gold......Page 164 The 1860s: A Decade of Growing Nervousness......Page 173 The Monetary Chain Gang......Page 178 The 1870s......Page 182 The Permissive Foundations of the Gold Standard......Page 188 7 The Stability of the Gold Standard......Page 194 The Stable Supersystem of International Politics......Page 198 The Stable Supersystem of International Economics......Page 202 The Gold Standard and Core Nations......Page 206 Synchronous Macroeconomies......Page 213 Stabilizing Expectations......Page 217 Tier 2: The Normative Foundations of Adjustment......Page 220 8 The Gold Standard and Regime Theory......Page 231 Hegemonic Regimes......Page 232 Cooperative Regimes......Page 237 Diffuse Regimes......Page 240 British Series......Page 250 Estimation Techniques......Page 251 Equations......Page 254 Granger Causality Tests......Page 275 World Price Indices and British Series......Page 276 Bank of England Discount Rate and British Series......Page 277 Bank of England Reserves and British Series......Page 278 Figures A.1–A.8......Page 279 Notes......Page 284 References......Page 338 B......Page 354 C......Page 355 G......Page 356 J......Page 357 P......Page 358 U......Page 359 Z......Page 360 Widely considered the crowning achievement in the history of international monetary relations, the classical gold standard (1880- 1914) has long been treated like a holy relic. Its veneration, however, has done more to obscure than to reveal the actual nature of the era's monetary system. In The Anatomy of an International Monetary Regime, Giulio M. Gallarotti addresses the nature of the classical gold standard in its international context, offering the first comprehensive and systematic treatment of the subject. Three fundamental questions are essential to the discussion: How did the regime originate? How did it work? Why did it persist? Gallarotti uses an interdisciplinary approach that draws upon politics, economics, and ideology to explain the answers. He challenges traditional assumptions about the period, arguing that cooperation among nations or central banks was not a principal factor in either the origin or stability of the system, and that neither the British state nor the Bank of England were the leaders or managers of the gold standard. Rather, a decentralized process involving the status of gold, industrialization and economic development, the politics of gold, and liberal economic ideology provided converging incentives for starting and maintaining the system. Gallarotti's study presents the most comprehensive and interdisciplinary examination available of the nature of monetary relations in the four decades before World War I. His important, revisionist view will alter the way we think about a crucial period in the growth of the international monetary system. It will be essential reading for scholars and students of economic history and policy