------------ EH.NET BOOK REVIEW --------------
Published by EH.NET (December 2004)
Mark Duckenfield, editor, _The Monetary History of Gold: A
Documentary History, 1660-1999_. London: Pickering & Chatto, 2004.
xix + 536 pp. =A399/$160 (hardcover), ISBN: 1-85196-785-0.
Reviewed for EH.NET by Lawrence H. Officer, Department of Economics,
University of Illinois at Chicago.
A Review Article
[This review article contains several tables, which can't be
displayed properly in plain text. The tables can be viewed in the
archived copy at http://www.eh.net/bookreviews/library/0878.shtml.]
A new collection of historical documents is always welcomed by
scholars. This is especially so if the collection is theme-oriented,
so that specialists can acquire new information or readier access to
existing information. Therefore the present volume, presented as a
documentary history of gold, warrants careful review. The editor,
Mark Duckenfield, explains that the project was financed by the World
Gold Council's Public Policy Centre "to raise awareness among
journalists, scholars and the informed public of gold's role as a
monetary asset" (p. xvii). This review will be concerned solely with
the book's place in the scholarly literature.
What is the World Gold Council? According to its website
(http://www.jewelrynet.com/WorldGold/), "the World Gold Council is a
non-profit association of the world's leading gold producers,
established to promote the use of gold ... and its promotional
activities cover markets representing some three quarters of the
world's annual consumption of gold." It is interesting, therefore,
that the volume contains no documents that deal with gold production,
gold consumption, or gold investment. Indeed, these categories do not
even enter the index, which, at over eleven pages, is not short. Only
in one editorial passage does the editor discuss the role of gold as
an investment. Duckenfield sees gold and the stock market as
investment alternatives, and observes that "the stock market's
decline since 1999, as well as the increase in international tensions
as a result of the terrorist attack on the World Trade Center in New
York on 11 September 2001 and the second Gulf War in 2003, brought a
resurgence in the gold market as investors returned to gold as a
traditional safe-haven in troubled times" (p. 327). He explicitly
states that "gold ... [is] a non-interest bearing asset."
Notwithstanding the sponsorship, this is a book that adopts a
scholarly viewpoint and can be appreciated by historians.
In this review the book is placed in context with existing
collections of historical documents that have the same,
gold-oriented, theme -- in whole or in part. These books are listed
in Table 1, in chronological order; full citations are provided in
the references at the end of this review.
[ Table 1 is available at
http://www.eh.net/bookreviews/library/0878.shtml#Table1 ]
In terms of absolute size Duckenfield is in the middle of the pack,
fourth out of seven in total pagination. With 100-percent devotion to
documents, the book's relative size in this respect is shared by only
two other collections: Huntington and Mawhinney (subsequently
referenced as "Huntington") and the massive, four-volume work of
Krooss. Considering the other books in Table 1, what else is in them
apart from historical documents and associated editorial commentary?
U.S. Senate contains proceedings of the International Monetary
Conference of 1878. These are presented as contemporary recording
rather than historical documentation; therefore these proceedings are
not included in the historical document pagination. Horton and
Laughlin are each mainly a monetary treatise. Shrigley offers
non-document information, quantitative and qualitative, on gold and
the Bank of England (of which, more below). It may be noted that S.
Dana Horton, a U.S. delegate to international monetary conferences,
not only authored and edited the historical documents in Horton
(1887) but also had been responsible for the historical documents
included in U.S. Senate (1879).
Table 2 summarizes the anatomy of Duckenfield and the six other
works. In Table 1 all historical documents are included to obtain the
page count; in Table 2 only those documents that fall within
categories covered by Duckenfield are incorporated. (These are called
"pertinent documents," in this review.) Some judgment on the part of
this reviewer is involved. For example, Duckenfield has one document
pertaining to the greenback period as a suspension of specie
payments; documents under that category are included for the other
works. An opposite example: Duckenfield has a document on goldsmith
banking; this reviewer judges that insufficient to incorporate the
category "commercial banking." Again, measured by number of
documents, Duckenfield is fourth among the seven collections.
[ Table 2 is available at
http://www.eh.net/bookreviews/library/0878.shtml#Table2 ]
All the collections except Shrigley are divided into sections, some
chronological, some by country, some by topic, as Table 2 shows. Only
two of the works have systematic subsections. Within sections and
subsections, ordering is uniformly chronological. Regarding editorial
commentary, Duckenfield is unique, and deserves praise, for having
editorial introductions in all three manifestations: for the entire
volume, by section, and for the individual documents within each
section. Because entries in a collected volume of documents generally
are excerpts rather than the entire documents, this reviewer
appreciates Duckenfield's practice of calling attention to
non-reprinted parts of documents.
The three sections of Duckenfield warrant discussion, here in the
context of editorial commentary. The introduction to the first, "The
Rise of the Gold Standard, 1660-1819," is concerned entirely with
British monetary history. Duckenfield observes England's movement
from bimetallism to a de facto gold standard in 1717. He notes the
interruption of the Bank Restriction Period in this process. It is
reasonable to confine discussion to Britain, because it was the only
country on a gold standard well into the nineteenth century. However,
it would have been in order to discuss the bimetallist systems of
other countries.
The second section, "The Heyday of the Gold Standard, 1820-1930," has
a broader introduction, including topics such as the expansion of the
gold standard, the price specie-flow mechanism, the U.S. shift from
an effective silver to an effective gold standard (with the
interruption of the greenback period), the deflation of 1873-1896,
and London as the center of the gold standard. The end of the
classical gold standard with World War I is noted, as is the return
to the standard after the war. Duckenfield discusses the issue of
convertibility but can be criticized for ignoring that of credibility
(of countries' commitment to convertibility at the existing mint
price), which underlay the success of the classical gold standard.
In his introduction to the third section, "After the Gold Standard,
1931-1999," Duckenfield sees a weak institutional structure as the
cause of instability of the interwar gold standard. "Domestic social
tensions" and the "prospect of substantial budget deficits" drove
countries off the gold standard. War and "new social realities" meant
that political and economic institutions that supported the gold
standard could not overcome political demands that occurred during
the Great Depression. Again, reference to the issue of credibility,
now the lack thereof, in government's commitment to convertibility
would have been in order.
The introduction also discusses the International Monetary Fund, the
role of the dollar, and the "Triffin dilemma" (the trade-off between
liquidity and confidence). On the U.S. suspension of gold
convertibility in 1971, Duckenfield writes: "Ironically, although it
was the weakness of the dollar relative to gold that brought about
the collapse of the Bretton Woods system, it was gold that was
removed from its primary position as a monetary asset while the
devalued dollar became even more crucial to the smooth operation of
the international economy" (pp. 326-327). It can be argued, rather,
that it was U.S. commitment to a fixed dollar price of gold that
artificially made gold the first class monetary asset.
Table 3 divides the pertinent documents of each work into
chronological sections (pre 1820, 1820-1930, post-1930) corresponding
to the Duckenfield partitioning, except that Horton's original
partitioning is retained, because it is so close to that of
Duckenfield chronologically. Of course, the four documents antedating
Shrigley lack the third (post 1930) section, because of the date of
publication.
[ Table 3 is available at
http://www.eh.net/bookreviews/library/0878.shtml#Table3 ]
What are the components of official versus private documents?
Official documents consist of country and international items.
Country official documents include acts, resolutions, announcements,
reports, memoranda, communications, statements, declarations,
representations, speeches, notes on petitions, parliamentary diaries,
proclamations, mint correspondence, and press conferences.
International documents (all official) consist of treaties,
conventions, resolutions, agreements, press releases, communiqu=E9s,
and decisions. Private documents include treatises, books, pamphlets,
diaries, discourses, petitions, speeches, reports, correspondence,
memoirs, newspaper articles, and memoranda.
As one would expect in collections of documents, the vast majority of
documents are official, in all the works. Duckenfield is unique in
having private documents constitute a significant proportion -- over
one-third the total number -- of documents in the pre-1820 period.
Table 4 offers an alternative division of pertinent documents -- by
country (Britain, United States, other countries), with international
as a separate category. For private documents, the subject country is
taken. For official documents, the country category is the country of
the official document rather than the subject country or countries.
All seven works concentrate on Britain and/or the United States.
Huntington and Krooss deal only with the United States, Shrigley only
with Britain. Laughlin has U.S., other-country, and international --
but not British -- documents; while Horton includes only British and
international documents. The only works with documents in each
category are the earliest and latest: U.S. Senate and Duckenfield. As
would be expected, U.S. Senate has somewhat more U.S. than British
documents overall (but not for the pre-1820 period).
[ Table 4 is available at
http://www.eh.net/bookreviews/library/0878.shtml#Table4 ]
One would predict a balanced British/U.S. division on the part of
Duckenfield, given that neither the book-title nor the sponsor is
specific-country oriented. Then one would be disappointed, because a
British emphasis is present in every period. The asymmetry is
apparent in several ways:
1. There are nine documents of the Bank Restriction Period but only
three from the greenback period and nothing on other U.S. suspensions
of specie payments.
2. There is an entry for the Bank of England charter, but not for the
Federal Reserve Act.
3. There are more entries for Acts of Parliament than for U.S. legislatio=
n.
4. The British Coinage Act of 1870 is reprinted in full; not so the
U.S. Coinage Act of 1873, which admittedly is a longer Act.
In fairness to Duckenfield, it should be noted that, while Winston
Churchill's famous Budget Speech of 1925 returning the United Kingdom
to the gold standard is excerpted, William Jennings Bryan's at least
equally famous "Cross of Gold" Speech is reprinted in full. Also,
there are many entries involving U.S. abandonment of the gold
standard in 1933-1934.
Notwithstanding the generally British orientation of Duckenfield,
Horton is the better source for material on the history of the guinea
-- perhaps the most famous coin in British history, and, along with
the (new) sovereign introduced in 1817, one of the country's two most
important coins. Only seven of Horton's 31 documents on the guinea
are included in Duckenfield. The guinea is notable as a coin for two
reasons. First, its initial value of 20 shillings corresponded to the
pound sterling. Interestingly, the guinea was not the first coin with
this property; that distinction belongs to the old sovereign,
introduced in 1489. Second, the fineness of 11/12th was firmly
established with the guinea (and continuing with the new sovereign);
but again the guinea was not the first coin with that fineness (that
honor belonging to the crown in 1526).
Shrigley, totally specialized on Britain, has a specific theme within
gold. She writes: "The purpose of this collection of documents is to
show the official position of gold as a marketable commodity from the
Incorporation of the Bank of England to the Gold Standard (Amendment)
Act of 1931" (p. vii). Of her 20 documents, 12 are not in Duckenfield.
Table 5 breaks down the "other-countries" category of Table 4 into
specific countries. Duckenfield does not provide a rationale for his
concentration on Switzerland in the 1920-1930 and post-1930 periods
in this respect, nor for inclusion of material on countries such as
Chile and Yugoslavia post-1930. It is also arguable that France and
Germany deserve greater attention than all three works give these
countries.
[ Table 5 is available at
http://www.eh.net/bookreviews/library/0878.shtml#Table5 ]
Table 6, similarly, partitions the "international" category of Table
4. Duckenfield can perhaps be criticized for neglecting the
international monetary conferences of the nineteenth century. Yet he
deserves praise for including the, post-World War I, Treaty of
Versailles -- relevant because of the gold-denomination of the
monetary obligations imposed on Germany.
[ Table 6 is available at
http://www.eh.net/bookreviews/library/0878.shtml#Table6 ]
Duckenfield deserves praise on a number of counts. First, for some
documents, the contents of appendices are listed. (Indeed, that is
sometimes the full text of the entry.) These contents can be useful
references for the scholar. Second, Duckenfield makes use of
generally neglected sources: Bank of England archives and the House
of Lords Record Office. Third, some documents may be new to
historians. Examples: a "confidential telegram" (one of many) sent on
September 20, 1931, from the Bank of England to domestic and foreign
correspondents; the Rothschild letter on fixing the price of gold in
1939, just prior to World War II.
A serious limitation of the Duckenfield volume is the neglect of
quantitative information. Only three documents have a quantitative
aspect: the original Articles of Agreement of the IMF, which contains
the list of country quotas; the IMF Executive Board decision on the
Smithsonian Agreement which lists exchange rates for member
countries; and, perhaps most interesting to historians because
probably not available elsewhere, three documents from the Bank of
England's Archives providing data on gold holdings of countries
occupied by Germany, in 1940. In contrast, the documents in U.S.
Senate contain many useful tables on U.S. exchange rates, gold and
silver prices, and coinage.
Shrigley presents several useful time series (which are not included
in the list of her documents, in Tables 2-4): the annual gold-silver
market price ratio, 1867-1932; the London market price of gold,
annual 1870-1932, daily 1919-1925; and the London market price of
silver, monthly 1833-1933. The last is an insert at the end of the
book, and includes also annual data on silver coined in England, the
amount of bills and telegraphic transfers drawn in England on Indian
governments, exports of silver to the East, imports of silver,
average Bank Rate, and remarks (generally historical). It is a large
and impressive table, which, unfortunately, because not attached to
the volume, may be missing from many copies. Not a time series, but
nevertheless useful, is a list of Governors of the Bank of England
from inception to 1920, along with dates of service.
In conclusion, the Duckenfield volume is a useful addition to
collections of historical documents on gold, and would be best
utilized by scholars in conjunction with existing works of a similar
ilk.
References:
Horton, S. Dana (1887). _The Silver Pound and England's Monetary
Policy since the Restoration, together with the History of the
Guinea, illustrated by contemporary documents_. London: Macmillan.
Huntington, A. T., and Robert J. Mawhinney, eds. (1910). _Laws of the
United States Concerning Money, Banking, and Loans, 1778-1909_.
National Monetary Commission, Senate Document No. 580, 61st Congress,
2nd session. Washington: Government Printing Office.
Krooss, Herman E., ed. (1969). _Documentary History of Banking and
Currency in the United States_, four volumes. New York: Chelsea House
in association with McGraw-Hill.
Lauglin, J. Laurence (1896). _The History of Bimetallism in the
United States_. New York: D. Appleton.
Shrigley, Irene, ed. (1935). _The Price of Gold: Documents
Illustrating the Statutory Control through the Bank of England of the
Market Price of Gold, 1694-1931_. London: P.S. King & Son.
U.S. Senate (1879). _International Monetary Conference=8Aheld=8Ain Paris,=
in August 1878, under the auspices of the Ministry of Foreign Affairs
of the Republic of France_. Senate Executive Document No. 58, 45th
Congress, 3rd session. Washington: Government Printing Office.
Lawrence H. Officer is Professor of Economics at University of
Illinois at Chicago. As Editor, Special Projects, EH.Net, he has
recently completed "What Is Its Relative Value in U.K. Pounds," a
calculator available on the EH.Net website
(http://www.eh.net/hmit/ukcompare).
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Published by EH.Net (December 2004). All EH.Net reviews are archived
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