----------------- HES POSTING ----------------- Published by EH.NET (November 2000) Angela Redish, _Bimetallism: An Economic and Historical Analysis_. Cambridge: Cambridge University Press, 2000. xii + 275 pp. 4.95 (cloth), ISBN: 0-521-57091-3. Reviewed by Lawrence H. Officer, Department of Economics, University of Illinois at Chicago. <[log in to unmask]> Any historian of monetary standards needs not only to read _Bimetallism: An Economic and Historical Analysis_ but also to keep a copy nearby. The book, based on a number of previously published articles of the author (who is Professor of Economics at the University of British Columbia), provides an analytical and descriptive history of the monetary standard, primarily in England and France, secondarily in the United States, with some attention also to the countries of the Latin Monetary Union. Redish sees a dichotomy between the economics literature, which is scanty on the details of a commodity (metallic) monetary standard, and the historical literature, which is overly detailed. "The book attempts to straddle the gap between these two literatures, to allow for a more complex monetary system than the economists' 'commodity money' and to find generalities that are buried in the historians' details" (p. 12). Redish succeeds admirably in this goal. Chapter 1 outlines the themes of the book and offers a sweep of the monetary-standard history of Western economies. Two important questions that will be addressed are (1) why bimetallism evolved into the gold standard, and (2) why the gold standard did not occur earlier than it, in fact, did. The answers hinge on two elements not generally viewed as central to monetary-standard determination: the role of small-denomination money, and the technology of coining money. Redish devotes chapter 2 to theoretical issues. She explains the need for multiple denominations of a medium of exchange. For a commodity standard, this means either multiple commodities (gold, silver, and copper coins) or a single commodity with variously sized pure coin, various-fineness pure coin, or convertible token coin. The latter, monometallic, standard has problems of coin size (too small or too large) and of susceptibility to counterfeiting. Therefore the former, multicommodity, standard was adopted. Its big problem is divergence between the fixed mint ratio of gold and silver and the market relative price of the metals. A good summary of the literature on Gresham's Law is provided. The author notes the traditional response of monetary authorities to an undervalued coined metal: depreciate the undervalued metal. Sometimes this policy was followed also to raise revenue for the monetary authority. Chapter 3 considers the historical experience of problems with large-denomination coin. The bimetallic solution led to chronic undervaluation. The English and French experience from the mid-fourteenth to the early-nineteenth centuries is examined meticulously. Especially praiseworthy is a new data set on mint price and mint equivalent (the difference between which is seignorage), including the fineness and weight of gold and silver coins issued in these countries. Running to 15 pages, this tabulation will prove immensely useful to researchers. Other tables provide details of great debasements of coinage in the countries. The corresponding experience of England and France with small-denomination coin is explored in chapter 4. Full-bodied coins had the problem of size (too small if silver, too large if copper), while token coins could be replicated and converted into full-bodied coins to the disadvantage of the monetary authority, or, if not convertible, could be overissued by the authority. Again there are useful tables and in this chapter, as elsewhere, the author exhibits a strong understanding of both the contemporary and current literature. Chapter 5, on the transition to the gold standard in England, is extremely interesting and provocative. As Redish summarizes: "After centuries of uncertainty about how to issue small-denomination coins, the early nineteenth century saw the British government adopt the principles of a 'sound' token currency. The raison d'Otre of bimetallism had been removed and England was on the gold standard." Very important in Redish's view (and she persuades this reviewer) was new technology for minting coin, which made token coins difficult to counterfeit. Also pertinent was the willingness of the Bank of England to convert silver coins (and bank notes) at par into gold. In chapter 6, Redish studies the transition to the gold standard in France. The French mint modernized later than the English. After the mid-nineteenth century the Latin Monetary Union countries (France, Belgium, Italy, Switzerland) switched from a de facto silver to a de facto gold standard. Redish disputes the conventional wisdom that the Union was an attempt to achieve international bimetallism. Rather, she argues that the Union constituted an optimal currency area and its formation reflected contemporary interest in economic integration. The U.S. experience is discussed in chapter 7. This history has been much discussed elsewhere. The author's contributions are important, nevertheless. She places the history in its international context, emphasizes the role of mint technology, and provides an excellent analysis of legislative developments. The U.S. experience is consistent with the author's analysis, as is that of the other countries examined. "In the United States, as elsewhere, the use of token silver coins eliminated the medium of exchange basis for bimetallism" (p. 234). Chapter 8 is the concluding chapter. It not only summarizes the work but also carries the history to the late nineteenth century and beyond, through abandonment of the gold standard, to the current interest in currency unions and currency boards. Fittingly, Redish observes that, at least in this respect, history does not repeat itself. These developments do not mean a return to the nineteenth century; the situation is different from the past. In sum, Redish has produced a wonderful book that any scholar of monetary standards will admire. Nevertheless, Redish's work leaves some questions open. First, the relationship between the monetary standard and the macroeconomy is not addressed. There is some attention to the seignorage gain of the monarch in comparison to normal revenue, but that is all. The impact of the monetary standard on prices, wages, and output is not considered. Granted, that would go beyond the author's theme, but the issue is not unimportant. Second, data, or lack thereof, on circulation (as distinct from issue) of large and small-denomination coin are not discussed. Third, the author makes some tantalizing observations that cry out for elaboration. For example, the relationship of England with Brazil, a gold-producing country, as a factor leading to England's adoption of the gold standard, is mentioned only in passing. However, these are issues that can be explored in future research, and that research will certainly benefit from Redish's work. All in all, my reaction to _Bimetallism: An Economic and Historical Analysis_ is unqualified admiration. Lawrence H. Officer, Professor of Economics at University of Illinois at Chicago, is author of _Between the Dollar-Sterling Gold Points: Exchange Rates, Parity, and Market Behavior_ (Cambridge: Cambridge University Press, 1996) and co-editor of _Monetary Standards and Exchange Rates_ (London: Routledge, 1997). Copyright (c) 2000 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ([log in to unmask]; Telephone: 513-529-2850; Fax: 513-529-3308). Published by EH.Net (November 2000). All EH.Net reviews are archived at http://www.eh.net/BookReview ------------ FOOTER TO HES POSTING ------------ For information, send the message "info HES" to [log in to unmask]