Monetary Controversy Research Articles

The Yellow Blaze: Naturalism's Response to Gold Economics in Frank Norris's McTeague

The Yellow BlazeNaturalism's Response to Gold Economics in Frank Norris's McTeague Todd Spooner (bio) "'It was a yellow blaze like a fire, like a sunset; such a glory, all piled up together, one piece over the other,'" recounts Maria Macapa between swallows of whiskey. "'Why, if the room was dark you'd think you could see just the same with all that glitter'" (Norris 29). Whether Maria's colorful tale of her youth in Mexico is real, or is simply imagined through a haze of dementia and alcohol, matters little in the case of the 1899 novel, McTeague. The transparent reality of Frank Norris's work is that the glorious yellow blaze serves as the predominant image of this entropic novel. McTeague's gold infatuation is not so surprising considering the late nineteenth-century monetary controversy among silver proponents and gold proponents. The prospect of operating exclusively on a single commodity monetary platform instilled fears of money shortages, deflation, and economic depression. The controversy eventually settled on demonetization of silver and sole reliance on the gold standard. As the single standard, gold then assumed a precarious identity as both artificial (money) and natural resource (object). This paradoxical nature enables the predominant tension in McTeague. Both relationships between McTeague-Trina and Zerkow-Maria enact this dichotomy and ultimately lead to adversarial behaviors of consumption (injection) and saving (leakage). Trina and Maria, through gold suppression, represent leakage from the economy. McTeague and Zerkow, through extreme resistance to leakage coupled with McTeague's former career as a gold miner, represent injection. Despite the Progressive Era's socioeconomic transformations of urbanization, industrialization, and domestic territorial expansion, McTeague is arguably more concerned with the monetary controversy pitting monometallism against bimetallism. Bimetallists promoted the continued minting [End Page 142] of both gold and silver while monometalism supporters clung exclusively to gold. When monometalism eventually prevailed, gold appropriated its perplexing dual role of glittering fetishized object as well as single commodity money transferable for goods and services. This ambiguous nature provokes compulsory responses from Norris's severely uncultivated characters. Gold, perceived as the superior element by goldbugs through Darwinian discourse, counters the primitive evolutionary status Norris assigns his ethnic characters. Trina, through hoarding practices, actualizes fears of the silverites of a constricting money supply. McTeague, through his background as a gold miner, exemplifies expansion of the money supply and promotion of gold as the standard. Although interpretations frequently vilify greed as the atavistic flaw of the novel's ethnic characters, it is rather the precarious nature of gold that compels adversarial responses of object-inspiring leakage and money-inspiring injection which ultimately determine the savage actions in McTeague. The examination of gold with respect to monetary economics is not novel interpretive territory for McTeague. It is no mystery that gold serves as the principal symbol of the novel, and its dichotomous nature prompts the question—why does the miser save? In his influential work The Gold Standard and the Logic of Naturalism (1987), Walter Benn Michaels has rigorously examined the natural versus artificial qualities of gold and more broadly the relationship between economics and determinism in McTeague. Michaels's work is more comprehensive than the monetary debate alone, instead leveraging Foucauldian discourse to interrogate the logic of naturalism in what he suggests is a false personification of the economy. Michaels expounds upon the economy's ability to serve as subject and ultimately critiques naturalism on this ground. The focus here is more finite in scope as it portends to examine McTeague through the monetary debate on its own terms. Although the Gilded Age is most frequently characterized as a period of progress and expansion, between 1873 and 1879 it was tormented by an international economic depression. As Alan Trachtenberg has expressed, the work of government during this period "seemed concerned mostly with tariffs and money policy" (165). Monetary policy at the time was myopically focused on commodity-based money or, as Michael O'Malley has conveyed, "insistence on a specie economy and the intrinsic value of precious metal" (370). During the years preceding the publication of McTeague, culminating in 1896, the United States was embroiled in a monetary debate between monometallists and bimetallists. Prior...

J. Laurence Laughlin versus Irving Fisher on the quantity theory of money, 1894 to 1913

AbstractIn the controversy leading to the Federal Reserve Act of 1913, J. Laurence Laughlin of the University of Chicago and Irving Fisher of Yale were the leading opponent and proponent, respectively, of the quantity theory of money as the theoretical basis for reorganizing the US monetary system. Laughlin identified the quantity theory with bimetallist claims that monetizing silver would have lasting real benefits. Laughlin offered a cost of production theory of the value of gold as an alternative to the quantity theory, while his students published empirical critiques of the quantity theory. Fisher upheld the quantity theory as explaining price movements while distancing the theory from assertions of long-run non-neutrality of money. Laughlin and Fisher vigorously debated monetary theory and monetary reform, notably at American Economic Association meetings. Their confrontations illuminate the monetary controversies preceding the Federal Reserve Act, which reflected the views of Laughlin and Willis (adviser to Congressman Carter Glass) while rejecting the mandate to stabilize the price level proposed by Senator Owen and his adviser Fisher.

Momentary equilibrium versus the Wicksell connection

The development of monetary economics is closely associated with a possible conflict between the explanation of relative prices by means of demand and supply as conditioned by substitution and scarcity on the one hand, and the average level of money prices seen as being explained by the supply and demand for money on the other. While classical economists avoided this conflict by distinguishing between real and monetary spheres in an economy, others have followed Wicksell’s lead to restrict monetary economics to the study of disequilibria and adjustment problems. By showing the consistency between Keynes’ General Theory and Hayek’s ‘Economics and Knowledge’, this paper provides a rationale for focusing on monetary controversy outside the ‘Wicksell Connection’.

A Sraffian interpretation of classical monetary controversies

The aim of this paper is to explore the contrasting views of inflation, exchange rate misalignments and determinants of gold flows held by different branches of the classical school during the first half of the nineteenth century. The properties of money neutrality and money endogeneity within the classical system are studied by reinterpreting these controversies through the analytical framework of the surplus approach as reconstructed by Sraffa [Production of Commodities by Means of Commodities. Cambridge: Cambridge University Press, 1960] and his followers.

Metalistas x papelistas: origens teóricas e antecedentes do debate entre monetaristas e desenvolvimentistas

O artigo analisa o debate entre metalismo e papelismo, ocorrido no Brasil, na segunda metade do século XIX, e defende que esta última foi uma das correntes que contribuíram para a gênese do desenvolvimentismo. Para tanto, retoma as controvérsias monetárias da Inglaterra, desde o início daquele século, e nelas identifica as origens teóricas do debate brasileiro, com destaque especial à questão referente à neutralidade ou não da moeda. A seguir, mostra como esse foi adaptado às peculiaridades da economia brasileira, com ênfase à opção dos papelistas pelo crescimento, rompendo com a ortodoxia da época. A influência no desenvolvimentismo nascente é trabalhada empiricamente por meio de manifestações assumidas por Getúlio Vargas, já que esse foi o personagem central do Estado desenvolvimentista, que marcou a experiência histórica brasileira após 1930.

Bank liquidity risk: From John Law (1705) to Walter Bagehot (1873)

By granting credit and issuing money, banks take a liquidity risk - that is, the risk of being unable to reimburse its notes in coins. Five different explanations of a bank liquidity crisis have been provided by different authors, since John Law and up to Walter Bagehot. First, according to Law (1703) and Steuart ([1767] [1998]), the distinction between money of account (the pound sterling) and money of payment (the guinea) may induce a bank run. Second, according to Cantillon (1730), Hume ([1752] 1972), Ricardo (1810-1823) and the Currency School (1837-1858), the bank reserve becomes insufficient as a consequence of a diminishing value of money allied with over issues. Third, according to Thornton ([1802] 1939, 1991) and the Banking School (1840-1857), it can occur as a consequence of a falling exchange rate that is not linked with over issues. Fourth, according to Smith (1776) and the Banking School, discounting of fictitious bills, by decreasing the shareholders' funds, leads to bank illiquidity. Lastly, according to Thornton ([1802] 1939, 1991) and Bagehot (1873), the liquidity crisis is a consequence of bank panics: a "flight" to money for Thornton, a "flight" to credit for Bagehot. The analysis of these five different explanations sheds new light on classical monetary controversies.

LA TEORIA MONETARIA DELL’ILLUMINISMO LOMBARDO

The Monetary Theory of the Lombard Enlightenment. The relationship. between economic arrangements and administrative decisions is at the core of the contributions of the Lombard economists of the eighteenth century, and it is also the main focus of this essay. Here, we wish to emphasize the importance of the history of ideas and of the history of facts in view of theory formulation and policy proposal within a framework of political economy. Theory must serve, together with history, to the governance of institutions aimed at the orderly working of economies and markets. The relationship. between economics and administration is at the root of the Milanese discussions on monetary policy that took place in the 1760s, and to which both Cesare Beccaria and Pietro Verri contributed. The interest of these discussions is twofold. On the one hand, as John Hicks pointed out, monetary disturbances throw light on the nature of money and on the problems monetary theory must address in moving from one context to another. On the other hand, monetary disturbances are important in highlighting the linkages between monetary theory and the governance of money in specific historical contexts. The writings of the Lombard Enlightenment economists are a case in point. For the Milanese monetary controversy highlights important theoretical issues concerning the governance of ‘imaginary money’, while also emphasizing the specific features of a context characterized by the integration between monetary and physical transfers on the international, and particularly European, scale. This controversy calls attention to monetary disturbances as triggers of change in monetary theory, but it also calls attention to the role of historical and institutional context in determining whether a given monetary policy may be effective or not. Monetary crises may trigger important developments in theory. At the same time, the crises highlight the objective character of structural conditions, which cannot be either unwillingly disregarded or deliberately violated. It is the task of the political economist to identify ‘a correct set of “economic laws” through the analysis of phenomena’, and outline on their basis ‘civil laws for the governance of the economy’(Quadrio Curzio). Section one of this essay (‘Monetary Disorders and Monetary Theory: A Premise’) outlines a conceptual framework for discussing the relationship. between theory, policy and historical context. Section Two (‘Economic Laws and Civil Laws’) discusses the monetary contributions of Cesare Beccaria and Pietro Verri and investigates the link between the structural properties of that ‘very delicate and complex device’ (Einaudi) that is the specific matter of monetary policy, and the civil or administrative laws and governmental decisions though which monetary policy comes into effect. Section Three (‘Monetary Theory and the Fundamental Ideas of Political Economy’) examines the links between the structure of economic systems as systems of interdependence among productive sectors and the structure of monetary systems as ‘systems of governance’ of that interdependence. Section Four (‘The Problem of “Debasement”; Monetary Disturbance and Real Standards’) focuses on the monetary controversy that triggered Beccaria’s and Verri’s contributions, and examines their attempt to identify a real standard for determining the relative value of the different currencies used for transactions on European markets. Section Five (‘Political Economy, Monetary Systems and the Practice of Monetary Policy’) considers possible developments of Beccaria’s and Verri’s contributions for what concerns the distinction between money as standard of measurement and money as means of payment. Section Six (‘Concluding Remarks’) draws the essay to close by discussing the integration between general principles of political economy and specific characteristics of ‘local’ context to be found in the monetary discussions of the Lombard Enlightenment.

The Development of Monetary Economics: A Modern Perspective on Monetary Controversies

The Development of Monetary Economics: A Modern Perspective on Monetary Controversies

The development of monetary economics: a modern perspective on monetary controversies – By Denis P. O'Brien

The development of monetary economics: a modern perspective on monetary controversies – By Denis P. O'Brien

The Quest for Gold: Monetary Debates in Nineteenth-century Brazil

ABSTRACT The paper examines some aspects of the monetary controversies which took place in several countries during the nineteenth century. In Brazil advocates of the gold standard and monetary restraint, known as metalistas, prevailed over papelistas, whose major desire was monetary expansion and credit creation. It will be argued that previous treatments of monetary debates in nineteenth-century Brazil have overlooked a crucial point, namely, the defence (or otherwise) of convertibility of the mil-réis. This has led to erroneous interpretations of the ideology underlying monetary management in the period.

Money, Banking and Inflation: Essays in the History of Monetary Thought

Money, Banking and Inflation focuses on such traditional central banking concerns as money stock control, price level stabilization, interest rates smoothing, exchange rate targeting, lender-of-last-resort responsibilities, limitations imposed by short-run tradeoffs and non-neutralities, and appropriate responses to supply shocks. Virtually all the essays take an historical-doctrinal perspective which, besides showing how these theories developed over time, allows them to be ranked according to their effectiveness in monetary controversies old and new.

The Methodological Roots of J. Laurence Laughlin's Anti-quantity Theory of Money and Prices

From the 1880s until after the creation of the Federal Reserve System in 1913 the United States was a hotbed of monetary controversy. The secular price deflation that began in 1865 prompted a host of efforts to increase the money supply, in the belief that more money would check the decline of prices. The agitation for free coinage of silver that arose in the 1870s and carried into the 1880s and 1890s generated a maelstrom of arguments and counterarguments. Such theoretical support as the “cheap money advocates” provided was in the form of a crude application of the quantity theory of money. Not surprisingly, using the quantity theory in such a manner brought the theory itself under fire.

The keynes versus robertson controversy in monetary economics — with a post-scriptum on the Dutch monetary controversy in the nineteen fifties

This article sets out to make a comparison of the controversy between Keynes and Robertson in the nineteen thirties and the discussion between a Keynesian (Witteveen) and a monetarist (Holtrop) in the Netherlands during the nineteen fifties. It is shown that by developing a loanable funds theory and thus accepting the Keynesian relationship between money and securities Robertson undermined the monetarist conclusion of his former monetary analysis. In the Dutch debate the rate of the market for securities was hardly touched. The distinction between Keynesian and monetarist analysis was seen as an analysis of the real versus the monetary side of economic life. This falsely suggested that Keynesian theory and the monetary analysis of the Netherlands Bank are complementary theories.

The English money stock 1834–1844

In determining the relative importance of proximate determinants, this study has suggested that the public was most important, followed by the banks and high-powered money. This seems to be consistent with Cagan's findings for a gold standard system over a period in which the money stock decreased at a very slow rate and banking crises were prevalent and serious. With respect to the monetary controversy, the comparison of views of the two schools with the empirical results suggests that the Banking School's estimation of the relative importance of the proximate determinants for causing changes in bank liabilities was more accurate than the Currency School's. Among the numerous questions left unanswered by this study are the following: What economic factors affected the proximate determinants in this period? What is the relationship between the money stock and economic activity? What is the direction of causality between economic activity and the moneey stock? Answers to these questions require further work.

The Politics of the Bullion Report

The Bullion Report of 1810 is important to economists not because of the originality of its thought or the subtlety of its analysis, but because of its place in the history of monetary controversy. It is a symbol of a group of loosely associated ideas that might be described in general terms as the tenets of pre-1914 monetary orthodoxy. The core of these ideas was that the credit policy of a central bank is the major influence on a country's prices and exchange rates, and that the central bank's discretion in credit policy is limited by the overriding importance of maintaining a fixed price of gold. Succeeding generations of economists have given different interpretations to the analysis of the Bullion Report, and to the motives of its authors and supporters. In the late nineteenth and early twentieth century the Report was generally praised as inspired wisdom of original and powerful analysts and far-sighted economic statesmen, but in the 1920's it came to be pictured as special pleading by Ricardo, as a financial manipulator, and by political obstructionists, who would have sacrificed the financial greatness and national safety of England to their economic and partisan interests. Both extremes of interpretation reflect to a large degree the prevailing economic philosophy and the international economic situation of the period when they had their greatest vogue; both are coloured by a common error of attributing to Ricardo a role, either for good or for evil, much more important than he played in producing the Bullion Report; and both to a large degree are made without due regard to the complex of forces that led to the Report, and that supported or opposed it after its publication. In the controversy of 1810 and 1811 the principal theoretical analysis of the Report, that monetary policy could control exchange rates, was repudiated by Parliament, and the recommendation for a resumption of specie payments in two years was rejected. With the return to peace the analysis and recommendation of the Report were accepted in the Resumption Act of 1819, and in the formal recognition by the Bank of England in 1827 of its power to control exchange rates.2 The result was that for the better part of a century after the 1820's the analysis and policy conclusions of the Bullion Report were in the

The Recent British Monetary Controversy: Reply

The Recent British Monetary Controversy: Reply

A Note on the Recent British Monetary Controversy

A Note on the Recent British Monetary Controversy

THE MONETARY CONTROVERSY IN THE U.S.A.

Journal Article THE MONETARY CONTROVERSY IN THE U.S.A. Get access J. S. FFORDE J. S. FFORDE NUFFIELD COLLEGEOXFORD Search for other works by this author on: Oxford Academic Google Scholar Oxford Economic Papers, Volume 3, Issue 3, October 1951, Pages 221–239, https://doi.org/10.1093/oxfordjournals.oep.a041833 Published: 01 October 1951

The Life and Writings of John Wheatley

STUDIES of recent years on the English monetary controversy of the Bank Restriction period have shown that Ricardo originated little, if any, of the monetary theory that tradition has associated with his name.2 With this has come a recognition of the significance of the writings of a number of Ricardo's contemporaries, in particular Henry Thornton and John Wheatley. Of Thornton there is a sketch in The Dictionary of National Biography, and the recent reprint of his Paper Credit of Great Britain3 has an introduction by Professor Hayek that gives an excellent picture of the man. But of John Wheatley virtually nothing has been known. The short article on Wheatley by J. D. Rogers in Palgrave's Dictionary of Political Economy is limited in biographical details to the simple statement fl. i803-22, and it lists only four of the nine works he is now known to have published. The only information available about Wheatley, other than his published works, was a letter from Ricardo sent to Wheatley at Shrewsbury, a town in the west of England, in September, i82I, in acknowledgment of the receipt of Wheatley's book given to the public early in i822.4 This letter, which led

The Monetary Theory of D. H. Robertson

THE reviewer of Professor Robertson's Essays,1 especially when (as in the present case) he comes to his task a year after its publication, is confronted with something different from the usual task of reviewing. Either in their collected form, or as originally published, these essays will already be familiar to most persons who are likely to read a review in ECONOMICA. They have already won an assured place in economic literature, which in this instance is English literature too; for may we not say that Robertson at his best is unmatched this side of Adam Smith for the combination of profound wisdom with literary charm ? The present volume contains a larger proportion of these best things than any of its predecessors ; their clarity and humanity it would be superfluous to praise. My own favourite is that Harvard address, characteristically entitled The Snake and the Worm . I do not know how often I have read it; I shall go on reading it until I know it by heart. Yet the way to these heights has not been won without effort; we have in this volume plenty of the rude climbing as well as the clear air of the mountain tops. The four essays, Saving and Hoarding (1933), Industrial Fluctuation and the Natural Rate of Interest (I934), Effective Demand and the Multiplier (1936) and Mr. Keynes and the Rate of Interest (1939), stand by themselves apart from the rest. They are a formidable series; one hopes that they will not scare off too many readers who would be delighted and fortified by the other essays. But they are the author's workshop, into which he invites us. My business here must clearly be to accept the invitation. There is contained in these four essays-and in the less alarming Survey of Modern Monetary Controversy (I937) which must be read with them-the outline of a theory of money and fluctuations second to no existing theory in its depth and its fairmindedness. But the theory is never set out in so many terms; we get to know it more by contrast than in itself. In the first essay of the quartet we see the impact of the Treatise on Money on the mind of the author of Banking Policy and the Price-Level; in the second he has been