Abstract
The subject of key currencies would seem to be more closely associated with the work of John H. Williams than with Herbert Giersch. It is nonetheless an appropriate subject for this volume since Professor Giersch is a key economist in a key country with what may well be the next key currency. I propose in this essay to discuss the question of whether the arrangements for international money should be organised hierarchically, with a single key currency standing at the apex of a world system—whether two or more such currencies can serve effectively if no single currency stands out following the weakening of the dollar—and to explore a bit of European financial history in search of insights, analogies or contrasts with the present.
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Notes and References
See John H. Williams, Postwar Monetary Plans and Other Essays, 3rd rev. and expanded ed. (New York: Knopf, 1947) passim. The index for this edition has almost four inches of citations under the headings ‘key countries’ and ‘key currencies’.
Susan Strange, Sterling and British Policy: a Political Study of an International Currency in Decline (London: Oxford University Press, 1971).
See Charles P. Kindleberger, The World in Depression, 1929–1939 (Berkeley: University of California Press, 1973), pp. 154–55.
See Gerard and Victoria Curzon, ‘Options after the Kennedy Round’, in Harry G. Johnson (ed.), New Trade Strategy for the World Economy (London: Allen & Unwin, for the Trade Policy Research Centre, 1969), pp. 34–36.
See Kindleberger, The Formation of Financial Centers: a Study in Comparative Economic History, Princeton Studies in International Finance, No. 36 (1974), repr. in Economic Response, Comparative Studies in Trade, Finance and Growth (Cambridge, Mass.: Harvard University Press, 1978), pp. 66–134.
Pierre Vilar, A History of Gold and Money, 1450–1920, transl. by Judith White (London: NLB, 1976), pp. 2–5.
Fernand Braudel, The Mediterranean and the Mediterranean World in the Age of Philip II, Vol. I (New York: Harper, 1973), p. 131.
Elizabeth E. de Jong-Keesing, De economische Crisis van 1763 te Amsterdam (Amsterdam: Intern. Uitgevers en H. Mij, 1939), p. 220.
On Antwerp, see Richard Ehrenberg, Capital and Finance in the Age of the Renaissance: a Study of the Fuggers and their Connections, transl. from the 1929 German text by R. M. Lucas (New York: Brace, 1928), p. 243; for two others,
see Peter Burke, Venice and Amsterdam: a Study in Seventeenth Century Elites (London: Temple Smith, 1974), p. 104;
Charles Wilson, Anglo-Dutch Commerce and Finance in the Eighteenth Century (Cambridge: Cambridge University Press, 1941), Pt II, Ch. III. Wilson deals here with the transition of Amsterdam from trade to finance.
Charles R. Boxer, ‘The Dutch Economic Decline’, in Carlo M. Cipolla (ed.), The Economic Decline of Empires (London: Methuen, 1970), p. 245.
E. Neville Williams, The Ancien Regime in Europe, Government and Society in the Major States, 1648–1789 (New York: Harper & Row, 1970), pp. 44 and 484.
Braudel, Afterthoughts on Material Civilization and Capitalism, transl. by Patricia M. Ranum (Baltimore: Johns Hopkins University Press, 1977), p. 86.
See Jean-François Bergier, ‘From the Fifteenth Century in Italy to the Sixteenth in Germany: A New Banking Concept’, in Center for Medieval and Renaissance Studies, UCLA (ed.), The Dawn of Modern Banking (New Haven: Yale University Press, 1979), pp. 107–8;
and Philippe Dollinger, The German Hansa, transl. and ed. by D. S. Ault and S. H. Steinberg (Stanford: Stanford University Press, 1970), p. 203.
Karl Helfferich, Georg von Siemens, Ein Lebensbild aus Deutschlands grosser Zeit, rev. and shortened ed. (Krefeld: Scherpe, 1956), pp. 32–34, 41 and 56.
Jean Bouvier, Un siècle de banque française (Paris: Hachette Littérature, 1973), p. 238, calls Paris the international clearing house in 1820–1840, citing
Maurice Lévy-Leboyer, Les banques européennes et l’industrialisation internationale dans la première moitié du XIXe siècle (Paris: Presses universitaires de France, 1964), pp. 437–44.
Most writers date the challenge as occurring in the 1850s, see for example Hans Rosenberg, Die Weltwirtschaftskrisis von 1857–1859 (Stuttgart and Berlin: W. Kohlhammer, 1934), p. 38.
Oskar Morgenstern, International Financial Transactions and Business Cycles (Princeton: Princeton University Press, for the National Bureau of Economic Research, 1959), p. 128, states that Paris emerges as the strongest (his italics) financial centre in the world before 1914 if the fact that its short-term interest rate is the lowest is an indication of strength. Franco Bonelli simply asserts that Paris was the real centre for regulating world liquidity at the beginning of the second half of 1907, but this may reflect a particular Italian view since Italian finances were tied to Paris; see La crisi del 1907: una tappa dello sviluppo industriale in Italia (Turin: Fondazione Luigi Einaudi, 1971), p. 42.
See Walter Bagehot, ‘Lombard Street’, in The Collected Works of Walter Bagehot, Vol. IX, ed. by Norman St John-Stevas (London: The Economist, 1978), p. 63.
See Marcia Stigum, The Money Market: Myth, Reality and Practice (Homewood, Ill.: Dow-Jones-Irwin, 1978), Ch. VI, esp. pp. 108–10 and 427.
See Charles A. Coombs, The Arena of International Finance (New York: John Wiley, 1976), pp. 96–98.
For details of these operations and sources, see Kindleberger, Manias, Panics and Crashes (New York: Basic Books, 1978), Ch. X, ‘The International Lender of Last Resort’.
See Lévy-Leboyer, ‘La balance des paiements et l’exportation des capitaux français’, in Lévy-Leboyer (ed.), La position internationale de la France, Aspects économiques et financiers, XIXe–XXesiècles (Paris: Ed. de l’Ecole des Hautes Etudes en Sciences Sociales, 1977), p. 129.
Frank C. Spooner, The International Economy and Monetary Movements in France, 1493–1725 (Cambridge, Mass.: Harvard University Press, 1972), pp. 5, 125.
See Braudel, Afterthoughts on Material Civilization and Capitalism, op. cit., p. 87; and José-Gentil da Silva, Banque et credit en Italie au XVIIesiècle (Paris: Ed. Klincksieck, 1969), pp. 38–40.
Violet Barbour, Capitalism in Amsterdam in the Seventeenth Century (Ann Arbor: University of Michigan Press, 1966), p. 50.
Jonathan R. T. Hughes, Fluctuations in Trade, Industry and Finance: a Study of British Economic Development, 1850–1860 (Oxford: Clarendon Press, 1960), pp. 243 et seq. and esp. p. 247.
Michel Chevalier, On the Probable Fall in the Value of Gold, transl. by Richard Gobden, 3rd ed. (Manchester: Alexander Ireland, 1859) calls the exchange of gold for silver in France a ‘parachute’ that retarded the fall in the price of gold.
Sir John Clapham, The Bank of England: a History (Cambridge: Cambridge University Press, 1958), Vol. II, pp. 170, 291–94, 329–30 and 344;
and Jacob Viner, Studies in the Theory of International Trade (New York: Harpers, 1937), p. 273.
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Kindleberger, C.P. (1983). Key Currencies and Financial Centres. In: Machlup, F., Fels, G., Müller-Groeling, H. (eds) Reflections on a Troubled World Economy. Trade Policy Research Centre. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-06892-0_4
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