Abstract
The earliest, recorded economic transactions among nations shows that cross-border trade and flow of capital can be traced back to the period of Mongol Empire and the Yuan Dynasty in China. However, globalization in the real sense cannot be achieved without distinctive international division of labor and continuous flow of goods (services) and capital across the national border. In this sense, the first wave of globalization took place in the 1970s.
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Notes
- 1.
Translator’s note Kennedy (1987).
- 2.
It is worth noting that as early as 1717, the prestigious Sir Isaac Newton, who then was the Master of The Royal Mint, linked Pound Sterling to gold, which led to the gradual retreat of silver from circulation. For this reason, some believe that ever since then, Britain had instituted the de facto single Gold Standard. See detailed comments by Friedman and Kindleberger.
- 3.
Please see Meissner (2002) for history of major powers’ transition to the gold standard in the second half of the 19th century.
- 4.
The other two types of Gold Standard are the Gold Bullion Standard and Gold Exchange Standard. They will be described in detail later.
- 5.
For example, the severe deflation suffered by the U.S. at the end of the 19th century.
- 6.
Giovannini (1986) in his quantitative analysis shows that the Bank of England did not abide by the “Rule of the Game” under the Classical Gold Standard.
- 7.
Quantitative analysis by López-Córdova and Meissner (2003) shows that between 1880 and 1910, 20% of global trade increase can be attributed to the adoption of the Gold Standard. This conclusion is basically consistent with the findings by Estevadeordal, etc., (2003). Taylor (1996) also found after studying the relations between “investment” and “consumption” that during the Gold Standard Era, international capital had been in constant flux and the markets were increasingly integrated. Similarly, Meissner (2002) also analyzed the globalization of trade and capital market and its relations with the adoption of the Gold Standard.
- 8.
Among all of the UK’s overseas investments, British investment in Argentina is especially spectacular. Between 1857 and 1910, the investment has risen from 26.1 million pounds to nearly 300 million pounds. For details, see Man’s Past and Present: A Global History of World since 1500 (Chinese Translation) by L.S. Stavrianos.
- 9.
For example, between 1913 and 1919, paper currency of pound sterling in circulation increased by 2.7 times, French Franc 6.1 times, and Deutsche Mark 14.5 times. Please see Kindleberger (2006).
- 10.
It is worth noting that, between 1914 and 1925, Britain’s existing gold standard was not legally suspended; yet, requests to redeem gold with paper currency from the Bank of England were often turned down under pretexts of “moral persuasions” like patriotism. Export of gold was prohibited as it was regarded as “trade with the enemies”. For further information, please see Officer (2008).
- 11.
Keynes estimated that in 1919, the Entente Powers owed the US 1.9 billion pounds. Please see Kindleberger (2006).
- 12.
Williams (1944).
- 13.
Generally that was what happened then. However, the US also made concessions as to the British proposal, in respects like introducing adjustable fixed exchange rates and regulating international capital flow.
- 14.
Mason and Asher (1973).
- 15.
Kindleberger (1986).
- 16.
Kindleberger (1986).
- 17.
Gilpin (1989).
- 18.
Zeng and Wu (2006).
- 19.
Mancur Olson (1996).
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Li, Y., Zhang, X. (2017). The Rise and Fall of Monetary Hegemony. In: Imbalance and Rebalance. Springer, Singapore. https://doi.org/10.1007/978-981-10-6150-9_1
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