By Marc Flandreau

Hoping on new statistical and archival fabric, this booklet tells the tale of the operation of the overseas financial procedure of the mid-nineteenth century. It seeks to provide an explanation for how the program used to be capable of climate the influence of the California and Australia gold discoveries.

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Additional resources for The Glitter of Gold: France, Bimetallism, and the Emergence of the International Gold Standard, 1848-1873

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What then was the mechanism which induced compliance with the official ratio? 45 When agents assess their money demand, they hence compare the ex ante equilibrium exchange ratio with the legal one . Obviously, if , no one would want to pay with gold (silver being cheaper), while, if , no one would want to pay with silver (it being a better deal to pay with gold). Bimetallic constitutions thus entail the following rational attitudes: if , then , and, if , then . The following proposition may then be formulated: Proposition 3(based on the same assumptions as Proposition 2) Suppose that authorities have fixed a legal ratio for which a single bimetallic equilibrium exists.

Chevalier and Parieu bitterly reproached the latter for ‘murdering’ his grandfather on the matter both of the monopoly (Plessis 1985b: 54) and bimetallism (Chapter 8). 18 BIMETALLISM IN THEORY but he believed that the bimetallic law fixing the legal ratio was a ‘natural complement’, a necessary adjunct, which enabled dealers to determine the relative price of the two metals. As more recent research has indeed shown, when two sorts of paper money are circulating within the same economy, setting their exchange rate is primarily a matter of convention, and thus of legislation, in line with Wolowski's intuition (Kareken and Wallace 1981).

They correspond with years when the relative abundance of gold led to its being the metal of choice for coinage. Moreover, Mulhall's figures (given here primarily as an indication) ignore the large amount of silver minting that took place in Silver Standard European countries (such as Germany and Holland). 1. 33 Giffen (1892: 56). , Vol. II, 110). 1 ‘Monetary’ and ‘non-monetary’ demand for bullion Gold (tonnes) Silver (tonnes) Coined 1831–40 50 1841–50 350 1851–60 1,633 1861–70 1,008 1871–80 849 TOTAL 3,890 Industry 180 200 280 570 840 2,070 Asia 10 28 100 300 120 558 Coined 2,700 4,800 0 0 1,200 8,700 Industry 2,000 2,200 2,700 3,100 4,500 14,500 Asia 2,200 2,400 11,300 12,300 10,800 39,000 Source: Mulhall (1903).

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