Ricardo on Money by Deleplace, Ghislain -- Read -- Imperial Library of Trantor

Index

Cover Half Title Title Page Copyright Page Dedication Table of Contents List of tables Acknowledgements Introduction

1. Why a book on Ricardo on money?

Revaluation Rehabilitation Completeness Relevance

2. An evolution in Ricardo’s theory of money

The relation with the theory of value and distribution Ricardo’s mature theory of money in brief

3. The content of the book: history, theory, policy

Part I. History Part II. Theory Part III. Policy

4. Two hundred years after

PART I History

1 The historical context

1.1 The English monetary system at the time of Ricardo

Currency Banking

1.2 International monetary relations in Europe: London, Paris, Hamburg 1.3 From Hume to the Bullionist Controversy

David Hume and James Steuart The Bullionist Controversy

1.4 The first round of the Bullionist Controversy (1797–1803)

The search for analytical foundations Thornton’s Paper Credit of Great Britain

Appendix 1: Ricardo on the bullion and foreign exchange markets

1. Ricardo contradicts Bosanquet on the rise of gold on the Continent 2. Ricardo contradicts Vansittart on the state of the exchange with Hamburg in 1760

2 Ricardo’s battles on currency and banks

2.1 Ricardo and the Bullion Controversy (1809–1811)

The second round of the Bullionist Controversy Ricardo’s positions

2.2 Ricardo and the resumption of convertibility (1816–1823)

The third round of the Bullionist Controversy Ricardo’s two plans

2.3 Conclusion: the legacy of Ricardo’s monetary battles Appendix 2: Attacks and weapons

1. Attacks: critical opinions on Ricardo 2. Weapons: Ricardo’s contributions on money

PART II Theory

3 Money and the invariable standard

3.1 Some definitions

Commodities: exchangeable value, money price, absolute value Money: measure of price, circulating medium, standard of money The condition of coherence of the price system

3.2 Value of money, price of gold bullion, and the general price level

The legal and the current value of money The purchasing power of money over all commodities except gold or over gold alone The condition of conformity of money to the standard A non-monetary cause of rise in the general price level? The question of taxation

3.3 The standard of money and the standard of value

The invariable standard of value: “a mean between the extremes” The standard of money A dilemma

3.4 Conclusion Appendix 3: An aborted attempt at the non-neutrality of money in respect to relative prices

4 The two causes of change in the value of money

4.1 The direction of the causality between the quantity and the value of money

An alleged inconsistency or contradiction The “analogy” with a gold mine The effect of a monopoly in issuing money

4.2 Ricardo’s distinction between “a fall in the value of money” and “a depreciation of money”

From the Bullion Essays to Proposals and beyond The definition and measure of depreciation

4.3 The Money–Standard Equation

Two channels of change in the value of money Ricardo’s factual illustration

4.4 Conclusion Appendix 4: Evidence on the Money–Standard Equation: the “Draft on Peel” (1821)

1. The context 2. Ricardo’s “Draft of a letter to a newspaper on the effects of Peel’s bill”, December 1821 3. Ricardo’s letter to McCulloch of 3 January 1822 4. The pamphlet On Protection to Agriculture, April 1822

5 The adjustment to a change in the value of the standard

5.1 From an ambiguity in the Bullion Essays to a clarification in Principles

Criticising Bentham on the cause of the general rise in prices From the mine to the mint

5.2 The extension of the theory of rent from land to mines 5.3 The specificity of gold bullion in respect to corn

The adjustment to a new land growing corn with a higher productivity Two differences between gold bullion and corn

5.4 The adjustment in the gold-producing country: a new “distribution of capital”

A fall in the value of gold bullion The closure of existing mines as a consequence of the discovery of a new one A formalisation of the adjustment A numerical example

5.5 The adjustment in the gold-importing country: minting

From the foreign mine to importation From importation to the mint

5.6 The effect of an increased demand for bullion by the issuing bank

The case of the Bank of England from 1819 to 1821 The adjustment

5.7 Conclusion: the Money–Standard Equation and a real shock on the value of money

A change in the value of money, but no depreciation or appreciation The timing of the adjustment Symmetrical real shock versus asymmetrical monetary shock

Appendix 5: Taxes on gold

1. The case examined by Ricardo 2. Ricardo’s numerical example 3. Three questions 4. Ageneralisation

6 The depreciation of metallic money

6.1 Convertibility and adjustment in the market for bullion

The effect of the melting pot on the upper limit of variation in the market price of bullion The effect of seignorage on the lower limit of variation in the market price of bullion

6.2 Price adjustment in the markets for other commodities than bullion

The effect of a change in the value of money on the competition of capitals From the market price of bullion to the market prices of commodities A bullion-price channel of transmission of a monetary shock

6.3 Debasement of the coin and depreciation of money

The effect of debasement on the market price of gold bullion Debasement and “the principle of limitation of quantity”

6.4 The instability of the double standard

The variability of the relative market price of gold in silver and the alternating standard The behaviour of the Bank of England and the prospective fall in the value of money

Appendix 6: A letter on the double standard of money

7 The regulation of the quantity of convertible notes by the standard

7.1 The Money–Standard Equation and the quantity of money 7.2 The adjustment of the value of money to an increase in the “wants of commerce”

The notion of wants of commerce An endogenous adjustment The superiority of paper money over coins

7.3 The adjustment to a discretionary increase in the convertible-note issue

“Forcing” Bank of England notes into circulation The melting of circulating coins The Penelope effect

7.4 A non-quantitative approach 7.5 Money without a standard

A double inconvertibility The Money–Standard Equation and inconvertibility

7.6 Conclusion: the specificity of the market for gold bullion Appendix 7: The effects of a change in the money supply: real balances, the rate of interest, and Say’s Law

1. The real-balance effect 2. The rate of interest and changes in commodity prices 3. Say’s Law

PART III Policy

8 The international adjustment to a monetary shock

8.1 Real par of exchange and bullion points

The legal par of exchange The real par of exchange according to Steuart The bullion points in Ricardo The real par computed on gold bullion, not the purchasing power parity over commodities The limits to the variations of the exchange rate

8.2 A two-stage international adjustment process

A double condition on the exchange rate The first stage: the exportation of gold bullion The second stage: the additional importation of commodities “The natural trade of barter”

8.3 The redundancy of money as the sole cause of fall in the exchange rate

Real and nominal variations in the exchange A matter of fact or of theory

8.4 Price-specie flow mechanism versus active management of the currency 8.5 The Ingot Plan and the gold-exchange standard

The reduction of the range of variation in the exchange rate Domestic management of the note issue rather than international bullion flows A prototype of the gold-exchange standard

Appendix 8: The boundaries constraining the exchange rate

1. The proportions in which the transfer cost of bullion and the depreciation of the note accounted for a fall in the exchange rate 2. The complications introduced by a difference in standard

9 Central banking and the euthanasia of metal currency

9.1 The public nature of paper money

Justice and security The danger of “this great Leviathan, the Bank” for security

9.2 The Ingot Plan

The 1811 outline The 1816 plan A permanent plan The unhappy fate of the Ingot Plan

9.3 The plan for a national bank

The main provisions of the plan The question of the independence of the national bank The ingot principle again

9.4 The management of the note issue

A controversial question Bank issues and the rate of interest Avoiding an undue contraction of the note issue

9.5 Increasing the security of the monetary system

The ingot principle and the management principle Stabilising the market price of the standard Preventing the drain of the Bank’s metallic reserve

9.6 An application of Ricardo’s theory of money Appendix 9: The Ingot Plan in perspective

Afterword

1. Results 2. The legacy of Ricardo’s theory of money for today

A contribution to the modern theory of Classical prices A contribution to a modern approach to money

Appendix 10: Ricardo’s model of a monetary economy with a standard

1. Domestic relations 2. International adjustment

References Name index Subject index

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