Money Mischief_ Episodes in Monetary History - Milton Friedman [115]
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* In 1880, gold and silver coins accounted for more than 70 percent of all transactions balances (coins plus paper money plus bank deposits); the corresponding fraction for the United States was about 15 percent. Source for France, Saint Marc (1983, pp. 23–33); for the United States, Friedman and Schwartz (1963, pp. 131, 174).
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† To illustrate France's importance, in both 1850 and 1870 monetary silver in France amounted to more than 10 percent of all the silver produced in the world from 1493 on; in 1850 monetary gold in France was about one-third of the world's monetary gold stock; in 1870 more than one-half. (I have been unable to find estimates of the world's monetary silver stock, which is why I have compared the French monetary silver with total production.) Source for France, Saint Marc (1983, pp. 23–33); for the world gold stock, Warren and Pearson (1933, pp. 78–79).
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* The ratio of ounces of silver to ounces of gold in its monetary stock fell from 41 to 8, entirely via an increase in gold.
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† The pound sterling was defined as 113 grains of pure gold, the U.S. dollar as 23.22 grains; the ratio of these two numbers gives the par exchange rate.
As an aside, a classic story illustrating British provincialism in the Victorian era has an American taking an English gentleman to task for the complexity of the British currency: "12 pence to the shilling, 20 shillings to the pound, 21 shillings to the guinea." Responds the English gentleman: "What are you Americans complaining about? Look at your awful dollar—4.8665 to the pound."
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* In a private communication dated April 24, 1989, Angela Redish suggests that the widest plausible limits, allowing for mint costs and 1 percent transactions costs, were 15.3 and 15.89. The limits of the market ratio cited are imperfect estimates, and so are not seriously in conflict with her estimated range.
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* Walker (1896b, chapters 4, 5, and 6) has an excellent discussion of this episode, as well as of prior French experience.
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* Schumpeter makes it clear that the "monetary monomaniacs" he refers to are among "the silver men," not the "sponsors of gold." In that respect, he shared the conventional view. My own opinion, like that of Francis A. Walker—to whose work Schumpeter refers as "of undoubted scientific standing"—is that the pro-gold cause had its share of monetary monomaniacs.
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* The analysis was spelled out much earlier in Fisher (1894, pp. 527–37).
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* Francis A. Walker was a volunteer in the Civil War who was promoted to general after the war ended and had a distinguished career as a statistician, economist, and educational administrator.
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* Evidence of Giffen's repute is the diplomacy with which F. Y. Edgeworth (1895, p. 435), one of the truly great economists of the time, prefaces his refutation of one of Giffen's fallacies: "An argument advanced by Mr. Giffen ... is not likely to be open to dispute. It is with great diffidence that the following counter-reasoning is submitted."
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† Francis A. Walker (1893, p. 175, n. 1) wrote: "Prof. Alfred Marshall, of Cambridge, easily the head of the English economists, has more than once told me that, as between bimetallism and gold monometallism, he is a bimetallist."
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* "Though a bimetallism of the international type, to the very center of my being, I have ever considered the efforts made by this country, for itself alone, to rehabilitate silver as prejudicial equally to our own national interests and to the cause of true international bimetallism" (Walker 1896b, p. iv).
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* Jevons's best and most concise statement of the theoretical case for bimetallism is in his Money and the Mechanism of Exchange ([1875] 1890, pp. 137–38). Fisher refers to this discussion in "The Mechanics of Bimetallism" (1894), in which he presents a much more thorough and definitive analysis. Fisher also notes that after