Hostname: page-component-78c5997874-s2hrs Total loading time: 0 Render date: 2024-11-19T08:20:02.207Z Has data issue: false hasContentIssue false
  • English
  • Français

BENJAMIN GRAHAM ON BUFFER STOCKS

Published online by Cambridge University Press:  10 June 2022

J. E. Woods
J. E. Woods*
Affiliation:
J. E. Woods, independent researcher.
Get access Rights & Permissions [Opens in a new window]

Abstract

Surprisingly, Benjamin Graham, the acknowledged “Father of Value Investing,” considered his most important work to be the invention of the Commodity Reserve Currency Plan during the 1930s and 1940s. Previous studies of the Plan have overlooked the fact that, of its three main components (buffer stocks, price stability, and currency backing), Graham regarded the first as the most important and the other two as “secondary” or “subsidiary.” By focusing on the buffer-stock aspect, we demonstrate, first, the breadth and depth of Graham’s overall conception in terms of both micro- and macroeconomics, and, second, the considerable overlap with John Maynard Keynes’s ideas developed around the same time, which are manifested particularly in their common conclusion that the inefficiency of commodity markets could be rectified only by government intervention. We also comment on Perry Mehrling’s assessment of Graham as “not any kind of economist at all” (JHET 2011).

Type
Article
Information
Journal of the History of Economic Thought , Volume 44 , Issue 4 , December 2022 , pp. 579 - 599
Copyright
© The Author(s), 2022. Published by Cambridge University Press on behalf of the History of Economics Society

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

I am very grateful to the referees for their detailed, constructive criticism of previous versions and to the editor, Professor Duarte, for guidance. I am responsible for all remaining errors of fact and interpretation. I dedicate this article to P. D., A. M., and D. Email: john.woods@cantab.net

References

REFERENCES

Buffett, Warren. 1973a. “Preface.” In Graham, B., The Intelligent Investor. New York: Harper & Row, pp. vii–viii.Google Scholar
Buffett, Warren. 1973b. “Appendix, The Superinvestors of Graham–and–Doddsville.” In Graham, B., The Intelligent Investor. New York: Harper & Row, pp. 291–313.Google Scholar
Buffett, Warren. 2009. “Preface.” In Graham, B. and Dodd, D., Security Analysis. New York: McGraw-Hill, pp. xi–xii.Google Scholar
Calsoyas, C. D. 1948. “Commodity Currency and Commodity Storage.” American Economic Review 38 (3): 341–352.Google Scholar
Fantacci, Luca. 2017. “Reconciling Money and Goods: Keynes’s Commodity and Currency Plans for the PostWar World.” Annals of the Fondazione Luigi Einaudi 51 (1): 149–176.Google Scholar
Fantacci, Luca, Marcuzzo, Maria Cristina, and Sanfilippo, Eleonora. 2010. “Speculation in Commodities: Keynes’ ‘Practical Acquaintance’ with Futures Markets.” Journal of the History of Economic Thought 32 (3): 397–418.CrossRefGoogle Scholar
Graham, Benjamin. 1933. “Stabilized Reflation.” Economic Forum 1 (2): 186–193.Google Scholar
Graham, Benjamin. 1937. Storage and Stability. New York: McGraw-Hill.Google Scholar
Graham, Benjamin. 1944a. World Commodities and World Currency. New York: McGraw-Hill.Google Scholar
Graham, Benjamin. [1944b] 1999. “Proposals for an International Commodity-Reserve Currency.” In Lowe, Janet, ed., The Rediscovered Benjamin Graham. New York: John Wiley & Sons, Inc., pp. 233–238.Google Scholar
Graham, Benjamin. 1973. The Intelligent Investor. New York: Harper & Row.Google Scholar
Graham, Benjamin. [1974] 1999. “Renaissance of Value.” In Lowe, Janet, ed., The Rediscovered Benjamin Graham. New York: John Wiley & Sons, Inc., pp. 63–69.Google Scholar
Graham, Benjamin. 1996. The Memoirs of the Dean of Wall Street. New York: McGraw-Hill.Google Scholar
Graham, Benjamin, and Dodd, David. [1934] 2009. Security Analysis. Sixth edition. New York: McGraw-Hill.Google Scholar
Graham, Frank D. 1944. “Keynes vs. Hayek on a Commodity Reserve Currency.” Economic Journal 54 (215–216): 422–429.CrossRefGoogle Scholar
Hart, Albert G. 1991. “Nicholas Kaldor as Advocate of Commodity Reserve Currency.” In Nell, E. J. and Semmler, W., eds., Nicholas Kaldor and Mainstream Economics. London: Macmillan, pp. 561–570.Google Scholar
Hayek, Friedrich A. 1943. “A Commodity Reserve Currency.” Economic Journal 53 (210–211): 176–184.CrossRefGoogle Scholar
Hobson, John A. 1922. The Economics of Unemployment. London: George Allen & Unwin.Google Scholar
Kaldor, Nicholas. 1964a. “The Problem of International Liquidity.” In Kaldor, N., Essays on Economic Policy. Volume II. London: Duckworth, pp. 28–47.Google Scholar
Kaldor, Nicholas. 1964b. “The Case for an International Commodity Reserve Currency, in Collaboration with Hart, A. G. and Tinbergen, J..” In Kaldor, N., Essays on Economic Policy. Volume II. London: Duckworth, pp. 131–177.Google Scholar
Kaldor, Nicholas. [1974] 1978. “International Monetary Reform: The Need for a New Approach.” In Further Essays on Applied Economics. London: Duckworth, pp. 90–99.Google Scholar
Kaldor, Nicholas. 1975. “Preface.” In Leo St. Clare Grondona, Economic Stability Is Attainable. London: Hutchinson, pp. 16–17.Google Scholar
Kaldor, Nicholas. 1976. “Inflation and Recession in the World Economy.” Economic Journal 86 (344): 703–714.CrossRefGoogle Scholar
Kaldor, Nicholas. 1978a. Further Essays on Economic Theory. London: Duckworth.Google Scholar
Kaldor, Nicholas. 1978b. Further Essays on Applied Economics. London: Duckworth.Google Scholar
Kaldor, Nicholas. [1983] 1989. “The Role of Commodity Prices in Economic Recovery.” In Further Essays on Economic Theory and Policy. London: Duckworth, pp. 235–250.Google Scholar
Kaldor, Nicholas. 1989. Further Essays on Economic Theory and Policy. London: Duckworth.Google Scholar
Kaldor, Nicholas. 1996. Causes of Growth and Stagnation in the World Economy. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Keynes, John Maynard. [1926] 1981. “The Control of Raw Materials by Governments.” In The Collected Writings of John Maynard Keynes, edited by Moggridge, D.. Volume XIX, Activities 1922–1929: The Return to Gold and Industrial Policy. Cambridge: Cambridge University Press, pp. 546–552.Google Scholar
Keynes, John Maynard. 1936. The General Theory of Employment, Interest and Money. London: Macmillan.Google Scholar
Keynes, John Maynard. 1938. “The Policy of Government Storage of Foodstuffs and Raw Materials.” Economic Journal 48 (191): 449–460.CrossRefGoogle Scholar
Keynes, John Maynard. [1942] 1980. “The International Control of Raw Materials.” In The Collected Writings of John Maynard Keynes, edited by Moggridge, D.. Volume XXVII, Activities 1940–1946: Shaping the Post-War World, Employment and Commodities. Cambridge: Cambridge University Press, pp. 112–133.Google Scholar
Keynes, John Maynard. 1943. “The Objective of International Price Stability.” Economic Journal 53 (210–211): 185–187.CrossRefGoogle Scholar
Keynes, John Maynard. 1944. “Note by Lord Keynes.” Economic Journal 54 (215): 429–430.CrossRefGoogle Scholar
Keynes, John Maynard. 1971–1981. The Collected Writings of John Maynard Keynes. Edited by Moggridge, D.. Volumes VI, VIII, XII, XIX, XXV, XXVI, XXVII. Cambridge: Cambridge University Press. [Designated in text as CW and volume number.]Google Scholar
Klarman, Seth A. 1991. Margin of Safety. New York: HarperBusiness.Google Scholar
Klarman, Seth A. 2009. “Preface: The Timeless Wisdom of Graham and Dodd.” In Graham, B. and Dodd, D., Security Analysis. New York: McGraw-Hill, pp. xiii–xl.Google Scholar
Klein, Rodney G, ed. 2009. Benjamin Graham on Investing. New York: McGraw-Hill.Google Scholar
Marcuzzo, Maria Cristina, and Sanfilippo, Eleonora. 2016. “Keynes and the Interwar Commodity Option Markets.” Cambridge Journal of Economics 40 (1): 327–348.CrossRefGoogle Scholar
Mehrling, Perry. 2011. “The Monetary Economics of Benjamin Graham: A Bridge between Goods and Money?” Journal of the History of Economic Thought 33 (3): 285–305.CrossRefGoogle Scholar
Moggridge, Donald E. 1992. Maynard Keynes: An Economist’s Biography. London: Routledge.CrossRefGoogle Scholar
Newbery, David M. G., and Stiglitz, Joseph E.. 1981. The Theory of Commodity Price Stabilization. Oxford: Clarendon Press.Google Scholar
O’Donnell, Rod M. 1989. Keynes: Philosophy, Economics and Politics. London: Macmillan.CrossRefGoogle Scholar
Pasinetti, Luigi L. 2007. Keynes and the Cambridge Keynesians. Cambridge: Cambridge University Press.Google Scholar
Pilling, David. 2018. “The Big Read. Commodities.” Financial Times, 6 June.Google Scholar
Ricardo, David. 1951a. On the Principles of Political Economy and Taxation. Edited by Sraffa, P.. Cambridge: Cambridge University Press.Google Scholar
Ricardo, David. 1951b. Pamphlets and Papers: 1815–1823. Edited by Sraffa, P.. Cambridge: Cambridge University Press.Google Scholar
Shleifer, Andre, and Vishny, Robert W.. 1997. “The Limits of Arbitrage.” Journal of Finance 52 (1): 35–55.CrossRefGoogle Scholar
Snyder, Carl. 1934. “Commodity Prices Versus the General Price Level.” American Economic Review 24 (3): 385–400.Google Scholar
Sraffa, Piero. 1960. Production of Commodities by Means of Commodities. Cambridge: Cambridge University Press.Google Scholar
Steil, Benn. 2013. The Battle of Bretton Woods. Princeton, NJ: Princeton University Press.Google Scholar
Targetti, Ferdinando. 1992. Nicholas Kaldor. Oxford: Clarendon Press.Google Scholar
Targetti, Ferdinando, and Thirlwall, Anthony P., eds. 1989. The Essential Kaldor. London: Duckworth.Google Scholar
Thirlwall, Anthony P. 1987. Nicholas Kaldor. Brighton: Wheatsheaf Books.Google Scholar
Tyszynski, H. 1950. “A Note on International Commodity Agreements.” Economica 17 (68): 438–447.Google Scholar
Tinbergen, Jan. 1952. On the Theory of Economic Policy. Amsterdam: North-Holland Publishing Company.Google Scholar
United Nations Conference on Trade and Development. 2019. State of Commodity Dependence 2018. Geneva.Google Scholar
Ussher, Leanne. 2009. “Global Imbalances and the Key Currency Regime: The Case for a Commodity Reserve Currency.” Review of Political Economy 21 (3): 403–421.CrossRefGoogle Scholar
Ussher, Leanne. 2016. “International Monetary Policy with Commodity Buffer Stocks.” European Journal of Economics and Economic Policies: Intervention 13 (1): 10–25.Google Scholar
Ussher, Leanne, Haas, Armin, Töpfer, Klaus, and Jaeger, Carlo C.. 2018. “Keynes and the International Monetary System: Time for a Tabular Standard?” European Journal of the History of Economic Thought 25 (1): 1–35.CrossRefGoogle Scholar
Williams, Jeffrey C., and Wright, Brian D.. 1991. Storage and Commodity Markets. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Woods, John E. 2013. “On Keynes as an Investor.” Cambridge Journal of Economics 37 (2): 423–442.CrossRefGoogle Scholar
Zhou, Xiaochuan. 2009. “Reform the International Monetary System.” Bank for International Settlements. https://www.bis.org/review/r090402c.pdf. Accessed April 25, 2022.Google Scholar