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What is the complementarity among monies? An introductory note

Published online by Cambridge University Press:  04 April 2008

Akinobu Kuroda
Akinobu Kuroda
Affiliation:
University of Tokyokuroda@ioc.u-tokyo.ac.jp
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Extract

‘The market makes its money’, thought Hicks, and similar messages have been delivered by many other thinkers on money. However, while students of money have mostly been concerned with who could or should produce it, the market or the state, few have questioned whether the money itself should be single or not. Apparently it has been taken for granted that a single market and a single money should coincide. Nevertheless, contrary to the modern assumption that one single currency should operate in one country, the history of money has been full of plurality until recent times, as we will argue in this issue. It is no exaggeration to say that the majority of human beings through most of history dealt with concurrent currencies. It is important to recognise that, in most if not in all cases, the coexistence of monies was not incidental but functional, since they worked in a complementary relationship. That is, one money could do what another money could not, and vice versa. In other words, an assortment of monies could do what any single money could not, and supply what the market required. In the following articles we will show how this worked.

Type
Articles
Information
Financial History Review , Volume 15 , Issue 1 , April 2008 , pp. 7 - 15
Copyright
Copyright © European Association for Banking and Financial History 2008

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References

1 The articles in this special issue have been produced through discussions in three workshops and a conference session under the title ‘Complementary Relationship among Monies in History’ held at New York University on 17 December 2005, at the University of Tokyo on 24–25 April 2006, at the University of Helsinki on 25 August 2006 (14th International Economic History Conference), and at Ecole Normale Supérieure, Paris, on 13 December 2006. We wish to thank all participants of the four meetings for making numerous suggestions.

2 J. R. Hicks, A Market Theory of Money (Oxford, 1989). Hicks was so flexible that he admitted the possibility that liabilities were expressed through more than one sort of money, even though it appeared to be complicated (p. 61). Marx thought that the money was not produced by any observation or agreement but was formed by instinct through the process of exchange. K. Marx, Zur Kritik der politischen Ökonomie (Berlin, 1961), S.35.

3 F. A. Hayek Denationalisation of Money (London, 1976); B. Klein, ‘The competitive supply of money’, Journal of Money, Credit and Banking, 6.4 (1974).

4 B. T. Cohen, The Geography of Money (Ithaca, 1998); E. Helleiner, The Making of National Money: Territorial Currencies in Historical Perspective (Ithaca, 2003).

5 C. Cipolla, Money, Prices and Civilization in the Mediterranean World: Fifth to Seventeenth Century (New York, 1967); T. J. Sargent and F. R. Velde, The Big Problem of Small Change (Princeton, 2002).

6 A. Redish, Bimetallism: an Economic and Historical Analysis (Cambridge, 2000). We follow her emphasis that ‘The monetary system of a market economy needs to provide a medium of exchange for a variety of scales of transaction’ (p. 39).

7 ‘Then come subsidiary silver coins fractional to the dollar, but subject to a fluctuating rate of exchange such that the dollar may this year change for 110 cents and next year for only 95 cents in small coin.’ H. B. Morse, The Trade and Administration of the Chinese Empire (London, 1908), p. 167. The Shanghai Museum exhibits a mechanical minting machine unearthed from an early twentieth-century counterfeiter site in Shanghai. For the fluctuating monetary situation in modern China, see A. Kuroda, ‘The collapse of the Chinese imperial monetary system’, in K. Sugihara (ed.), Japan, China and the Growth of the Asian International Economy, 1850 –1949 (Oxford, 2005).

8 The total output of subsidiary coins during the period was around 17 million dollars. C. C. Patterson, ‘Silver stocks and losses in ancient and medieval times’, Economic History Review ser. 2, 25.2 (1972).

9 R. G. de Glanville, ‘The numbers of coins in circulation in the United Kingdom’, Studies in Official Statistics, Research Series no. 2 (1970), p. 4.

10 The contents of a Swedish hoard containing 18,217 coins from 1624 to 1741, to an astonishing extent, follow the movement of annual issuance of the Swedish Royal Mint, but there is a clear tendency that the older the issuance is, the higher the loss rate. Bengt Thordeman, ‘The Lohe hoard’, Numismatic Chronicle ser. 6, 8 (1948). The recall of old coins for recoinage was negligible in this period. In their article in this issue, Engdahl and Ögren show that the Swedish economy would become dependant mostly on paper monies. I thank Mark Blackburn for bringing my attention to this article.

11 A recent exception linking concurrent currencies to the spatial issue is L. Fantacci, ‘Complementary currencies: a prospect on money from a retrospect on premodern practices’, Financial History Review, 12.1 (2005).

12 J. C. Mollema, De eerste schipavaart der Hollanders naar Oost-Indië 1595–97 (The Hague, 1935), p. 211.

13 T. Joplin, An Analysis and History of the Currency Question (London, 1832) in D. P. O'Brien (ed.), Foundation of Monetary Economics, vol. 6: Monetary Non-Conformists (London, 1994), pp. 191–2.

14 M. Bloch, ‘Natural economy or money economy: a pseudo-dilemma’, in Land and Work in Medieval Europe, trans. E. Anderson (London, 1967).

15 Mono-function money has been discussed particularly in African Studies. P. Lovejoy, ‘Polanyi's “Ports of Trade”: Salaga and Kano in the nineteenth century’, Canadian Journal of African Studies, 16.2 (1982).

16 A typical example of the interfacial function is found in the circulation of the Maria Theresa dollar in the Red Sea region. A. Kuroda, ‘The Maria Theresa dollar in the early twentieth-century Red Sea region: a complementary interface between multiple markets’, Financial History Review, 14.1 (2007).