Globalizing Capital

The importance of the international monetary system is clearly evident in daily news stories about fluctuating currencies and in dramatic events such as the recent reversals in the Mexican economy. It has become increasingly apparent that one cannot understand the international economy without knowing how its monetary system operates. Now Barry Eichengreen presents a brief, lucid book that tells the story of the international financial system over the past 150 years. Globalizing Capital is intended not only for economists but also for a general audience of historians, political scientists, professionals in government and business, and anyone with a broad interest in international economic and political relations. Eichengreen's work demonstrates that insights into the international monetary system and effective principles for governing it can result only if it is seen a historical phenomenon extending from the gold standard period to interwar instability, then to Bretton Woods, and finally to the post-1973 period of fluctuating currencies. Eichengreen analyzes the shift from pegged to floating exchange rates in the 1970s and ascribes that change to the growing capital mobility that has made pegged rates difficult to maintain. However, he shows that capital mobility was also high prior to World War I, yet this did not prevent the maintenance of fixed exchange rates. What was critical for the successful maintenance of fixed exchange rates during that period was the fact that governments were relatively insulated from democratic politics and thus from pressure to trade off exchange rate stability for other goals, such as the reduction of unemployment. Today pegging exchange rates would require very radical reforms of a sort that governments are understandably reluctant to embrace. The implication seems undeniable: floating rates are here to stay.

ISBN 0691002452   Pages 240 ISBN13 9780691002453 (What's this?)   Volumes 001 Publisher The University Press Group Ltd   Weight (grammes) 342 Imprint Princeton University Press   Published in New Jersey Format Paperback   Height (mm) 229 Publication date 13 Jul 1998   Width (mm) 152 Library of Congress HG3881   Spine width (mm) 13 DEWEY 332.4566   Academic level Professional / Scholarly, Tertiary education DEWEY edition DC21

		Preface
Ch. 1		Introduction		3
Ch. 2		The Gold Standard		7
		Prehistory		8
		The Dilemmas of Bimetallism		9
		The Lure of Bimetallism		13
		The Advent of the Gold Standard		15
		Shades of Gold		20
		How the Gold Standard Worked		25
		The Gold Standard as a Historically Specific Institution		30
		International Solidarity		32
		The Gold Standard and the Lender of Last Resort		35
		Instability at the Periphery		38
		The Stability of the System		42
Ch. 3		Interwar Instability		45
		Chronology		46
		Experience with Floating: The Controversial Case of the Franc		51
		Reconstructing the Gold Standard		57
		The New Gold Standard		61
		Problems of the New Gold Standard		63
		The Pattern of International Payments		68
		Responses to the Great Depression		72
		Banking Crises and Their Management		75
		Disintegration of the Gold Standard		77
		Sterling's Crisis		80
		The Dollar Follows		85
		Managed Floating		88
		Conclusions		91
Ch. 4		The Bretton Woods System		93
		Wartime Planning and Its Consequences		96
		More...

This book by a prominent economic historian is a succinct and well-written history of the international monetary system--the general framework in which financial transactions among residents of different countries take place--and its evolution... [It] provides useful historical background for understanding current European efforts to create a monetary union. -- Richard N. Cooper Foreign Affairs Capital flows in the recent period, unlike those in the earlier one, proved to be incompatible with exchange rate stability. [Eichengreen's] reasons for the difference... constitute a unique insight and contribution... to the professional literature on a familiar topic. Choice

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