This book provides a comprehensive survey of the major developments in
monetary theory and policy from David Hume and Adam Smith to Walter Bagehot and Knut
Wicksell.
In particular, it seeks to explain why it took so long for a theory of central
banking to penetrate mainstream thought. It investigates how major monetary theorists
understood the roles of the invisible and visible hands in money, credit and banking; what
they thought about rules and discretion and the role played by commodity-money in their
conceptualizations; whether or not they distinguished between the two different roles
carried out via the financial system; how they perceived the influence of the monetary
system on macroeconomic aggregates such as the price level, output and accumulation of
wealth; and finally, what they thought about monetary policy. It also explores the
analytical dimensions in the various monetary theories while emphasizing their policy
consequences.
Table of Contents
Introduction
Part I. Analytical and Historical Foundations:
1. Monetary theory circa 1750: David Hume
2. Mid 18th century British financial system
3. Adam Smith: the case for laissez faire in money and banking
4. 'Monetary theories of credit' in exchange
Part II. Debating Monetary Theory under Inconvertibility:
5. New reality: the restriction period 1797–1821
6. Boyd versus Baring: the early round in the bullion debate
7. Henry Thornton: ahead of his times
8. Ricardo versus Bosanquet: the famous round in the bullion debate
9. 'Credit theories of money' in exchange and intermediation
Part III. Debating: Laissez Faire, Rules and Discretion:
10. From the resumption to 1837: more crises
11. The currency school trio: Loyd, Torrens, Norman
12. The banking school trio: Tooke, Fullarton, Wilson
13. Neither discretion nor rules: Joplin and the free banking school
Part IV. The Road to Defensive Central Banking:
14. Bagehot and a new conventional wisdom
15. Does Karl Marx fit in?
16. Marshall and bi-metallism
Part V. A New Beginning: Towards Active Central Banking:
17. Wicksell's innovative monetary theory
18. The puzzling slow rise of a theory of central banking: between the lender of last
resort, passive and active monetary policy.
448 pages, Hardcover