The Ascent of Money_ A Financial History Part 8

39 See e.g. Douglas B. Ball, See e.g. Douglas B. Ball, Financial Failure and Confederate Defeat Financial Failure and Confederate Defeat (Urbana, 1991). (Urbana, 1991).

40 Irving Katz, Irving Katz, August Belmont: A Political Biography August Belmont: A Political Biography (New York, 1968), esp. pp. 96-9. (New York, 1968), esp. pp. 96-9.

41 S. Diamond (ed.), S. Diamond (ed.), A Casual View of America: The Home Letters of Salomon de Rothschild A Casual View of America: The Home Letters of Salomon de Rothschild, 1859-1861 1859-1861 (London, 1962). (London, 1962).

42 See Rudolf Glanz, 'The Rothschild Legend in America', See Rudolf Glanz, 'The Rothschild Legend in America', Jewish Social Studies Jewish Social Studies, 19 (1957), pp. 3-28.

43 Marc D. Weidenmier, 'The Market for Confederate Cotton Bonds', Marc D. Weidenmier, 'The Market for Confederate Cotton Bonds', Explorations in Economic History Explorations in Economic History, 37 (2000), pp. 76-97. See also idem idem, 'Turning Points in the U.S. Civil War: Views from the Grayback Market', Southern Economic Journal Southern Economic Journal, 68, 4 (2002), pp. 875-90.

44 See W. O. Henderson, See W. O. Henderson, The Lancas.h.i.+re Cotton Famine: 1861-1865 The Lancas.h.i.+re Cotton Famine: 1861-1865 (Manchester, 1934); Thomas Ellison, (Manchester, 1934); Thomas Ellison, The Cotton Trade of Great Britain The Cotton Trade of Great Britain (New York, 1968 [1886]). (New York, 1968 [1886]).

45 Marc D. Weidenmier, 'Comrades in Bonds: The Subsidized Sale of Confederate War Debt to British Leaders', Claremont McKenna College Working Paper (February 2003). Marc D. Weidenmier, 'Comrades in Bonds: The Subsidized Sale of Confederate War Debt to British Leaders', Claremont McKenna College Working Paper (February 2003).

46 Richard Roberts, Richard Roberts, Schroders: Merchants and Bankers Schroders: Merchants and Bankers (Basingstoke, 1992), pp. 66f. (Basingstoke, 1992), pp. 66f.

47 Richard C. K. Burdekin and Marc D. Weidenmier, 'Inflation is Always and Everywhere a Monetary Phenomenon: Richmond vs. Houston in 1864', Richard C. K. Burdekin and Marc D. Weidenmier, 'Inflation is Always and Everywhere a Monetary Phenomenon: Richmond vs. Houston in 1864', American Economic Review American Economic Review, 91, 5 (December 2001), pp. 1621-30.

48 Richard Burdekin and Marc Weidenmier, 'Suppressing a.s.set Price Inflation: The Confederate Experience, 1861-1865', Richard Burdekin and Marc Weidenmier, 'Suppressing a.s.set Price Inflation: The Confederate Experience, 1861-1865', Economic Inquiry Economic Inquiry, 41, 3 (July 2003), 420-32. Cf. Eugene M. Lerner, 'Money, Prices and Wages in the Confederacy, 1861-65', Journal of Political Economy Journal of Political Economy, 63, 1 (February 1955), pp. 20-40.

49 Frank Griffith Dawson, Frank Griffith Dawson, The First Latin American Debt Crisis The First Latin American Debt Crisis (London, 1990). (London, 1990).

50 Kris James Mitchener and Marc Weidenmier, 'Supersanctions and Sovereign Debt Repayment', NBER Working Paper 11472 (2005). Kris James Mitchener and Marc Weidenmier, 'Supersanctions and Sovereign Debt Repayment', NBER Working Paper 11472 (2005).

51 Niall Ferguson and Moritz Schularick, 'The Empire Effect: The Determinants of Country Risk in the First Age of Globalization, 1880- 1913', Niall Ferguson and Moritz Schularick, 'The Empire Effect: The Determinants of Country Risk in the First Age of Globalization, 1880- 1913', Journal of Economic History Journal of Economic History, 66, 2 (June 2006), pp. 283-312.

52 Kris James Mitchener and Marc Weidenmier, 'Empire, Public Goods, and the Roosevelt Corollary', Kris James Mitchener and Marc Weidenmier, 'Empire, Public Goods, and the Roosevelt Corollary', Journal of Economic History Journal of Economic History, 65 (2005), pp. 658-92.

53 William Cobbett, William Cobbett, Rural Rides Rural Rides (London, 1985 [1830]), p. 117. (London, 1985 [1830]), p. 117.

54 Ibid., pp. 34, 53. Ibid., pp. 34, 53.

55 M. de Cecco, M. de Cecco, Money and Empire: The International Gold Standard, 1890-1914 Money and Empire: The International Gold Standard, 1890-1914 (Oxford, 1973). (Oxford, 1973).

56 Theo Balderston, 'War Finance and Inflation in Britain and Germany, 1914-1918', Theo Balderston, 'War Finance and Inflation in Britain and Germany, 1914-1918', Economic History Review Economic History Review, 42, 2 (May 1989), pp. 222- 44.

57 Calculated from B. R. Mitch.e.l.l, Calculated from B. R. Mitch.e.l.l, International Historical Statistics: Europe, 1750-1993 International Historical Statistics: Europe, 1750-1993 (London, 1998), pp. 358ff. (London, 1998), pp. 358ff.

58 Jay Winter and Jean-Louis Robert (eds.), Jay Winter and Jean-Louis Robert (eds.), Capital Cities at War: Paris, London, Berlin 1914-1919 Capital Cities at War: Paris, London, Berlin 1914-1919, Studies in the Social and Cultural History of Modern Warfare, No. 2 (Cambridge, 1997), p. 259.

59 Gerald D. Feldman, Gerald D. Feldman, The Great Disorder: Politics, Economy and Society in the German Inflation, 1914-1924 The Great Disorder: Politics, Economy and Society in the German Inflation, 1914-1924 (Oxford / New York, 1997), pp. 211-54. (Oxford / New York, 1997), pp. 211-54.

60 Elias Canetti, Elias Canetti, Crowds and Power Crowds and Power (New York, 1988), p. 186. (New York, 1988), p. 186.

61 John Maynard Keynes, John Maynard Keynes, A Tract on Monetary Reform A Tract on Monetary Reform, reprinted in Collected Writings Collected Writings, vol. IV (Cambridge, 1971), pp. 3, 29, 36.

62 John Maynard Keynes, John Maynard Keynes, The Economic Consequences of the Peace The Economic Consequences of the Peace (London, 1919), pp. 220-33. (London, 1919), pp. 220-33.

63 Frank Whitson Fetter, 'Lenin, Keynes and Inflation', Frank Whitson Fetter, 'Lenin, Keynes and Inflation', Economica Economica, 44, 173 (February 1977), p. 78.

64 William C. Smith, 'Democracy, Distributional Conflicts and Macroeconomic Policymaking in Argentina, 1983-89', William C. Smith, 'Democracy, Distributional Conflicts and Macroeconomic Policymaking in Argentina, 1983-89', Journal of Inter-american Studies and World Affairs Journal of Inter-american Studies and World Affairs, 32, 2 (Summer 1990), pp. 1- 42. Cf. Rafael Di Tella and Ingrid Vogel, 'The Argentine Paradox: Economic Growth and Populist Tradition', Harvard Business School Case 9-702-001 (2001).

65 Jorge Luis Borges, 'The Garden of Forking Paths', in Jorge Luis Borges, 'The Garden of Forking Paths', in idem idem, Labyrinths: Selected Stories and Other Writings Labyrinths: Selected Stories and Other Writings, ed. Donald A. Yates and James E. Irby (Harmondsworth, 1970), pp. 50ff.

66 Ferguson, Ferguson, World's Banker World's Banker, ch. 27.

67 Further details in Gerardo della Paolera and Alan M. Taylor, Further details in Gerardo della Paolera and Alan M. Taylor, Straining at the Anchor: The Argentine Currency Board and the Search for Macroeconomic Stability, 1880-1935 Straining at the Anchor: The Argentine Currency Board and the Search for Macroeconomic Stability, 1880-1935 (Chicago, 2001). (Chicago, 2001).

68 'A Victory by Default', 'A Victory by Default', Economist Economist, 3 March 2005.

69 For a recent discussion of the issue, see Michael Tomz, For a recent discussion of the issue, see Michael Tomz, Reputation and International Cooperation: Sovereign Debt across Three Centuries Reputation and International Cooperation: Sovereign Debt across Three Centuries (Princeton, 2007). (Princeton, 2007).

70 On the Great Inflation, see Fabrice Collard and Harris Dellas, 'The Great Inflation of the 1970s', Working Paper (1 October 2003); Edward Nelson, 'The Great Inflation of the Seventies: What Really Happened?', Federal Reserve Bank of St Louis Working Paper, 2004- 001 (January 2004); Allan H. Meltzer, 'Origins of the Great Inflation', On the Great Inflation, see Fabrice Collard and Harris Dellas, 'The Great Inflation of the 1970s', Working Paper (1 October 2003); Edward Nelson, 'The Great Inflation of the Seventies: What Really Happened?', Federal Reserve Bank of St Louis Working Paper, 2004- 001 (January 2004); Allan H. Meltzer, 'Origins of the Great Inflation', Federal Reserve Bank of St Louis Review Federal Reserve Bank of St Louis Review, Part 2 (March / April 2005), pp. 145-75.

71 The eleven markets are Australia, Canada, France, Germany, Hong Kong, Ireland, j.a.pan, Netherlands, Switzerland, the United Kingdom and the United States. See Watson Wyatt, 'Global Pension Fund a.s.sets Rise and Fall': The eleven markets are Australia, Canada, France, Germany, Hong Kong, Ireland, j.a.pan, Netherlands, Switzerland, the United Kingdom and the United States. See Watson Wyatt, 'Global Pension Fund a.s.sets Rise and Fall': http://www.watsonwyatt.com/news/press. asp?ID=18579 asp?ID=18579.

72 CNN, 9 July 2000. CNN, 9 July 2000.

73 Testimony of Chairman Alan Greenspan, Federal Reserve Board's semi-annual Monetary Policy Report to the Congress, before the Committee on Banking, Housing, and Urban Affairs, US Senate, 16 February 2005. Testimony of Chairman Alan Greenspan, Federal Reserve Board's semi-annual Monetary Policy Report to the Congress, before the Committee on Banking, Housing, and Urban Affairs, US Senate, 16 February 2005.

3. Blowing Bubbles 1 For a recent contribution to a vast literature, see Timothy Guinnane, Ron Harris, Naomi R. Lamoreaux, and Jean-Laurent Rosenthal, 'Putting the Corporation in its Place', NBER Working Paper 13109 (May 2007). For a recent contribution to a vast literature, see Timothy Guinnane, Ron Harris, Naomi R. Lamoreaux, and Jean-Laurent Rosenthal, 'Putting the Corporation in its Place', NBER Working Paper 13109 (May 2007).

2 See especially Robert J. s.h.i.+ller, See especially Robert J. s.h.i.+ller, Irrational Exuberance Irrational Exuberance (2nd edn., Princeton, 2005). (2nd edn., Princeton, 2005).

3 See Charles P. Kindleberger, See Charles P. Kindleberger, Manias, Panics and Crashes: A History of Financial Crises Manias, Panics and Crashes: A History of Financial Crises (3rd edn., New York / Chichester / Brisbane / Toronto / Singapore, 1996), pp. 12-16. Kindleberger owed a debt to the pioneering work of Hyman Minsky. For two of his key essays, see Hyman P. Minsky, 'Longer Waves in Financial Relations: Financial Factors in the More Severe Depressions', (3rd edn., New York / Chichester / Brisbane / Toronto / Singapore, 1996), pp. 12-16. Kindleberger owed a debt to the pioneering work of Hyman Minsky. For two of his key essays, see Hyman P. Minsky, 'Longer Waves in Financial Relations: Financial Factors in the More Severe Depressions', American Economic Review American Economic Review, 54, 3 (May 1964), pp. 324-35; idem idem, 'Financial Instability Revisited: The Economics of Disaster', in idem idem (ed.), (ed.), Inflation, Recession and Economic Policy Inflation, Recession and Economic Policy (Brighton, 1982), pp. 117-61. (Brighton, 1982), pp. 117-61.

4 Kindleberger, Kindleberger, Manias Manias, p. 14.

5 'The Death of Equities', 'The Death of Equities', Business Week Business Week, 13 August 1979.

6 'Dow 36,000', 'Dow 36,000', Business Week Business Week, 27 September 1999.

7 William N. Goetzmann and Philippe Jorion, 'Global Stock Markets in the Twentieth Century', William N. Goetzmann and Philippe Jorion, 'Global Stock Markets in the Twentieth Century', Journal of Finance Journal of Finance, 54, 3 (June 1999), pp. 953-80.

8 Jeremy J. Siegel, Jeremy J. Siegel, Stocks for the Long Run: The Definitive Guide to Financial Market Returns and Long-Term Investment Strategies Stocks for the Long Run: The Definitive Guide to Financial Market Returns and Long-Term Investment Strategies (New York, 2000). (New York, 2000).

9 Elroy Dimson, Paul Marsh and Mike Stanton, Elroy Dimson, Paul Marsh and Mike Stanton, Triumph of the Optimists: 101 Years of Global Investment Returns Triumph of the Optimists: 101 Years of Global Investment Returns (Princeton, 2002). (Princeton, 2002).

10 Paul Frentrop, Paul Frentrop, A History of Corporate Governance 1602-2002 A History of Corporate Governance 1602-2002 (Brussels, 2003), pp. 49-51. (Brussels, 2003), pp. 49-51.

11 Ronald Findlay and Kevin H. O'Rourke, Ronald Findlay and Kevin H. O'Rourke, Power and Plenty: Trade, War, and the World Economy in the Second Millennium Power and Plenty: Trade, War, and the World Economy in the Second Millennium (Princeton, 2007), p. 178. (Princeton, 2007), p. 178.

12 Frentrop, Frentrop, Corporate Governance Corporate Governance, p. 59.

13 On the ambivalence of the Calvinist capitalist Dutch Republic, see Simon Schama, On the ambivalence of the Calvinist capitalist Dutch Republic, see Simon Schama, The Embarra.s.sment of Riches: An Interpretation of Dutch Culture in the Golden Age The Embarra.s.sment of Riches: An Interpretation of Dutch Culture in the Golden Age (New York, 1997 [1987]). (New York, 1997 [1987]).

14 John P. Shelton, 'The First Printed Share Certificate: An Important Link in Financial History', John P. Shelton, 'The First Printed Share Certificate: An Important Link in Financial History', Business History Review Business History Review, 39, 3 (Autumn 1965), p. 396.

15 Shelton, 'First Printed Share Certificate', pp. 400f. Shelton, 'First Printed Share Certificate', pp. 400f.

16 Engel Sluiter, 'Dutch Maritime Power and the Colonial Status Quo, 1585-1641', Engel Sluiter, 'Dutch Maritime Power and the Colonial Status Quo, 1585-1641', Pacific Historical Review, Pacific Historical Review, 11, 1 (March 1942), p. 33. 11, 1 (March 1942), p. 33.

17 Ibid., p. 34. Ibid., p. 34.

18 Frentrop, Frentrop, Corporate Governance Corporate Governance, pp. 69f.

19 Larry Neal, 'Venture Shares of the Dutch East India Company', in William N. Goetzmann and K. Geert Rouwenhorst (eds.), Larry Neal, 'Venture Shares of the Dutch East India Company', in William N. Goetzmann and K. Geert Rouwenhorst (eds.), The Origins of Value: The Financial Innovations that Created Modern Capital Markets The Origins of Value: The Financial Innovations that Created Modern Capital Markets (Oxford, 2005), p. 167. (Oxford, 2005), p. 167.

20 Neal, 'Venture Shares', p. 169. Neal, 'Venture Shares', p. 169.

21 Schama, Schama, Embarra.s.sment of Riches Embarra.s.sment of Riches, p. 349.

22 Ibid., p. 339. Ibid., p. 339.

23 Neal, 'Venture Shares', p. 169. Neal, 'Venture Shares', p. 169.

24 Frentrop, Frentrop, Corporate Governance Corporate Governance, p. 85.

25 Ibid., pp. 95f. Ibid., pp. 95f.

26 Ibid., p. 103. Cf. Neal, 'Venture Shares', p. 171. Ibid., p. 103. Cf. Neal, 'Venture Shares', p. 171.

27 Neal, 'Venture Shares', p. 166. Neal, 'Venture Shares', p. 166.

28 Findlay and O'Rourke, Findlay and O'Rourke, Power and Plenty Power and Plenty, p. 178.

29 Ibid., pp. 179-83. Cf. Sluiter, 'Dutch Maritime Power', p. 32. Ibid., pp. 179-83. Cf. Sluiter, 'Dutch Maritime Power', p. 32.

30 Findlay and O'Rourke, Findlay and O'Rourke, Power and Plenty Power and Plenty, p. 208.

31 Femme S. Gaastra, 'War, Compet.i.tion and Collaboration: Relations between the English and Dutch East India Company in the Seventeenth and Eighteenth Centuries', in H. V. Bowen, Margarette Lincoln and Nigel Ribgy (eds.), Femme S. Gaastra, 'War, Compet.i.tion and Collaboration: Relations between the English and Dutch East India Company in the Seventeenth and Eighteenth Centuries', in H. V. Bowen, Margarette Lincoln and Nigel Ribgy (eds.), The Worlds of the East India Company The Worlds of the East India Company (Leicester, 2002), p. 51. (Leicester, 2002), p. 51.

32 Gaastra, 'War, Compet.i.tion and Collaboration', p. 58. Gaastra, 'War, Compet.i.tion and Collaboration', p. 58.

33 Ann M. Carlos and Stephen Nicholas, ' "Giants of an Earlier Capitalism": The Chartered Trading Companies as Modern Multinationals', Ann M. Carlos and Stephen Nicholas, ' "Giants of an Earlier Capitalism": The Chartered Trading Companies as Modern Multinationals', Business History Review Business History Review, 62, 3 (Autumn 1988), pp. 398- 419.

34 Gaastra, 'War, Compet.i.tion and Collaboration', p. 51. Gaastra, 'War, Compet.i.tion and Collaboration', p. 51.

35 Findlay and O'Rourke, Findlay and O'Rourke, Power and Plenty Power and Plenty, p. 183.

36 Ibid., p. 185, figure 4.5. Ibid., p. 185, figure 4.5.

37 Gaastra, 'War, Compet.i.tion and Collaboration', p. 55. Gaastra, 'War, Compet.i.tion and Collaboration', p. 55.

38 Jan de Vries and A. van der Woude, Jan de Vries and A. van der Woude, The First Modern Economy: Success, Failure and Perseverance of the Dutch Economy, 1500- 1815 The First Modern Economy: Success, Failure and Perseverance of the Dutch Economy, 1500- 1815 (Cambridge, 1997), p. 396. (Cambridge, 1997), p. 396.

39 Andrew McFarland Davis, 'An Historical Study of Law's System', Andrew McFarland Davis, 'An Historical Study of Law's System', Quarterly Journal of Economics Quarterly Journal of Economics, 1, 3 (April 1887), p. 292.

40 H. Montgomery Hyde, H. Montgomery Hyde, John Law: The History of an Honest Adventurer John Law: The History of an Honest Adventurer (London, 1969), p. 83. (London, 1969), p. 83.

41 Earl J. Hamilton, 'Prices and Wages at Paris under John Law's System', Earl J. Hamilton, 'Prices and Wages at Paris under John Law's System', Quarterly Journal of Economics Quarterly Journal of Economics, 51, 1 (November 1936), p. 43.

42 Davis, 'Law's System', p. 300. Davis, 'Law's System', p. 300.

43 Ibid., p. 305. Ibid., p. 305.

44 Thomas E. Kaiser, 'Money, Despotism, and Public Opinion in Early Eighteenth-Century Finance: John Law and the Debate on Royal Credit', Thomas E. Kaiser, 'Money, Despotism, and Public Opinion in Early Eighteenth-Century Finance: John Law and the Debate on Royal Credit', Journal of Modern History Journal of Modern History, 63, 1 (March 1991), p. 6.

45 Max J. Wa.s.serman and Frank H. Beach, 'Some Neglected Monetary Theories of John Law', Max J. Wa.s.serman and Frank H. Beach, 'Some Neglected Monetary Theories of John Law', American Economic Review American Economic Review, 24, 4 (December 1934), p. 653.

46 James Macdonald, James Macdonald, A Free Nation Deep in Debt: The Financial Roots of Democracy A Free Nation Deep in Debt: The Financial Roots of Democracy (New York, 2003), p. 192. (New York, 2003), p. 192.

47 Kaiser, 'Money', p. 12. Kaiser, 'Money', p. 12.

48 Ibid., p. 18. Ibid., p. 18.

49 Hamilton, 'Prices and Wages', p. 47. Hamilton, 'Prices and Wages', p. 47.

50 Davis, 'Law's System', p. 317. Davis, 'Law's System', p. 317.

51 Antoin E. Murphy, Antoin E. Murphy, John Law: Economic Theorist and Policy-Maker John Law: Economic Theorist and Policy-Maker (Oxford, 1997), p. 233. (Oxford, 1997), p. 233.

52 Hamilton, 'Prices and Wages', p. 55. Hamilton, 'Prices and Wages', p. 55.

53 Murphy, Murphy, John Law John Law, p. 201.

54 Ibid., p. 190. Ibid., p. 190.

55 See Larry Neal, See Larry Neal, The Rise of Financial Capitalism: International Capital Markets in the Age of Reason The Rise of Financial Capitalism: International Capital Markets in the Age of Reason (Cambridge, 1990), p. 74. (Cambridge, 1990), p. 74.

56 Kaiser, 'Money', p. 22. Kaiser, 'Money', p. 22.

57 For evidence of English speculators exiting Paris in November and December, see Neal, For evidence of English speculators exiting Paris in November and December, see Neal, Financial Capitalism Financial Capitalism, p. 68.

58 Murphy, Murphy, John Law John Law, pp. 213f.

59 Ibid., p. 205. Ibid., p. 205.

60 Lord Wharncliffe (ed.), Lord Wharncliffe (ed.), The Letters and Works of Lady Mary Wortley Montagu The Letters and Works of Lady Mary Wortley Montagu (Paris, 1837), pp. 321f. (Paris, 1837), pp. 321f.

61 Earl J. Hamilton, 'John Law of Lauriston: Banker, Gamester, Merchant, Chief?', Earl J. Hamilton, 'John Law of Lauriston: Banker, Gamester, Merchant, Chief?', American Economic Review American Economic Review, 57, 2 (May 1967), p. 273.

62 Murphy, Murphy, John Law John Law, pp. 201-2.

63 Hamilton, 'John Law', p. 276. Hamilton, 'John Law', p. 276.

64 Murphy, Murphy, John Law John Law, p. 239. Cf. Hamilton, 'Prices and Wages', p. 60.