Steven P. Reti. Silver and Gold The Political Economy of International Monetary Conferences,
1867-1892. Westport, Conn.: Greenwood Press, 1998. x + 214 pp. $59.95 (cloth), ISBN 978-0313-30409-5.
Reviewed by John H. Wood (Department of Economics, Wake Forest University)
Published on EH.Net (February, 2000)
Two important sets of economic and political data
lay behind and condition the meetings described in this
book: after falling from 15.93 to 15.19 between 1843 and
1859, the market ratio of silver to gold rose to 15.57 in
1867, 23.72 in 1892, and 39.15 in 1902 (Table. 1); and the
western world discontinued the coinage of silver and followed Britain onto the gold standard.
for the purposes of establishing, internationally, the use
of bimetallic money and securing fixity of relative value
between those metals.” None of the conferences rallied
material support for this goal, although there was some
brief European sentiment in that direction after the large
gold flow to the United States in 1879-80.
The story is well told, but the author’s efforts to
increase its importance by tying it to various theories
of how gold came to dominate world finance are unconvincing. His purpose is to correct the impressions
that the gold standard regime arose “spontaneously as
states responded to silver depreciation in an uncoordinated but similar fashion” and was “a case of international cooperation arising without international negotiation” (p. 33). He “examines spontaneous [market? ]
and [British] hegemonic explanations ̂E and argues that a
coordination-game explanation of the classical gold standard possesses greater validity.” Cooperation in the latter setting “is by no means assured” because the parties
may “disagree about the appropriate conventions, or focal point, to coordinate policies. The challenge of developing and maintaining a focal point is the central concern
of this book. The monetary conferences under investigation were concerned about the appropriate point to fix
exchange rates” (p. 5).
The book is an interesting account of the international monetary conferences of 1867, 1878, 1881, and
1892, and is recommended to anyone who wishes to become informed of diplomatic efforts to resist the dominant market and political forces reflected in the above
data. The first conference, of representatives of twenty
leading commercial nations, convened in Paris at the invitation of Emperor Louis Napoleon and agreed to recommend to their governments formal negotiations toward a common gold coinage. The Conference of 1867
“marked the pinnacle of success for international coinage
advocates” (p. 45), but its recommendations received little support at home. Governments were reluctant to be
seen to tinker with the contents of their coins, and significant bimetallic sentiment of the silver interests undermined support for a universal gold coinage.
The other three conferences were convened at the
invitation of United States government under pressure
from domestic silver interests to arrest the decline of silver, primarily by adopting a bimetallic standard with a
fixed silver/gold ratio that greatly overvalued the former. The Bland-Allison Act of 1878 directed the Treasury to buy and coin $2 million to $4 million of silver
per month and the President to invite such “nations as
he may deem advisable to join the United States in a conference to adopt a common ratio between gold and silver
An alternative approach seems both simpler and
more fruitful. Ask the following questions: Did any of
the last three conferences have a chance? What would
have become of the international monetary system if the
American silver interests had gotten their way? The first
must be answered in the negative because important economic and political interests saw chaos in the second.
Agents desire predictability in the settlement of con1
H-Net Reviews
tracts and are averse to accepting payment in a depreciating currency. The aversion was not limited to British
lenders. Those wanting credit needed to promise repayment in sound money. That is as true today as in the
nineteenth century.
money were senseless because more money generates its
own demand through higher prices. The Asian crisis of a
hundred years later was a reminder that there may even
be a shortage of money in a fiat paper system when borrowers have promised more than they can deliver.
The supporters of so-called “bimetallism” were not interested in a workable bimetallic system with a marketresponsive ratio (as in Arthur J. Rolnick and Warren E.
Weber, “Gresham’s Law or Gresham’s Fallacy? ” Journal
of Political Economy, Feb. 1986). They wanted support for
silver, a redistribution of wealth to silver producers and
to borrowers wanting to repay gold debts in a depreciating currency. A freely convertible bimetallic system with
a market-violating ratio is bound to fail (as the United
States was reminded in 1893, when President Cleveland
called Congress to repeal the Sherman Silver Purchase
Act of 1890). Furthermore, complaints of a shortage of
All this was known in contemporary private and government circles. The impression of a system formed by
market forces without the benefit of conferences called
to mollify silver interests might be the best one after all.
Copyright (c) 2000 by EH.NET and H-Net. All rights
reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the
list. For other permission, please contact the EH.NET Administrator ([email protected]; Telephone 513-5292850; Fax: 513-529-3308). Published by EH.NET (February 2000)
If there is additional discussion of this review, you may access it through the network, at:
http://eh.net/
Citation: John H. Wood. Review of Reti, Steven P., Silver and Gold The Political Economy of International Monetary
Conferences, 1867-1892. EH.Net, H-Net Reviews. February, 2000.
URL: http://www.h-net.org/reviews/showrev.php?id=3856
Copyright © 2000, EH.Net and H-Net, all rights reserved. This work may be copied for non-profit educational use
if proper credit is given to the author and the list. For other permission questions, please contact the EH.NET
Administrator ([email protected]; Telephone: 513-529-2850; Fax: 513-529-3309). Published by EH.NET.
2