P1: FJT/ CY144-FM 0521819954 December 13, 2002 9:2 Char Count= 0 ii This page intentionally left blank P1: FJT/ CY144-FM 0521819954 December 13, 2002 9:2 Char Count= 0 International Financial History in the Twentieth Century system and anarchy The essays in this book, written by some of the leading experts in the field, examine the long-run history of the international financial system in terms of the current debate about globalization and its limits. In the nineteenth century, international markets existed without international institutions. A response to the problems of capital flows came in the form of attempts to regulate national capital markets (for example, through the establishment of central banks). In the interwar years, there were (largely unsuccessful) attempts at designing a genuine international trade and monetary system; and at the same time (coincidentally) the system collapsed. In the post-1945 era, the intended design effort was infinitely more successful. The development of large international capital markets since the 1960s, however, increasingly frustrated attempts at international control. The emphasis has shifted in consequence to debates about increasing the transparency and effectiveness of markets, but these are exactly the issues that already dominated the nineteenth- century discussions. Marc Flandreau is Professor of International Economic Relations at the Institut d’Etudes Politiques de Paris. Carl-Ludwig Holtfrerich is Professor of Economics at the John F. Kennedy Institut f ¨ ur Nordamerika Studien at the Freie Universit ¨ at Berlin. Harold James is Professor of History at Princeton University. i P1: FJT/ CY144-FM 0521819954 December 13, 2002 9:2 Char Count= 0 ii P1: FJT/ CY144-FM 0521819954 December 13, 2002 9:2 Char Count= 0 publications of the german historical institute, washington, d.c. Edited by Christof Mauch with the assistance of David Lazar The German Historical Institute is a center for advanced study and research whose purpose is to provide a permanent basis for scholarly cooperation among historians from the Federal Republic of Germany and the United States. The Institute con- ducts, promotes, and supports research into both American and German political, social, economic, and cultural history; into transatlantic migration, especially in the nineteenth and twentieth centuries; and into the history of international relations, with special emphasis on the roles played by the United States and Germany. Recent books in the series Norbert Finzsch and Dietmar Schirmer, editors, Identity and Intolerance: Nationalism, Racism, and Xenophobia in Germany and the United States Susan Strasser, Charles McGovern, and Matthias Judt, editors, Getting and Spending: European and American Consumer Societies in the Twentieth Century Carole Fink, Philipp Gassert, and Detlef Junker, editors, 1968: The World Transformed Roger Chickering and Stig F ¨ orster, editors, Great War, Total War: Combat and Mobilization on the Western Front Manfred F. Boemeke, Gerald D. Feldman, and Elisabeth Glaser, eds., The Treaty of Versailles: A Reassessment After 75 Years Manfred Berg and Martin H. Geyer, eds., Two Cultures of Rights: The Quest for Inclusion and Participation in Modern America and Germany Manfred F. Boemeke, Roger Chickering, and Stig F ¨ orster, eds., Anticipating Total War: The German and American Experiences, 1871–1914 Roger Chickering and Stig F ¨ orster, eds., The Shadows of Total War: Europe, East Asia, and the United States, 1919–1939 Elisabeth Glaser and Hermann Wellenreuther, eds., Bridging the Atlantic: The Question of American Exceptionalism in Perspective iii P1: FJT/ CY144-FM 0521819954 December 13, 2002 9:2 Char Count= 0 iv P1: FJT/ CY144-FM 0521819954 December 13, 2002 9:2 Char Count= 0 International Financial History in the Twentieth Century system and anarchy Edited by marc flandreau Institut d’Etudes Politiques de Paris carl-ludwig holtfrerich Freie Universit ¨ at Berlin harold james Princeton University GERMAN HISTORICAL INSTITUTE Washington, D.C. and v    Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo Cambridge University Press The Edinburgh Building, Cambridge  , United Kingdom First published in print format isbn-13 978-0-521-81995-4 hardback isbn-13 978-0-511-07011-2 eBook (EBL) © German Historical Institute 2003 2003 Information on this title: www.cambrid g e.or g /9780521819954 This book is in copyright. Subject to statutory exception and to the provision of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. isbn-10 0-511-07011-X eBook (EBL) isbn-10 0-521-81995-4 hardback Cambridge University Press has no responsibility for the persistence or accuracy of s for external or third-party internet websites referred to in this book, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate. Published in the United States of America by Cambridge University Press, New York www.cambridge.org - - - -     P1: FJT/ CY144-FM 0521819954 December 13, 2002 9:2 Char Count= 0 Contents Contributors page ix Preface x Introduction Marc Flandreau and Harold James 1 1 Caveat Emptor: Coping with Sovereign Risk Under the International Gold Standard, 1871–1913 Marc Flandreau 17 2 Conduits for Long-Term Foreign Investment in the Gold Standard Era Mira Wilkins 51 3 The Gold-Exchange Standard: A Reinterpretation Stephen A. Schuker 77 4 The Bank of France and the Gold Standard, 1914–1928 Kenneth Mour ´ e 95 5 Keynes’s Road to Bretton Woods: An Essay in Interpretation Robert Skidelsky 125 6 Bretton Woods and the European Neutrals, 1944–1973 Jakob Tanner 153 7 The 1948 Monetary Reform in Western Germany Charles P. Kindleberger and F. Taylor Ostrander 169 8 The Burden of Power: Military Aspects of International Financial Relations During the Long 1950s Werner Abelshauser 197 9 Denationalizing Money? Economic Liberalism and the “National Question” in Currency Affairs Eric Helleiner 213 vii P1: FJT/ CY144-FM 0521819954 December 13, 2002 9:2 Char Count= 0 viii Contents 10 International Financial Institutions and National Economic Governance: Aspects of the New Adjustment Agenda in Historical Perspective LouisW.Pauly 239 Index 265 [...]... Yale University and CarlLudwig Holtfrerich of the Freie Universit¨ t Berlin At a later stage, Marc a Flandreau and Harold James were involved in the planning The aim of the conference and the volume was and is to examine major episodes in the history of the international financial system: the gold standard, the Great Depression, the creation of a new international and European order after the Second World... of the international community It appears in regional variants of an international monetary order, as in the case of the evolution of the European Monetary System Is high-minded internationalism just a cover for national interests – American in the case of the Bretton Woods system and British in the case of the interwar League of Nations? Indeed, there are remarkable continuities between the League and. .. Count= 0 Marc Flandreau and Harold James trade and monetary system; and at the same time (coincidentally) the system collapsed In the post-1945 era, the intended design effort was in nitely more successful At first, it was designed to regulate and indeed control financial markets The development of large international capital markets since the 1960s, however, increasingly frustrated attempts at international. .. Count= 0 Introduction marc flandreau and harold james The long-run history of the international financial system in the course of the twentieth century can be described in terms of the current debate about globalization and its limits At the beginning of the new century, there existed a substantially integrated world economy, tied together through more or less unconstrained flows of capital, goods, and labor... Mira Wilkin’s chapter in this book 7 Feis, Europe, the World’s Banker 8 Ignorance and herding behavior play an important role in the boom and bust approaches to international lending See Charles P Kindleberger, International Propagation of Financial Crises: The Experience of 1888–93,” in Charles P Kindleberger, Keynesianism vs Monetarism and Other Essays in Financial History (London, 1985) 9 The first... in 1998–9 involved the integration of environmental and labor standard issues in IMF programs Such demands reflect an expectations trap The more the IMF is seen to extend its mandate, the more it will be expected to do; and inevitably also the less it will be able to live up to the demands The problem came into much sharper focus during the Asian crisis of 1997–8, when both the right and the left (including... globalization and financial and trade liberalism (the so-called Washington consensus) Like the conference, this book examines the three phases of the modern globalized economy – the creation of the global world in the nineteenth century, interwar disintegration, and postwar restoration – in a very broad context, looking at the economic history but also at the institutional and political and security... the case in the pre-1914 system) , but in the financial and economic centers What seems unique about the interwar situation is how completely and devastatingly the political process failed It may be, as one of the editors of this book has argued in relation to the intense debate about whether there was political room for maneuver in Germany in the Depression era, that there was a willful failure of the. .. fundamental character of the involvement of international institutions in the domestic political complexes that are inevitably produced by debates about appropriate strategies of economic stabilization On the one hand, the international institutions have a lightning rod function, in which they take away the blame for unpopular decisions On the other hand, in democratic politics, responsibility and accountability... about the role of the central banks in domestic economic management It produced legends and myths about the baleful in uence of the “bankers’ ramp” (in the United Kingdom) or the “deux cent familles” (in France) Then came the financial panics and crises of the early 1930s Central banks and international central bank cooperation, which had for a time been seen as the solution to problems of the international . History in the Twentieth Century system and anarchy The essays in this book, written by some of the leading experts in the field, examine the long-run history of the international financial system in terms. attempts at designing a genuine international trade and monetary system; and at the same time (coincidentally) the system collapsed. In the post-1945 era, the intended design effort was in nitely more. Singapore, São Paulo Cambridge University Press The Edinburgh Building, Cambridge  , United Kingdom First published in print format isbn-13 97 8-0 -5 2 1-8 199 5-4 hardback isbn-13 97 8-0 -5 1 1-0 701 1-2