[...]... of the pound sterling Many other government central banks also abandoned the gold standard, and exchange rates were for the most part left to float for the rest of the decade As the Second World War drew to a close, the Allies agreed to set up a government- operated, pseudo-gold standard structure In the postwar era, the Bretton Woods plan provided the basis for a world exchange rate system until the. .. the Bank of England and the Fed, and their efforts to counteract the pressures of what would have been routine gold standard adjustments, emphasizes the validity of the maxim that a true gold standard and an activist central bank are incompatible institutions A nation-state either has one or the other In the face of the world financial crisis of 1931, the Bank of England permanently abandoned gold convertibility... of the international monetary system Present-day monetary arrangements arose from the international gold standard; yet the gold standard has been a relatively recent development It functioned as the world' s monetary standard only for a brief period of time between the early 1870s and 1914 Before then, the international monetary standard was largely bimetallic Britain, traditionally on a silver standard,... at the mint Therefore, gold did not come to 6 Money and the Nation State the mint and the U.S monetary system functioned as if it were on a silver standard In 1834 the U.S gold-silver price ratio was revised to near 16: 1 Since the world price ratio remained much as it was before (around 15.6:1), this new ratio put the United States onto an effective gold standard In 1861 the federal government of the. .. extension of the franchise complicated the timeconsistency problem The time-consistency problem provides the motivation for a public-choice-theoretic explanation of the evolution of constraints, such as the nineteenth-century gold standard, on the exercise of the state monopoly I offer some concluding remarks in section five The Evolution of Money and the Origins of the State Monopoly Monetary evolution... accept the depreciated paper of these central banks as full payment for previously contracted debts The undisciplined fiat standard replaced the earlier gold standard, and the vagaries of the political process now determined the value of the currency In the United States and in many other countries private holdings of gold held and used for monetary purposes were outlawed altogether in the 1930s The ancient... standard, in the proper sense of the term, dates primarily from the late nineteenth century to World War I, during which time it functioned reasonably well However, the financial and monetary upheavals accompanying the war obliterated the gold standard and seriously jeopardized its reestablishment after the armistice Murray Rothbard in chapter four details the rather bizarre machinations of the world' s... convertibility was abandoned and the government or its pet bank(s) inflated the currency on the pretext that the emergency required it A good example was the Civil War period in the United States, when the federal (Northern) government abandoned gold convertibility of the currency and embarked on greenback inflation to help finance the war, but much the same thing happened in many other countries at different... have fallen under the influence of political and legal arguments that accept the legitimacy of the state's alleged monetary sovereignty, the state's powers to specify what shall be legal tender, and the state's right to create a central bank Van Dun's chapter focuses on the development of these political and legal concepts and their influence on the political and financial milieu Perhaps the critical issue... chapters of the book fall naturally into three groupings The first section focuses on historical issues and, in particular, the history of the international monetary system Chapter one examines the evolution of the state's monetary monopoly from ancient times to the present As David Glasner notes, the history of money is virtually the history of the state's debasement, depreciation, and devaluation of the . Nathan Glazer MONEY AND THE NATION STATE The Financial Revolution, Government, and the World Monetary System Edited by Kevin Dowd and Richard Timberlake PRIVATE RIGHTS & PUBLIC ILLUSIONS. 1-5 600 0-9 3 0-6 (paper) Printed in the United States of America Library of Congress Cataloging-in-Publication Data Dowd, Kevin. Money and the nation state : the financial revolution, government, . tender, and the state's right to create a central bank. Van Dun's chapter focuses on the development of these political and legal con- cepts and their influence on the political and financial