Skip to main content Accessibility help

The Gold Standard as a “Good Housekeeping Seal of Approval”

  • Michael D. Bordo (a1) and Hugh Rockoff (a1)

In this article we argue that during the period from 1870 to 1914 adherence to the gold standard was a signal of financial rectitude, a “good housekeeping seal of approval”, that facilitated access by peripheral countries to capital from the core countries of western Europe. Examination of data from nine widely different capital-importing countries, using a model inspired by the Capital Asset Pricing Model, reveals that countries with poor records of adherence were charged considerably more than those with good records, enough to explain the determined effort to stay on gold made by a number of capital-importing countries.

Hide All
Abramovitz, Moses. “The Monetary Side of Long Swings in U.S. Economic Growth.” Stanford University Center for Research on Economic Growth. Memorandum No. 146, Mimeo 1973.
Acena, , Pablo, Martin. “Spain During the Classical Gold Standard Years, 1880–1914.” In Monetary Regimes in Transition, edited by Michael, D. Bordo and Forrest, Capie, 135–72. Cambridge: Cambridge University Press, 1993.
Annual Abstract of Statistics. Central Statistics Office, London.
Barro, Robert J. and David, B. Gordon. “Rules, Discretion, and Reputation in a Model of Monetary Policy.” Journal of Monetary Economics 12 (1983): 101–21.
Bordo, Michael D. “The Bretton Woods International Monetary System: An Historical Overview.” In A Retrospective on the Bretton Woods System: Lessons for Monetary Reform, edited by Michael, D. Bordo and Barry, Eichengreen, 398. Chicago: University of Chicago Press, 1993.
Bordo, Michael D. and Jonung, Lars. The Long-Run Behavior of the Velocity of Circulation: The International Evidence. Cambridge: Cambridge University Press, 1987.
Bordo, Michael D. and Lars, Jonung. “Monetary Regimes, Inflation, and Monetary Reform: An Essay in Honor of Axel Leijonhufvud.” In Inflation, Institutions, and Information: Essays in Honor of Axel Leijonhufvud, edited by Vaz, D. F. and Vellapillai, K.. London: MacMillan Press, 1996.
Bordo, Michael D. and Anna, J. Schwartz. “The Operation of the Specie Standard: Evidence for Core and Peripheral Countries, 1880–1990”. In Historical Perspectives on the Gold Standard: Portugal and the World, edited by Barry, Eichengreen and Jorge, Braga de Macedo. London: Routledge, 1996.
Bordo, Michael D. and Santos, Fernando. “Portugal and the Bretton Woods International System.” In The History of International Monetary Arrangements, edited by Jaime, Reis, 181208. London: Macmillan, 1995.
Bordo, Michael D. and Eugene, N. White. “British and French Finances During the Napoleonic Wars.” In Monetary Regimes in Transition, edited by Michael, D. Bordo and Forrest, Capie, 241–73. Cambridge: Cambridge University Press, 1993.
Bloomfield, Arthur. Patterns of Fluctuations in International Investment before 1914. Princeton Studies in International Finance, No. 21. Princeton: Princeton University Press, 1968.
Brennan, M. J. “Capital Asset Pricing Model.” In The New Palgrave Dictionary of Money & Finance, edited by Peter, Newman, Murray, Milgate, and John, Eatwell, s.v., 287–91. London: The Macmillan Press, Ltd., 1992.
Butlin, Noel G.Australian Domestic Product, Investment and Foreign Borrowing, 1860–1938/39. Cambridge: Cambridge University Press, 1962.
Butlin, Noel G. “Our 200 Years: Australian Wealth and Progress Since 1788, A Statistical Picture”. In Commemorative Bicentenary Diary. Brisbane, Australia: Sunshine Diaries, 1987.
Calomiris, Charles W. “Historical Perspectives on The Tax-Based Theory of Money”. Ph.D. diss., Stanford University, 1985.
Calomiris, Charles W.Price and Exchange Rate Determination During the Greenback Suspension.” Oxford Economic Papers 40, no. 4 (1988): 719–50.
Calomiris, Charles W.The Motives of U.S. Debt-Management Policy, 1790–1880: Efficient Discrimination and Time Consistency.” Research in Economic History 13 (1991): 67105.
Canzoneri, Matthew. “Monetary Policy Games and the Role of Private Information.” American Economic Review 75 (1985): 1056–70.
Canzoneri, Matthew B. and Dale, W. Henderson. Monetary Policy in Interdependent Economies. Cambridge, MA: MIT Press, 1991.
Capie, Forrest and Webber, A.. A Monetary History of The UK 1870–1982. London: George Allan & Unwin, 1985.
Cardoso, Eliana A. and Dornbusch, Rudiger. “Brazilian Debt Crises: Past and Present”. In The International Debt Crisis in Historical Perspective, edited by Barry, Eichengreen and Peter, H. Lindert, 106–39. Cambridge: MIT Press, 1989. Commercial and Financial Chronicle, various dates.
Cortés, Condé, Roberto, . Dinero, deuda y crisis: Evolución fiscaly monetaria en la Argentina. Buenos Aires: Editorial Sudamericana, Instituto Torcuato Di Tella, 1989.
Davis, Lance and Robert, Cull. International Capital Markets and American Economic Growth. Cambridge: Cambridge University Press, 1994.
DeKock, Gabriel and Vittorio, Grilli. “Endogenous Exchange Rate Regime Switches”. NBER Working Paper No. 3066, Cambridge, MA, 1989.
Della, Paolera, Gerardo, . “How the Argentine Economy Performed during the International Gold Standard: A Reexamination”. Ph.D. diss., University of Chicago, 1988.
De, Mattia, Renato, . Storia del capitale della Banc d'Italia e degli istitute predecessori. Rome: Banca d'Italia, 1977.
Dick, , Trevor, J. O. and John, E. Floyd. Canada and the Gold Standard. New York: Cambridge University Press, 1992.
Edelstein, Michael. Overseas Investment in the Age of High Imperialism: The United Kingdom, 1850–1914. New York: Columbia University Press, 1982.
Eichengreen, Barry, . Golden Fetters: The Gold Standard and the Great Depression, 1919–1939. Oxford: Oxford University Press, 1992.
Eichengreen, Barry and Peter, H. Lindert, eds. The International Debt Crisis in Historical Perspective. Cambridge, MA: MIT Press, 1989.
Eichengreen, Barry, . “Editor's Introduction”. In The Gold Standard in Theory and History, edited by Barry, Eichengreen, 135. London: Methuen, 1985.
Estatisticas historicas do Brasil. Series economicas, demograficas e sociais de 1550 a 1988. Rio de Janeiro: Brasilia. 1990.
Estadisticas historicas de Espana, Siglos xix-xx Madrid: Fundacion Banco Exterior 1989.
Feis, Herbert. Europe: The World's Banker, 1870–1914: An Account of European Foreign Investment and the Connection of World Finance with Diplomacy before the War. New York: Council on Foreign Relations. Reprinted by Augustus, M. Kelley, 1974.
Fetter, F.Development of British Monetary Orthodoxy, 1797–1875. Cambridge: Harvard University Press, 1965.
Fisher, , Irving., The Theory of Interest: As Determined by Impatience to Spend Income and Opportunity to Invest It. New York: The Macmillan Company, 1930.
Flood, Robert P. and Peter, Isard. “Simple Rules, Discretion and Monetary Policy.” NBER Working Paper No. 2934, Cambridge, MA, 1989.
Ford, A. G.The Gold Standard 1880–1914: Britain and Argentina. Oxford: Clarendon Press, 1962.
Frankel, Jeffrey A.On Exchange Rates. Cambridge, MA: Cambridge University Press, 1993.
Frankel, Jeffrey A. and Chudozie, Okongwu. “Liberalized Portfolio Capital Inflows in Emerging Markets: Sterilization, Expectations, and the Incompleteness of Interest Rate Convergence”. NBER Working Paper No. 5156, Cambridge, MA, 1995.
Fratianni, M. and Spinelli, F.. “Italy in the Gold Standard Period, 1861–1914.” In A Retrospective on the Classical Gold Standard, 1921–1931, edited by Michael, D. Bordo and Anna, J. Schwartz, 405–41. Chicago: University of Chicago Press, 1984.
Friedman, Milton. “Bimetallism Revisited.” Journal of Economic Perspectives 4, no. 4 (1990): 85104.
Friedman, Milton and Anna, J. Schwartz. Monetary Trends in the United States and the United Kingdom: Their Relation to Income, Prices, and Interest Rates, 1867–1975. Chicago: University of Chicago Press for the NBER, 1982.
Fritsch, Winston and Gustavo, H. B. Franco. “Aspects of the Brazilian Experience Under the Gold Standard.” PUC Rio de Janeiro. Mimeo, 1992.
Gallarotti, Giulio M.The Anatomy of an International Monetary Regime: the Classical Gold Standard 1880–1914. New York: Oxford University Press, 1995.
Giovannini, Alberto. “Bretton Woods and Its Precursors: Rules Versus Discretion in the History of International Monetary Regimes.” In A Retrospective on the Bretton Woods System, edited by Michael, D. Bordo and Barry, Eichengreen, 109–47. Chicago: University of Chicago Press, 1993.
Grilli, Vittorio. “Managing Exchange Rate Crises: Evidence from the 1890s.” Journal of International Money and Finance 9 (1990): 258–75.
Grossman, Herschel J. and John, B. Van Huyck.Sovereign Debt as a Contingent Claim: Excusable Default, Repudiation, and Reputation.” American Economic Review 78 (1988): 1088–97.
Havinden, Michael and Meredith, David. Colonialism and Development: Britain and its Tropical Colonies, 1850–1960. London: Routledge, 1993.
Hayashi, Fumio. “Japan's Saving Rate: New Data and Reflections”. NBER Working Paper No. 3205, Cambridge, MA, 1989.
ISTAT Annuario Statistica Italiano, Rome. various years.
Kydland, Finn E. and Edward, Prescott. “Rules Rather than Discretion: The Inconsistency of Optimal Plans”. Journal of Political Economy 85 (1977): 473–91.
Lains, Pedro. “A economia Portuguesa no seculo XIX: Crescimento economico ecomercio externo, 1850–1913.” Unpublished Manuscript, 1995.
Lintner, J.The Valuation of Risk Assets and the Selection of Risky Investments in Stock Portfolios and Capital Budgets.” Review of Economics and Statistics 47 (1965): 1337.
Llona-Augustin, . “Chilean Monetary Policy: 1860–1925”. Ph.D. Diss., Boston University, 1990.
Llona-Rodriguez, , Augustine, “Chile During the Gold Standard: A Successful Paper Money Experience”. Mimeo. Instituto Torcuato Di Tella, 1993.
Lucas, , Robert, E. Jr and Nancy, L. Stokey. “Optimal Fiscal and Monetary Policy in an Economy Without Capital.” Journal of Monetary Economics 1 (1983): 5593.
Macedo, , Jorge, Braga de. “Convertibility and Stability 1834–1994: Portuguese Currency Experience Revisited.” Mimeo. Nova University, Lisbon, 1995.
Macaulay, Frederic R.The Movements of Interest Rates, Bond Yields and Stock Prices in The United States Since 1856. New York: NBER, 1938.
Maddison, Angus. Dynamic Forces in Capitalist Development. Oxford: Oxford University Press, 1991.
Mankiw, Gregory. “The Optimal Collection of Seigniorage: Theory and Evidence.” Journal of Monetaiy Economics 20, no. 2 (1987): 327–41.
Mamalakis, Markos J.Historical Statistics of Chile. Vol. 5. New York: Greenwood, 1989.
Marichal, Carlos. A Century of Debt Crisis in Latin America: From Independence to the Great Depression 1820–1930. Princeton: Princeton University Press, 1989.
Miller, Marcus and Alan, Sutherland. “Britain's Return to Gold and Entry into the ERM.” In Exchange Rate Targets and Currency Banks, edited by Paul, Krugman and Marcus, Miller, 82106. Cambridge: Cambridge University Press, 1992.
Miller, Marcus and Man, Sutherland. “Speculative Anticipations of Sterling's Return to Gold: Was Keynes Wrong?” Economic Journal, 1994.
Mitchell, Brian R.Abstract of British Historical Statistics. Cambridge: Cambridge University Press, 1962.
Mitchell, Brian R.International Historical Statistics: Europe, 1750–1988. New York: Stockton Press, 1992.
Mitchell, Brian R.International Historical Statistics: The Americas, 1750–1988. 2d ed.New York: Stockton Press, 1993. (This volume includes data on Australia).
Morgenstern, Oskar. International Financial Transactions and Business Cycles. Princeton: Princeton University Press, 1959.
Neufeld, Edward P.The Financial System of Canada. Toronto: Macmillan, 1972.
Obstfeld, Maurice. “Destabilizing Effects of Exchange Rate Escape Clauses”. NBER Working Paper No. 3606, Cambridge, MA, 1992.
Officer, Lawrence. “The Efficiency of the Dollar-Sterling Gold Standard, 1980–1908”. Journal of Political Economy 94 (1986): 1038–073.
Officer, Lawrence. “Gold-Point Arbitrage and Uncovered Interest Arbitrage Under the 1925–1931 Dollar-Sterling Gold Standard.” Explorations in Economic History 30, no. 1 (1993): 98127.
O'Rourke, , Kevin, and Jeffrey, Williamson. “Were Hechsher and Ohlin Right? Putting the Factor Price Equalization Theorem Back Into History? NBER Working Papers on Historical Factors in Long-Run Growth, No. 37, Cambridge, MA, 1992.
Pelaez, Carlos M. and Suzigan, Wilson. Historia monetaria do Brazil. Editoria Universidade de Brazilia, 1976.
Pope, David. “Australia's Payments Adjustments and Capital Flows Under the International Gold Standard, 1870–1913”. In Moneta, Regimes in Transition, edited by Michael, D. Bordo and Forrest, Capie, 201–37. Cambridge: Cambridge University Press, 1993.
Reis, Jaime. “The Gold Standard in Portugal, 1854–1891.” Mimeo. Universidale Nova de Lisbon, 1992.
Roll, Richard. “Interest Rates and Price Expectations During the Civil War.” this JOURNAL 32, no. 10 (1972): 476–98.
Schwartz, Anna J. “Banking School, Currency School, Free Banking School.” In New Paigrave Dictionary of Economics, 148521. London: Macmillan, 1987.
Sharpe, W. F.Capital Asset Prices: A Theory of Market Equilibrium Under Conditions of Risk”. Journal of Finance 19 (1964): 425–42.
Simons, Henry C. “Rules Versus Authorities in Monetary Policy”. In A.E.A. Readings in Monetary Theory edited by Friedrich, A. Lutz and Lloyd, W. Mintz, 337–68. Homewood, Illinois: Richard D. Irwin, 1951.
Smith, Gregor and Todd, Smith. “Wesley Mitchell and Irving Fisher and the Greenback Gold Reforms, 1865–1879.” Mimeo. Queens University, 1993.
Smith, W. S. and Smith, R. T.Stochastic Process Switching and the Return to Gold.” Economic Journal 100 (1990): 164–75.
Social Science Federation of Canada. Historical Statistics of Canada. 2d ed.Ottawa: Statistics Canada in joint sponsorship with the Social Science Federation of Canada, 1983.
Spinelli, Franco and Fratianni, Michele. Storia monetaria D'Italia: l'Evoluzione del sistema monetario e bancario. Milano: A. Mondadori, 1991.
Spinelli, Franco. “The Demand For Money In The Italian Economy: 1867–1965” Research Report. Department of Economics, University of Western Ontario, 1978.
Stiglitz, Joseph and Andrew, Weiss.Credit Rationing in Markets with Imperfect Information.” American Economic Review 71, no. 8 (1981): 393410.
Tonniolo, G.An Economic History of Liberal Italy: 1850–1918. New York: Routledge, 1990.
Unger, I.The Greenback Era: A Social and Political History of American Finance, 1865–1879. Princeton: Princeton University Press, 1964.
Urquhart, Malcolm C. “New Estimates of GNP, Canada, 1870–1926.” In Long-Term Factors in American Economic Growth, NBER Studies in Income and Wealth, vol. 51, edited by Stanley, L. Engerman and Robert, E. Gallman, 994. Chicago: University of Chicago Press, 1986.
U.S. Bureau of Census. Historical Statistics of the United States: Colonial Times to 1957. Washington, DC: GPO, 1960.
U.S. Bureau of Census. Historical Statistics of the United States, Colonial Times to 1970, Bicentennial Edition. Washington, DC: GPO, 1975.
Vamplew, Wray. Australians, Historical Statistics. Broadway, N.S.W. Australia: Fairfax, Syme, and Weldon Associates, 1987.
Viner, J.Studies in the Theory of International Trade. Chicago: University of Chicago Press,1937.
Williamson, Jeffrey G.American Growth and the Balance of Payments. Chapel Hill: The University of North Carolina Press, 1964.
Wilson, Roland. Capital Imports and the Terms of Trade. Melbourne: Melbourne University Press in association with Macmillan&Co., 1931.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

The Journal of Economic History
  • ISSN: 0022-0507
  • EISSN: 1471-6372
  • URL: /core/journals/journal-of-economic-history
Please enter your name
Please enter a valid email address
Who would you like to send this to? *


Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed