Accounting for the Fall of Silver
Hedging Currency Risk in Long-Distance Trade with Asia, 1870-1913
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Product details:
- Publisher OUP Oxford
- Date of Publication 20 October 2020
- ISBN 9780198865025
- Binding Hardback
- No. of pages216 pages
- Size 245x165x25 mm
- Weight 486 g
- Language English 47
Categories
Short description:
Michael Schiltz analyses the efforts by nineteenth century banking to mitigate the effects of the depreciation of silver. He shows that strategies for hedging exchange rate risk were created earlier than traditionally thought, and explores the relationship between Great-Britain and its colonies in Asia, and the rise of Japan as a financial power.
MoreLong description:
The second half of the nineteenth century is correctly known to have culminated in the emergence of the gold standard as the first truly international monetary regime. The processes leading up to this remarkable feat are, however, far less documented or understood. Economic historians have only recently started digging into the causes behind the 'fall of silver' that preceded the scramble for gold. It is nowadays clear that its effects were felt worldwide. Not in the least, silver depreciation severely affected East-West trade. It was, among other factors, behind the bankruptcy of several powerful institutions as the Oriental Bank Corporation. Yet at the same time, it cemented the position of other banks, some of which exist until this very day (HSBC, Standard Chartered). What did these banks know that others did not?
In Accounting for the Fall of Silver, Michael Schiltz explains that the 1870s and 1880s witnessed furious experiments with new financial products and, equally important, strategies for hedging exchange rate risk. Drawing on archives that have never been used before, the book throws new light on an important episode of nineteenth century world history. At the same time, it illuminates lesser known aspects of the first gold standard period. It draws attention to the existence of 'carry trades' between European money markets and the lesser liquid Asian periphery; and describes the creation of financial contracts with the sole aim of enabling commodity finance among Asian mercantile centers.
This is a serious work of scholarship about an important episode in global monetary history. An impressively researched book about the mechanisms and risks of payment systems in the golden age of globalization. Schiltz argues that the gold standard was the effect, not the cause, of the golden age of globalization. In the multi-polar trade economy of the late 19th century, exchange banks were key mediators — and risk mitigants - among the varieties of world currencies. Schiltz studies the adoption of the gold standard as a great risk shift that both disrupted existing financial institutions and changed the mechanisms by which this fundamental risk was mitigated.
Table of Contents:
Nomenclature; conventions; currency
Dedication
List of tables and figures
Preface and Acknowledgments
Introduction: Liquidity, Hard and Soft Currencies, and Trade Finance
Silver Risk, Silver Exports, and Sovereign Debt in the Nineteenth Century: A Brief Reappraisal
Trade Finance in the Late Nineteenth Century: Accounting for Silver Risk
“On an Even Keel”: Hedging Exchange Rate Risk on the Branch Network Level
Yokohama Specie Bank Flow-of-fund analysis: 1893-1908
Conclusion
Appendix 1: Construction of the Database & Methodological Issues
Appendix 2: Exchange Banking: a Concise Japanese-English Glossary
References
Index
