Economics Dictionary of ArgumentsHome
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| Bullionism: Bullionism was an 18th-century economic theory that emphasized the importance of gold and silver as a measure of a nation's wealth. It argued that the balance of trade should be positive, with more precious metals coming into the country to strengthen its economy. Bullionism influenced early mercantilist policies. See also Gold Standard, Central Banks._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Murray N. Rothbard on Bullionism - Dictionary of Arguments
Rothbard II 160 Bullionism/central banks/inflation/gold standard/Rothbard: The political controversies (…) centred on explaining the price inflation and depreciation and on assessing the role of the Bank of England. The ‘bullionists’ pointed out that the cause of the price inflation, the rise in the price of bullion over par, and the depreciation of the pound was the fiat money expansion. They further maintained that the central Rothbard II 161 role in that inflation was played by the Bank of England, freed of its necessity to redeem in specie. >Central Banks, >Gold standard. VsBullionism: Their opponents, the ‘anti-bullionists’, tried absurdly to absolve the government and its privileged bank of all blame, and to attribute all unwelcome consequences to specific problems in the particular markets involved. Depreciation in foreign exchange was charged to the outflow of bullion caused by excessive imports or by British war expenditures abroad (presumably unrelated to the increased amount of paper pounds or to the lowered purchasing power of the pound). The rise in the price of bullion was supposedly caused by an increased ‘real’ demand for gold or silver (again unrelated to the depreciated paper pound). The increases in domestic prices received less attention from the two sides of the debate, but they were attributed by the anti-bullionists to wartime disruptions and shortages in supply. >Inflation. In short, the anti-bullionists reverted to mercantilist worry about ad hoc causes and the balance of trade on the market. The previous hard-won analysis of money and overall prices went by the board. >Money, >Monetarism, >Money supply, >Demand for money. Rothbard II 162 The price of food rose substantially in 1799, but it was easy for the anti-bullionists and other administration apologists to dismiss this rise in a flurry of pamphlets as the product of crop failure and wartime disruption in the import of grain. The first phase of the bullionist controversy (1800–4) started when one of the best of the bullionists [Walter Boyd (c.1754–1837) (…) one of the prominent sufferers from its allegedly tight money] published his remarkable pamphlet on the cause of the depreciation. Body/Rothbard: (…) Boyd put the blame for his failure not on his own reckless feeding at the public trough, but on the niggardly policies of the Bank of England. In November 1800, Boyd wrote A Letter to the Rt. Hon. William Pitt published in 1801, which won quick fame (…). With Boyd's Letter, the bullionist controversy was born, Boyd now denouncing the Bank of England not for overly tight credit but to the contrary for generating the inflation and monetary depreciation in the first place. >Money/Walter Boyd, >Money/Adam Smith. Rothbard II 176 Rothbard: (…) the correct analysis of complete bullionism (such as presented by Boyd and later by Lord King) stresses monetary factors leading to monetary equilibrium, while showing that real factors can only have temporary effects. The analysis of real factors is integrated with, and at all times subordinated to, the monetary factors, and short-run and long-run monetary processes are integrated as well. Henry Thornton: In Thornton's moderate anti-bullionist position (often miscalled 'moderate bullionist'), however, both real and monetary causal factors and processes are presented as separate and independent of each other, with real factors presented as empirically more important. Short-run factors are similarly stressed, to the neglect of long-run forces. >Time/Rothbard. Rothbard II 187 After 1804, the Bank of England dampened its expansionist policy for a few years, and inflation and depreciation abated as well. As a result, the bullionist controversy about England and Ireland died down. Phase 1 of the great bullionist controversy was over. There had appeared on the scene three schools of monetary thought and opinion: first, the anti-bullionist apologists of the British government and the Bank of England, whose views can scarcely be dignified by the name of 'theory' and who simply denied that monetary issue had any relation to the evils of inflation and depreciation. Ranged against them, were, second, the complete bullionists, headed by Lord King and by Walter Boyd, who trenchantly applied supply and demand for money analysis to the new conditions of irredeemable fiat money, and Who attacked the Bank of England's over-issue as the cause of the evils, with 'real' factors also playing a temporary and subordinate role. In the middle were, third, the moderates, consisting largely of Henry Thornton and Francis Horner, theoretical agnostics who claimed that either monetary or real factors might be responsible for any given inflation, and emphasized empirically and ad hoc which set of factors might be the culprits in any given situation. Starting as a moderate anti-bullionist, the empirical weight shifted quickly for Horner, at least, to enter the moderate bullionist camp by 1803. Before Phase 1 had ended, however, a fourth school of thought, and the third strand of bullionism, had emerged: mechanistic bullionism. The great error of mechanistic bullionism was not simply to neglect all real influences, and to insist that monetary factors and monetary factors alone determined price levels and exchange rates. If that had been the only flaw, the error would have been a relatively minor one. The main problem was thatthe mechanists were also moved to neglect all other causal factors than the money supply - many of them of great importance. In brief, they neglected the demand for money, in all its subtle variations, and such vital 'distribution' effects - even in the long run - as changes in relative assets and incomes and changes in relative prices. In sum, the mechanists claimed that, in the short run and in the long, the only causal factors on price and exchanges were changes in the quantity ofmoney. Hence their erroneous and distorted view that changes in price 'levels' are exactly quantitatively proportionate to changes in the quantity of money._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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> Counter arguments against Rothbard
> Counter arguments in relation to Bullionism
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