Journal Issue

Book Notices

International Monetary Fund. External Relations Dept.
Published Date:
March 1969
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Triffin, Robert, Our International Monetary System: Yesterday, Today and Tomorrow, New York, N.Y., U.S.A., Random House, 1968, xvi + 206 pp., paperback, $2.50; and Young, George K., Finance and World Power, London, England, Nelson, 1968, viii + 221 pp., 45s; Eric Roll, The World After Keynes, New York, N.Y., U.S.A., Frederick A. Prager, 1968, xiii + 193 pp., $5.50.

Robert Triffin’s book and also that of George Young deal with the forces that determine the structure of the international monetary system. Sir Eric Roll’s book is wider in concept but well over half the book deals with the “international economy.” Their various approaches make interesting comparative and, to some extent, complementary reading.

Professor Triffin views the international monetary system as an evolutionary organism constantly changing as a result of the “gradual displacement of ‘commodity money’ by man-made ‘fiduciary money.’” International monetary crises of the past are witness to the disorderliness of earlier periods of adjustment away from “commodity money.”

From this starting point Triffin makes vigorous use of a great number of facts, conveniently arranged, in his interpretation of international monetary history and prognostications for the future. He concludes that “the gold exchange standard of today … parallels the early phase of fiduciary money in national monetary systems, that is, the uneasy coexistence of commodity money with currency or deposit liabilities, freely issued by separate deposit banks but convertible at any time into commodity money by the issuing insitutions.” He argues for the demonetization of gold and envisages the growth of monetary unions “within the narrower confines of regional integration.” Above all, Triffin argues “the need to concentrate into a single depository institution … the fiduciary reserves held, alongside gold, by participating central banks.” Such rigorous determinism is intellectually challenging; but one cannot help but feel that the evolution of institutions is not rigorously logical, but humanly unpredictable.

Mr. Young argues that the structure of the international monetary system is a reflection of relative changes in the economic strength of countries and, therefore, in the influence countries command in international finance and the power they exert over international monetary policy. Countries are not, in general, altruistic; but neither are they monolith in their views, ideas, and aspirations.

The thesis of the book is itself cynical, yet Young develops it without cynicism, and with considerable skill. The book makes interesting reading and one can only be impressed with the large amount and sometimes abstruse information that the author handles with ease and compactness. One can only hope that charity, along with optimism, will keep breaking into Young’s world of calculated power.

Sir Eric Roll is an internationalist. In this well written but oddly old-fashioned survey of philosophic-economic and economic issues, he analyzes, as a central theme, the “proper role of the economist as a theorist in practical affairs.” While no definitive answer is provided, Sir Eric is clear that one of the new responsibilities of an economist is to further “the creation of a one-world economy.” In terms of policies to achieve that end, however, he concludes that it might “… be wiser to accept the verdict of those who actually operate the economy rather than of those who analyze it.”

But Sir Eric, long an operating economist, is also a first-class analytical economist. In this book he analyzes most perceptively some of the problems of economic policy, especially as seen from the British-American point of view, and outlines the arduous path which must be trod in the creation of the “one-world economy.” The chapter on economic planning is brilliant. He also carefully traces the emergence and operations of “the Bretton Woods world” of the Fund and Bank, the General Agreement on Tariffs and Trade, and the Organization for Economic Cooperation and Development, of the adjustment process and of the problems of the less developed world. Though he believes the world to be moving “toward continuing restriction of the role of gold” and that it is “reasonable to suppose that changes will be of the same general order as those which have already transformed the international monetary mechanism in the last thirty years” the main query remains: “what degree (or purpose) of national sovereignty in economic matters is likely to be possible and appropriate when the end of the century looms near?” In their different ways all three books reviewed here come back to this fundamental noneconomic problem.

David Williams

Cameron, Rondo, with the collaboration of Olga Crisp, Hugh T. Patrick, and Richard Tilly, Banking in the Early Stages of Industrialization, A Study in Comparative Economic History, New York, N.Y., U.S.A., Oxford University Press, 1967, xv + 349 pp., $6.50.

“One of the clearest lessons to be derived from this study of history is that no single model of a banking system is appropriate for all economies. It is not to be expected, therefore, that the historical experience of the industrialized nations of Europe or elsewhere will be directly applicable in countries that differ widely in culture, resources, historical traditions, and many other respects.”

This is the cautious conclusion of an interesting and intelligent book, in which Professor Cameron and his collaborators have attempted to distill the lessons of seven countries’ banking experience. Careful studies of the growth of banks in England from 1750 to 1844, in Scotland (1750-1845), in France (1800-1870), in Belgium (1800-1875), in Germany (1815-1870), in Russia (1860-1914), and in Japan (1868-1914), provide some, but not conclusive, insight into the essential question: as between industrialization and banking growth, which is the hen and which the egg?

By merely asking the right questions, however—as it notably does—this book will help anyone seeking to know how financial evolution can assist economic development. At least it becomes possible to see the dangers of extreme courses—of overmuch official restraint, as in France, or of overlax supervision, as in the financial crises in nineteenth century England. Between these two dangers many routes to prosperity are shown, in which the relationship between government and individual enterprise can range from useful encouragement (as in Russia and Japan), through passive permissiveness (as in Scotland and Belgium) to benevolent wrongheadedness (as in Prussia).

One advantage that today’s developing countries enjoy, compared with the conditions that prevailed when their predecessors were growing up, is a general acceptance of paper as a medium for making payments. On the other hand, the experience distilled from the seven countries suggests that economic growth may be better served by local banks gathered at a late stage under the wing of a central bank than by a system which starts with a single national bank and attempts to proliferate. In that respect, present-day developing countries may suffer a relative handicap. However, to quote Professor Cameron again, “Today’s developing nations must work out their own problems with such assistance as they can obtain from their wealthier and technically more advanced neighbors. Conditions are different now from what they were in the past and they will be different in the future from what they are in the present. But … a knowledge of history on the part of the leaders of today is the best guarantee that the world will benefit from the mistakes of the past as well as from its triumphs.”

It is the value of this book that it condenses into a coherent story the causes of these mistakes and of these triumphs in the significant economic field with which it deals.

J. K. Horsefield

Scammell, W.M., The London Discount Market, New York, N.Y., U.S.A., St. Martin’s Press Inc., 1968, 269 pp., $15.00; Sayers, Richard S., Gilletts in the London Money Market, 1867-1967, New York, N.Y., U.S.A., Oxford University Press, 1968, xii + 204 pp., $5.60.

In Professor Scammell’s introduction he suggests that some day “a good and useful book can be written from the inside, which records the experiences of a firm [in the discount market] and which catches the spirit and activities of Lombard Street more felicitously than this one can hope to do.” It is unfortunate for Professor Scammell that such a book has appeared at the same time as his own: Professor Sayers’ Gilletts in the London Money Market, 1867-1967. With this available, it is impossible to recommend Professor Scammell’s study, since Professor Sayers’, besides being much better written, is based on firsthand information, is permeated with Professor Sayers’ unique knowledge of the British banking structure, and is available at barely one third of the price.



The inclusion of a book in this list does not preclude its being reviewed at a later date.

Gilbert, Milton, The Gold-Dollar System: Conditions of Equilibrium and the Price of Gold, Princeton, New Jersey, U.S.A., Princeton University, Department of Economics, 1968, 60 pp., $1.00.

McPherson, W.W. (Editor), Economic Development of Tropical Agriculture: Theory, Policy, Strategy, and Organization, Gainesville, Florida, U.S.A., University of Florida Press, 1968, xvi + 328 pp., $8.50.

Tisdell, Clement Allan, The Theory of Price Uncertainty, Production, and Profit, Princeton, New Jersey, U.S.A., Princeton University Press, 1968, ix + 197 pp., $6.50.

Eckstein, Alexander, Walter Galenson, and Ta-Chung Liu (Editors), Economic Trends in Communist China, Chicago, Illinois, U.S.A., Aldine Publishing Company, 1968, 757 pp., $17.50.

Shils, Edward (Editor), Criteria for Scientific Development: Public Policy National Goals; A Selection of Articles from Minerva, Cambridge, Mass., U.S.A., The M.I.T. Press, 1968, xvi + 207 pp., $8.95.

Munby, Denys (Editor), Transport: Selected Readings, Baltimore, Maryland, U.S.A., Penguin Books, Inc., 1968, 333 pp., $1.95.

Clarkson, G. P. E. (Editor), Managerial Economics: Selected Readings, Baltimore, Maryland, U.S.A., Penguin Books, Inc., 1968, 429 pp., $1.95.

Turvey, R. (Editor), Public Enterprise: Selected Readings, Baltimore, Maryland, U.S.A., Penguin Books, Inc., 1968, 395 pp., $1.95.

McCormick, B.J., and E. Owen Smith (Editors), The Labour Market: Selected Readings, Baltimore, Maryland, U.S.A., Penguin Books, Inc., 1968, 393 PP., $1.95.

Blaug, M. (Editor), Economics of Education 1: Selected Readings, Baltimore, Maryland, U.S.A., Penguin Books, Inc., 1968, 441 PP., $1.95.

The Tenth Annual Yearbook of The Far Eastern Economic Review, published as a supplement to The Far Eastern Economic Review, The Far Eastern Economic Review Co., Hong Kong, $5.00.

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