One Nation, One Money:
Territorial Currencies and the Nation-State*
Eric Helleiner
Department of Political Science, York University, Canada
Abstract
Most nation-states in the contemporary world have attempted to maintain a distinct currency which is both homogenous and exclusive within their territorial boundaries. Indeed, these "territorial currencies" are widely seen as a central symbol of the sovereignty of the nation-state. In the late twentieth century, however, the practice of maintaining territorial currencies is increasingly being challenged by developments such as the EMU initiative, currency substitution, eurocurrency activity and the growth of local currencies. To understand the significance of these developments for the nation-state, this essay looks back into history to investigate the nature of the relationship between the nation-state and territorial currencies. Three broad arguments are developed. First, I demonstrate that territorial currencies are a relatively recent historical creation, emerging for the first time only in the nineteenth century in the leading economic powers of the world. Second, their historical emergence is best explained by a number of developments that accompanied the rise of the "nation-state" in that era. Finally, once territorial currencies were in place, I argue that they also strengthened a number of important features of the nation-state. Drawing on the three arguments, I conclude that the historical relationship between territorial currencies and nation-states has been a very close and important one which has been unjustly neglected in existing academic literature.
In the final chapter of his widely-read and very critical book on European monetary union, Bernard Connolly writes: "the [European] Commission's slogan `One Market, One Money' is no more than a prediction of discredited `neo-functionalist' theory. In contrast, the counter-cry of `One Nation, One Money' is the product of psychological, political and historical reality." [1] Many would agree with Connolly's assertion that there is a certain "psychological and political reality" supporting the idea of organizing money along the lines of the territorial borders of nation-states. After all, most nation-states in the contemporary world have attempted to maintain a distinct currency which is both homogenous and exclusive within their territorial boundaries. Moreover, these "territorial currencies" are widely seen as one of the central symbols of the sovereignty of the nation-state. [2]
But what about the "historical reality" of territorial currencies that Connolly mentions? How recent, for example, is the practice of organizing money along the territorial lines of "one nation, one money"? Was there in fact a close historical relationship between the emergence of this practice and the growth of the nation-state? And in what way(s) were these territorial currencies significant for the nation-state in history? These kinds of questions about the historical relationship between territorial currencies and nation-states are not ones that Connolly attempts to address. But they are questions that are beginning to attract increasing interest in the late twentieth century.
The reason for this growing interest is clear. In many places around the world, territorial currencies are increasingly being challenged and these challenges are often perceived to undermine the nation-state. This is most visible in the European context where the project to introduce a supranational form of money is seen by many, including Connolly, as a central threat to the nation-state. Elsewhere, however, the power and sovereignty of the nation-state are also seen to be challenged by the increased use of foreign currencies within national economic spaces in the form of both eurocurrency activity and extensive "currency substitution". The proliferation of sub-national "local currencies" within many countries during the last decade has also been depicted as a further way in which nation-state is being challenged in the contemporary age.
As the issue of the relationship between territorial currencies and the nation-state becomes more salient, one would expect that the kinds of historical questions outlined above would have begun to receive attention in scholarly circles. In fact, attention has so far been sparse. The literature analysing contemporary monetary transformations, for example, has made little effort place these transformations in a longer historical context. [3] Similarly, the growing literature in international relations (IR) on the historical origins of sovereignty and territoriality has largely neglected these questions to date. [4] The importance of monetary structures is also remarkably understudied in the considerable and rapidly growing literature on the history of the nation-state and nationalism. To be sure, some prominent scholars in this area - such as Antony Giddens, Gianfranco Poggi, and Eric Hobsbawm - have mentioned in passing that the emergence of territorial currencies took place alongside that of the nation-state in history. [5] But their analysis of the nature of the relationship between these two developments is limited. Even historians interested in the "economic infrastructure" of the nation-state have neglected this issue. [6]
If we turn to scholarship on the history of money, comprehensive answers to these questions are also surprisingly absent. Much useful information exists in this literature about various monetary reforms that produced territorial currencies in history. But the literature is dominated by economic historians who have tended to steer their attention away from the broader political issues of the relationship between these reforms and changing state structures. Only scholars addressing the history of money from a more political and sociological perspective - such as Karl Polanyi, George Knapp, Viviana Zelizer and Nigel Dodd - have touched on these issues in a limited way. [7] But again, they do not explore the questions outlined above in a systematic manner.
In this essay, I begin to fill these holes in the academic literature by answering the three questions above. The first section of the essay analyzes briefly the question of the nature and timing of the monetary transformation that first gave rise to territorial currencies. I show that this development involved three important changes to the organization of money and that it did not take place until the nineteenth century, a timing that challenges conventional views in international relations about the historical origins of the practice of "territoriality". The second section seeks to explain the rise of territorial currencies in the nineteenth century. In that section, I argue that territorial currencies emerged as a product of many broader historical developments that accompanied the emergence of the "nation-state" in that era including: the industrial revolution, changing state-society relations, growing fiscal pressures, new commitments to economic and political nation-building, and the influence of international norms. In the third section of the essay, I investigate the significance of territorial currencies for the nation-state, arguing that three important features of this form of state were strengthened by this monetary structure: the nation-state's economic territorial coherence, the sense of collectivity that binds national citizens, and the state's more direct link to the society it governs. The essay concludes with a brief discussion of the significance of these arguments for four different bodies of existing scholarship.
1. The Emergence of Territorial Currencies
When did territorial currencies first emerge in history and what kind of monetary reforms were necessary to create territorial currencies? It is surprising that these questions have not received more attention in international relations circles. In recent years, IR scholars have shown a growing interest in the historical origins of territoriality and sovereignty, an interest that has been generated by apparent challenges to the territorial sovereign state system in the contemporary era. As was mentioned in the introduction, the questions have also not received much more attention outside of international relations scholarship. But what attention they have received calls into question a conventional view in international relations about the origins of sovereignty and territoriality.
It is commonly assumed in IR circles that territoriality and sovereignty had their roots in seventeenth century Europe around the time of the 1648 Peace of Westphalia. For this reason, contemporary threats to the territorial sovereign state are often described as ushering in a "post-Westphalian" world order. Current monetary transformations which challenge territorial currencies are, for example, often cited to defend this "post-Westphalian" thesis. [8] A number of scholars outside of international relations, however, have noted in passing, however, territorial currencies were not a product of the Westphalian age in Europe. Rather, they were first created in the nineteenth century. [9]
This observation would seem to give important ammunition to a small but growing group of scholars who argue that the significance of change in the Westphalian age has been overstated by the IR field. [10] It would also seem to have important implications for arguments that link contemporary monetary transformations to a challenge of the "Westphalian state". If territorial currencies were not a product of the Westphalian age, these arguments would seem to miss the target. To bolster these claims, however, a more systematic analysis of the nature and timing of the monetary transformation that gave rise to territorial currencies must be developed. Unfortunately, those scholars who dated the timing of the emergence of territorial currencies in the nineteenth century do not provide such an analysis. This section takes up the task.
Money Before Territorial Currencies
If territorial currencies originated with the rise of the Westphalian state system, one would expect to find their origins in seventeenth century Europe. To be sure, leading European theorists of state sovereignty such as Jean Bodin did begin to advocate the creation of uniform, exclusive currencies in the early modern era. [11] Moreover, Hendrik Spruyt argues that the consolidation of the sovereign state during the period leading up to the Westphalian age involved important monetary transformations such as the centralization of coinage and the creation of standardized units of account. [12] But these developments did not lead to the creation of fully-fledged territorial currencies. Before the nineteenth century, monetary systems in Europe - as well as elsewhere in the world - differed from the territorial model advocated by Bodin in three respects.
First, foreign currencies and domestic currencies commonly circulated alongside each other. The kinds of reforms described by Spruyt, for example, did little to stop foreign coins from being used frequently within each political jurisdiction. In many instances, this practice was even endorsed by the state which set a rate at which foreign coins should be accepted vis-a-vis domestic coins. [13] At the very high levels of the economy, various forms of paper money issued by foreign merchants and banks were also commonly used within domestic monetary systems. [14] These kinds of practices ensured that a large proportion - sometimes the majority - of the currency used in a country was of foreign origin.
Second, although Bodin advocated that a single uniform form of money be used by the inhabitants of each state, the poor majority of the population had few links to the formal monetary system endorsed by each state in the pre-nineteenth century period. This partly resulted from the simple fact that many of the poor did not have recourse to a monetary economy of any kind. [15] But even those who did use money on a regular basis employed monetary instruments that had only a loose and uncertain link to the official money used by the more wealthy in each country. Such monetary instruments included non-metallic commodities as well as petty coins made of copper, bronze or other base metals which were issued privately by local tradespeople. These forms of money were not easily convertible into the silver and gold coins issued by public authorities and their circulation was often limited to small rural areas or a few blocks within a larger town. [16] The state also made little concerted effort to ban these "local currencies" used by the poor and initiatives to replace them with government-issued petty coin were only partial. When petty coins were issued by state authorities, the coins were usually poorly made and had no clear relationship to silver and gold coins. [17] Indeed, the authorities who produced such petty coins often did not consider them to represent "real" money.
Third, despite Bodin's call for a uniform and homogenous state-issued currency, even the official money of each country did not meet these criteria before the nineteenth century. The coinage may have become centralized, but the silver or gold coins in circulation were rarely of uniform quality. Not only were old and worn coins left in circulation without being regularly withdrawn, but also the product of official mints within the country varied considerably from mint to mint, from year to year, and even within a single coining session. As paper money increasingly began to be issued in the leading economic powers during the eighteenth and nineteenth centuries, the lack of uniformity in the formal monetary system only grew. Many institutions - from various levels of government to a multitude of private banks - began to issue paper notes, and the denominations and appearance of these different forms of paper money varied considerably. So too did their "quality" and thus the degree of their acceptance across the economic space of each country. [18]
Compounding the lack of uniformity in the official monetary order were two further features of monetary life before the nineteenth century. One was the large-scale counterfeiting of both paper money and coins. [19] The other was the commitment of most states to maintain "full weight" silver and gold coins in circulation whose assigned value was equivalent to the value of the metals they were made of. Under this kind of coinage system, a change in the market value of gold or silver would cause enormous disruption to the domestic monetary system as one or other of the dominant coins quickly disappeared from circulation. This kind of system also ensured that the relationship between the value of gold and silver coins was not stable over time but rather was subject to alterations in market conditions and official regulations.
To cope with the lack of uniformity in the domestic monetary system - made worse, of course, by the presence of foreign money and various forms of inconvertible token coins - abstract units of account were often used to value the various forms of money in circulation. These "ghost monies" were meant to simplify economic transactions by providing a single accounting unit within each country's territory. Indeed, only at this abstract level were early modern European states able impose some degree of uniformity over the monetary system within their territory. [20] But even in this respect, they were not always successful. Their orders that the official ghost money be employed were not always followed and several such units of account were often used within each country. [21] Moreover, many observers in the pre-nineteenth century period felt that the ghost monies only further contributed to the currency confusion by creating yet another monetary instrument that had to be used. [22]
The Construction of Territorial Currencies
Only in the nineteenth century did more territorially uniform and exclusive currencies emerge. Although the timing of the emergence of territorial currencies has been noted by a number of scholars, the precise nature of the transformation has not been well described in existing literature. What is clear, however, is that there was nothing particularly "natural" about this monetary transformation. Instead, as Viviana Zelizer notes, it resulted from only from the "painstaking and deliberate activities of public authorities". [23] What were these activities?
To begin with, governments had to make the official monetary system more unified and homogenous. One key development in this process was the move away from a monetary order in which most coins had full intrinsic metallic value. "Full weight" coins were replaced by "token" coins whose face value derived not from their metallic content but from an assigned value by the state. [24] In the pre-1931 period, this value was usually set with reference to a monometallic gold standard. [25] By the end of the century, these token coins comprised most of the coinage in industrial countries and the old full-weight gold and silver coins that had dominated monetary systems of the past had largely disappeared from circulation. This change did much to reduce monetary chaos since it ended the risk of a sudden disappearance of a large portion of the coinage when the market value of gold and silver altered. It was also important in ensuring that all coins now also existed in a fixed relationship to each other over time. In addition, it reduced the need for "ghost monies", a development which was further encouraged by public authorities who adopted units of account that corresponded directly to real coins in circulation [26].
The second kind of "token" money whose use grew rapidly during the nineteenth century - paper money - also required standardization. As part of the creation of a territorial currency, governments ensured that all forms of paper money were issued in a homogenized form under the regulation of the state. And their value, like that of token coins, was tied to the new national gold standard. [27]. The state also furthered the homogenization of the domestic monetary order by launching a much more concerted effort to stamp out all counterfeit money, both notes and coins. Furthermore, the earlier poor quality of coins and notes in circulation was addressed in a systematic way by efforts to remove old, worn money on a regularized basis and to produce coins and notes of a more uniform high quality. [28]
The poor also had to be integrated within the newly standardized monetary order. In part, this resulted from the rapid penetration of market relations into previously self-sufficient rural economies during the nineteenth century. Whereas previously, rural peasants had relied only on barter or on the occasional use of non-metallic commodity monies, they now were brought into contact with the official monetary system on a much more regular basis. [29] Equally important, however, public authorities made a more concerted effort to produce large quantities of high quality "petty coins" for the poor for the first time. [30] These coins were also fixed in a clear relationship to the other official forms of money and private "local currencies" were outlawed. [31]
Finally, the new uniformity within the domestic monetary system also contributed to the disappearance of foreign currencies from domestic circulation. [32] In part, this was a byproduct of the initiatives just outlined. With the new standardization of coins and notes in circulation, it became more difficult for a foreign currency with different denominations and quality to enter the domestic circulation and be accepted. [33] As money increasingly assumed a "token" form, it was also less likely to be accepted abroad since its value depended not on its intrinsic metallic value but on some knowledge of the trustworthiness of the government that issued them. [34] In addition, however, the removal of foreign currencies from circulation was also actively pursued by public authorities often through extensive and time-consuming initiatives. [35]
The construction of territorial currencies in the nineteenth century took place at quite different speeds in different countries and it was a gradual process in most countries that was spread out over a number of decades. Because of space limitations, it is impossible to provide a detailed historical account of each country's experience here. [36] But it is worth noting that the creation of territorial currencies can be seen to have taken place in four waves. Britain was the early pioneer, reforming its coinage system along the new "territorial" lines by the 1820s and its paper money by mid-1800s. [37] The second wave involved many other Western European countries, the United States and Japan. Partial reforms - such as the abolition of "ghost" money and creation of a high quality petty coin - were carried out in many of these countries in the early part of the nineteenth century, but it was not until the 1870-1918 period that they created fully fledged territorial currencies. [38] A third wave included many countries in Latin America and Eastern Europe as well as the British Dominions which began to introduce partial reforms in the last third of the 19th century and then completed reforms, for the most part, during the interwar period. And the final wave involved most newly independent countries in Africa and Asia which attempted to build territorially homogenous and exclusive currencies when they emerged from their colonial status in the years following the Second World War. [39]
2. Explaining the Rise of Territorial Currencies
If territorial currencies were not a product of the Westphalian age but rather of the nineteenth century, how can their emergence in that latter era be explained? Much of the recent international relations literature analysing the historical forces which produced the territorial sovereign state is not very helpful in answering this question because it focuses on developments in the Westphalian period. Instead, we need to turn to those scholars who have observed a historical association between the emergence of territorial currencies and the rise of the nation-state in the nineteenth century. As noted in the introduction, a number of writers have commented in passing on this association. Of these writers, however, only Antony Giddens has sought to explain how the emergence of the nation-state might have encouraged this transformation in the nature of monetary structures. His analysis is very sparse but it provided us with a starting point from which to begin to address the issue.
Two Preconditions: State Capacity and Technological Change
One limitation of Giddens' analysis is that he seeks to explain only one feature of these new territorial currencies: their "token" nature. Still, his analysis of this feature of modern money is useful. Giddens argues that currency structures centred on token forms of money could not emerge until the state acquired a considerable capability to influence the forms of money used by the inhabitants of its territory. His reasoning is straightforward: token forms of money were much less likely to be accepted on a mass scale than "full-weight" coins because of their more limited intrinsic value. In Giddens' analysis, the necessary state capability to encourage the use of token money emerged only once a more direct relationship between state and society was created with the rise of the nation-state in the nineteenth century. According to Giddens, this direct relationship was important in two ways.
First, it gave the state the ability to regulate the forms of money used by the population. He provides little detail to explain this argument, but this can be briefly provided. The development of nation-wide policing structures in the nineteenth century, for example, enabled the state to enforce legal tender laws in a comprehensive fashion for the first time. These laws were important not only in encouraging people to use whatever money the state declared to be valid. [40] They also set clear legal tender limits on small denomination token coins, limits that were necessary for the smooth functioning of the new form of monetary order based on token coins. [41] The expansion of the state's role in the emerging national economy during the nineteenth century also gave it new powers to influence the forms of money they used. As Max Weber hinted, the state in this era was able to influence the kind of money employed in its territory simply through proclamations concerning which forms of money would be accepted at public offices and which would not. These proclamations had important results only because the state's role within the daily economic life of the people it governed was deepening with the spread of national networks of post offices and railway stations as well as national military conscription and the emergence of consolidated taxation systems. [42]
According to Giddens, the second way in which the new direct relationship between state and society was important in encouraging the use of token forms of money was that it cultivated the "trust" of the population in state's ability to manage the value of this form of money. After all, people did not use token money only because they were forced to but also because they came to consider it a reliable form of money. Unlike "commodity money", the production of token forms of money had to be closely managed by public authorities to ensure that it maintained its reliable value. Again, Giddens provided few details about how changed state-society relations contributed to this new sense of trust. But he seems to have in mind two mechanisms. First, "trust" in the state's ability to perform this task was cultivated in part by opening its management up to more representative forms of government. [43] Second, in countries where representative government was slower in coming, control over the management of money was usually given to a central bank managed by "trusted experts" from the merchant and banking communities, the two communities that were the dominant users of paper money in the nineteenth century. [44]
Two further mechanisms might also be mentioned in this context which Giddens neglects. One was suggested by several nationalist writers of the nineteenth century: that the willingness of the population to "trust" the value of the new token forms of money may also have been linked to emerging nationalist sentiments in each country. [45] The use of token money on a nation-wide scale appeared to rely on a degree of collective faith in its value that was similar to the kind of quasi-religious faith on which nationalist sentiments are often said to rest. Using Benedict Anderson's term, it is tempting to speculate that the seemingly "imagined" value of the new state-issued token money may have been more readily accepted as valid by a population who had come to see themselves as members of a common "imagined" national community in this period. [46]
"Trust" in the value of token money was also reinforced in one further way neglected by Giddens: through the state's new ability to stamp out any unauthorized production of such money. Because of the difference between the intrinsic value and face value of token money, the temptation for counterfeiters to produce token money was very high. Industrial technologies played a role in reducing the possibility for large-scale counterfeiting, but the risk of isolated individuals with access to sophisticated industrial technology engaging in counterfeiting was still present, If successful, such individuals could cause considerable damage to the monetary order. As with the enforcement of legal tender laws, this problem could only be addressed once the policing role of the state expanded in a comprehensive fashion in the nineteenth century. Indeed, the need to prevent counterfeiting of new token forms of money was often a key catalyst for the expansion of such police functions. [47]
Giddens' arguments, although underdeveloped, provide us with the first important clue about one way in which the emergence of the nation-state encouraged the rise of territorial currencies. Only once a direct link between the state and domestic society had been established with the rise of the nation-state during the nineteenth century did the state acquired the capability to influence and regulate directly the forms of money used by the inhabitants of its territory. As Giddens points out, this capability was crucial for a token form of money be sustained. His argument about the importance of the new direct relationship between state and society can easily be extended to other features of the new territorial currencies. This capability was also important for other aspects of the task of consolidating territorial currencies such as the discouragement of the use of foreign currencies, counterfeits and other unofficial forms of money.
The new direct relationship between state and society was not the only precondition for the emergence of territorial currencies. A second development, ignored by Giddens, was the application of new industrial technologies to the production of money. It is surprising that historians of the nation-state have neglected the importance of this technological revolution for monetary structures. After all, the new industrial technologies for producing money can be seen to have had just as important an impact on the consolidation of territorial currencies as the invention of the printing press had in encouraging the rise of the new standardized national means of communication that were so crucial to the emergence of the nation-state. [48] They made it possible for the first time to produce standardized, high quality forms of money in mass quantities. Coins produced by steam-powered presses, for example, could be produced at a fraction of the cost that the old "milled" coins had been made. These new coins were also of much higher quality and more uniform appearance than those made by the old method. The same dramatic cost and quality improvements were encountered when industrial technologies began to be used to produce paper bank notes. [49]
The impact of these changes on the monetary system were dramatic. The new industrially-produced money improved the uniformity of the money in circulation in the nation overnight. Particularly significant was the transformation in the money encountered by the poor. For the first time, public authorities found it possible and affordable to produce large qualities of high quality, low denomination coins. Indeed, steam-powered presses were first applied to the production of money for the purpose of producing a better quality "petty coin" for the poor. [50]
Equally important, the high quality of the new industrially-produced money also made counterfeiting a much more difficult proposition. [51] This development was important not only in reducing the number of existing counterfeits in circulation. Even more important, it created the conditions in which "token" forms of money could be used on a mass scale for the first time. Before the nineteenth century, public authorities could never maintain the value of this kind of money for long because counterfeiters would invariably be tempted to produce large quantities of it, given the enormous profits to be made. By reducing this risk, the application of new industrial technologies to the production of money was a crucial precondition for the creation of a monetary order based on the gold standard and token coins and notes. [52]
If new industrial technologies and the emergence of more direct state-society links in the age of the "nation-state" were key preconditions for the emergence of territorial currencies, it is still necessary to explain why state policymakers actively chose to create such currencies in these new conditions. Interest in this project had existed since Bodin's time, but before the nineteenth century, policymakers had not seen it as a pressing task. Why did they suddenly pursue this project with greater seriousness and consistency in the nineteenth century? To answer this question in a comprehensive way, it would be necessary to analyze the specific politics that surrounded the hundreds of different monetary reforms in a diverse set of countries. Obviously, this cannot be done in an essay such as this. Instead, the following section draws on more specific studies to outline several developments that help to answer this question in a broad way.
Motivations: Fiscal Pressures, Nation-Building, International Norms
Once again, Giddens provides us with one possible answer to the question: the reform of monetary structures was driven by the growing fiscal needs of the state. Like Charles Tilly, Giddens argues that these fiscal needs grew largely out of pressures of modern warfare. [53] Giddens does not provide a detailed explanation of the link between war-driven fiscal needs and monetary reform, but the link can certainly be substantiated. Fiscal pressures associated with warfare, for example, encouraged some governments to unify the issuance of paper money under state control in order to increase seigniorage gains. [54] Important developments in areas such as the combatting of counterfeiting also often emerged during wartime as states resorted to the large-scale use of token forms of money for the first time for financial reasons. [55] The link between fiscal pressures and monetary reform also existed with respect to taxation. The creation of a single homogenous currency, for example, greatly reduced the transactions costs associated with the administration of taxation. At a more general level, many states also encouraged the spread of the monetary economy in order to enhance their ability to extract taxes from the populations they governed as a means of meeting the growing fiscal demands of the state in the context of war. [56]
War-driven fiscal pressures, thus, provide one explanation for some key monetary reforms that first created territorial currencies in the nineteenth century. Clearly, however, they do not provide a comprehensive explanation since many of the key reforms did not take place in the context of war or the preparation of war. One way to expand the scope of Giddens' argument would be to recognize the importance of growing fiscal pressures that were not associated with war. Financial needs associated with costly "late development" strategies after the mid-19th century, for example, played some role in encouraging various monetary reforms in that era. But whether war-related or not, fiscal pressures still can not explain fully the creation of territorial currencies in the nineteenth century.
This kind of explanation ignores the important role played by the emergence of a new commitment to the nation as an integrated economic community in this era. Indeed, this commitment was at the center of most of the monetary reforms that produced territorial currencies in the nineteenth century. And the sudden prominence of the goal in the nineteenth century was linked in turn to the emergence of national-scale markets with the onset of the age of industrial capitalism. In this new environment, interest arose in the task of constructing a national economic community with homogeneous national economic rules and institutions to make economic transactions more efficient and smooth within an emerging national market space. A crucial element in this project was the building of a territorial currency. [57]
With the increasing incorporation of the small local economies of the pre-industrial age within a national-scale economy, it became apparent that a uniform currency across the spatial territory of the nation would be required if large transaction costs were to be avoided in the new nation-wide markets. The national economy also could not easily function if it were constantly buffeted by the disappearance of gold or silver coins as the relative ratio of these metals changed in value. Indeed, these ratios began to fluctuate even more frequently and rapidly in the new industrial age as trade expanded and discoveries of gold and silver increased in the nineteenth century. These rapid price changes - especially after the late 1840s - played a central role in encouraging countries to abandon bimetallism and construct a more territorially homogenous currency based on token coinage and the gold standard. [58]
A territorial currency was also needed to provide a form of money that was uniform hierarchically between the social classes of the nation. As noted already, the emergence of national markets was not just a spatial phenomenon, but also a "vertical" one in which the poor began to become incorporated within the larger market economy for the first time. In this context, the costs of the uneven quality and inadequate quantity of "small change money" of the pre-national monetary order became much more apparent as did the uncertain nature of the link between "poor" money and that used by the more wealthy. These inadequacies often acted as the central impetus for the monetary reforms that began to introduce territorial currency structures. [59]
The industrial revolution was, thus, important not just in producing new technologies with which to produce money. It also created large-scale markets for which territorial currencies appeared to be a necessary adjunct if economic transactions were to take place easily and efficiently. A parallel can be drawn with Ernest Gellner's argument that a new standardized national means of communication was necessary for the new large-scale nature of social life in the age of industrial capitalism. Whereas Gellner focuses on the need for a standardized national language to foster the new national-scale political-cultural community, here the focus is on the need for a homogenous and exclusive national currency to facilitate the emerging national economic community. [60]
To avoid the functionalism of Gellner's argument, we can also identify the specific groups who pushed for territorialization of currency. In many countries, reforms emerged in a rather ad hoc fashion in response to demands by the very societal groups who were experiencing the inadequacies of the old monetary order most directly as the industrial capitalism spread. Protests by the poor against terrible quality and shortages of small change, for example, often played an important role in encouraging reforms. [61] Business groups beginning to operate beyond small localized markets were also often keen on reforms such as the homogenization of the note issue. [62] In other countries, especially "late industrializers" such as Japan or Germany, reforms were also promoted by state elites who sought to build a national-scale economy in a top-down fashion as part of a broader project of promoting industrial development.
Another group promoting reforms to build territorial currencies in the nineteenth century were policymakers inspired by liberal economic ideas. From their standpoint, the creation of territorial currencies was a crucial element in their project of building a national-scale economy based on market principles. In addition to facilitating market transactions across the economic space of the nation, currency reform would ensure that the growing volume of token money could be managed centrally to prevent monetary disturbances. A single type of paper note whose production was supervised by a central authority, for example, was seen by most nineteenth century liberal economists as preferable to a monetary system composed of a multitude of independent private bank notes. The latter might be produced in an amount that could not be adequately backed by each bank's reserve or was not in keeping with the metallic monetary base of the national economy. Similarly, policymakers recognized the importance of bringing the production of all token coinage under central control in order to produce it in a volume that would not undermine its value. [63]
Not all economic liberals fully embraced territorial currencies, however. Some "free banking" advocates argued that the management of paper money was better left to the private market than to a central bank with monopoly powers. [64] In addition, they held that a multiplicity of private notes need not undermine the creation of national economic space since private banks could ensure the nation-wide circulation of their notes through mechanisms such as private clearing houses. Not surprisingly, these arguments often found strong support among representatives of private banks whose note issue was threatened by the creation of the central bank as well as from regionalist groups who opposed the growth of the central government's power. In countries where these groups were politically powerful or where the structure and experience of private banking seemed to bolster their arguments, the creation of a homogenous national paper note was often delayed.
Other economic liberals also worried that the creation of territorial currencies might interfere with their longer term "cosmopolitan" objective of building a unified worldwide market economy in which national economies had little role. In the enthusiasm generated by the triumph of economic liberal ideas in the 1850s and 1860s, for example, many economic liberals began to advocate the creation of a "universal currency" that would circulate in all countries of the world. The proposal, however, failed to generate enough enthusiasm within the major countries of the world. Its only legacies were two limited "currency unions" among small groups of European countries - the Latin Monetary Union (LMU) and the Scandinavian Monetary Union (SMU) - in which these countries permitted each other's coins to circulate within their territories. [65] These unions, moreover, lasted only until World War One and their establishment was certainly not just a product of cosmopolitan liberalism. [66]
Liberal enthusiasts of both "free banking" and the "universal currency" project might have had more influence in the nineteenth century if the construction of territorial currencies had not also been driven by a further development not yet mentioned: the new commitment to building the nation as an integrated political community in the nineteenth century. The influence of this development on the construction of territorial currencies can be seen in several ways.
To begin with, the concern to produce a high quality national "petty coin" for the poor was related partly to a new political commitment to "the people" that arose in the wake of the American and French revolutions. In England, for example, the Royal Mint refused to put the monarch's face on such money before the nineteenth century and its production was not seen as an altogether proper activity for the institution. [67] Many of the reforms that unified and simplified the official monetary order - such as the abolition of ghost money and the ending of bimetallism - were also driven by a new desire to prevent the poor from suffering from the complexities of old currency system. [68] Most important from the standpoint of "free banking" enthusiasts, the creation of a monopoly of note issue was often justified on similar grounds: poor citizens must be protected from the chaos of a multiplicity of note issues whose quality was often difficult to evaluate especially if one was illiterate. Even liberals who supported "free banking" often recognized the need for the creation of single state-issued note in lower denominations of paper money for this reason.
Like flags and anthems, territorial currencies were also sometimes seen by political nationalists as helpful in binding the nation together politically. One goal of US policymakers in creating a single national banknote in the 1860s was that this banknote would help in "strengthening the bond of union" by encouraging a greater interest in national affairs and sense of patriotism. [69] US politicians were particularly keen to insist that the images placed on the new note would enhance "a sentiment of nationality", a particularly pressing goal given the civil war that was raging at the time. [70] To this end, the new notes were emblazoned with beautiful vignettes of personalities, events, locations, and symbols that were seen as seminal to the history and image of the nation. This US practice of covering its uniform notes with nationalist imagery was also adopted by most other states which centralized their note issue in the second half of the nineteenth century. [71] Coins, too, increasingly became carriers of nationalist imagery in this period. Indeed, liberal proponents of an "international coin" in the US discovered the strength of the commitment of policymakers to this practice in the early 1870s when they advanced a "practical, utilitarian" proposal to remove the eagle from US silver coins and replace it with words indicating the intrinsic fineness and weight of the coin, a move designed to encourage the international acceptance of the proposed coins. The proposal met stiff opposition in Congress from members whose stressed the symbolic value of such nationalist imagery on US coins. [72]
The strength of nationalist political sentiments made clear to economic liberals that any world monetary system in the nineteenth century had to be built on the basis of nations rather than more "cosmopolitan" principles. Many economic liberals were in fact strongly committed to political nationalist ideas and vice-versa in this period. [73] Even those economic liberals of a more cosmopolitan persuasion, who had briefly flirted with "universal currency", redirected their energies towards the construction of an "inter-national" monetary order after the 1860s. While promoting the creation of territorially homogenous national currencies, they sought to ensure that each national currency was linked to the others by a common metallic standard: the international gold standard. The construction of territorial currencies based on the gold standard, thus, had both an internal and external benefit from their standpoint. It would consolidate the domestic national monetary system, while at the same time fostering international economic exchange by placing all countries on the same monetary standard.
Given the emphasis placed on the latter benefit in many current accounts of the pre-1914 gold standard, it is worth stressing that the domestic goal of consolidating the national monetary system was often the more significant one for those who advocated the move to the gold standard in the nineteenth century. [74] The extent to which the gold standard was an "inter-national" monetary order and not a "cosmopolitan" one also needs to be highlighted. It was, after all, an order constructed on the basis of territorially distinct national currencies that were managed and maintained by national central banks. Indeed, it became clear to economic liberals in the post-1918 period that the proper functioning of the regime required the existence of such nationally integrated monetary systems for its smooth functioning. [75] After World War One, they strongly implored countries that had not yet done so to establish central banks to manage a "modern" national token currency. [76] It was in this context that many Latin American and East European countries as well as the British Dominions underwent monetary reforms that established territorial currencies managed by new national central banks. [77] In supporting the construction of the gold standard, economic liberals thus embraced and even strengthened the nation as a political-economic entity rather than the cosmopolitan ideas that had briefly attracted attention in the 1860s.
The Latin American, East European and British Dominion cases also highlight one final important point about the new commitment to the task of building territorial currencies in the nineteenth and twentieth centuries. It did not derive entirely from domestic sources, but also from external factors. In these cases, external influences were of the kind that Antony Giddens and Alexander Wendt have highlighted in their work on the role that international norms play in bolstering the sovereignty of nation-states; that is, the norms of the international gold standard after World War One strengthened policymakers' commitment to the goal of constructing the new territorial currencies. [78] This kind of international influence was also apparent in other initiatives in the 1920s such as in the creation of an international convention requiring member states of the League of Nations to police the counterfeiting of foreign currencies within their borders, as well as in the post-1945 period when newly independent countries were encouraged to establish central banks and territorial currencies as part of their integration into the Bretton Woods monetary order. [79] Furthermore, international norms were also important in a more indirect way as policymakers emulated "models" of monetary organization in leading powers that were associated with progress and modernity. Britain's monetary practices, for example, were widely studied as a model to mimic in the nineteenth century because of its status as the world's leading industrial nation. Policymakers in other countries came to see its territorial currency based on the gold standard with economic advancement, power, and even "civilization". [80]
In sum, several broad historical processes associated with the rise of the nation-state were of central importance in explaining why territorial currencies first emerged in the nineteenth century. One set of processes - the growing infrastructural power of the state and the emergence of industrial technology - were key preconditions without which state policymakers could not have contemplated the reforms which introduced territorial currencies. The second set of factors - fiscal pressures, the new commitment to economic and political nation-building, and international norms - represent explanations for why state policymakers sought to create these new monetary structures in this new structural environment.
3. The Significance of Territorial Currencies for Nation-States
If territorial currencies emerged from many of the same developments that accompanied the rise of the nation-state, once in place these monetary structures also strengthened three important features of the nation-state: its economic territorial coherence, the sense of collectivity that binds national citizens; and the state's more direct link to the society it governs. Each of these developments was anticipated, but only to a limited extent, by those who played the central role in building territorial currencies in the nineteenth century. The full potential of territorial currencies to bolster the nation-state was not realized until the early decades of the twentieth century (although it was often correctly anticipated by nationalist thinkers during the nineteenth century). Once this potential had been experienced, however, initiatives to create territorial currencies in the newly independent countries in Africa and Asia after World War Two were often undertaken with the promise of these benefits.
Economic Territoriality
The first feature of the nation-state to be strengthened by a territorial currency was its economic territorial cohesion. As Antony Giddens has argued, a key distinction between the "nation-state" and previous historical forms of state is the territorial cohesion and unity of the former. [81] In the economic realm, the new money form was a central tool or "technology" that fostered "territoriality". [82] One aspect of the nation-state's economic territoriality to be bolstered was that intended by the economic liberals who played such a key role in building these currencies: its internal economic coherence. With the elimination of the transaction costs and uncertainty associated with domestic currency conversions, market transactions within the territory of each nation-state were greatly encouraged and the local particularism of the pre-national economic life was undermined.
Equally important, however, territorial currencies also emphasized the new external economic "territoriality" of the nation-state in two ways that were often not anticipated by economic liberals. First, with the exclusion of foreign currencies from each national monetary space, states created a significant monetary boundary around the territory they governed. International merchants and travellers were now forced to exchange currencies whenever a border was crossed. Whereas a "cosmopolitan" currency such as the Mexican piastre was used throughout much of the world in the first half of the nineteenth century, it was no longer acceptable in most countries by the end of that century. [83] Although the universal coin proposal in the 1860s was designed by economic liberals to preserve this transnational feature of economic life in the pre-national age, its failure ensured that monetary territoriality increasingly became the norm (outside of currency unions such as the LMU and SMU).
Second, with almost all domestic currency now having a token form, the movement of money across borders took place much more on the basis of the state's consent than in the past. Because the state controlled the bulk of the country's metallic monetary reserve, it regulated the convertibility of token money into metallic money that would be accepted abroad. This position gave the state much more power than it had had in the past to draw a clear economic boundary between the nation and the rest of the world if it so chose. By ending the convertibility of the national currency into gold, for example, the state could quickly make it difficult for economic transactions to take place with the outside world since the token money of citizens was not easily acceptable abroad. Similarly, the state had a greater chance of making exchange controls effective. Instead of having to search every traveller for gold or silver, all that was required now was for the state to shut down foreign exchange markets that allowed citizens to trade their domestic token currencies for foreign currencies. Unless citizens could find a market abroad for their money, they would derive little benefit from taking it out of the country. The consequence, as Michael Heilperin notes, was that the state was now able to insulate itself economically from the world much more effectively than was possible in the age of mercantilism when full-weight metallic money predominated. [84]
At the height of the age of the international gold standard, the possibility of these kinds of state activities seemed distant. Not only were most of the world's currencies tied to gold, but also foreign exchanges operated freely in almost all countries. In a world such as this, monetary borders seemed insignificant and, as Karl Polanyi noted, the nationality of currencies appeared hardly to matter from a liberal standpoint. [85] The economic significance of the new national monetary borders, however, became clearer during World War One and then again after the early 1930s when the new token national currencies were made inconvertible into gold and freely functioning foreign exchange markets were shut down. With these moves, governments showed their new ability to insulate the national economy from the world economy. As Polanyi observed, "going off gold involved no less than dropping out of the world economy". [86]
Interestingly, while most nineteenth century thinkers gave little attention to the idea that territorial currencies could promote national economic autonomy, some nationalist critics of economic liberalism in that era recognized the possibility quite clearly. Figures associated with the German romantic school in the early nineteenth century as well many economic nationalists in North America in the middle decades of the century, for example, argued in favour of an inconvertible national token money on the grounds that this would discourage international trade and enhance the self-sufficiency of a country. [87] Drawing on the experience of the French revolutionaries' use of inconvertible paper money, Johann Fichte also argued in his 1800 work The Closed Commercial State that the most effective way to promote the commercial isolation of a country would be to remove all metallic money and introduce a national currency based only token forms of money. [88] In his vision, the conversion of the new national token currency into metallic money could be tightly regulated by the state, thereby giving the state a high degree of control over external economic links. Although this vision had little influence in any industrial state during the nineteenth century, it did forecast accurately the kinds of policies that many states did implement in World War One and then again during the 1930s. [89]
Money and "Imagined Communities"
The second feature of the nation-state to be strengthened by the emergence of territorial currencies was the sense of collectivity that binds each of its inhabitants to each other. In Benedict Anderson's phrase, members of a nation-state feel themselves to be linked as members of a kind of "imagined community". [90] Historians of the nation-state have analyzed many different ways in which this sense of collectively is fostered. Quite neglected in this literature, however, is the role played by territorial currencies.
One way in which territorial currencies promoted a sense of collectivity was at the symbolic level. The use of currencies for political symbolic purposes had long been recognized by political leaders. Monarchs and emperors through the ages had usually put their head on coins in order to remind subjects of the authority of the land. Those inspired by nationalist thinking in the nineteenth century also sought to use money for symbolic purposes, although the purpose was now of course that of promoting the ideals of national unity. [91] As noted above, this benefit was sometimes cited when territorial currencies were first created. But the precise ways in which territorial currencies might achieve this end were not usually analyzed in much detail by those who first built such currencies and the economic liberals who usually played the central role in these monetary reforms tended to neglect the issue altogether. [92]
Rather, it was those nationalists opposed to economic liberalism - particularly from the German romantic tradition - who once again analyzed this particular benefit of territorial currencies in most detail. From their standpoint, the new token nature of national currencies made them a particularly effective symbolic tool for promoting nationalist ideals. Because token money appeared to be intrinsically worthless and to derive its value only from the national state, it was seen to be a very useful symbol reminding people of their connection to that state and their oneness with it. In Adam Muller's words, a national token currency could act as an expression of the "inner spiritual unity" of the nation. Metallic money, by contrast, was seen as undesirable because its "cosmopolitan" nature undermined the link that should tie each individual to the national state. Not surprisingly, the symbolic virtue of token money was thought by German romantics to be further reinforced when currencies were taken off the gold standard. [93]
The symbolic value of a territorial currency for promoting a sense of national collectivity was bolstered by a second quality it had. Whereas the money of monarchs in the pre-national age had been chaotic in form and had not reached the vast bulk of the population, a territorial currency was homogenous and was used by everyone in the nation on a daily basis. It thus acted as a constant everyday reminder to people of the fact that they were members of what nationalists considered to be a common, homogenous community. For this reason, territorial currencies acted as much more effective purveyors of nationalist messages than flags or anthems. Their role was more akin to that of a national language and the mass-produced media that carried it in an age of spreading literary. [94] As Virginia Hewitt observes, coins and banknotes were, after all, also "among the most mass-produced objects in the world, painstakingly designed for millions of people to use." As she concludes, they thus offered "an unparalleled opportunity for officially-sanctioned propaganda, to colour the recipient's view". [95]
Money was a particularly effective vehicle for carrying the symbols of nationalist propaganda to the poor in the nineteenth century. The state often had limited means for influencing the views of the poor in that age since mass education was only in its infancy and much of the population remained illiterate. Because the poor handled money on an everyday basis, however, states could use it as an important medium to communicate nationalist ideology and imagery to them. Its potential effectiveness was recognized, for example, by the chief clerk of the US Treasury in 1863 who explains to his superior why certain central episodes in US history - such as the Surrender of General Burgoyne - should be detailed in the country's new national banknotes:
"[the banknotes] would tend to teach the masses the prominent periods in our country's history. The laboring man who should receive every Saturday night, a copy of the `Surrender of Burgoyne' for his weekly wages, would soon inquire who General Burgoyne was, and to whom he surrendered. This curiousity would be aroused and he would learn the facts from a fellow laborer or from his employer. The same would be true of other National pictures, and in time many would be taught leading incidents in our country's history, so that they would soon be familiar to those who would never read them in books, teaching them history and umbuing them with a National feeling." [96]
A further quality of money that might have enhanced its symbolic value for the nationalist cause was its seeming ability to homogenize diverse social groups and social relations across the nation. This quality was remarked upon by many leading thinkers in the nineteenth and early twentieth centuries who analyzed the spread of the monetary economy. Karl Marx, for example, saw money as a "radical leveller" that "does away with all distinctions" associated with traditional social relations. [97] In a similar vein, George Simmel spoke of the "qualitatively communistic character" of money, a character that derived from its "colourlessness" and its ability to "become a denominator for all values". [98] If money had these important sociological characteristics, the usefulness of emblazoning it with symbols of the national unity was undoubtedly enhanced. [99]
The emergence of territorial currencies also promoted a sense of national collectivity in a more concrete fashion. As some nationalists anticipated in the nineteenth century, a kind of national bond was created by the fact that all members of the country now lived within the same monetary space. [100] A decision by the state to increase the supply of the national currency, for example, would now be experienced by everyone in the society and would have a direct impact on their lives. The state was also now able to ensure that the nation as a whole adjusted collectively to changes in the country's external payments position. If, for example, the exports of one region within the country declined, the national currency could be devalued and all national citizens - albeit in different ways and to different degrees - would experience the adjustments unleashed by this monetary change. If the state sought to maintain a fixed exchange rate in this situation, the entire population would also feel the effects of the adjustments (e.g. a bank rate rise or a reduction in the money supply) that were required to try to restore the external balance.
In the age before territorial currencies, such collective monetary experiences were less likely to occur. A change in the exchange rate of the official currency or in the supply of official coins had little impact on the poor majority of the population who either were not active in the monetary economy or used forms of money that were not easily convertible into official money. Indeed, the crucial "exchange rate" for this latter group was not the external rate between foreign and domestic money, but rather the internal rate between "petty coins" and the official gold and silver coins. [101] A changed external exchange rate would not affect even the more wealthy in the same collective way as in the age of territorial currencies. Since they used both domestic and foreign coins, a devaluation of domestic coins would have differential effects according to the composition of foreign and domestic coins that individuals held and employed before the rate change. Changes in internal exchange rates - such as that between gold and silver coins, or between real coins and "ghost money" - were also equally if not more significant to their lives than alterations in the external exchange rate. [102]
The impact of the new common national monetary experiences on the development of national collective sentiments has not been well analyzed in the historical literature. In Karl Polanyi's The Great Transformation, however, we find a partial exception. He criticizes nineteenth century economic liberals for having "thoroughly overlooked" what he considers to be "the constitutive importance of the currency in establishing the nation as the decisive economic and political unit of the time". Monetary policy in the new nationally-integrated monetary environment, he suggests, had a key "integrating power" for the nation: "[it] created what amounted to veritable artificial weather conditions varying day by day and affected every member of the community" [103] Polanyi also argues that it was in the interwar period that the new nationally-integrated monetary setting fostered a sense of national collectivity most significantly. In this era, he notes, large and frequent fluctuations in the value of money highlighted particularly well the extent to which people shared a common national monetary space and hence a more common destiny. [104]
Obviously, these collective monetary experiences need not necessarily have encouraged a sense of positive allegiance to the nation. In fact, they may often have promoted the exact opposite sentiment. How many citizens of Germany felt proud to be German during the collective hyper-inflation they experienced in the early 1920s? My point here is simply that these collective monetary experiences forced citizens to recognize themselves as members of a common national political community. In many instances, they no doubt deeply disapproved of the way their community chose to manage its money. But even in instances such as these, the new territorial currency structures provided them with a strong incentive to participate in the national political arena to influence monetary policy. The German monetary experience of the early 1920s, for example, appears to have resulted in a remarkably strong and deeply-felt political commitment among Germans as a whole in favour of conservative monetary policies.
State-Society Linkages
The third feature of the nation-state to be bolstered by the emergence of territorial currencies was the direct nature of the link between state and domestic society. As already noted, this link has been highlighted by many scholars as a key characteristic that distinguishes "nation-states" from previous historical forms of state. Earlier in this paper, it was shown that this link was crucial in allowing territorial currencies to come into existence. At the same time, once in place, territorial currencies also strengthened the link further in two ways.
First, the capacity of the state to extract resources directly from the people it governed was enhanced. The spread of a monetary economy and the use of a common form of money by all inhabitants of the territory augmented the state's ability to tax people directly. Seigniorage gains also rose as the state became the monopoly producer of money within the territory. Furthermore, the new token form of money enhanced these seigniorage gains and made it easier for states to raise revenue through inflationary means. [105]
Second, territorial currencies also provided the state with a new tool to serve the goals of the national community. With the nation now experiencing monetary events collectively, the state could actively pursue a monetary policy aimed at meeting national needs to an extent that had not been true before. The token nature of money under the new territorial currency system also obviously enhanced this possibility since its supply could be more easily controlled and managed by political authorities than old commodity forms of money. In Robert Gilpin's words, token money inaugurated an age of "political money". [106]
As was noted in the previous section, these consequences were anticipated to some extent by those who supported the creation of territorial currencies in the nineteenth century. The benefits in terms of the extractive capacity of the state, for example, were occasionally noted, particularly in the context of the financial exigencies of war. Economic liberals also acknowledged that the new territorial currencies could be managed by the state to serve the national community: their support for the monopolization of the production of token money was, after all, based on the idea that the supply of this new form of money needed to be controlled carefully to support a smoothly functioning national market economy.
But the extent to which the creators of territorial currencies saw the new monetary systems being managed to serve the goals of the state or nation was very limited. Economic liberals, in particular, hoped the new token forms of money would be managed in a fashion that closely resembled the automatic market principles by which commodity money had been regulated. Having witnessed John Law's experiment with paper money and the fiasco of the assignats during the French revolution, they viewed the active management of token currencies for national political ends very sceptically. [107] Indeed, to prevent more active "political" tampering in the management of money, economic liberals sought to remove the management of territorial currencies from the direct control of "the nation" by delegating it to an independent central bank. The latter was also to be subject to both internal and external forms of discipline. Internally, binding rules were set concerning the amount of money that could be created and the need to maintain the gold convertibility of the currency. Externally, liberals subjected national currencies to the disciplinary pressures of international gold standard and freely functioning foreign exchange markets. Although the same form of money was now used by the entire nation, its potential for serving the political goals of the state or national community was thus rather constrained.
Many critics of the liberal approach during the nineteenth century saw the broader potential of territorial currencies to bind state and nation, however Once again, Johann Fichte's The Closed Commercial State provides an early example. Inspired rather than repulsed by the French experiment with assignats, he envisioned a country in which token money was actively managed by the state with the objective of promoting the welfare of its citizens and its own needs. For the state to manage a territorial currency in this way, he also recognized that the currency would need to be protected from external constraints. Not only should it be made inconvertible into foreign money, but exchange controls would be required to prevent capital flight from disrupting monetary management. [108]
This Fichtean vision was not fully realized in any country during the nineteenth century, but it did finally come to fruition during the 1930s. The international financial collapse which began that decade prompted the introduction of exchange controls and an abandonment of the international gold standard, thus removing the external disciplines on states' ability to pursue a more active national monetary policy. Domestically, it became impossible to insulate monetary policy from the growing demands of domestic groups and state leaders for more active forms of monetary management in the context of the Great Depression and militarization pressures. In this new environment, central banks were brought under closer state control and made to manage national currencies according to broader state and national objectives, particularly the reduction of unemployment and the financing of government deficits. Keynes then provided the intellectual road map explaining how and why money could be deliberately managed to serve these goals. [109] To a greater extent than ever before in history, the state had harnessed money as a way of linking itself to the inhabitants of the territory it governed.
4. Conclusion
The arguments of the last section thus reinforce the broad point made in the previous section: that territorial currencies and nation-states have shared a closely interrelated history. Not only were territorial currencies created out of many of the same historical processes that have been associated with the emergence of the nation-state in the nineteenth century, as the previous section argued. Equally significant, once in place, territorial currencies bolstered three important features of this historical form of state: its economic coherence, the sense of collectivity that binds national citizens; and the state's more direct link to the society it governs.
As was noted in the introduction to this essay, this close historical relationship between territorial currencies and nation-states has been largely neglected in existing academic literature. This neglect is unfortunate since the relationship is of considerable relevance to four different bodies of scholarship that can be briefly highlighted in this conclusion. The first is contemporary work in the field of international relations exploring the historical origins of territoriality. As the first section of this paper highlighted, this study of the monetary sector questions the argument in much international relations scholarship that the Westphalian age represented a sharp historical break that ushered in new practices of territoriality and sovereignty. Although the principle of monetary "territoriality" was first put forward in the Westphalian era, its practical application in a concerted and successful fashion in the monetary realm had to wait for the arrival of the nation-state in the nineteenth century. This conclusion is one increasingly echoed by several other studies beyond the monetary realm as well. [110] It suggests that IR scholars have tended to overstate the significance of change in the Westphalian age.
The arguments of this paper also have much to contribute to scholarship in the field of history and historical sociology that examines the rise of the modern nation-state. Although the literature in this area is voluminous, surprisingly little attention has been given to the nature and significance of the link between the rise of territorial currencies and the consolidation of the nation-state. I have tried to show in this paper that this historical link was a very important one. Monetary transformations played a central role in strengthening various aspects of the nation-state. And the emergence of the nation-state was also important in transforming the nature of money and monetary structures.
The neglect of monetary issues in the two bodies of literature just described can be seen to be part of a broader failure within the social sciences to study money as more than just an economic phenomena. A third body of scholarship to which this study contributes is that which seeks to analyze money in a more inter-disciplinary way than has hitherto be done. An examination of the relationship between national currencies and the nation-state is particularly well suited to highlight the importance of adopting this wider perspective on money. For if money served only an economic purpose, it is unlikely that it would be organized along national lines. After all, almost no country in the world represents the kind of "optimum currency area" that many economists suggest is best served by a single currency. [111] My examination of the political and sociological reasons why nation-states have sought to create and maintain these territorial currencies helps to explain this phenomenon. In so doing, it also contributes to recent work that is examining money not just as an economic phenomenon but as geographical, political, and sociological one as well. [112]
Finally, this study also contributes to current academic literature studying challenges to territorial currency structures in the contemporary era. As noted in the introduction, this literature has made little effort to place current monetary transformations in the kind of longer historical context that this paper has examined. This historical perspective can be seen to be useful in several ways. At the most basic level, it reminds us that territorial currencies are not in any way "natural" monetary structures but rather were products of the developments of a particular historical age. Moreover, it makes clear that contemporary challenges to territorial currencies can not be interpreted as signs of a threat to the three hundred-year-old Westphalian state system as some have suggested. Rather, these challenges are undermining a monetary arrangement which has been in place in the leading economic powers for only a century and half or less. Furthermore, even the historical novelty of contemporary monetary developments should also not be overstated. The increasing use of foreign currencies alongside national currencies within countries - as witnessed in the dollarization trend in developing countries and growth of eurocurrencies - simply replicates a practice that was common before the mid-nineteenth century. Similarly, supporters of "local currencies" are endorsing forms of money that bear considerable resemblance to the inconvertible money used commonly by the poor prior to the age of the nation-state.
Although any erosion of territorial currencies can not be seen to signal the decline of the Westphalian state system, the historical analysis in this paper suggests that it would clearly have important implications for the "nation-state". One would expect the nation-state to be weakened by the trend in three respects. Alternative currency arrangements would foster economic spaces which are more transnational (eurocurrencies), supranational (the European currency) and local (the local currencies) than the unitary, exclusive national economic spaces of the age of territorial currencies. They may also promote different senses of identity in both a symbolic and concrete fashion than the national identities that territorial currencies encouraged. The kinds of direct links between the state and domestic society that territorial currencies fostered would also be undermined.
Each of these predictions, however, assumes that the "territorial currency order is seriously threatened. This is not an assumption that should necessarily be made. One final conclusion that can be drawn from the arguments of this paper is that any significant erosion of territorial currencies will likely take place only under the influence of a variety of broader historical processes that would be undermining the nation-state as a whole. If the nineteenth century experience is any guide, this paper may also provide some clues for those researchers investigating what kinds of processes these would be. Technological changes could be expected to play a key role, both in transforming the nature of money and in fostering the emergence of different kinds of economic spaces for which new monetary structures are seen as necessary. Reinforcing these technological changes would likely be a shift away from the kind of state-society relations that were characteristic of the age of the nation-state. Alternative currency arrangements might also be promoted by groups that turned their back on the commitment to the "nation" as a unified economic and political community. Finally, the developments of new international norms would be likely to play a role in eroding territorial currencies. Some evidence of each of these developments could certainly be cited, but it is not the task of this paper to explore the extent to which these kinds of developments are indeed occurring. Suffice it to say simply that the fate of territorial currencies and that of the nation-state are likely to remain as closely linked in the future as they have been in the past.
Footnotes
* ACKNOWLEDGEMENTS: I am grateful to Margaret Moore, Al Vachon and Vincent Sica for research assistance, as well as to the Social Sciences and Humanities Research Council of Canada for helping to finance some of the research for this paper. I am also grateful for helpful comments from: John Agnew, Sam Barkin, Phil Cerny, Jennifer Clapp, Andre Drainville, Raymond Duvall, Ed Friedman, Tsuyoksi Kawasaki, Helen Milner, Ton Notermans, Lou Pauly, Andreas Pickel, Tony Porter, Susan Roberts, Andre Schmid, Ken Thomas, Charles Tilly, Bent-Sofus Tranoy, Geoffrey Underhill, Robert Wolfe, participants in the IPE seminar at Columbia and the ARENA seminar at University of Oslo.
[1]. Connolly 1995, 378-9.
[2]. For the rest of the essay, I will use the phrase "territorial currencies" to refer to currencies which are homogenous and exclusive within the territorial boundaries of a state.
[3]. Those few articles which have attempted to provide a longer historical perspective on the contemporary monetary transformations - such as Holtfrerich's and Sannucci's articles in De Cecco and Giovannini 1989, Duncan and Rotstein 1991, Devaeve and Duvosquet 1991, and Perlman 1993 - have not addressed the relationship of historical monetary developments to changing state structures, as this paper attempts to do.
[4]. For this growing historical focus in IR literature, see for example Bartelson 1995, Thomson 1994, Thomson 1995, Spruyt 1994, Ruggie 1993, Krasner 1993. Spruyt's work contains some discussion of the link between the centralization of the coinage and the consolidation of the sovereign state in the period between the fourteenth and seventeenth centuries, but these discussions are very brief and (as is discussed in section 1) they only address one small aspect of the process of creating territorial currencies.
[5]. Giddens 1985, 1990; Poggi 1978, 93; Hobsbawm 1992, 28. See also Weber 1976, 32-5, 40.
[6]. An analysis of the emergence of territorial currencies is particularly absent from Ardant's (1975) important article on the consolidation of the "economic infrastructure" and financial policy of modern national states.
[7]. Polanyi 1944, Knapp 1905, Zelizer 1994, Dodd 1994.
[8]. See, for example, Strange (1995), Cohen (1994), Ruggie (1993) and Rosenau (1989).
[9]. For example, Poggi 1978, 93; Hobsbawm 1992, 28.
[10]. See for example Krasner 1993, Thomson 1994.
[11]. See for example Monroe 1923, 51, 62-64.
[12]. Spruyt 1994.
[13]. Foreign coins made up a large portion of the coinage in the US until the 1850s (Carothers 1930). Across most of continental Europe, coins from various countries circulated alongside each other until about the mid-nineteenth century as well (Braudel 1990,601-2; Cipolla 1956, 14,31). Foreign coins also made up an important portion of the coinage in circulation in England until the late 1700s (Craig 1953, xiii). Foreign coins also circulated widely in Japan until the late nineteenth century (Shinjo 1962, 10,15).
[14]. For example Braudel 1990, 628; Boyer-Xambeu, Deleplace and Gillard 1994.
[15]. Up until the eighteenth century, Fernand Braudel (1985a, 439) reminds us that the bulk of economic life across Europe was conducted within the context of a relatively self-sufficient rural life where trade was conducted largely by barter. See also Cipolla 1956, ch.1; Vilar 1984, 25.
[16]. Cipolla 1956, ch.2-3; Falkner 1901. In early seventeenth century London, for example, as many as 3000 tradespeople were issuing independent token monies (Craig 1953, 140).
[17]. Helfferich 1969, 39.
[18]. At the end of the Tokugawa era in Japan, for example, there were as many as 1,694 different kinds of paper notes in circulation (Takaki 1930, 31). Similarly, at the time of the US civil war, as many as 10,000 different types of paper notes circulated in that country and merchants were forced to consult frequent newsletters that detailed the current exchange rates between them (Davis 1910, 24).
[19]. As many as fifty percent of the bank notes in circulation at the start of US civil war were counterfeit (Johnson 1995). Bank of England notes were widely forged until the early nineteenth century (Mackenzie 1953, 13, 48-58) as were government coins (Craig 1953, 253-4; Cook 1993; Styles 1980).
[20]. Boyer-Xambeu, Deleplace and Gillard 1994, Einuadi 1953.
[21]. Carlo Cipolla (1956, 49), for example, notes how several different ghost monies were used simultaneously in the Italy city-state of Florence in the early modern period. Many different units of account persisted in use in rural France until the late 19th century (Braudel 1990, 609; Weber 1976, 33-4).
[22]. This was, for example, the view of the French revolutionaries who eliminated the use of "ghost money" in France (Einaudi 1953).
[23]. Zelizer 1994, 205.
[24]. Copper coins had already been essentially "token" money already before the nineteenth century (Vilar 1984, 21).
[25]. The UK was the first to create this kind of coinage system when it moved formally onto a gold standard in 1816. The US did the same in 1853. Other leading industrial powers also created "token" coinages when they joined the gold standard after the 1860s.
[26]. See for example Einaudi 1953.
[27]. This process took place at different speeds in different countries. England was the first to create a note monopoly in 1844. The US forced all banks to issue a standardized national paper note after 1863, although various forms of government-issued money continue to circulate alongside them until the creation of the Federal Reserve system in 1913 began the process of creating a single form of paper money. Legislation to introduce paper note standardization was brought in many other leading industrial powers in the 1870-1914 period. In countries such as Italy and Canada, however, a note monopoly was granted only for small denomination notes, while private notes continued to circulate until the interwar period. For a detailed history of the standardization of the note issue in many different countries in the nineteenth century, see Goodhart 1988, 105-60; Smith 1990.
[28]. The British government, for example, began to remove old and worn coins in a regularized manner in the mid-1800s (Craig 1953, 311). The US began to attack counterfeiting seriously only after 1863. For the more uniform and high quality of coins and notes, see the discussion in the next section of this paper.
[29]. For an interesting account of this process in France, see Weber 1976.
[30]. The British government, for example, did this after 1816 for the first time (Craig 1953).
[31]. In the UK, for example, the issue and circulation of private tokens was outlawed in 1817 (Whiting 1971, 31). In the US, private local forms of money were outlawed in the 1860s (Zelizer 1994, 15).
[32]. Governments continued, of course, to hold foreign currencies as reserves once they had created a "territorial currency".
[33]. Helfferich 1969, 49.
[34]. See for example Carson 1962, 567; Polanyi 1944, 193.
[35]. The US government and the Canadian government, for example, launched comprehensive efforts between 1857-1861 and 1869-70 respectively to remove all foreign coins from domestic circulation (Carothers 1930, ch.11). Many countries continued to grant legal tender status to foreign gold coins up until 1914. In a number of European countries, selected foreign "token" coins also continued to circulate well until up to 1914 despite the fact that all other features of a territorial currency had been introduced. They did so, however, only because of new international agreements - such as the Latin Monetary Union and the Scandinavian Monetary Union - which encouraged the practice both by standardizing the forms of money issued in each participating country and by promising to accept the other country's money as valid. See discussion in second section of the paper.
[36]. See previous footnotes for many of the specifics, however.
[37]. Scotland was, however, allowed to maintain its system of private bank notes under the latter reforms.
[38]. In each of these instances of change, the new monetary systems almost never matched the "territorial currency" model perfectly. As Benjamin Cohen (1994, 3) points out, "monetary sovereignty is rarely absolute". Zelizer (1994) describes a number of minor ways in which the homogeneity of the currency structures was often compromised. More significant departures from the territorial currency model also emerged during eras of high inflation (when the substitution of the national currency for foreign currencies usually became more common) or during periods when the national currency was in short supply (such as during the early 1930s when sub-national local currencies proliferated: Weishaar and Parrish, 1933).
[39]. The most striking exception to this pattern were the ex-colonies of France in West Africa (with the exception of Guinea) who joined a common CFA franc zone. Initiatives to construct territorial currencies in other countries in the developing world were often less than fully successful. Cohen (1994, 9) suggests the term "permeated currencies" to describe the nature of their national currency structures.
[40]. For example, Johnson 1995; Weber 1968, 166-80; Knapp 1905. Although scholars such Weber and Knapp considered legal tender laws to be of key importance in determining the money used in a country, their significance clearly varied from country to country. With respect to the process of encouraging the use of the state's paper money, for example, they were less important in countries where the use of such paper money had evolved gradually (such as Great Britain) than in countries where it had been introduced more suddenly. Similarly, Goodhart (1988, 22-3) observes that states were more likely to rely on legal tender laws to encourage the use of paper notes when the notes were inconvertible.
[41]. Carothers 1930.
[42]. See Weber 1968, 167. See also Knapp 1905 and Weber 1976.
[43]. It is not a coincidence, for example, that the first successful wide-scale use of paper money in Europe emerged in England where the monarch's ability to tamper with money had been curtailed by more representative government.
[44]. For the role of "experts", see Giddens 1990, 26-7.
[45]. See references below in section 3 of the paper.
[46]. Anderson 1983.
[47]. See especially Johnson 1995. For the link between the expansion of nationwide policing and the curtailment of counterfeiting in Britain, see Cook 1993.
[48]. For the latter importance of the printing press, see Anderson 1983, Hobsbawm 1992, 61.
[49]. For coins, see for example Liverpool 1880, 226-7; Taxay 1966, ch.12; Doty 1986. For notes, see for example Mackenzie 1957, 21,33-6,87-91,98-105.
[50]. Matthew Boulton, one of pioneers in the invention of the steam engine, played a key role in convincing governments of the usefulness of new industrial technology for producing "petty coin" (Craig 1953, 263-5; Doty 1986).
[51]. Cook 1993, 18; Hewitt and Keyworth 1987, 81,109,156fn6; Takaki 1903, 41.
[52]. Redish 1990.
[53]. Giddens 1985. See also Dodd 1994, 32-36. For Tilly's general argument about the role played by inter-state rivalry in the construction of nation-states, see Tilly 1975, 1990.
[54]. The decision of the US government to create a homogenous national banknote during the 1860s, for example, was driven in part by the federal government's need for finances during the civil war. The move created an instant market for the government's bonds since private banks wishing to issue the new banknote were required to back their issues with federal government bonds (Davis 1910). Similarly, a monopoly on note issue was initially granted to the early central banks, such as the Bank of England and the Banque de France, as a means of securing more stable source of finance for the state in the context of war. It is important to remember, however, that in the latter two cases the note issue monopoly initially covered only the region surrounding the capital cities (London and Paris). These initiatives, thus, were not intended to create "territorial currencies" on a nation-wide basis, although in hindsight we can see that they represented important steps towards this goal. The decisions to extend these institutions' note issue monopoly nation-wide in the mid-19th century were not primarily motivated by the state's need for finance.
[55]. The British government's resort to the large-scale use of paper currency to finance spending during the Napoleonic wars forced it to begin to develop mechanisms to prevent wide-scale counterfeiting of token forms of money. The same was true of the US federal government during the civil war.
[56]. Once again, the US decision to create a single national banknote during its civil war provides a key example. State officials hoped the move would ease their ability to raise tax revenue (Davis 1910, 106). More broadly, Gabriel Ardant (1975, 174) notes that states sought generally to encourage the spread of the monetary economy since taxation became easier and less costly in a fully-monetized economy both because indirect taxes could become a major source of revenue and because direct taxes could be more accurately evaluated and more easily collected. See also Tilly 1990, 85, 88-9.
[57]. The link between the new "national markets" and the need for a new nation-wide standardized monetary system was first made very effectively in an 1805 book by Lord Liverpool (1880, 136-8). This book was used as the basis for the 1816 monetary reforms that formalized the gold standard in Britain. This motivation was then cited as a central one behind the various monetary reforms in other countries during the 19th century that introduced territorial currencies. See for example Davis 1910; Clough 1964, 40; Holtfrerich 1989; Shinjo 1962.
[58]. For example Gallarotti 1995.
[59]. Carothers (1930) argues persuasively that the central motivation in Britain and the US for creating the gold standard with token subsidiary coins was the need for an adequate supply of "small change" coins. See also Martin 1973 and Redish 1990.
[60]. Gellner 1983. The link between language and money as basic means of social communication is one that has been drawn by many scholars including Talcot Parsons (Zelizer 1994, 10-11), Karl Marx (Shell 1982), Fernand Braudel (1985a, 440,477), and Charles Kindleberger (1967).
[61]. Carothers 1930.
[62]. In the business community, however, the financial community often played a quite ambivalent role. Not only could they often make large profits out of a chaotic monetary system, but also the private note issue of many banks was threatened by the monopolization of the note issue.
[63]. Cipolla 1956, 27,31; Redish 1990.
[64]. Smith 1990.
[65]. For histories of the "universal coin" initiative and these monetary unions, see for example Perlman 1993, Willis 1901, De Cecco 1992, Nielsen 1933.
[66]. The LMU was driven also by the imperial objectives of Napoleon III, while the SMU was in part a legacy of the "pan-Scandinavian" movement which had flourished in the 1860s. In both instances, the practice of accepting each others' coins had also been very widespread historically among the countries involved in these unions and the unions simply formalized this practice with respect to the new token forms of money that were created in each country in this period.
[67]. Craig 1953, 250; Whiting 1971, 13-25.
[68]. See for example Smith 1990, 76-7, 176-7; Davis 1910, 16, 89, 91; Liverpool 1880, 177; Einaudi 1953, 247.
[69]. Quotation from US Treasury Secretary Salmon Chase in Davis 1910, 89. See also Johnson 1995, 172,176; Davis 1910, 11,80,106. After the unification of Italy, Shepard Clough also notes that Italian politicians hoped that the introduction of a common monetary standard would act as "an ever-present reminder of political unification". Clough 1964, 40. The usefulness of monetary unification for the broader project of political unification was also noted in Germany (Holtfrerich 1989, 231,233; Zucker 1975, 62).
[70]. Senator John Sherman quoted in Davis (1910: 80). See also Sharkey (1959: 225).
[71]. See Hewitt 1994; Hewitt and Keyworth 1987, 148.
[72]. Congressional Globe January 17, 1873, p.672, 679.
[73]. Hayes 1931, 130-1, 244-5; Hobsbawm 1992, 24-45.
[74]. See, for example, Nugent (1968, 63-64) and Zucker (1975, 64-65) for the case of Germany, and Redish 1990 and Carothers 1930 for the cases of the US and Britain. The move to join the gold standard was of course also linked to domestic conflicts between class and sectoral interests, as De Cecco 1974, Frieden 1993, and Gallarotti 1995 point out.
[75]. This provides a good example of the argument made by Janice Thomson and Stephen Krasner (1989, 198) that the consolidation of national sovereignty was a necessary condition for expansion of the international economy.
[76]. This was, for example, a recommendation of the 1920 Brussels Conference on international monetary reconstruction.
[77]. In most cases, these reforms were strongly encouraged by advisors from major financial powers - especially the United States and Britain - who sought to construct territorial currencies as a way of stabilizing the monetary systems of these countries and enabling them to participate more fully in the post-1918 world economy. The reforms were also driven by some similar domestic pressures as those which had promoted the emergence of territorial currencies elsewhere during the 19th century. See, for example, Drake 1989.
[78]. See Giddens 1985, Wendt 1992. The role that the international norms of the gold standard played in reinforcing the domestic validity of national token currencies more broadly is explored very briefly by Giddens 1985, 154-5.
[79]. For the former, see League of Nations 1930. For the latter, see for example Cullather 1992.
[80]. See for example Yeager 1984, 657-9; Gallarotti 1995, 143-47.
[81]. Giddens 1985. See also Winichakul 1994.
[82]. For a discussion of various "technologies" that bolstered the territoriality of the nation-state, see Winichakul 1994, although the central importance of money in this role is ignored in his discussion.
[83]. Andrew 1904. Both Sanger 1906 and Knapp 1924 note the prejudice against the new token forms of money that existed among international merchants for this reason.
[84]. Heilperin 1960, 26.
[85]. Polanyi 1944, 202-3.
[86]. Polanyi 1944, 230.
[87]. Roll 1939, 216. Adam Muller and Freidrich Gentz both advanced this argument. Both drew on the experience of Austria's inconvertible paper standard in the early 19th century. In the US, the economic nationalist Henry Carey and his followers also favoured the creation of an inconvertible currency. See also a similar "national currency school" in Canada (Henley 1989/90).
[88]. Hayes 1931, 263-4; Heilperin 1960, 92; Roll 1939, 218. For the similar views of the French revolutionaries, see White 1933, 33.
[89]. Interestingly, Fichte's ideas and those of the German romantics began to be reread after the late 19th century and especially during the 1930s. Hayes 1931, 265; Roll 1939, 217; Pribam 1983, 211.
[90]. Anderson 1983.
[91]. Currencies were first used to convey nationalist messages by the American and French revolutionaries in the late eighteenth century. The French revolutionaries renamed their money "francs" (instead of "livres") and replaced Latin wording with inscriptions written in French (Porteous 1969, 230-1). The first official coin issued by the newly independent US Congress carried the inscription "We Are One". The US Congress also refused to put the head of President Washington on its coins considering this a "monarchical" practice and instead substituted a figure of "Liberty" (Taxay 1966, 31, 57-61; Carothers 1930, 54, 61).
[92]. As Hobsbawm (1992, 43) notes, liberals did not write much about nationalism and what was written "has a somewhat casual air". Interestingly, however, when liberals of a cosmopolitan perspective wrote about the benefits of the "universal coin", they did emphasise the symbolic use of money. For example, Walter Bagehot argued that if England were to introduce the universal coin "all Englishmen would lose some of the exceptional national feeling which retards their progress, which makes them look at others as strange, which makes them think us singular too. If civilization could make all men of one money, it would do much to make them think they were of one blood" (quoted in Perlman 1993, 318). See also Kemmerer 1916, 71.
[93]. Muller is quoted in Pribam 1983, 212. See also Roll 1939, 224 and Mayall 1990, 80. In a concrete sense, an inconvertible money standard could help spread the use of a new national currency by pushing old coins out of circulation quickly, as Italy experienced after 1866 (Toniolo 1990, 58,63-4).
[94]. For the latter, see Anderson 1983.
[95]. Hewitt 1994, 11. W.B.Yeats described the new coins of independent Ireland in the 1920s as "the silent ambassadors of national taste" (quoted in McGowan 1990, 46). Despite the importance of money as a tool of propaganda, scholars of nationalism have neglected this role it played and they have produced no studies which analyze the symbols carried on money. Even Eric Hobsbawn's important essay on the mass production of traditions in the late 19th century ignores this topic, despite his brief acknowledgement that money is the "most universal form of public imagery" (Hobsbawn 1983, 281).
[96]. Letter from S.M.Clark to Secretary Chase, March 28, 1863, Record Group 318, Records of the Bureau of Engraving and Printing, Press Copies of Official and Miscellaneous Letters Sent, 1862-1912, Vol.1 of 346. National Archives, Washington, D.C.
[97]. Quote from Marx 1984, 132. See Shell 1982.
[98]. Quotes from Simmel 1978, 377, 440. As Harvey (1989, 103) notes: "Money unifies precisely through its capacity to accommodate individualism, otherness, and extraordinary social fragmentation".
[99]. For this reason, Simmel was not quite right to talk about the "colourlessness" of money. Although money was certainly homogenous within each country, the new national currencies were not at all without colour but rather were covered everywhere with various symbols and imagery of the nation. Indeed, an analysis of the importance of the nationality of money is strikingly absent from Simmel's otherwise interesting work. In this respect, Marx was more perceptive, noting that money "uses different national languages and wears different national uniforms" (quoted in Harvey 1982, 243).
[100]. See footnotes 56 and 57. See also Muller's views that national money made the economic oneness of the people a reality (Roll 1939, 223). The American economic nationalist Henry Carey also emphasized the way that money promoted the association of individuals in harmony (Nugent 1968, 39-40).
[101]. Braudel 1985b, 423-6; 1990, 600.
[102]. See for example, Einaudi 1953.
[103]. Polanyi 1944, 203, 205.
[104]. Polanyi 1944, 24, 205.
[105]. See for example Ardant 1975.
[106]. Gilpin 1987, 122.
[107]. Frankel 1977, 17-18.
[108]. Heilperin 1960, 95. The French revolutionary government had experimented with such controls (White 1933, 48).
[109]. As Brian Johnson (1970, 7) puts it, Keynes made people aware of the political nature of money. See also Frankel 1977.
[110]. Janice Thompson (1994), for example, has recently demonstrated that sovereign control over extra-territorial violence was achieved only very late in historical terms with the emergence of the national state in the nineteenth century. As has already been noted, Antony Giddens' work (1985, 49-51) also associates the practice of territoriality in a broader sense with the age of the nation-state rather than the earlier Westphalian era. See also Krasner (1993).
[111]. As Goodhart (1995: 452) puts it, "the theory of optimum currency areas has relatively little predictive power".
[112]. For discussions of the absence of literature in these areas as well as some initial efforts to address these gaps in the literature, see Zelizer 1994, Dodd 1994, Cohen 1994, Corbridge, Martin and Thrift 1994.
[Date of publication in the ARENA Working Paper series: 15.8.1997]
|