On Some Classical Monetary Controversies

David Glasner ()

Chapter Chapter 3 in Studies in the History of Monetary Theory, 2021, pp 51-83 from Palgrave Macmillan

Abstract: Abstract This chapter uses the classical money model introduced in Chapter 2 to explain the different views of Adam Smith and David Hume on banking and the price-specie-flow mechanism (PSFM). These differences reappeared in the debates between the Banking School and the Currency School over Peel’s Bank Charter Act, the Banking School echoing Smith and the Currency-School echoing Hume. Smith’s theory of banking was also echoed by J. B. Say in his explaining his law of the markets. Say’s Law (Identity) is in fact analytically equivalent to Fullarton’s law of reflux. Cairnes’s Humean quantity-theoretic interpretation of the effects of gold discoveries in California and Australia is shown to be inferior to an interpretation consistent with a Smithian classical interpretation.

Keywords: Classical monetary theory; Quantity theory; Law of reflux; Currency school; Banking school; Say’s Law; Gold standard (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pshchp:978-3-030-83426-5_3

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DOI: 10.1007/978-3-030-83426-5_3

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