Central Banks and Gold: How Tokyo, London, and New York Shaped the Modern World

261 Pages·2016·2.37 MB·English

by  Simon James Bytheway

Central Banks and Gold
A volume in the series
Cornell Studies in Money
Edited by Eric Helleiner and Jonathan Kirshner
A list of titles in this series is available at www.cornellpress.cornell.edu.
Central Banks and Gold
How Tokyo, London, and New York
Shaped the Modern World
Simon James Bytheway
and Mark Metzler
Cornell University Press
Ithaca and London
Copyright © 2016 by Cornell University
All rights reserved. Except for brief quotations in a review, this book, or
parts thereof, must not be reproduced in any form without permission in
writing from the publisher. For information, address Cornell University
Press, Sage House, 512 East State Street, Ithaca, New York 14850.
First published 2016 by Cornell University Press
Printed in the United States of America
Library of Congress Cataloging-in-Publication Data
Names: Bytheway, Simon James, 1969– author. | Metzler,
Mark, 1957– author.
Title: Central banks and gold : how Tokyo, London, and New York
shaped the modern world / Simon James Bytheway and Mark Metzler.
Description: Ithaca ; London : Cornell University Press, 2016. | Includes
bibliographical references and index.
Identifi ers: LCCN 2016026968 | ISBN 9781501704949 (cloth : alk. paper)
Subjects: LCSH: Banks and banking, Central—History. | Banks and
banking, International—History. | Money supply—History. | Gold
standard—History.
Classifi cation: LCC HG1811 .B98 2016 | DDC 332.4/22209041—dc23
LC record available at https://lccn.loc.gov/2016026968

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Cloth printing 10 9 8 7 6 5 4 3 2 1
Contents
List of Tables and Figures ix
Preface xi
Acknowledgments xiii
Abbreviations xv
Note on Conventions xvi
Introduction: Bases of Credit 1
1. The Beginnings of Central Bank Cooperation:
Tokyo and London, 1895–1914 8
The Bank of Japan’s Foreign Specie Reserve Held in the
Bank of England / Alliance and War: London Lends to
Japan / Tokyo and New York: Weaker Connections / Japan
Lends to the World’s Bank of Banks
2. World War and Globalization 28
De-globalization after 1914? / A US Central Bank /
Wartime Origins of Multilateral Central Bank Cooperation /
New York as an International Financial Center
vi Contents
3. Japan Emerges as an International Creditor, 1915–1918 48
What’s in a Center? / Lending to Wartime Allies / Lending
to China / Some Failings of Yen Diplomacy
4. Postwar Alignment 64
A Typology of Central Bank Cooperation / A Market-
Making Initiative in Tokyo / Spring Tide: A Flood of Gold
/ Trilateral Defl ation: Crises Cooperatively Induced
5. Wall Street Discovers Japan, Spring 1920 79
Three Wall Street Missions / Benjamin Strong’s Report on
Japan / New York–Tokyo Cooperation
6. Putting the Program into Action, 1920–1928 94
“World Defl ation Has Been Started” / Global Financial
Governance: The London–New York Program / A
New Central-Bank Connection: New York and Tokyo /
Tokyo and London: Coordinating the Return to the Gold
Standard / Burying Gold: Strong and Norman / The
Central Banking Family / More Cooperation, More Debt,
More Defl ation
7. Making a Market: London and Gold in the 1920s 124
The Bank of England as London’s Gold Market before
1919 / Gold Afl oat / The Founding of London’s “Free”
Gold Market in 1919 / The Free Gold Market during the
Years of the Floating Pound, 1919–1925 / “Second to None”:
Kuhn Loeb and Rothschilds / 1925: The Central Banks
Take Control / Channeling Free Gold
8. The Rush for Gold 144
New York: An Infl ated Inverted Pyramid / A World
Central Bank? / The Endgame Begins / Boom Times in
the London Gold Market / De-globalization in the 1930s
Contents vii
Conclusion: Private Networks and the Public Interest 168
Hierarchical Markets / “Capitals of Capital” /
Capital City Bubbles
Appendix: Reference Material 183
Notes 191
References 213
Index 233

Tables and Figures
Tables
1.1. Bank of England reserves and Bank of Japan
accounts, 1896–1900 15
1.2. Bank of England borrowings from the Bank of Japan 26
3.1. Japanese lending to wartime allies, 1915–1918 53
3.2. Japanese lending to China, 1915–1918 60
6.1. Banks of issue organized, 1921–1931 101
7.1. Estimated gold production by countries and areas,
1919–1930 129
7.2. Reported gold fl ows from the United Kingdom
to the United States, 1919–1925 130
A.1. Bank of England reserves and Bank of Japan
accounts, 1904–1916 183
A.2. Bank of England borrowings from the Bank of Japan 185
A.3. Gold infl ows to Japan from Korea, 1911–1936, compared
to Japan’s overall balance of gold shipments 189