Mainstreaming money: perspectives on currency in the history of the British Isles

Abstract

After considering whether the author’s interest in and approach to British monetary history may be regarded as reflecting an Antipodean perspective, this article presents a synoptic account of British monetary history in the period 1603–1932 deploying the ‘four nations’ perspective fostered by J. G. A. Pocock and others, while conceptualising money itself as a social, political and cultural phenomenon. The account shows not only that the study of money is crucial to a proper understanding of the creation of the United Kingdom, but also that it can generate critical insights into the development and reproduction of power relationships in modern Britain.

This article has been peer reviewed.

Keywords:

• British history
• economic history
• ‘four nations’ history
• money
• sterling

This article is concerned above all with perspectives, and with the power of novel perspectives to generate fresh insights. After reflecting on the consequences of my own idiosyncratic but manifestly Antipodean perspective for my approach to British history, I will begin by advancing a brief theoretical argument concerning the nature of money to suggest that it can only be fully understood as a political, social and cultural phenomenon. I will argue that this insight provides a fresh perspective from which to consider British history, especially when coupled with the ‘four nations’ perspective which first gained traction in the later 1970s. To substantiate this claim I will present a synoptic account of the monetary history of Britain and Ireland from the union of the crowns in 1603 to the collapse of the sterling gold standard in 1931.

To this historian, the invitation to reflect on my own current work on British history in the context of ‘Antipodean Perspectives’ poses a difficult problem, for it is not immediately clear to me how, or even whether, my own current work on the history of currency in Britain and Ireland reflects such a perspective. Indeed, it is not even clear how either my topic or my perspective could be meaningfully understood in terms of geographical location rather than (or even as well as) in terms of my own intellectual and political trajectory, or of the specific kind of training and sensibilities conferred on me by studying in a distinctive department of history in a specific historical moment. There is no doubt in my own mind that my approach to this project is far more readily understood in terms of these other factors than in terms of my Antipodean location, in every respect bar, perhaps, the most important one. And this is the shock which gave rise to the question with which my larger project began. Thatshock, I suspect, was of a kind that could only be experienced by an Antipodean, or at least by an Anglo-Celtic product of a British settler society, for whom, as Clive James has observed, the first direct experience of British society can produce a surreal sensation of familiarity bringing the unexpected into sharp relief.¹

For this Antipodean, whose early visits to Britain took place in the late 1980s and 1990s, and involved very little contact with academic circles, one of the most startling features of an otherwise familiar society was the near impossibility of conducting a rational conversation on any one of three topics: Ireland, the monarchy, and the proposal that Britain should participate in a unified European currency. It was this last observation that gave rise to my interest in the monetary history of the British Isles.

The resulting inquiry first began to take form as an attempt to investigate why the Euro proposal should give rise to such powerful hostility, for it was clear that regardless of the merits of the economic case for or against British participation in the Euro, it was not that which primarily motivated its opponents, but a visceral fear that to surrender the pound was to commit a devastating act of national self-effacement. The task therefore became to provide an historical account of how, when and why currency had become deeply entwined with British national identity and prestige – indeed, so deeply entwined and ‘instinctive’ that perhaps only an outsider found it worthy of investigation.

My early thinking in this area thus shared some of the same concerns as that body of scholarship which James Vernon describes as attempting ‘to explain and even repudiate the hostility to European integration that gripped British political culture from the 1980s’.² For Vernon, this body of work was one of a number of historiographical strands leading to the abandonment of a ‘national narrative … in favour of themes and case studies’. The never-written book that I projected in the late 1990s was very much in this latter mould; conceived as a series of chapters consisting largely of analysis of public discourse around episodes in modern British history in which the relationship between money and identity was made explicit, together with such things as analysis of the nationalistic visual rhetoric on banknotes and coins.

I soon came to find this approach deeply unsatisfactory for reasons that had nothing to do with my Antipodean perspective, and everything to do with my historical sensibilities and political predilections. The further my research progressed, the more uneasy I became about an absence identified by Vernon as characteristic of much recent work on British history. To use Vernon’s words, the projected work was clearly going to lack both ‘an organising narrative and a structure of causation’ and thus contribute to that ‘bricolage effect’ which, as he suggests, leaves ‘opaque’ the meaning of much of the past that it describes. Increasingly, the decision to study discrete episodes looked like little more than a shying away from the challenges of writing a coherent narrative account. These were considerable, especially for someone with no background in economics, for when money is the topic, a coherent explanatory narrative cannot help but engage systematically with economic history.

Existing scholarship provides very little guidance on what such a narrative might look like. While we might join Vernon in lamenting the lack of ‘any sustained account of Britain’s economic history’ in recent scholarship, we can only marvel at the almost complete failure of any scholarship – old or new – to engage with the history of currency outside the pages of a tiny handful of highly specialised works. Still more remarkable is that consideration of monetary issues in narrative accounts of British or Irish history has become less rather than more common in recent decades.

This trend is counter-intuitive, and should caution us against any tendency to glibly historicise developments in our own discipline. In 1984, Charles Wilson wrote – in the second edition of his successful 1965 social and economic survey history –

An age of inflation rampant, monetarism, credit cards and state lotteries presumably needs less incentive than some of its predecessors to believe that financial institutions are of importance to the economy of those who live in it.³

If anything, however, the movement has been in the opposite direction. A systematic study of the index pages of a wide range of survey histories of Britain written in the past sixty years suggests that the decades since 1984 actually saw less interest by historians in matters relating to currency, banking and financial institutions than the years before. Authors such as Eric Hobsbawm, Asa Briggs, Arthur Marwick, and of course Wilson himself, writing in the 1950s and 1960s, made some attempt to consider monetary issues as part of the mainstream of British history and to treat decisions about currency as if they might actually have had some effect on people’s lives.⁴ On occasion they even recognised that there is such a thing as monetary power, that it is distributed very unevenly, and that it is generally exercised in the interests of those who wield it. Beyond obligatory references to the Gold Standard crisis of 1931, one will look almost completely in vain for any kind of recognition of these issues in later works.

It is tempting to attribute this decline to some generational factor – to suggest (Wilson’s opinion notwithstanding) that the generation of historians who lived the Great Depression, who witnessed the triumph of the Keynesian critique of orthodox economics, and who wrote while the sterling exchange rate was a perennial political problem, were naturally more likely to give attention to such matters than those who followed. But this line of thinking has its limits. When we consider the work of E. P. Thompson in the 1960s, we find an almost complete blank on monetary issues, even when he discusses Cobbett, who was obsessed with them.⁵ This note reverberates through the social histories written in the ensuing decades, where it is not unusual to find no reference to monetary questions whatsoever, even when their importance to the issues under discussion ought to be dazzlingly clear.⁶ This is truly astonishing. How can it be possible to discuss wages, or consumption, or the allocation of purchasing power in families without any awareness at all of the medium in which all of these processes took place; of where it came from, what it looked like, how capable it was of subdivision, how likely it was to be counterfeit, how its value might change, whether people trusted it and why, or who decided that it had value and on what basis?

This absence of meaningful discussion of, or reference to, monetary questions requires explanation beyond the generational to the ideological and methodological: the radical forms of social history expounded by Thompson and his followers were united by an interest in working-class agency, and a concern with exploitation and resistance at the point of production. They were inherently little disposed and poorly equipped to take up questions which revolve, like money, around arcane decision-making by those who wielded power at the national level on the one hand, and around issues of representation and abstract meaning on the other. Conservative types of social history of the kind famously pilloried by Tony Judt in the pages of History Workshop Journal,⁷ with theories of ‘modernisation’ at their intellectual core, were even less likely than Thompsonite social history to ask meaningful questions about monetary history. To be sure, the monetisation of ‘the economy’ may be viewed as a part of the broader process of modernisation, but given that it seldom appears to have given rise to significant resistance by the lower orders it is a story best left to the economists – whose narratives on monetary history, it should be noted, are teleological to the point of ‘Whiggishness’.⁸

It is true that in recent years there has been something of a surge of interest in the history of money, but most of this has come from outside the historical discipline – from geographers such as Eric Helleiner, Emily Gilbert, Andrew Leyshon and Nigel Thrift,⁹ sociologists such as Viviana Zelizer, Nigel Dodd or Geoffrey Ingham,¹⁰ and literary scholars like Mary Poovey, or Martha Woodmansee, Mark Osteen and their colleagues.¹¹ Historians, such as Craig Muldrew, Carl Wennerlind and Deborah Valenze, have generally been later to the party, and in smaller numbers.¹² All of this research is focused on the early modern period, and while Muldrew’s work is focused purely on England, Wennerlind and Valenze venture across the Atlantic by examining aspects of the relationship between money and slavery – a concern perhaps reflecting the fact that both of these scholars are Americans. Of the three, only Wennerlind’s work is centrally concerned with the operation of monetary power at national level or by the state.

Valuable as these works are, none of them provides the narrative account of the history of money in Britain and Ireland of the kind I believe is required. That account is not a simple survey of British monetary history – several such surveys exist, of widely varying value.¹³ Still more emphatically, the world does not need another ideologically driven account of the triumphal march towards the modern monetary order.¹⁴ Rather, what is required, and what I hope to provide, is a narrative of money in its context, in a way that actually enriches our understanding of that context. The remainder of this article attempts to illustrate the explanatory value of such a narrative by presenting a summary account of what it might look like, together with some of the theoretical and historiographical pillars on which it should stand.

My study will be built around the relationships between money, power and national identity in the British Isles since the beginnings of modern credit-money and the earliest movements towards the establishment of a gold standard in the seventeenth century, and the concomitant beginnings of monetary union between Scotland, England and Wales, and Ireland. It ends between the world wars, after the partial dissolution of the monetary union in 1928 following the founding of the Irish Free State, and with the failure in 1931 of Britain’s last attempt to sustain its currency system on a commodity basis. While one could readily make a case for a range of alternative beginning or ending dates, the ones I have selected allow for the development of two conceptually intertwining narrative arcs from their beginning to their respective ends – or at least to their current states. It traces the entire evolution of British credit money from its origins to the final dissolution of its claim to be based on bullion, while simultaneously tracing the creation of the United Kingdom monetary union from its first beginnings to its current scope and structure.

The central historical process to be examined in this context is thus the creation of a unified monetary order in the United Kingdom. By this I mean not just the geographical unification of the currency that accompanied the forging of England, Scotland and Ireland into a unitary state, but the development of a particular kind of monetary system, specific to capitalism, that incorporated the entire population, and commanded enduring and near-unanimous support across the boundaries of nations, economic sectors, social classes and political ideologies. From three jurisdictions,¹⁵ each exhibiting its own distinctive instance of early modern monetary dysfunction and conflict, there was created – over the course of more than two centuries – a single monetary order exercising a hegemony so profound that its central assumptions could barely be identified, let alone challenged – even by those who were in principle hostile to the capitalist economic order of which it formed an indispensable part.

This was not a single process, but a collection of overlapping, asynchronous and at times dissonant developments, each of which took place in its own historical context. As I will show, these were simultaneously economic, political, social and cultural, for the simple reason that – to pastiche Milton Friedman’s famous dictum – money is, always and everywhere, an economic, political, social and cultural phenomenon.¹⁶

This is not the place to fully elaborate a theoretical account of the nature of money. Such an account is of course necessary if the work I am proposing is to proceed: it is impossible to write meaningfully about the history of anything, including money, without a reasonably clear understanding of what the subject of inquiry actually is. In my view, the most intellectually defensible working definition of money – and the most fruitful in this context – is that money is a numerically-measured means of final settlement of transactions, universally recognised and generally accepted as such within a given geographical and temporal space.¹⁷ Such recognition does not come out of thin air, nor, despite Adam Smith’s and others’ evidence-free speculations on the origins of money in barter, does it come from some sort of agreement between interlocking pairs of autonomous economic actors.¹⁸ Rather, it is initiated and governed by sovereign political authority. The state requires a stable system of values in order to proclaim and to calculate what is owed to it, and what it owes. The state also determines what passes as money, and at what value, by proclaiming what it will accept and give for its own payments. Historically, the power to determine what constitutes money has been a defining facet of state power for as long as states of any kind have existed.

This way of viewing money, although far from original, is at odds with the definitions deployed by most of the economics profession and implicitly accepted by most historians who have written on the subject. But one of the strengths of this way of understanding money is that it immediately makes clear the need to understand it as a social, cultural and political phenomenon. The observation that nothing is money unless it is generally recognised as such makes money take its place, with language and the family, as one of the central social institutions and cultural practices of almost all human societies. But the insight that nothing is generally recognised as money unless the state so recognises it, makes it take its other rightful place at the centre of political power.

The first systematic attempt to create a British monetary union was initiated by James VI & I in 1604. Within a year of inheriting the English throne, James, having been frustrated at every turn in his push towards full political union of Scotland and England,¹⁹ launched a new coinage for both countries, whose pivotal coin, the ‘Unite’, made the nature of his project clear. Like all the coins in the series its circumscription used quotations from the bible and the prayer book to propagandise for the union of the two countries embodied in his own person: ‘FACIAM EOS IN GENTEM UNAM’, can be translated as either ‘I will make them one nation’ or ‘I will make them one people’. This did not, however, mark the beginning of a smooth progress to complete monetary unity. Not only did James not attempt to incorporate Ireland, but his effort did not survive even the beginnings of the turmoil of the mid-seventeenth century, and Oliver Cromwell’s attempt to impose a monetary union on all three of the countries he briefly ruled lasted no longer than the British republic itself. In the aftermath of the restoration, James’ partial monetary union might as well never have happened.

Scrutiny of these episodes sheds light on a number of important historical questions. Most obviously, it demonstrates that the process of creating a monetary union was deeply enmeshed in the making of the United Kingdom. The theoretical observations above suggest that this was virtually inevitable: the geographical extension of sovereign authority implies a congruent extension of monetary authority.

Studying such processes immediately brings us into engagement with the ‘four-nations’ approach to British history. It is now well over 30 years since J. G. A Pocock made his famous plea for ‘British’ history as a new subject, by which he meant the study of relations between the nations of the Atlantic archipelago, and the ways in which that complex of relationships has jointly and severally shaped the political, cultural, and social formations that have developed there.²⁰ Pocock’s plea was timely, and turned out to be but one of several spurs to a burgeoning interest in the type of history he advocated. On the whole, however, the ‘new’ British history has very often been nothing more than a new, albeit fruitful way of writing Welsh, Irish, and more particularly Scottish history, and a way of insisting on the importance of these histories in shaping aspects of the history both of England and the archipelago as a whole. The perspective proposed here is slightly different, being focussed on the history of a core institution – money – which evolved into its modern form as relations between the constituent nations of the archipelago developed into their modern form. The story cannot therefore be told from anything but an archipelagic perspective. That said, however, there is no getting around the fact that England was and is hegemonic within the archipelago, and that, as Pocock pointed out, ‘there are extremely powerful professional and historical reasons pressing us towards the continuation of the Anglocentric perspective’²¹ which has dominated British history since history’s emergence as an academic discipline. In the monetary context, most of the history of the four nations boils down to a tale of how the English pound sterling superseded and destroyed the separate currencies of Scotland and Ireland, such that by the time the functions of modern central banking began to evolve in the United Kingdom, it was inconceivable that they would be exercised by any bank but the Bank of England, a private firm established in London over a century before the United Kingdom came into being. But as Pocock also points out, ‘the fact of a hegemony does not alter the fact of a plurality’,²² a plurality which, albeit in attenuated forms, survives in the currency of the United Kingdom to this day, and whose continued existence may perhaps help to explain not only the divergent English, Irish and Scottish responses in the 1990s to the proposal to surrender monetary sovereignty to the European Central Bank, but also aspects of the rather tortured debate on Scotland’s possible currency futures during the 2014 referendum campaign.

A proper study of money in Britain and Ireland must therefore be informed by the ‘four nations’ approach, suggesting that the latter still has something to offer, even when it remains – as Vernon puts it – ‘centred upon the British Isles’.²³ At the same time, such a study also has the potential to enrich our understanding of ‘British History’ in Pocock’s sense. Indeed, it is both striking and regrettable, to this author at least, that monetary issues have received so little attention in studies of relations between the three kingdoms, whether written from an English, Irish, Scottish, or even ‘British’ perspective.²⁴ It is also striking that even in the histories of sterling cited earlier, the key episodes in the creation of the UK monetary union are mentioned only in passing, if at all.²⁵ Most surprising of all these lacunae is the absence of currency issues from historical studies of modern Ireland. Again, recent works are more remiss than some of their predecessors. Of 10 surveys or general edited collections published between 1966 and 2011, only the earliest makes significant reference to currency or banking; the remainder either make no reference at all, or the most passing reference to arbitrarily chosen events or developments.²⁶ References to currency and banking are often missing in places where they are clearly significant. Thus Oliver Macdonagh did not regard the creation of an independent currency in 1926–28 as of sufficient importance to mention in his chapter on the economy of the infant Irish Free State.²⁷ More specialised works do no better in contexts where one might reasonably expect some discussion of currency questions. John Regan, for example, in his study of The Irish Counter-Revolution 1921–1936 could find no place for a discussion of the Free State currency despite the fact that its terms – based on the twin pillars of acceptance of Ireland as a dependent colonial economy and on a ‘hard money’ orthodoxy as pure as the Bank of England’s – would lend strong support to the thesis embodied in his title.²⁸

Study of the creation of a unified monetary system requires engagement not only with Pocock’s ideas but also with Eric Helleiner’s work on ‘the making of national money’.²⁹ By this Helleiner means that process whereby monetary systems were created which were monopolistic within a national territory in the sense that no other monies circulated – whether foreign or issued by a non-official domestic source – and which were unified in the sense that all types of monetary instruments had a consistent relationship with the unit of account and with each other, and were therefore, in principle, capable of use in any type of transaction. The process was both geographic and socioeconomic: geographic in the sense that local and private currencies of various kinds had to be suppressed and superseded along with the use of foreign currency, and the boundaries of the nation-state’s political authority thereby made coterminous with the currency zone; socioeconomic in the sense that it saw the creation of a monetary system that unified the types of currency used by all classes for all types of transactions large and small, personal and commercial. While it remained true that most of the common people hardly used higher value instruments such as banknotes at all before the twentieth century, the system was unified in the sense that each type of instrument was readily convertible into any other. Helleiner, a cultural geographer, has examined this process as a global phenomenon, arguing that it generally took place well after the establishment of the relevant nation-state, as a result of deliberate nation-building projects with both economic and propagandist objectives.³⁰

Although Helleiner’s model is instructive, it does not adequately capture the British experience. Instead, the making of the United Kingdom’s national money was a gradual and uneven process imbricated in the creation of the state itself. Uneven as it was, however, the process of geographic monetary unification can at least be navigated by means of key events with definite dates. The socioeconomic processes were more uneven, and are much more difficult to pinpoint. While there are certainly critical episodes, it is impossible to say definitively (as it is with, say, the abolition of the Irish currency) that any part of the process was ever complete at any particular time, or indeed, what it might mean to describe such a process as complete. We are dealing with something much more multi-faceted and nebulous, involving not only material objects and transactions and (often submerged) struggles around the distribution of wealth and power, but also cultural practices, social beliefs and intellectual frameworks – mentalités, to borrow the useful term of the Annales historians. Moreover, the socioeconomic processes unfolded in very different ways in each country. Indeed, they were not even synchronous within each country: the monetary experience of three generations of peasants in Galway was vastly different not only from that of their landlords, but also from the distinct experiences of the labouring poor of Dublin, Belfast, Edinburgh and London, and different again from that of the rural poor of the English home counties or the west of Scotland. It should go without saying that the monetary experience of all of these differed from the much more geographically uniform experience of the national elite.

Throughout the early modern period, the economic lives of many people in the British Isles intersected only spasmodically with any monetary system, and barely at all with the monetary systems that existed among the governing and commercial classes of their respective capital cities.³¹ As Craig Muldrew has shown, most economic transactions in rural districts and provincial towns in eighteenth-century England were based on local, often quite informal, networks of personal credit, largely because the small denomination coins required for ordinary people’s cash transactions were simply unobtainable.³² On the other hand, some of the poor, and even some of the well-to-do in the provinces, responded to this problem by means of counterfeiting, a capital crime that was often regarded as trivial by common people.³³ As the poor paid no direct taxes it was of comparatively little moment to the authorities that they could not get hold of money. It was, however, important to maintain the integrity of the system of payments that underlay the state’s revenue. To that extent only, the state concerned itself with their monetary behaviour, or rather misbehaviour, meting out savage punishments accordingly, including burning women at the stake for clipping coin as late as 1780. As Carl Wennerlind has shown, the death penalty remained an important tool of monetary policy well into the nineteenth century.³⁴

Such a state of affairs was not compatible with the increasing commercialisation of the economy and depersonalisation of society, which required the incorporation of ever larger sections of society into the monetary economy. This required a more plentiful supply of reliable money for the common people, but it was also predicated on the growth of ever more complex credit instruments and more convenient means of payment for the commercial classes in their dealings with one another and with their counterparts in foreign countries. At the same time, the growing financial demands of the fiscal-military state required reliable media for the payment of taxes, and ready government access to credit.³⁵

From these imperatives arose the two key English developments of the late seventeenth century: the foundation of the Bank of England in 1694 and the printing of notes on the basis of the proprietorship of government debt, which saw the beginnings of capitalist credit-money, and the great recoinage of 1696. The latter failed as an attempt to produce an enduringly reliable coinage, but succeeded – largely at the expense of the poor and the provincial – in the more important aims of deflating prices and restoring exchange rate stability in the wake of the nine years war.³⁶ The achievement of these aims of deflating prices in the interests of creditors and maintaining exchange rates in the interests of those sections of capital engaged most directly with global markets – especially global financial markets – is a recurring theme of British monetary history, most spectacularly in the aftermath of the Napoleonic Wars and the First World War.

Despite superficial appearances, the foundation of Bank of Scotland in 1695 did not signify that Scotland was following a lead established by the Bank of England the previous year. Scottish and English monetary history remained divergent. Unlike the Bank of England, Bank of Scotland was founded overwhelmingly on the capital of the landed aristocracy, rather than that of urban merchants.³⁷ More importantly, Bank of Scotland was expressly forbidden from lending money to the government – the Bank of England’s central and defining activity.

Paradoxically, despite these differences, the Scottish people became deeply and widely implicated in a monetary system based on government debt and circulating paper long before their English or Irish counterparts did. The disastrous failure of the Darien venture at the close of the seventeenth century, which absorbed a quarter of Scotland’s liquid capital, led not just to the parliamentary Union of 1707 and a complete union of the Scottish and English coinages, but also left many ordinary Scots with government debentures in payment of the massive financial inducement the Scottish people were offered in exchange for their state.³⁸ It was this debt which formed the stock on which the Royal Bank of Scotland was founded in 1727,³⁹ a development which, together with the recoinage attendant on the union (mediated by Bank of Scotland paper), further hastened the circulation of paper money among Scotland’s lower orders to an extent unknown in England or in Ireland (outside Dublin) until after 1797.

While the Scots became and remained comfortable with paper money, a number of crises in England and Ireland in the late eighteenth and early nineteenth centuries, as well as an avalanche of propaganda generated by radicals and conservatives of both plebian and patrician origin, ensured that the English and Irish people became deeply wedded to a monetary ideology that was no less powerful in effect for being profoundly mistaken about the nature and origin of the money they used.

The first of these crises was the ‘Bank restriction’ of 1797, when the English and Irish governments, faced by a financial crisis caused in part by their own insatiable wartime demand for gold, directed the Bank of England and the Bank of Ireland to stop paying out gold coin in exchange for their notes. At the same time, both banks were authorised to begin printing notes for £1 and £2, overturning an earlier law prohibiting the issue of notes under £5. In what must be the first attempt in the British Isles to persuade – as opposed to compel – people outside the political and commercial elite to engage in specific monetary behaviour, the government and the commercial elite went to some pains to persuade the common people to use the notes in place of the bullion coins they were used to; an effort that would be repeated more strenuously at the outbreak of war in 1914.⁴⁰

Intended to last a few weeks or months, the Bank Restriction period stretched out over 24 years. As a result, and under the direct stimulus of the bouts of inflation that took place during the period, the foundational debates of monetary economics unfolded, increasingly contained within the rapidly maturing intellectual framework of political economy.⁴¹ At the same time, thousands of people in England, Scotland and Ireland were executed or transported for involvement in the forgery of banknotes that by now had all the characteristics of money.⁴² The return of peace saw the infliction of a deliberately deflationary monetary regime designed to restore both the gold circulation and the foreign exchange rate. Paradoxically, it also saw radical writers – especially William Cobbett – actively preaching the necessity of a ‘pure’ bullion currency, thus making the formulation of a coherent critique of the new monetary orthodoxy all but impossible, despite the widespread serious privation and the upward redistribution of wealth it was causing.⁴³ This was a critical development, which helped to ensure that the radical and labour mass movements that began to emerge shortly afterwards would reject alternative monetary viewpoints, and thereby render themselves and their successors innately incapable of generating any worthwhile critique of the monetary system as it was consolidated by successive legislative acts. Indeed, virtually all these diverse movements’ leaders, from Feargus O’Connor and Richard Cobden to Keir Hardie and H. M. Hyndman, actively endorsed the system in all but detail. Money, and especially the gold standard, had become ‘apolitical’, a part of the national patrimony.

Ideologically drained of the social and economic significance that properly always belongs to it, the monetary system in public discourse became a mere symbol of national identity and prestige. In a multi-national state this naturally played out in complex ways. In Scotland the representation of money became a key site of struggle for the maintenance of a distinct national identity when Sir Walter Scott led a successful campaign in 1826 to allow Scottish banks to continue to issue low-denomination notes, even as they were banned in England and the government sought to impose uniformity across the border.⁴⁴ More substantively, Daniel O’Connell’s colleagues in the Catholic Association, having achieved Catholic Emancipation the year before, turned in 1830 to the foundation of a note-issuing bank in Ireland explicitly designed to channel the savings of the Catholic masses and thereby to subvert the monetary hegemony of the Anglo-Irish ascendancy.⁴⁵

In England, the sterling gold standard, underwritten by the security of British public credit, became synonymous with allegedly British virtues of probity, acumen, enterprise and common sense. As sterling increasingly became the medium of international trade during the rapid globalisation of 1870–1914, it came to bear still heavier weight. Together with the Bank of England which managed it, the pound sterling became a symbol of national prestige and imperial power, to stand alongside the legal system and the Royal Navy. The only challenge to the existing system that was even to receive scrutiny was bimetallism, which was easily brushed aside.⁴⁶

Sterling was now at the hub of an international market in money, all of whose significant institutions were headquartered in London. This posed some troublesome problems. To begin with, it left British investors and the British monetary system dangerously exposed to the financial, fiscal and economic vagaries of other jurisdictions, not all of which could be adequately controlled by the exercise of diplomatic influence or armed force. While it was relatively straightforward to occupy Egypt in 1882 to protect the interests of British bondholders, it was not possible to do likewise in Argentina and Uruguay eight years later in response to the Baring crisis. By the time of the latter, however, it was well understood that some institutions were too big to fail.⁴⁷ Barings was saved by the concerted action of its competitors and the Bank of England.⁴⁸ The crisis and its resolution highlighted the problematically ‘cosmopolitan’ nature of much of the City’s activities. A decade later, the Boer War brought anxieties on this head into sharp relief, amplifying a discourse that rested substantially on the idea that responsibility for financial wrongs rested largely with foreigners, or with people whose British identity was in some way open to question, often through the deployment of anti-Semitic tropes.⁴⁹

These issues came to a head during the global financial crisis attending the outbreak of the First World War – a key turning point in British and global monetary history. Gold shipments immediately became impossible, leading the entire system of international payments through Bills of Exchange denominated in sterling to freeze, even before any state had declared war. By the time Britain was a belligerent, all of the verities of the monetary system had been overturned.⁵⁰ The very next day the United Kingdom, for the first time in its history, put into general circulation government-issued currency notes which were legal tender in all of its constituent countries. The crisis and the transformation it produced required a major ideological operation of a sort that could only be carried out in wartime. Patriotic sentiment was invoked at every social level to ensure that people used the paper in preference to bullion coin, which the government required as security for its foreign purchasing.⁵¹ Meanwhile, the crisis itself was represented in a way that emphasised its foreign origins while emphasising international dependence on Britain’s unique power; and contrasted foreigners’ susceptibility to panic with British level-headedness and unselfish pursuit of the national and international good.⁵²

The war ultimately destroyed both the sterling gold standard and British financial hegemony. This was a bitter pill that took decades to swallow. In the meantime, the ideologies that had developed around Britain’s monetary system in the course of the previous century ensured the common people’s support for monetary policies intended to restore the pre-war status quo, but which were largely deleterious not only to their own interests, but to the interests of virtually everybody outside the gentlemanly elite where monetary power was exercised.⁵³ The restoration of the gold standard in 1925 at what was now regarded as its ‘historic’ or ‘traditional’ value of £3.17s.10½d to one ounce of gold had been made possible, as Keynes foresaw, only by a sharp contraction of the economy, the crippling of export industries, wage reductions, and mass unemployment.⁵⁴ It also entailed a massive redistribution of wealth in favour of creditors, chief among whom were those who had financed the war with cheaply borrowed, inflated money.

While a few isolated voices denounced these transactions for what they were,⁵⁵ the vast bulk of Labour and socialist critics of the economic order focused their attention on the increased exploitation at the point of production that was largely a symptom of key monetary decisions taken in 1919, and tacitly accepted by the labour movement. Any kind of popular critique of the monetary or financial system had to wait until after the sterling crisis of 1931, which destroyed the second Labour government, and precipitated an election that saw an unqualified victory for the principles of the gold standard, which were represented as synonymous with honesty, common sense, tradition, and fundamental national interests. Even then, such criticism of the monetary and banking system as did emerge from the devastated labour movement was generally shallow and incoherent. Even the most thoughtful criticism was misconceived, being based on a jejune fixation with the gold standard and a hostility to paper money that was derived partly from Cobbett’s polemics during the Bank Restriction period, and partly from an irrelevant application of Marx’s labour theory of value.⁵⁶ After more than a century of intellectual failure on monetary questions – partly as a result of the inadequacies of its entire pantheon of founders; partly as a result of the confounding of the monetary order with ‘apolitical’ notions of national identity and prestige – the labour movement was powerless to critique, let alone to fight, the program of ‘austerity’ necessitated by the monetary system’s latest failure.

James Vernon concluded his keynote address to the recent Macquarie workshop on British history by proclaiming the need for an alternative to the ‘self-congratulatory “national” narrative’ beloved of television producers and Conservative politicians.⁵⁷ His outline of a narrative built around ‘the rise, demise and reinvention of a liberal political economy that reified the market as the organising principle of social and economic life’ promises enormous explanatory power. I hope to have shown, however, that a narrative that begins with the recognition that liberal political economy not only reified the market but fetishised the currency, and which provides an historical account of how that fetish developed and played out across classes and nations, might help to make our understanding of the arc of modern British history richer still.

About the author

David Blaazer is Associate Professor of History at University of New South Wales, Canberra. His early publications were on the non-communist left in Britain. He is currently completing a book on currency, power and nationality in Britain and Ireland, on which he has published a number of articles and given papers at numerous conferences.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 Clive James, Falling towards England (London: Jonathon Cape, 1985), 17–18.

2 James Vernon in this issue, 21.

3 Charles Wilson, England’s Apprenticeship 1603–1763, 2nd ed. (London: Longman, 1984).

4 Asa Briggs, The Age of Improvement 1783–1867 (London: Longman, 1959); Peter Calvocoressi, The British Experience 1945–1975 (London: Bodley Head, 1965); E. J. Hobsbawm, Industry and Empire; an Economic History of Britain since 1750 (London: Weidenfeld & Nicolson, 1968); Arthur Marwick, The Deluge: British Society and the First World War (London: Macmillan, 1965).

5 E. P. Thompson, The Making of the English Working Class (Harmondsworth: Pelican, 1980). On Cobbett’s obsession, see William Cobbett, Rotten Rag Manufactory!!! The Threadneedle-Street Catechism; or, Bank-Bubble Exposed … For the Instruction of John Bull and Family in the History and Mystery of Bank Notes (London: J. Fairburn, 1818); Paper against Gold; or, the History and Mystery of the Bank, the Funds, the Debt, the Taxes, the Pauperism, the Poverty and the Miseries of England, 9th ed. (London: C. Clement, 1820); Gold for Ever!: Real Causes of the Fall of Funds: Also, Wholesome Advice to Holders of Funds, Scrip, Shares, and All Sorts of Paper-Money (London: C. Clement, 1825).

6 Neither Edward Royle, Modern Britain. A Social History (London: Edward Arnold, 1987), nor F. M. L. Thompson, ed. The Cambridge Social History of Britain, 1750–1950, 3 vols (Cambridge: Cambridge University Press, 1990) make any reference to currency issues. It is noteworthy also that Clive Emsley does not discuss currency crime despite its importance in his period: Clive Emsley, Crime and Society in England (Harlow: Longman, 1987).

7 Tony Judt, ‘A Clown in Regal Purple: Social History and the Historians’, History Workshop, no. 7 (1979): 66–94.

8 Thomas J. Sargent and François R. Velde, The Big Problem of Small Change (Princeton, N.J.: Princeton University Press, 2002); John H. Wood, A History of Central Banking in Great Britain and the United States (Cambridge: Cambridge University Press, 2005).

9 Eric Helleiner, The Making of National Money: Territorial Currencies in Historical Perspective (Ithaca: Cornell University Press, 2003); Eric Helleiner and Emily Gilbert, Nation-States and Money: The Past, Present and Future of National Currencies (London: Routledge, 1999); Andrew Leyshon and Nigel Thrift, Money/Space: Geographies of Monetary Transformation (London: Routledge, 1997).

10 Nigel Dodd, The Sociology of Money: Economics, Reason and Contemporary Society (Cambridge: Polity, 1994); Geoffrey Ingham, The Nature of Money (Cambridge: Polity, 2004); Viviana A. Zelizer, The Social Meaning of Money (New York, N.Y.: Basic Books, 1994).

11 Mary Poovey, Genres of the Credit Economy: Mediating Value in Eighteenth- and Nineteenth-Century Britain (Chicago: University of Chicago Press, 2008); Martha Woodmansee and Mark Osteen, eds, The New Economic Criticism: Studies at the Intersection of Literature and Economics, Economics as Social Theory (London New York: Routledge, 1999).

12 Craig Muldrew, The Economy of Obligation: The Culture of Credit and Social Relations in Early Modern England (New York: St. Martin’s Press, 1998); ‘“Hard Food for Midas”: Cash and Its Social Value in Early Modern England’, Past & Present [Great Britain], no. 170 (2001): 78–120; Deborah M. Valenze, The Social Life of Money in the English Past (Cambridge: Cambridge University Press, 2006); Carl Wennerlind, ‘The Death Penalty as Monetary Policy: The Practice and Punishment of Monetary Crime’, History of Political Economy 36, no. 1 (2004): 131–61; Casualties of Credit: The English Financial Revolution, 1620–1720 (Cambridge, Mass.: Harvard University Press, 2011).

13 Albert Feavearyear, The Pound Sterling: A History of English Money, 2nd ed. revised by Victor E. Morgan, ed. (Oxford: Clarendon Press, 1963); Douglas Jay, Sterling: Its Use and Misuse: A Plea for Moderation (Oxford: Oxford University Press, 1986); Nicholas Mayhew, Sterling: The Rise and Fall of a Currency (London: Allen Lane, The Penguin Press, 1999); David Sinclair, The Pound: A Biography: The Story of the Currency That Ruled the World (London: Arrow, 2001).

14 Niall Ferguson, The Ascent of Money: A Financial History of the World (London: Allen Lane, 2008).

15 England and Wales were one monetary jurisdiction for the purpose of this discussion.

16 The original is, ‘Inflation is always and everywhere a monetary phenomenon’.

17 While the formulation is my own, the thinking has obvious debts to both Georg Friedrich Knapp, The State Theory of Money, abridged ed. (London: Published on behalf of the Royal Economic Society by Macmillan, 1924) and Ingham, The Nature of Money.

18 Adam Smith, An Inquiry into the the Nature and Causes of the Wealth of Nations, vol. 1 (London: University Paperbacks, 1961), book I, ch. 4. Compare ethnographically based accounts such as Paul Einzig, Primitive Money in Its Ethnological, Historical and Economic Aspects, 2nd ed. (Oxford: Pergamon Press, 1966); David Graeber, Debt: The First 5,000 Years (New York: Melville House, 2011). It should hardly need to be pointed out that the sorts of bartering pairs that Smith posits are inconceivable outside of the monetary economy which they are supposed to have invented.

19 Jenny Wormald, ‘“O Brave New World?” The Union of England and Scotland in 1603’, in Anglo-Scottish Relations from 1603 to 1900, ed. T. C. Smout (Oxford: Oxford University Press, 2005), 13–36.

20 J. G. A. Pocock, ‘British History: A Plea for a New Subject’, The Journal of Modern History 47, no. 4 (1975): 601–21.

21 Ibid., 613.

22 Ibid.

23 Vernon in this issue, 20.

24 The exceptions are all Scottish. See Bruce Galloway, The Union of England and Scotland, 1603–1608 (Edinburgh: J. Donald, 1986); Henry Hamilton, An Economic History of Scotland in the Eighteenth Century (Oxford: Clarendon Press, 1963); Douglas Watt, The Price of Scotland (Edinburgh: Luath Press, 2008).

25 Feavearyear, Pound Sterling; Mayhew, Sterling; Sinclair, The Pound.

26 The works surveyed were: F. S. L. Lyons, Ireland since the Famine, 2nd ed. (London: Fontana, 1973); Donnchadh Ó Corráin and Tomás O’Riordan, eds, Ireland 1870–1914: Coercion and Conciliation (Dublin: Four Courts Press, 2011); Richard English, Irish Freedom: A History of Nationalism in Ireland (Basingstoke: Macmillan, 2006); J. V. Beckett, The Making of Modern Ireland 1603–1923 (London: Faber and Faber, 1966); John O’Beirne Ranelegh, A Short History of Ireland, 3rd ed. (Cambridge: Cambridge University Press, 2012); Oliver MacDonagh, Ireland: The Union and Its Aftermath (London: George Allen & Unwin, 1977); R. F. Foster, Modern Ireland 1600–1972 (London: Penguin, 1989); The Oxford History of Ireland (Oxford: Oxford University Press, 1989); Gearóid Ó Tuathaigh, Ireland Before the Famine 1798–1848 (Dublin: Gill and Macmillan, 1972); John A. Murphy, Ireland in the Twentieth Century (Dublin: Gill and Macmillan, 1975).

27 MacDonagh, Union and Aftermath ch. 6.

28 John M. Regan, The Irish Counter-Revolution 1921–1936 (Dublin: Gill & Macmillan, 1999).

29 Helleiner, The Making of National Money.

30 Ibid., 11, 31.

31 A. J. S. Gibson and T. C. Smout, Prices, Food and Wages in Scotland 1550–1780 (Cambridge: Cambridge University Press, 1995), 263–4.

32 Muldrew, The Economy of Obligation, 98–103.

33 Malcolm Gaskill, Crime and Mentalities in Early Modern England (Cambridge, UK; New York: Cambridge University Press, 2000), 160, 182

34 Wennerlind, ‘Death Penalty’, 149–155.

35 John Brewer, The Sinews of Power: War, Money and the English State, 1688–1783 (London: Unwin Hyman, 1989); Dwyryd Jones, War and Economy in the Age of William III and Marlborough (Oxford: B. Blackwell, 1988).

36 Ming-Hsun Li, The Great Recoinage of 1696 to 1699 (London: Weidenfeld and Nicolson, 1963).

37 Richard Saville, Bank of Scotland: A History, 1695–1995 (Edinburgh: Edinburgh University Press, 1996), 3.

38 Watt, The Price of Scotland.

39 Neil Munro, The History of the Royal Bank of Scotland 1727–1927 (Edinburgh: R. & R. Clark, 1928).

40 Whitehall Evening Post, 7–9 March 1797; David Blaazer, ‘Reading the Notes: Thoughts on the Meanings of British Paper Money', Humanities Research, no. 1 (1999): 43.

41 Frank Whitson Fetter, Development of British Monetary Orthodoxy, 1797–1875 (Cambridge, Mass.: Harvard University Press, 1965), chs 2–3.

42 Randall McGowen, ‘Managing the Gallows: The Bank of England and the Death Penalty, 1797–1821’, Law and History Review 25, no. 2 (2007), 243.

43 Cobbett, Paper Against Gold.

44 Silvana Colella, ‘Monetary Patriotism: The Letters of Malachi Malagrowther, the Antiquary and the Currency Question’, Nineteenth-Century Studies 17 (2003).

45 Oliver MacDonagh, The Emancipist: Daniel O’ Connell, 1830–47 (London: Weidenfeld and Nicolson, 1989), 11–15.

46 R. Robey, ed, The Monetary Problem, Gold and Silver: Final Report of the Royal Commission Appointed to Inquire into the Recent Changes in the Relative Values of the Precious Metals, Presented to Both Houses of Parliament, 1888 (New York, N.Y.: Columbia University Press, 1936), 92.

47 Bagehot had, in effect, argued this in light of the consequences of the 1867 collapse of the merchant banking firm Overend, Gurney & Co. Walter Bagehot, Lombard Street: A Description of the Money Market, 10th ed. (London: Kegan Paul, Trench, Trubner & Co, 1892), 295.

48 David Kynaston, A World of Its Own 1815–1890 (London: Chatto & Windus, 1994), 428–37.

49 Claire Hirshfield, ‘The British Left and the “Jewish Conspiracy”: A Case Study of Modern Antisemitism’, Jewish Social Studies 43, no. 2 (1981): 95–112.

50 D. Blaazer, ‘Not Only Patriotism but Self-Interest’: War, Money and Finance in British Public Discourse 1914–1925’, War and Society, 23, no. 1. (September 2005), 4–6. See also J. M. Keynes, ‘War and the Financial System’, August, 1914, Economic Journal 24, no. 95. (September, 1914): 460–86.

51 Blaazer, ‘Reading the Notes’, 43.

52 Financial World, 1 August 1914, 666.

53 I have borrowed this term, very deliberately, from P. J. Cain and A. G. Hopkins, British Imperialism, 2 vols (London: Longman, 1993).

54 John Maynard Keynes, The Economic Consequences of Mr.Churchill (London: Hogarth Press, 1925).

55 H. N. Brailsford, ‘A Golden Gallipoli’, The New Leader, 8 May 1925, 8.

56 See for example Arthur Woodburn, The Mystery of Money (London: NCLC, 1931).

57 Vernon in this issue, 34.