Preface

Summary

This book is a labor of love. I can think of nothing more intellectually stimulating than studying the broad sweep of the dollar–sterling exchange rate from 1791 to 1931. The existence of gold, or other metallic, standards during most of this period provides the background to the foreign-exchange market. Even when such a system was inoperative and a paper standard reigned, in almost all such episodes the exchange rate can be measured in such a way that the gold standard can be deemed to exist. Therefore the dollar–sterling exchange rate is studied from the universal standpoint of a gold standard.

The outcome is this volume, a dollar–sterling handbook for the economic historian. The book is a contribution to Anglo-American monetary history over the 140-year period 1791–1931. It is based on two fundamental premises of the behavior of the exchange rate under a gold standard. First, the dollar/pound exchange rate cannot be considered apart from exchange-rate parity and gold or specie points. Second, the precise location of the exchange rate is of importance; much information is lost – indeed, some important questions cannot even be answered – if the exchange rate is measured by the dollar/sterling mint parity (as is customary) rather than by the “actual value” of the exchange rate, difficult though it may be to obtain this “actual value.”

These premises lead to a reconsideration of data on all three variables: exchange rate, parity, and gold points.