The Cyclical crises in the first decades of the nineteenth century aroused increasing attention to the question of monetary stability. Prevalent opinion was focused on the necessity to assure convertibility of paper money in species (gold and silver), controlling its issue and avoiding fluctuations in the value of money measured against commodities. Nevertheless this monetary policy was unable to guarantee monetary stability and to repress speculation, and when severe financial crisis occurred, the convertibility of paper money into species was usually suspended. The crisis of 1837 and 1839 reawakened the debate on the monetary system, favouring alternative theses not only on the monetary policy, but on the nature of money itself. In this context, Luigi Chitti’s proposal on monetary reform seems particularly original. This Italian economist, exiled in the newborn Kingdom of Belgium, proposed a reform of the monetary system based on state control of fiat money, rejecting the theory of commodity money. In the 19th century, many economists were concerned about the instability associated with the commodity money regime and proposed different reforms. Chitti was one of the first economists to believe that metallic money and convertible paper money were not able to guarantee price stability and to avoid financial crisis. He was certainly the first to believe that money issue cannot be left to private banking interests, but must be considered a specific attribution of the modern State, and must be carried out under public monopoly and commensurate with the actual needs of economic development.

Trade Cycle and Paper Money in the 1830s Debate: Luigi Chitti’s Monetary Reform Proposal / Patalano, Rosario. - In: HISTORY OF ECONOMIC IDEAS. - ISSN 1122-8792. - XXVII:2(2019), pp. 51-82. [10.19272/201906102003]

Trade Cycle and Paper Money in the 1830s Debate: Luigi Chitti’s Monetary Reform Proposal

Rosario Patalano
2019

Abstract

The Cyclical crises in the first decades of the nineteenth century aroused increasing attention to the question of monetary stability. Prevalent opinion was focused on the necessity to assure convertibility of paper money in species (gold and silver), controlling its issue and avoiding fluctuations in the value of money measured against commodities. Nevertheless this monetary policy was unable to guarantee monetary stability and to repress speculation, and when severe financial crisis occurred, the convertibility of paper money into species was usually suspended. The crisis of 1837 and 1839 reawakened the debate on the monetary system, favouring alternative theses not only on the monetary policy, but on the nature of money itself. In this context, Luigi Chitti’s proposal on monetary reform seems particularly original. This Italian economist, exiled in the newborn Kingdom of Belgium, proposed a reform of the monetary system based on state control of fiat money, rejecting the theory of commodity money. In the 19th century, many economists were concerned about the instability associated with the commodity money regime and proposed different reforms. Chitti was one of the first economists to believe that metallic money and convertible paper money were not able to guarantee price stability and to avoid financial crisis. He was certainly the first to believe that money issue cannot be left to private banking interests, but must be considered a specific attribution of the modern State, and must be carried out under public monopoly and commensurate with the actual needs of economic development.
2019
Trade Cycle and Paper Money in the 1830s Debate: Luigi Chitti’s Monetary Reform Proposal / Patalano, Rosario. - In: HISTORY OF ECONOMIC IDEAS. - ISSN 1122-8792. - XXVII:2(2019), pp. 51-82. [10.19272/201906102003]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11588/760869
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