What I’m Reading: Money by D.H. Robertson Cambridge Economic Handbooks

I’ve always had an intellectual fascination with money and when I saw an old book on a shelf called “Money by D.H. Robertson“, my hope was that it would be a book about the origins and social dynamics of money through the ages – I have not yet found such a book and this looked like a possible candidate – but once again I was disappointed. Disappointed in not finding what I was looking for but delighted with what I found.

This incredibly readable and interesting little book edited by the famous economist John Maynard Keynes (arguably one of the the most influential economic policy makers of the 20th century – father of Keynesian Economics!) and written by D.H. Robertson is a textbook on (essentially) world banking practices written just prior to the stockmarket crash which led to the worldwide Great Depression and during the hieght of the recovery from what Robertson calls The Great Muddle – which was the confusion of banking practices and economic chaos that led to and followed up upon World War I. This little book was written prior to chaotic events of the Depression and World War II.

The chapters of this seemingly dull book about banking practices are each led off with a quote from Lewis Carrol’s Alice in Wonderland and Through the Looking-glass – which pretty well convinced me that what was to follow would be trip down the rabbit hole. I was not disappointed. The opening chapters were as close as I was to get to my desired study of the origins of money in that we are given a definition “anything which is accepted inthe payment of goods or in the discharge of other kinds of business obligations” – Robertson makes a good argument that the best argument for money is that it allows manufacturers the ability to acquire raw materials without having to trade their finished product for the materials – which the raw material producers may not need or have a use for. So, essentially, it simplifies things. He argues that for the consumer, it allows a freedom of choice and eliminates a large degree of waste which would follow from payment in kind. Finally, (and this is where this becomes more of a text about banking) the existence of money makes it possible for there to be loans and debts.

Later in the chapter, Robertson talks about how a downturn affects the businessman – how demand dries, then prices drop, then they drop below the level of profitability and then, and this is interesting how businessmen at different levels deal with a recession:

If he is old and wily and has made his pile he retires from business for a season and goes for a sea voyage or into the House of Commons or Congress. If he is young and ambitious or idealistic he keeps the ball rolling and the flag flying as best he can. If he is an average sort of manufacturerhe explains that while he adheres to his previous opinion that the finances of his business is no concern of the working classes, yet just so much financial knowledge as to see the absurdity of the existing trade-union rate is a thing which any workman should possess. In any case, early or late, he bows to his fate .. and restricts in greater or less degree the output of his product and two things happen…the world adopts a lower standard of comfort cutting off its nose, as it were, to spite its face. And men trained and willing to work find no work to do, and tramp about the streets with the parrot-cries of journalists about increased output ringing in their ears and growing rancor in their hearts.

“Thus money, which is a source of so many blessings to mankind, becomes also, unless we can control it, a source of peril and confusion.”

And with that the book dives into monetary policy, most of which has not been applicable since the gold and silver standards were abandoned and most of the world’s currency became fiat, that is money based on debt but without any actual source of backing. This is interesting reading, written in a lyrical style that is sometimes hard to correlate with economic policy. The chapter about economic policy during “The Great Muddle” is fascinating – looking at the root economic causes of the first world war from an economic rather than a political perspective is enlightening. The following chapter which delves into economic cycles is equally compelling as it most likely is the root of the entire Keynesian school of economic thought – before the events of the depression and World War II had solidified the theories.

Overall, an enjoyable journey down a dry and abandoned rabbit hole which expanded my understanding of economic policy and banking without boring me to tears.