The Making of National Money: Territorial Currencies in Historical Perspective

by Eric Helleiner

Why should each country have its own exclusive currency? Eric Helleiner offers a fascinating and unique perspective on this question in his accessible history of the origins of national money. Our contemporary understandings of national currency are, Helleiner shows, surprisingly recent. Based on standardized technologies of production and extraction, territorially exclusive national currencies emerged for the first time only during the nineteenth century. This major change involved a narrow definition of legal tender and the exclusion of tokens of value issued outside the national territory. "Territorial currencies" rapidly became bound up with the rise of national markets, and money reflected basic questions of national identity and In what way should money be managed to serve national goals? Whose pictures should go on the banknotes? Helleiner draws out the potent implications of this largely unknown history for today's context. Territorial currencies face challenges from many monetary innovations―the creation of the euro, dollarization, the spread of local currencies, and the prospect of privately issued electronic currencies. While these challenges are dramatic, the author argues that their significance should not be overstated. Even in their short historical life, territorial currencies have never been as dominant as conventional wisdom suggests. The future of this kind of currency, Helleiner contends, depends on political struggles across the globe, struggles that echo those at the birth of national money.

Genres: Economics, History

296 pages, Hardcover

First published December 1, 2002

Reviews

[Frank Stein · Rating 4 out of 5]

A sterling overview of why and how almost every country on Earth decided it needed its own money, and why that idea is now under attack. As Helleiner points out, while governments had long had their own mints, they showed little concern with foreign coins invading their land, and many states had a profusion of mini-mints from local lords and dukes with their own minting rights, or simple tokens made in towns for poor farmers and tradesmen. When banks began issuing their own paper money, this only added to the confusion.

Only with the creation of Matthew Boulton's steam-powered coin mint, and the substitution of copper for steel printing plates for paper notes (originally by Philadelphia inventor Jacob Perkins) allowed nations to try and monopolize money beginning in the 19th century. The government's goals were capturing more revenue from printing and collecting cash, forging national identities through new symbols, and integrating poorer people with little access to cash into the national economy. Imperialists in this era, surprisingly, often created new currencies in the lands they governed, with similar ends in mind, like Ceylon in 1884 by Britain, the Philippines in 1902 by the US, and Korea in 1905 by Japan, although usually the creation of new coins and then new "currency boards" was coupled with a requirement to keep all bank reserves in the imperial country's currency.

Today, projects like the Euro and bitcoin seem to pose a threat to the old ideal of one money for one nation, but this book reminds us that that ideal is really not that old after all, and how contested the battle over "territorial" currencies was.

[Cărăşălu · Rating 3 out of 5]

It's a good book to give you a perspective of how national territorial money came to be. I'm no expert in the field and it's hard for the to judge the quality of the historical analysis offered by Helleiner. As a beginner, I was slightly afraid the book might be too "difficult" (I'm not the only one for whom economics are a boogeyman, am I?), but it's written in a beginner-friendly style. Some anterior knowledge of economic and political thinkers in the 19th and 20th century, of world history and of basic-to-average economics is needed for a critical reading of the book. Nonetheless, if you lack this knowledge, the book may still be interesting enough as it shows under what historical circumstances national territorial money came into being, what the motivations of their advocates and opponents were, how their development and implementation varied by country and age, what challenges they faced during their history and how current challenges (e-money, local money, supranational money) compare to them. Many chapters are rich in details and those interested will surely enjoy them. The analysis seems competent as far as I can tell, but not groundbreaking.