Posted Sun, 2007-01-14 20:00 by backend
Author:
Hamilton, Earl J.
Reviewer:
Munro, John
Classic
Reviews in Economic History
Earl J.
Hamilton, American Treasure and the Price Revolution in Spain,
1501-1650. Cambridge, MA: Harvard University Press, 1934. xii + 428 pp.
Review
Essay by John Munro, Department of Economics, University of Toronto.
Hamilton and the Price Revolution: A Revindication of His
Tarnished Reputation and of a Modified Quantity Theory
Hamilton
and the Quantity Theory Explanation of Inflation
As Duke University's website for the "Earl J. Hamilton
Papers on the Economic History of Spain, 1351-1830" so aptly states:
Hamilton "helped to pioneer the field of quantitative economic history
during a career that spanned 50 years."[1] Certainly his most important
publication in this field is the 1934 monograph that is the subject of this
"classic review." It provided the first set of concrete, reliable
annual data on both the imports of gold and silver bullion from
Spain's American colonies — principally from what is now Bolivia (Vice Royalty
of Peru) and Mexico (New Spain) — from 1503 to 1660 (when bullion registration
and thus the accounts cease); and on prices (including wages) in Spain (Old and
New Castile, Andalusia, Valencia), for the 150 year period from 1501 to
1650.[2] His object was to validate the Quantity Theory of Money: in seeking to
demonstrate that the influx of American silver was chiefly, if not entirely,
responsible for the inflation of much of the Price Revolution era, from ca.
1520 to ca. 1650: but, principally only for the specific period of ca. 1540 to
ca. 1600. Many economic historians (myself included, regrettably) have
misunderstood Hamilton on this point, concerning both the origins and
conclusion of the Price Revolution. Of course the Quantity Theory of Money,
even in its more refined modern guise, is no longer a fashionable tool in
economic history; and thus only a minority of us today espouse a basically
monetary explanation for the European Price Revolution (ca. 1515/20-1650) —
though no such explanation can be purely monetary.[3]
If
inflations had been frequent in European economic history, from the twelfth
century to the present, the Price Revolution was unique in the persistence and
duration of inflation over a period of at least 130 years.[4] Furthermore, if
commodity money — i.e., gold and especially silver specie — was not the sole
monetary factor that explains the Price Revolution that commodity money
certainly played a relatively much greater role than it did in the subsequent
inflations (of much shorter duration) from the mid-eighteenth century to the present.
The role of specie, and specifically Spanish-American silver, in
"causing" the Price Revolution was a commonplace in Classical
Economics and Hamilton cites Adam Smith's statement in The Wealth of
Nations (p. 191) that "the discovery of abundant mines of America
seems to have been the sole cause of this diminution in the value of silver in
proportion to that of corn [grain]."[5].. Read More
