Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench
Gold & Silver Prices in
In the same category

U.S. Current Accounts and Bullion Flows, 1821-1900

IMG Auteur
Published : March 06th, 2012
471 words - Reading time : 1 - 1 minutes
( 0 vote, 0/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...
FOLLOW : 1971, Europe, Nathan Lewis

 

 

 

 

A while ago, we looked at the history of current account balances and bullion flows for the United States during the 19th century.

September 18, 2011: U.S. Balance of Payments During the 19th Century

There's a silly notion that a gold standard system causes "balanced trade." Why this should be, I don't know. Don't you think that the U.S. maaaaaybe had some "unbalanced trade" in the 182 years of gold standard usage (with lapses) from 1789-1971? How about Britain, during its 233 years of gold standard usage?

I put the available data in some graphs to look at. Remember, any trade statistics and GDP statistics from the 19th century are going to be pretty hypothetical. So, don't take them too seriously. But, they are the best we have and they give us some idea of what was going on in those days.

Also, remember that the U.S. was actually off the gold standard system from 1861-1879, so there's a big floating-currency period in there too.




Here's what it looks like. This is in millions of dollars. The blue is bullion flows. A positive denotes an export. The red is the current account balance ex-bullion flows. The green is the current account balance including bullion flows.

First, we see that there certainly wasn't "balanced trade," because the red and green bars are all over the place, instead of flatlining near zero.

However, there is some negative correlation between the blue bars (bullion flows) and the red bars (CA ex-bullion flows). This, I think, is mostly a coincidence.

The blue bars start to become strongly positive in 1850. Why? Gold was discovered in California in 1849. There was more coming out of the ground than people needed, so they exported it.

Beginning in 1860, we again see big exports of gold, and big imports of everything else. This was, of course, the Civil War. During such a war, a) domestic gold holders decide that maybe they should ship their gold overseas to Europe, and invest in British Consols or something safe like that (the reverse flow happened during World War II); b) foreign investors have no interest in sending any gold to the war-torn U.S.; c) there are a lot of things to pay for in wartime, so people with gold sell it to buy something they need. When we return to the gold standard in 1879, and the period to 1900, there's a lot less correlation.

Here's the same graph, represented as percentages of estimated GDP.




We see that current account deficits were commonly on the order of 2% of GDP, and sometimes hit 3%. The U.S. was a growing economy in those days, and they needed lots of capital. Europeans were eager to invest in the exciting New World.


Nathan Lewis


(This item originally appeared at Forbes.com on February 27, 2012.)


 

 

Companies Mentionned : Bullion | Gold | New World |
<< Previous article
Rate :Average :0 (0 vote)
>> Next article
Nathan Lewis was formerly the chief international economist of a firm that provided investment research for institutions. He now works for an asset management company based in New York. Lewis has written for the Financial Times, Asian Wall Street Journal, Japan Times, Pravda, and other publications. He has appeared on financial television in the United States, Japan, and the Middle East.
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
The Way Out
31 MarGypsy1
James, you're wrong to think the people on earth couldn't THRIVE ~ live well, eat well, enjoy great lives, advance mankind ~ with the resources we ...
Time to Eliminate Pilots in Airc...
30 MarShadowdoo1
Hi Mish, Sorry pal, I would rather take the door off than give the controls to some moron on the ground. Especially with that nitwit in t...
Gold: April 2015 Update
30 Marovertheedge
"I have been invited to speak at the Mines & Money Mauritius Conference in June 2015 again. If you would like to join you can receive 25% off your ...
Greece Needs the Magic Formula t...
30 Marovertheedge
Wow dude. "Idiocracy" is obviously not just another dumb-ass movie. I admit that I should have recognized your devotion to Brawndo (it has ...
Signs that America Will Hit the ...
30 MarFalconflight
I'll tell you what signals a return of the Dark Ages....the growing, almost hysterical screed again in the West that those Jews are responsible for...
Misunderstanding "Peak Gold"; Go...
29 MarTed S.1
Hi Mish, You make a good point about the difference between commodities and gold. It's a great point of discussion to counter people who ar...
The Finanser Interviews Jon Matonis
29 Marovertheedge
"In late 2009, I got introduced to Bitcoin by a random email from Satoshi Nakamoto. I didn’t give it much thought at the time and then 3-4 months ...
Gold Effect on Mining & Shale Wa...
28 Marneville1
Thank you Jim Willie for your open and candid report on some of the most urgent matters agrevating this economically and war torn world thanks...
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS
Mining Company News
Bankers Petroleum(Oil)BNK.TO
to Release First Quarter Operational Update and Hold Conference Call April 7, 2015
CA$ 2.71-1.09%Trend Power :
Corporate news
Aurico(Au-Ag)AUQ.TO
Announces Details for First Quarter Results and Annual General Meeting
CA$ 3.50-2.78%Trend Power :
Financials
Erdene(Au-Cu-Mo)ERD.TO
Reports Initial Resource Estimate for Altan Nar Gold-Polymetallic Project
CA$ 0.12+19.05%Trend Power :
Corporate news
Impact Silver(Ag-Au-Cu)IPT.V
Reports Additional Wide & High Grade Drill Intercepts at San Ramon Deeps; Expands Scope of Mi
CA$ 0.18-2.63%Trend Power :
Corporate news
Perlite CanadaPCI.V
Announces its Results for for the First Quarter of 2015
CA$ 0.18+0.00%Trend Power :
Financials
Dundee Precious Metals(Ag-Au-Cu)DPM.TO
Announces Reserve and Resource Update for 2015
CA$ 2.72+1.49%Trend Power :
Corporate news
Typhoon Expl.(Au-Gems-Ur)TYP.V
Acquires Two New Properties
CA$ 0.06+0.00%Trend Power :
Corporate news
Silver Bear Res.(Ag-Au-Le)SBR.TO
Announces the Filing of its Financial Results for the Year Ended December 31, 2014
CA$ 0.04+12.50%Trend Power :
Financials
Rogue Res(Cu-Le-Ni)RRS.V
Appoints Angela Yap CFO
CA$ 0.06+9.09%Trend Power :
Nominations
Chesapeake Gold(Ag-Au-Cu)CKG.V
Announces New Water Source Strategy For Metates; Updated Pre-Feasibility Study To Be Released
CA$ 2.14+0.00%Trend Power :
Corporate news
Comments closed
Subscribe to 24hGold’s daily market briefing
  • Prices and data of precious metals in 119 currencies and world mining companies
  • Daily analysis of the economy, markets and more
  • Free, daily and indispensable
Stay informed, subscribe now !
* Your email will never be shared.