Competing Bimetallic Ratios: Amsterdam, London and Bullion Arbitrage in the Mid-18th Century
This article analyzes the stability of bimetallism for countries operating in integrated bullion markets who enact different legal ratios. I articulate a new theoretical framework to demonstrate that two countries can both be bimetallic only if they coordinate their legal ratios. The theoretical framework is applied to the mid-18th century when London’s legal ratio was 3.8% higher than that of Amsterdam. I find that Amsterdam was effectively on the bimetallic standard, whereas London was on a de facto gold standard.
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