Thomas Tooke, Henry Thornton, and the Development of British Monetary Orthodoxy

Abstract

The first half of the nineteenth century in Great Britain was one of nearly continuous controversy over monetary issues. The Restriction of Cash Payments and the Bullion Controversy dominated the first two decades. After Resumption in 1821, a series of banking crises kept monetary issues on the front burner, until they boiled over again in the Currency-Banking Controversy of the 1840s. Of the many writers contributing to the monetary literature during the period, few contributed so much as Thomas Tooke. Long recognized as a collector of economic data without peer in his era, Tooke's reputation as an economic theorist has grown in recent years (cf. Laidler 1972; Arnon 1991; M. Smith 2001). Readers of Tooke's works have long known that his views on monetary theory changed radically from the 1820s to the 1840s, when he adopted a starkly anti-quantity theory approach. In his early years as a collector of economic data, Tooke allied himself with David Ricardo in the effort to return Great Britain to the gold standard. But though both subscribed to the quantity-theory/price-specie-flow-mechanism (QT-PSFM) framework for analyzing the economy's adjustment to monetary disturbances, their theoretical approaches differed in important respects. The differences were great enough to lead Arnon (1989, 1991) to conclude that Tooke and Ricardo should be viewed primarily as political, not theoretical, allies and to suggest that Tooke's approach shared greater affinities with the work of moderate bullionists than with Ricardo (Arnon 1991, pp. 48, 58, 108).