The singularity of Henry Thornton and Paper Credit on monetary theory

• Grant number: 12/23282-9
• Support Opportunities: Scholarships in Brazil - Scientific Initiation
• Effective date (Start): March 01, 2013
• Effective date (End): February 28, 2014
• Field of knowledge: Applied Social Sciences - Economics - Economic Theory
• Principal Investigator: Mauricio Chalfin Coutinho
• Grantee: Stella Harumi Okumura
• Host Institution: Instituto de Economia (IE). Universidade Estadual de Campinas (UNICAMP). Campinas , SP, Brazil

Abstract

The present project intends to investigate the main contributions of the English author Henry Thornton to modern monetary theory, discussing both his most important work - An Inquiry into the Nature and Effects of Paper Credit, also known as Paper Credit - and the most important comments to it. The research is motivated by Thornton's characterization of money, which contrasts with the definitions usually found in the literature of the time, as well as by his approach to the English monetary system. Among Thornton's most relevant modern critics, we can mention Friedrich von Hayek, who wrote the Introduction for Paper Credit's 1939 edition, and John Hicks, who helped to create the IS-LM model. David Hume's and Adam Smith's stands on money and circulation will be taken as references to the understanding of Thornton's critique. Hume, for his basic version of the Quantitative Theory of Money, and Smith because of his real bills approach to paper money circulation. In order to understand the atmosphere in which Thornton released his ideas, it will be offered a brief characterization of the English monetary system around the late XVII century and the beginning of the XIX century, especially the Restriction (1797-1821) context, in which the Bank of England notes were no longer convertible into gold.(AU)