IN THE FOOTSTEPS OF TOOKE: TRACING THE EVOLUTION OF 19TH CENTURY MONETARY IDEAS AND POLICIES

Abstract

This paper examines the contributions of Thomas Tooke to 19th century England’s monetary theory and policy discussions. Tooke was a prominent economist who formulated his own ideas on money and prices, which became the basis of the Banking School position. The paper provides an overview of his economic writings, focusing on his second period, and discusses Tooke's ideas on credit money, endogeneity of the money supply, interest rate, monetary transmission mechanism, balance of payments adjustments, and free banking. Tooke's central point was that the amount of money in circulation was endogenously determined by the demand for money, and that the only way for the monetary authority to influence effectual demand was by controlling the interest rate. The paper differentiates between Tooke's ideas and the currency school's theory on the balance of payments. Finally, the paper discusses Tooke's stance on free banking and its importance