Rothbard Tells of American Attempts to Replicate British Monetary Imperialism in the Foreign Territories They Controlled

The essential elements of the currency board system were created between 1890 and 1912, a period in which the London money market went from one crisis to another. These reserves crises had a central bearing on colonial currency policies, both in terms of the gold reserves they were required to hold in London, as well as their holdings of undesirable British Government securities. For imperial authorities, the colonial currency systems provided an extremely valuable mechanism to immediately counter reserves crises by mechanisms totally within the control of the Secretary of State for Colonies, not available through their normal London Money market control mechanisms. . . .

While my original DPhil did not examine the colonial currency policies of other imperial powers such as France and Holland, Rothbard (2002, pp 210–32) has a fascinating account of American attempts to replicate British monetary imperialism in foreign territories they controlled, but based on the US dollar reserves in New York, comparable to sterling reserves in London, for British colonies. Rothbard describes how the leading lights of the American Economic Association, in co-operation with American bankers, foreign investors, and corporate interests in gold and silver, set out to foster similar imperialist monetary systems in Puerto Rico, Philippines, Mexico, Cuba and China. The systems were supposed to be gold exchange standards, but based on dollars deposited in New York. The currencies in circulation would be new silver tokens with the seigniorage also deposited in New York, while the Mexican dollars would be eliminated by several artificial means. In Rothbard’s accounts, the American attempts succeeded in Philippines and Mexico, but failed in Cuba because of the American sugar interests there. They also failed in China, which recognized all the disadvantages in the American proposals.

—Wadan Narsey, British Imperialism and the Making of Colonial Currency Systems, Palgrave Studies in the History of Finance (Houndmills, UK: Palgrave Macmillan, 2016), 158-159.