Money, Banks and Finance in Economic Thought

The Commodity Standard by Jean de Largentaye (1903-70), the French translator of Keynes' General Theory

de Largentaye Hélène, retired ( PhD University of Cambridge UK)

In 1967, the French journal Economie appliquée published a long article by Jean de Largentaye, written in 1965 under the title “L’étalon marchandises” (“The Commodity Standard”). Jean de Largentaye was the French translator of Keynes's General Theory, a member of the French delegation in Bretton Woods, author of the French report on the conference, and French administrator to the International Monetary Fund from 1946 to 1964. L'étalon marchandises describes his vision of a commodity standard and outlines its advantages relative to other currency mechanisms. Most advantages had already been discussed in previous writings, such as the stabilising effect of monetary commodity stocks on effective demand – which would reconcile full employment with price stability and ensure the fairness of long-term and short-term loans denominated in a commodity currency. But for the first time, Largentaye stressed that the commodity standard would be conducive to fairer international trade. He also recognised that the commodity standard would render production costs, financial conservation costs (or liquidity costs) and storage costs greater than under a fiat monetary standard, but these costs would be negligible compared to the gains for the economy. Finally, Largentaye accepted that national governments would be reluctant to relinquish fiat money and its very low cost of issuance, a major attribute of sovereign power. Yet he believed that the commodity standard would be ideal for the international monetary system.

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Keywords: commodity standard

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