Hi
“The Charles Dickens Miscellany” by Jeremy Clarke, the author writes about Charles Dickens: "Merely the *American tour, for example, £19,000 made him, despite the fact that he lost a fortune changing his dollars into pounds sterling. This too, without resorting to profiteering " (page 179).
*I’m not sure if that was his 1842 tour or 1867 tour.
Why exactly did he lose money on converting his dollars into pounds sterling and how did “profiteering” work? I look forward to your feedback.
In “The Charles Dickens Miscellany” by Jeremy Clarke, the author writes about Charles Dickens: "Merely the *American tour, for example, made him £19,000 , despite the fact that he lost a fortune changing his dollars into pounds sterling. This too, without resorting to profiteering " (page 179).
*I’m not sure if that was his 1842 tour or 1867 tour.
This is a bit of a guess, but… if it was indeed the 1867 tour, at that point the US currency situation was a bit of a mess with the combination of lingering inflation from the Civil War and the Federal government’s attempts to get bills issued by state banks out of circulation and replace them with federal greenbacks. It could be that, much like countries today with currency problems, the government tried to enforce an “official” exchange rate that wasn’t representative of the actual market conditions. Maybe the “profiteering” bit is that Dickens didn’t resort to more favorable “unofficial” exchanges and thus lost a bunch of money on the “official” rate.
It could also just be contrasting his earlier tour to the later one. In the earlier one he spent a certain amount of time lambasting American readers for pirating his books, which led to a bit of a feud with certain elements of the American press. The second tour was just fairly sedate readings, so maybe the idea is that the second tour was more profitable even without the blatant “profiteering” (i.e. trying to get people to actually buy his books) of the first.
Thanks GreasyJack. So you’re saying that he would have exchanged his dollars for pound sterling in the US and not in the UK. ? If so, why not in the UK?
All I can assume is that Dickens converted his cash into gold. So let’s say $40-60 dollars(??) fetched $1 dollar worth of gold. That would have spelt a huge loss for him at those exchange rates. Unfortunately I could not find any precise information for the Reconstruction exchange rates for 1867. Would foreigners have exchanged their greenbacks for gold or for foreign currency?
For Brits, like Dickens, it would have been the same thing; sterling was on the gold standard at the time.
I think the point is that the US dollar used to be freely convertible into gold at a fixed rate, but this was suspended during and for some time after the civil war, and at this time if you converted dollars into gold (or any gold standard currency) you would get rather less gold/currency than you would have done a few years previously.
It’s not strictly correct to say that Dickens (or anyone else) lost money when selling dollars. They ended up with less money than they would have done, had they sold a similar quantity of dollars a few years earlier, but as they didn’t have a similar quantity of dollars a few years earlier that isn’t really a loss. Still, at the time a lot of people would have felt that the previously-fixed conversion rate represented the natural or true value of the dollar, and that if you sold at less than that rate you were in some sense losing money.
Thanks UDS. That makes sense.
Presumably he would have negotiated any fees to be paid in dollars with the expectation that he would have to convert the money to sterling, and he would have priced his appearances accordingly.
Well, again I’m just speculating, it might have been difficult to export large amounts of currency. At the time the Federal government collected much of its revenue through tariffs and so there were probably regulations controlling movements of large sums of currency. It could also have simply been that nobody in the UK would have been interested in buying the US’s newfangled fiat dollars. There weren’t really currency exchanges like you have today where you can get every little obscure world currency, but sterling was a well established world currency that people wanted pretty much everywhere.
At least if my “official versus unofficial exchange rate” theory is right, we’re not just talking about normal grumbling over a fluctuating exchange rate. It’s that when exchanging at the official rate, the amount of currency you get out of the deal purchases significantly fewer goods than the amount of currency you put into it. I think in that situation it’s perfectly correct to say someone “lost money” exchanging currency.
I’m open to correction, but I don’t the US has ever had an “official exchange rate” (except for dollars into silver/gold). And of course if there’s no official exchange rate, then there can’t be a mismatch between the official and unofficial exchange rates.
Can anyone suggest any good books/articles/links on the US Treasury and the dollar during Reconstruction that might shed some comprehensive light on the subject?
Here’s a free ebook in Google Books that discusses the situation. It’s a brief textbook about banking as of 1880, and it focuses on the “bad money” resulting from Lincoln’s laws and Lincoln’s war. See p 5.
The book also includes a nice clear exposition of the basic points of economics. Much more informative than the theoretical stuff you find in modern econ texts.
There are many countries today where an illegal street trader will give you a better rate between the local currency and a ‘hard’ currency. I suspect that back then, the situation was much the same in the USA.
Thanks Polistra