Marcello de Cecco
Jacob Viner stated in 1937 that international capital movements had not yet found their historian. Things have progressed since then, but not substantially. In particular, there do not seem to have appeared, since the publication of Arthur Bloomfield's Princeton paper, 'Short-term capital movements under the pre-1914 gold standard' many contributions which try to shed more light on the subject, on the basis of research conducted in the archives of banks and central banks.
By default, therefore, we seem to remain inclined to accept the version of the story of how the pre-1914 gold standard worked which assigns short-term capital movements a largely equilibrating role, and sees the central banks of the core countries intent in following the Bank of England, the conductor of an ideal international monetary orchestra, or the leader of an international oligopoly over monetary affairs. The Old Lady would signal policy changes by changing her discount rate, money would be called to London as a differential appeared between interest rates there and elsewhere, and other central banks would raise their own rates.
This is a way of giving back neoclassical virtue to institutions, like pre-1914 central banks, which on the contrary gave contemporary observers the distinct impression of being created exactly for the purpose of putting obstacles to international short-term capital movements which national economic authorities considered as endangering the economic policies which they were trying to enforce in their respective countries. Contemporary observers, in other words, thought that, far from forming an international orchestra expertly led by the Bank of England for the benefit of the world economy as a whole and of its component parts, central banks were increasingly used, in the course of the twenty years leading to World War II, as institutions whose role was to increase the national authorities' control over their national economic systems, on the assumption that it was not always for the benefit of each individual economy that the international cycle moved and international capital movements, especially short-term ones, occurred.