The Transformation of Money. A Transatlantic History of 'Money Illusion' during the Gold Standard Era, 1870s-1920s

Jun.-Prof. Dr. Sebastian Teupe, Bayreuth (Principal Investigator)


The project investigates historical changes in monetary perceptions as a basis of contemporary experiences and expectations during transitions from deflation to inflation between the 1870s and 1920s. The central thesis is that expectations and social relations in economic contexts changed radically due to alterations in the general price level. However, alterations are not easily observed, and explanations for them depend on contemporary knowledge and past experiences. Therefore, the connection of monetary values to expectations is neither straightforward nor independent of time. The project aims to historicize the connection between the continuous transformation of money and contemporary experiences and expectations. Its objective is to provide a novel historical periodization of changes in monetary perceptions and their effects. It intends to overcome a current dichotomy of conceptual approaches in historical research on monetary phenomena. Cultural narratives focus on contemporary explanations for price changes. Positivist economic historians look at statistical aggregates and their effects on economic growth. Whereas the latter misses relevant changes in the actors' time horizons and sense-making processes, a discursive view remains silent about the economic effects of such changes.

By pursuing a practice-theoretical approach the project will base its findings on changes in perceptions and routinized behavior over time. These changes in practices can be related to routines in bargaining as well as to political moves for institutional change, theoretical innovations in economic thinking, or narratives and expectations about the stability and time-dimensions of money. It is by bringing the different dimensions together that it becomes possible to overcome the dichotomy. The project attempts to utilize the concept of "money illusion" to do so. "Money illusion" means that actors are unable to relate the nominal value of money to the real value of goods which has grave economic effects. Instead of simply assuming this to be the case, the concept of "money illusion" will be used heuristically to investigate the contingencies of monetary perceptions, changes over time, and their link to expectations, economic behavior and social relations. The focus will be on industrial relations, creditor-debtor relations in farming, and struggles between households and retailers. Three central research questions guide the project that will focus on the United States, Germany, and Great Britain from the 1870s to the 1920s. First, when and why did understandings and expectations of monetary values change? Second, in what ways and why did experiences and expectations regarding the currencies' purchasing power influence social relations of economic actors? Third, did monetary fluctuations influence social relations in different ways in the three countries, leading to different institutional solutions that in turn influenced processes of expectation formation?



Teupe, S. (2020). Keynes, inflation and the public debt: How to Pay for the War as a policy prescription for financial repression?. Financial History Review, 27(2), 187-209.

Teupe, S. (2021). Inflation and the negotiation of wages. Comparative responses to monetary changes in Germany and the United States during the Gold Standard Era, 1876–1926. Labor History, 62(1), 1-22.

Teupe, S. (2022). Zeit des Geldes. Die deutsche Inflation zwischen 1914 und 1923, Frankfurt am Main/New York: campus.