Thomas Tooke (1774-1858), English merchant, economist, and historian of prices, was born in Russia, where his father was a clergyman of the English church in Kronstadt and later chaplain of the English factory in St. Petersburg. He was for many years in the Russian trade as a partner in Stephen Thornton Brothers Co. and later in Asteel, Tooke, & Thornton. After retirement from active business in 1836, he served for over a decade as governor of the Royal Exchange Assurance Corporation and as chairman of the St. Katherine’s Dock Company.
Tooke began to participate in discussions of economic policy in 1819, when he was a witness before the Commons and Lords committees considering the resumption of cash payments. In 1820 he gave evidence in favor of free trade before the Lords committee and in 1821 before a similar Commons committee. Tooke made few contributions to the theory of international trade, but throughout his life he was an effective spokesman, in the business community and among men in public life, for the removal of trade barriers. He was the author of the London Merchants’ Petition of 1820 in support of free trade, which was presented to the House of Commons by Alexander Baring. Largely in association with others who had been instrumental in the Merchants’ Petition, he was a leader in founding the Political Economy Club in 1821 and was a member until his death.
Important as Tooke’s contemporary influence on behalf of free trade was, his permanent place in the history of economics rests primarily on his role in the British monetary and banking controversy and on his collection of price statistics. Testifying in 1819 before the parliamentary committees on the resumption of cash payments, Tooke had taken a view close to that of Ricardo—not only supporting the re-establishment of the gold standard but accepting a basically monetary explanation of price changes. In 1821 Tooke again gave evidence, this time before the Commons committee on the depressed state of agriculture, largely on the relation of monetary policy to agricultural prices. Although he never wavered in his defense of the gold standard, his study of prices led him gradually to the view that bank-created money is a result and not a cause of price changes. His first book, Thoughts and Details on the High and Low Prices of the Thirty Years, From 1793-1822 (1823), emphasized the influence of climatic conditions and changing demand on agricultural prices. Later publications, including the first two volumes of his History of Prices, which appeared in 1838 and incorporated most of his 1823 book, increasingly stressed the influences affecting individual prices but did not explicitly repudiate his earlier monetary explanation of price changes. In his extensive testimony before the Bank Charter Committee of 1832, Tooke’s position shifted substantially from that of his testimony of 1819; but only when he appeared before the Select Committee on Banks of Issue of 1840 did he finally reject the idea that monetary changes induced by bank credit influence prices—an idea that was the basis of the Currency Principle, namely, that Bank of England notes should be made to fluctuate exactly as would a metallic currency. Indeed, Tooke became the leading advocate for the opposing view commonly known as the Banking Principle, namely, that note issue needs no rigid control. In the policy controversy of the time Tooke’s opposition to the Currency Principle concentrated on the monetary significance of deposits. But his argument had the wider implications that monetary policy is powerless to influence prices or economic conditions and that the Bank of England should not be subject to any rules other than the good judgment of its management. Before the passage of the Bank Act of 1844, Tooke urged these views in An Inquiry Into the Currency Principle (1844) and, after its passage, in testimony in 1848 before the parliamentary Secret Committees on the Commercial Distress that followed the suspension in 1847 of the Bank Act and in On the Bank Charter Act of 1844 (1856). The third and fourth volumes of his History of Prices, appearing in 1840 and 1848, incorporated, in addition to new statistics, much of his earlier writing and testimony. The fifth and sixth volumes, brought out in 1857 with William Newmarch as coauthor, added material on developments after the Californian and Australian gold discoveries but always within the same theoretical assumption—that the money supply is the consequence rather than the cause of economic changes.
Tooke was an avid collector of figures, a persuasive polemical writer against the more mechanical concepts of the “currency school,” and a discriminating and forceful critic of Bank of England actions in particular situations, but he had little ability to develop an organized monetary theory. Although he favored a discretionary rather than a rules approach to monetary policy, it would be easy, in the light of monetary controversy since 1930, to read modern interpretations into Tooke’s views. The discretion that he favored was always within the limits of the gold standard. Although Tooke was critical of the idea that the Bank of England should be a lender of last resort, his insistence that the Bank keep larger reserves contributed to the forces that led in the 1870s to the adoption of the Bagehot Principle. (According to the Bagehot Principle, the Bank of England has the responsibility of holding larger reserves than do other banks so that in time of crisis it can lend freely on proper security to all who ask for credit.) Tooke and his collaborator, Newmarch, made no attempt to construct index numbers from their extensive raw data; but Stanley Jevons later used their figures in his pioneering work on price indices and described the History of Prices as “a unique work, of which we can hardly overestimate the value.”
Tooke was elected a fellow of the Royal Society in 1821. In 1833 he was appointed to the Royal Commission on the Employment of Children and in 1840 to a similar commission, and he played a prominent part in the work of both. The Tooke professorship of economic science and statistics at the University of London was established in his honor.
Frank W. Fetter
[For discussion of the subsequent development of Tooke’s ideas, seemoney; prices; and the biography ofbagehot, particularly the article oneconomic CONTRIBUTIONS.]
(1823) 1824 Thoughts and Details on the High and Low Prices of the Thirty Years, From 1793-1822. 2d ed. London: Murray.
1826 Considerations on the State of Currency. London: Murray.
1829a A Letter to Lord Grenville, on the Effects Ascribed to the Resumption of Cash Payments on the Value of the Currency. London: Murray.
1829b On the Currency in Connexion With the Corn Trade, And on the Corn Laws; to Which is Added, a Postscript on the Present Commercial Stagnation. London: Murray.
(1838-1857) 1928 Tooke, Thomas; and Newmarch, William A History of Prices and the State of the Circulation From 1792 to 1856. 6 vols. London: King.-> First published as A History of Prices and the State of the Circulation, From 1793 to 1837: Preceded by a Brief Sketch of the State of the Corn Trade in the Last-Two Centuries.
(1844) 1959 An Inquiry Into the Currency Principle: The Connection of the Currency With Prices, and the Expediency of a Separation of Issue From Banking. 2d ed. London School of Economics and Political Science.
1856 On the Bank Charter Act of 1844, Its Principles and Operation, With Suggestions for an Improved Administration of the Bank of England. London: Longmans.
Gregory, Theodor E. G. (1928)1962 An Introduction to Tooke and Newmarch’s A History of Prices and of the State of the Circulation From 1792 to 1856. London School of Economics and Political Science.
Thomas Tooke, 1774–1858, British economist, b. St. Petersburg, Russia. A successful businessman, he began to speak on behalf of free trade before Parliamentary committees and was one of the founders of the Political Economy Club (1821). His History of Prices (6 vol., 1838–57) is a classic exposition on the economics of prices. A pioneer of the empirical method in economics, Tooke worked extensively to understand the causes behind price fluctuations, investigating such variables as changing seasons, new machinery, and monetary policies. He was a staunch critic of trade barriers, opposing any governmental restriction on foreign trade.