Blake, William (c1774–1852)
Blake was a member of the Political Economy Club from 1831 until his death, and in 1815–16 President of the London Geological Society (of which his friend Ricardo was also a member). His reputation as an economist was established by his 1810 tract, Observations on the Principles Which Regulate the Course of Exchange; and on the Depreciated State of the Currency, which came to be regarded as a standard work on the subject of foreign exchanges. He made the point that the actual (or computed) rate of exchange is determined by two different groups of causes. One, the demand and supply of foreign bills in the market, depending on the foreign payments the country has to make. The other, causes only affecting the value of the currency – i.e. the quantity and quality of metal in the coin, and the amount of currency compared with the commodities which have to be circulated by it. The rate of exchange as affected by the former causes he called the real exchange, the latter causes would instead affect what he called the nominal exchange. The combined effects of the two would determine the actual exchange (1810, p. 481). The distinction (which was then generally accepted: see e.g. Ricardo, Works, IV, p. 353) was not entirely well founded, however, because for instance changes in the price level caused by changes in the amount of money in circulation (Blake accepted the quantity theory) would affect the exports and imports of the country, and therefore could be seen as affecting the real exchange.
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