On the Manipulation of Money and Credit. Людвиг фон Мизес

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СКАЧАТЬ standard at the moment, the possibility would remain that its tie to gold might be cut at some later time. So there is no basis for choosing this roundabout route in order to attain a sound monetary system. It is not true that adopting the gold standard leads to economic dependence on England, gold producers, or some other power. Quite the contrary! As a matter of fact, it is the monetary standard which relies on the money of a foreign government that deserves the name of a “subsidiary [dependent] or vassal standard.”¹

2. Sufficiency of Available Gold

      There are no grounds for saying that there is not enough gold available to enable all the countries in the world to have the gold standard. There can never be too much, nor too little, gold to serve the purpose of money. Supply and demand are brought into balance by the formation of prices. Nor is there reason to fear that prices generally would be depressed too severely by a return to the gold standard on the part of countries with depreciated currencies. The world’s gold supplies have not decreased since 1914. They have increased. In view of the decline in trade and the increase in poverty, the demand for gold should be lower than it was before 1914, even after a complete return to the gold standard. After all, a return to the gold standard would not mean a return to the actual use of gold money within the country to pay for small-and medium-sized transactions. For even the gold exchange standard [Goldkernwährung] developed by Ricardo in his work, Proposals for an Economical and Secure Currency (1816), is a legitimate and adequate gold standard,² as the history of money in recent decades clearly shows.

      Basing the German monetary system on some foreign money instead of the metal gold would have only one significance: By obscuring the true nature of reform, it would make a reversal easier for inflationist writers and politicians.

      The first condition of any real monetary reform is still to rout completely all populist doctrines advocating Chartism,³ the creation of money, the dethronement of gold and free money. Any imperfection and lack of clarity here is prejudicial. Inflationists of every variety must be completely demolished. We should not be satisfied to settle for compromises with them. The slogan, “Down with gold,” must be ousted. The solution rests on substituting in its place: “No governmental interference with the value of the monetary unit!”

IV

       The Money Relation

       1. Victory and Inflation

      No one can any longer maintain seriously that the rate of exchange for the German paper mark could be reestablished [in 1923] at its old gold value—as specified by the legislation of December 4, 1871, and by the coinage law of July 9, 1873. Yet many still resist the proposal to stabilize the gold value of the mark at the currently low rate. Rather vague considerations of national pride are often marshalled against it. Deluded by false ideas as to the causes of monetary depreciation, people have been in the habit of looking on a country’s currency as if it were the capital stock of the fatherland and of the government. People believe that a low exchange rate for the mark is a reflection of an unfavorable judgment as to the political and economic situation in Germany. They do not understand that monetary value is affected only by changes in the relation between the demand for, and quantity of, money and the prevailing opinion with respect to expected changes in that relationship, including those produced by governmental monetary policies.

      During the course of the war, it was said that “the currency of the victor” would turn out to be the best. But war and defeat on the field of battle can only influence the formation of monetary value indirectly. It is generally expected that a victorious government will be able to stop the use of the printing press sooner. The victorious government will find it easier both to restrict its expenditures and to obtain credit. This same interpretation would also argue that the rate of exchange of the defeated country would become more favorable as the prospects for peace improved. The values of both the German mark and the Austrian crown rose in October 1918. It was thought that a halt to the inflation could be expected even in Germany and Austria, but obviously this expectation was not fulfilled.

      History shows that the foreign exchange value of the “victor’s money” may also be very low. Seldom has there been a more brilliant victory than that finally won by the American rebels under Washington’s leadership over the British forces. Yet the American money did not benefit as a result. The more proudly the Star Spangled Banner was raised, the lower the exchange rate fell for the “Continentals,” as the paper notes issued by the rebellious states were called. Then, just as the rebels’ victory was finally won, these “Continentals” became completely worthless. A short time later, a similar situation arose in France. In spite of the victory achieved by the Revolutionists, the agio [premium] for the metal rose higher and higher until finally, in 1796, the value of the paper monetary unit went to zero. In each case, the victorious government pursued inflation to the end.

2. Establishing Gold “Ratio”

      It is completely wrong to look on “devaluation” as governmental bankruptcy. Stabilization of the present depressed monetary value, even if considered only with respect to its effect on the existing debts, is something very different from governmental bankruptcy. It is both more and, at the same time, less than governmental bankruptcy. It is more than governmental bankruptcy to the extent that it affects not only public debts, but also all private debts. It is less than governmental bankruptcy to the extent that it affects only the government’s outstanding debts payable in paper money, while leaving undisturbed its obligations payable in hard money or foreign currency. Then too, monetary stabilization brings with it no change in the relationships among contracting parties, with respect to paper money debts already contracted without any assurance of an increase in the value of the money.

      To compensate the owners of claims to marks for the losses suffered, between 1914 and 1923, calls for something other than raising the mark’s exchange rate. Debts originating during this period would have to be converted by law into obligations payable in old gold marks according to the mark’s value at the time each obligation was contracted. It is extremely doubtful if the desired goal could be attained even by this means. The present title-holders to claims are not always the same ones who have borne the loss. The bulk of claims outstanding are represented by securities payable to the bearer and a considerable portion of all other claims have changed hands in the course of the years. When it comes to determining the currency profits and losses over the years, accounting methods are presented with tremendous obstacles by the technology of trade and the legal structure of business.

      The effects of changes in general economic conditions on commerce, especially those of every cash-induced change in monetary value, and every increase in its purchasing power, militate against trying to raise the value of the monetary unit before [redefining and] stabilizing it in terms of gold. The value of the monetary unit should be [legally defined and] stabilized in terms of gold at the rate (ratio) which prevails at the moment.

      As long as monetary depreciation is still going on, it is obviously impossible to speak of a specific “rate” for the value of money. For changes in the value of the monetary unit do not affect all goods and services throughout the whole economy at the same time and to the same extent. These changes in monetary value necessarily work themselves out irregularly and step by step. It is generally recognized that in the short or even the longer run, a discrepancy may exist between the value of the monetary unit, as expressed in the quotation for various foreign currencies, СКАЧАТЬ