Modern monetary systems

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Monograph

Identifikator:: 1753210836

URN:: urn:nbn:de:zbw-retromon-128414

Document type:: Monograph

Author:: Nogaro, Bertrand http://d-nb.info/gnd/117039713

Title:: Modern monetary systems

Place of publication:: London

Publisher:: King

Year of publication:: 1927

Scope:: XII, 236 S.

Digitisation:: 2021

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part II. The explanation of contemporary monetary phenomena and currency theory

Collection:: Economics Books

CURRENCY AND PRICE MOVEMENTS 113 year 1923 brings a curious check ; between February and April the circulation nearly doubled—it rose from 3513 milliards of marks to 6546 and prices tended to fall.1 Finally, two recent experiments, so far from con- tributing any precise proof of this theory, give rise to serious doubts, viz., the monetary reform in Czecho- slovakia and the monetary reform on Austria. In the first case, a policy largelybased on the Quantity Theory showed that the limitation and even the contraction of a currency did not prevent prices from rising considerably between 1919 and November 1920. The index reached about 1500 in 1920 (the base index being 100 for 1914 and the figure at the end of 1919 being about 700) and showed a level of prices which, in 1920 and the first quarter of 1921, was at least as high as in Germany, where inflation has been continuing. Moreover, at the very time when a fresh increase in the circulation (12 milliards of crowns as against 8 milliards when the monetary reform took place) brings it to its maximum, prices begin to fall ;2 and here again we find that the fall was much sharper from 1922 onwards than the further reduction in the circulation, viz., 100 to 67 as compared with 100 to 89. On the other hand, we have another counter proof in experience in Austria, where the note issue trebled between September 1922,3 when the exchange was stabil- ised, and the end of 1923 without being accompanied apparent inflation, the increase in clearing operations or setting off debts, if it does not bring about an increase in the number of real units, at least multiplies the number of units of account proportionately to the rise in prices. But the fact that, in spite of a restriction of the number of monetary ‘nstruments, methods of settlement tend to increase proportionately to a rise in prices, shows that prices are not proportionate to the number of “physical” monetary instruments, which alone can be regulated in quantity by public authorities. 1It may be added that this was a period of stable prices. As soon as methods directed towards stabilisation ceased to operate, prices resumed their upward movement. See Aftalion, “La circulation, les changes et les Prix,” in the Revue Economique Internationale, February 1924. 2 It has been pointed out above that this double price movement again corresponds very exactly with the movements of the exchange. 8 See above, p. 91.

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