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

THE THEORY OF EXCHANGE 135 It is possible, however, that the loss on exchange does not appear at once, if the balance of payments is positive. For the absence of exportable gold does not make itself felt and the available drafts on foreign countries will amply suffice to meet external payments. Thus, particularly in 1914, the repatriation of capital enabled France for some time to keep the exchange in her favour in spite of forced currency and the impossibility of exporting gold. But this state of affairs could not continue for long. Even a coun- try with a positive annual balance of payments will suffer an exchange crisis if its currency cannot be exported, since periods will always occur when the balance of payments is negative ; then the exchange will break and its fluctuations will have no limits in the absence of any means of pro- curing exportable currency at a fixed rate. The question ought, however, to be put whether behind this direct cause of a fall in the exchange there does not exist a more remote cause among the circumstances which brought about the disappearance of the exportable cur- rency and thereby of the export gold point. Now this dis- appearance has generally accompanied abnormal issues of fiduciary currency. Is it therefore right to conclude that in the last analysis the exchange crisis is connected with the excess of currency and so amenable to an explanation based on “quantity” which would fit in so well with the vague and confused notion of monetary depreciation to which we have already directed the reader’s attention ? In the opinion of certain economists this view is con- nected with the idea of internal depreciation due to infla- tion preceding the loss on exchange. An internal currency which has lost purchasing power will only be in demand in foreign countries if it suffers in relation to par or to the previous parity a loss which makes up for the decrease in its internal purchasing power. Therefore in the opinion of these writers, if the franc only retained one-quarter of its purchasing power, Americans will not buy francs for the purpose of making purchases in France at more than one- quarter of its previous value unless the dollar has also lost purchasing power. In any case, they will wish to obtain in exchange for their dollars a sufficient quantity of francs to

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