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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Document type:: Monograph

Structure type:: Chapter

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

Collection:: Economics Books

152 MODERN MONETARY SYSTEMS statistical data and in view of the uncertain intervals in which the supposed reactions show themselves, it does not seem possible to draw scientific conclusions from a detailed comparison of the curves. But certain results, such as the recovery in the foreign trade of France after 1920 following a serious fall in the exchange, are in favour of the reasonable assumption that the exchange has a regulating effect on the balance of payments, and Vice versa. And yet this tendency towards equilibrium cannot be considered demonstrable in all circumstances. In the first place the idea that the foreign trade of a country varies solely with prices is crude. The most prosperous country in the world can only give what it has got, and a premium on the exchange will not allow of an indefinite development of exports if the means of production are inadequate. On the other hand, iz may happen—and it certainly has happened— that the exporter who derives profit from the premium on exchange, owing to the difference between the external depreciation and the minimum internal depreciation of the currency, will abandon a part of that profit to his foreign purchaser. Tt is true that nevertheless exports will be thereby stimulated; but goods will be sold at a lower price in foreign currency—say in gold—than that at which it would have been sold with a normal exchange, and the value of exports will not increase in proportion to their volume. But since the balance of payments depends on an increase not in the weight or tonnage but in the value of exports, it is easy to see that on this assumption, which is often in fact realised, the fall in the exchange will not be enough to restore the balance of payments. The auto- matic machinery contemplated above may very well not come into play. Lastly, the whole theory has been built up as though the rate of exchange were bound up solely with the balance of payments. But as has been pointed out, this statement, while it is approximately true when the exchange is restricted by the gold points, becomes inaccurate when we are dealing with abnormal exchanges. Of course, the

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