Modern monetary systems

Bibliographic data

Monograph

Identifikator:: 101030657X

URN:: urn:nbn:de:zbw-retromon-41609

Document type:: Monograph

Author:: Aughinbaugh, William E.

Title:: Selling Latin America

Place of publication:: Boston

Publisher:: Small, Maynard & Company Publishers

Year of publication:: 1915

Scope:: 1 Online-Ressource (VI, 408 Seiten)

Digitisation:: 2018

Collection:: Economics Books

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Title page

Document type:: Monograph

Structure type:: Title page

Collection:: Economics Books

88 MODERN MONETARY SYSTEMS the first instance to a change in public opinion abroad, sur it was carried through above all because of the increasingly effective operations on the market of the Banking Department, which had succeeded in accumulating, with the help of a large natural surplus in the trade balance, a very large stock of foreign exchange—the outstanding event of 1921.1 Moreover, while a strict financial policy may in itself contribute largely towards exchange recovery, it cannot be recognised as sufficient to effect stabilisation, even if it is backed by foreign credits.? The experience of Czechoslovakia up to the end of 1922 proves exactly the opposite, and if at the beginning of 1923 the Czech crown entered on a new phase, that of approximate stabilisation round about 34 crowns to the dollar, there can be no doubt that this stabilisation has been due to the regulating activities of the Banking Department. Although the character of this stabilisation is not officially recognised, and although the Czechoslovakian Government has not hitherto thought it advisable to establish a fixed rate of conversion, iz is common knowledge that, to the extent necessary to keep the crown stable, the Banking Department buys and sells foreign bills at a rate which does not differ widely from the one mentioned above. It offers a rather more elastic method of attaining convertibility than Conversion or Exchange Offices, but the principle is 1 The Foreign Exchange Control Office helped to procure bills for the Banking Department. But so long as exporters anticipated the con- tinuance of depreciation, they made every effort to evade the control of foreign exchange, which was never entirely effective until, taken by surprise by a series of sharp recoveries in the crown, they regained con- fidence in it, and spontaneously handed over their foreign bills. Action through control offices thus appears to be an inadequate expedient when it is founded on force, but valuable when it is based on confidence. 2 M. Rist (0p. cit., p. 87) declares that “the mere stoppage of inflation by a Government, combined with the perseverance and determination necessary to balance the Budget, and supported by foreign credits, is sufficient to stabilise the exchange.” Neither the stoppage of inflation nor Budget equilibrium nor even foreign credits will suffice to stabilise an exchange, if there is no systematic intervention in the exchange market to create an almost constant rate for the bills necessary to fill the gap in com- mercial drawings, and to allow of the purchase at approximately the same rate of surplus commercial foreign bills on foreign countries.

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