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

THE THEORY OF EXCHANGE 133 problem arises indirectly because only a part of the circulation is international in character.! We shall return to the logical consequences of this statement, and only note for the moment that those exchange phenomena which are most difficult to explain and which have the most serious effect are those which occur as between countries not possessing the same kind of currency, lead to irregular and violent fluctuations, and sometimes end in the unlimited depreciation of one national currency in relation to foreign currencies. N 3. Abnormal exchanges ; the essential test is instability— the ultimate cause is inconvertibility of the internal cir- culation. In a country which had previously enjoyed regular ex- changes with a group of others, an exchange crisis generally shows itself at first in a decrease in the value (or deprecia- tion) of the national currency in relation to foreign cur- rencies, this decline taking place more or less continuously in the course of irregular fluctuations. But it may happen that a stable parity disappears through an appreciation of the national currency. This has happened in certain coun- tries with a silver currency, and especially in British India where, after the exchanges had been perfectly stable for twenty years under the system of the gold exchange stan- dard, at a rate of 164. to the rupee, the latter rose above this rate owing to a rise in the price of silver and a fall in sterling and because it was impossible in practice to pre- vent the export of rupees, which were now worth more than 16d. in silver content. The same process took place during the war in Sweden, as the prohibition to import gold had cut off the Swedish gold currency from others and prevented it from being increased by the minting of foreign gold. But these are exceptional cases and the idea of abnormal exchanges is usually bound up with that of depreciation. It should be remembered, however, that the 1 In France, even before the war, paper and silver made up about half the total volume of currency and the proportion was considerably higher in many other countries.

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