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

CRITICISM OF CLASSICAL THEORY 99 increase in the volume of currency issued does not always mean a corresponding rise in prices. It follows that even in a case where the old Quantity Theory seemed to explain the phenomenon much more complex relations of cause and effect must be sought. Finally, when we come to economic phenomena (such as the supposed equilibrium in Foreign Trade), which are connected with monetary phenomena, it again appears to be necessary to substitute for the older theory of Ricardo with its faulty chain of reasoning! and its questionable conclusions, a set of hypotheses derived from a much more detailed knowledge of facts and particularly of exchange mechanism. In general, the inadequacy of the classical theory in explaining the monetary phenomena of the present time is due to the fact that it consists of blindly applying a few simple principles in an abstract way instead of taking a large number of particular cases, analysing them and then drawing the conclusions which they warrant. It is no doubt true that the old-established law of supply and demand can be seen operating everywhere, but this is not enough. Ve must examine the objects supplied or de- manded and the conditions of the market. Neither in attempting to account for the depreciation of the rupee nor in explaining Bimetallism is it sufficient to bring into play this notion of Quantity as applied to any given cur- rency or to two precious metals. We must ask ourselves what exactly is meant by the ratio between gold and silver (price of the metal in London, in a monometallist gold country bordering on bimetallist countries) and dis- cover what is the situation both from the legal point of view and in practice of buyers and sellers of silver at different times. Similarly, we must ask ourselves what exactly is meant by “ the value of the rupee.” We must understand that this involves the rate of exchange of the rupee on the London market and inquire what are the circumstances which affect that market at a given moment. ! See B. Nogaro, “Le Role de la Monnaie dans le commerce inter- national et la théorie quantitative,” thesis, Paris, 1904.

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