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

Usage license:: Get license information via the feedback formular.

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 159 method of restoring the gold points and therefore of re-institut- ing a system of stable exchanges with countries on a gold currency. When inflation has not gone very far, so that new issues can be easily withdrawn, and the level of prices has not risen 100 high while the loss on exchange remains low, a return to the gold points can be brought about by abolishing forced currency 50 that the unlimited convertibility of notes is restored. This method has been used particularly in France after 1870 and may be ultimately adopted in England. It should be added that it is inapplicable except when all the conditions described above are present, or unless the definition of the monetary unit is changed ; and even then it cannot be used without running serious risks. The first consequence of merely abolishing forced currency would be to force the bank of issue to ex- change them at the rate of one gold unit for one paper unit, thus involving possibly a temporary but certainly a violent return to a par exchange. If the forced currency were in fact abrogated at the present time in France it would at once be open to anyone to obtain gold at the rate of one gold franc for one paper franc, and so the exchange would revert to 25221 to the pound and 5°18 to the dollar. It would be superfluous to recall what has already been said on this subject and to describe the catastrophe which would follow. There would be only two methods of avoiding such an upheaval. The first one would be to wait for a gradual improvement in the exchange until it nearly reached par ; 1 As we have seen particularly from the relation between the Moroccan and Algerian franc and the French franc, it is possible to establish harmonious exchanges between different countries by making one paper currency convertible into another. But a general monetary restoration presupposes that harmony has been restored with the few countries—like the United States—where the internal currency is on a par with gold owing to the freedom to export, import and coin the yellow metal. Hence the formula “convertibility into gold” is more generally and more easily accepted than the one which aims at making the various paper currencies convertible into United States dollars. But the method of convertibility into gold should also be understood as extending to the system of buying and selling at a constant rate bills payable abroad in gold.

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