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 I. Modern monetary systems and their operation

Collection:: Economics Books

THE MONETARY CRISIS ) or evade the appalling difficulties of such monetary in- stability. The principle applied to wages was ultimately extended to all kinds of indebtedness, the sum due being subject to an automatic increase proportional to the de- crease in purchasing power. At first an attempt was made to reduce indebtedness to terms, not of money, but of some commodity in current use, which for any given sum would have a fairly constant exchange value in relation to all other commodities; thus, for instance, loans were issued in Germany equivalent to a certain quantity of rye, coal,! potash and even kilowatts. Then, owing to the accelerating depreciation, an experi- ment was made with a system of ‘accounts of constant value,” under which a deposit in paper marks was assigned a certain gold value at the time when it was made, and the right was conferred of withdrawing whatever sum in paper money was equivalent to the same gold value at a later date; but borrowers were also obliged to repay at maturity the amounts of their loans plus a supplement representing the currency depreciation which had occurred since they borrowed.? Thereby changes in the value of paper money cease to have any effect except to alter the number of monetary instruments, the standard of value remaining unchanged. It is obvious, however, that if a private bank is to accept deposits on such terms, it must be in a position actually to convert a deposit into stable foreign currencies in order to avoid loss in obtaining ! For instance, a new company, the Grosse-Kraftwerk of Mannheim, Wiig share certificates of 10,000, 5000, 2000, 1000 and 500 kilograms of coal. 2 A good example is the Deutsche Festmarkbank, opened at Berlin in March 1923, which was to issue loans in these “fixed” marks on behalf of certain companies. After June 12th, when the Federal Government had accepted the principle of wages of constant value, the Economic Council admitted in a declaration of July 12th that it was no longer possible to oppose the general introduction of accounts in terms of gold, and that the Reichsbank itself should open such accounts. The same method ought, of course, to be applied to taxes, and this was done in Germany, in particular by a law of August 11th, 1923, and later in another form by opening revenue accounts of constant value (ordinance of August 25th, 1923). 6¢

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