Modern monetary systems

Bibliographic data

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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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part I. Modern monetary systems and their operation

Collection:: Economics Books

THE MONETARY CRISIS 71 § 9. Efforts to re-establish normal exchanges. England's traditional policy. In concluding this brief review of the exchange crisis resulting from the war, something must be said of the efforts of certain countries to put an end to it. Among the countries which were effectively belligerent, only the United States who entered the war late and, with the advantage of an enormous credit balance, found that a large part of the world’s stock of gold was flowing back to them, were able to return to normal conditions by restor- ing the freedom to export gold. Nor did this bring about a large decrease in their note issue, which, taking the index 100 in 1919 as a basis, rose to 106 at the end of 1920, fell back to 88-6 at the end of 1921, and again increased, after a slight diminution (83) at the beginning of 1922, to 89 at the end of that year. The former belligerents have for the most part not yet begun to pursue any definite monetary policy; the by being given a constant internal purchasing power. At first it may seem that this was the method adopted in Germany with the issue of the Rentenmark (ordinance of October 15th, 1923). This new currency is convertible unit for unit into gold debentures with a nominal value of 500 gold marks, constituting an investment of constant value, the interest being equivalent to a fixed sum in gold at 59. Thus, besides the vague and illusory guarantee of a general mortgage on real property, the bearer of these notes at least had the prospect of an income with a constant value. The issue of rentenmarks, which were to be convertible into paper marks at the rate of one rentenmark for one billion (thousand milliard) paper marks, was accompanied by the stabilisation of the former, and rentenmarks were dealt in at par (4'2105 marks = 1 dollar). But although the issue of the rentenmark assisted stabilisation by checking internal depreciation and exercising a favourable psychological influence, it is obvious that stabilisation cannot be brought about by this very indirect method of making currency convertible, not into foreign currency, but into some “stable value,” and based, not on the capital sum involved, but only on the interest. The real cause was the quite different action taken at the same moment by the Reichsbank in Berlin and the money markets abroad. Here again the machinery which really effected stabilisation was the use of credits or liquid assets for the purchase and sale of foreign currencies at a fixed rate. But with insufficient means of action, the Reichsbank was soon obliged to ration foreign exchange and an exchange premium began to appear after February 1924.

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