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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Chapter

Document type:: Monograph

Structure type:: Chapter

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

Collection:: Economics Books

78 MODERN MONETARY SYSTEMS The first part of this plan, viz., the stamping and contraction of the note issue, was carried out under a law of February 25th, 1919, supplemented by several ordinances of the same date. The notes which were with- drawn were not necessarily confiscated ; those which were withdrawn formed, for each owner, an account bearing interest at 19 ; this forced loan was intended to prepare the way for a tax on capital levied in accordance with a careful assessment, and every individual was to be reim- bursed any surplus of notes appropriated over and above his share as soon as the proceeds of the loan itself had flowed in. The rate of reduction was finally fixed at only 50%, and owing to a certain number of exemptions (for amounts under 300 crowns, one-quarter of all salaries and wages, notes issued by public authorities) the effective reduction was less than 30%. Moreover, a very large proportion of the notes which had thus been withdrawn were put back into circulation some months later, when M. Horacek succeeded M. Rasin as Minister. Deflation, properly so-called, seems therefore to have been fairly moderate. But a law of April 10th, 1919, prohibited any increase of State notes “in excess of the succeeded by its bill and discount system in maintaining the quotation of the krone at gold parity.” It will be observed in the first place that it is a strange misconception to suppose that a noticeable currency contraction can be brought about by reducing the note issue, while at the same time an equal amount of purchasing power is made available in the form of Bank accounts supplied by the Treasury. Again, the creation of a “gold” currency secured on a foreign loan is necessarily ineffective if that currency is to remain incon- vertible. But the author contemplated a system similar to the one adopted by the Austro-Hungarian Bank before the war and could point out with truth that therewas no convertibility then. To be more exact, the note issue was not legally convertible, but was convertible in practice, and this explains how it was possible to maintain an almost constant parity. On the whole, the practical lessons of the experience of Austria-Hungary before the war corrected a too simple theory, and it will be seen that the present stabilisation of the Czech crown is due not to the theory but to these practical lessons. 1 Rasin, 0p. cit., pp. 28, 29.

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