Borrowing and business in Australia

Bibliographic data

Monograph

Identifikator:: 183051623X

URN:: urn:nbn:de:zbw-retromon-222122

Document type:: Monograph

Author:: Wood, Gordon L. http://d-nb.info/gnd/1239193688

Title:: Borrowing and business in Australia

Place of publication:: London

Publisher:: Oxford university press, H. Milford

Year of publication:: 1930

Scope:: xv, 267 Seiten; graph. Darst.

Digitisation:: 2022

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part V. Australia during and after the great war

Collection:: Economics Books

THE THEORY OF EXCHANGE 143 At the present time when exchange crises are so numer- ous, we are far from being able to observe that the curves of exchanges and of circulation are consistently parallel. An exchange will move considerably upwards and down- wards while the circulation is constant, and conversely. Lastly, it should be observed that the fact of currency and exchange movements being parallel is not by itself con- clusive. In Germany, particularly since 1920, the increase in the volume of currency has lagged behind the fall in the exchange instead of preceding it and really amounts to a modified contraction in view of the level of prices due to the exchange position. Moreover, it would not be surprising, even if variations in the circulation affected the exchange, that this influence should not show itself by simultaneous variations in the curves of the exchange and circulation, as the latter in any case depends upon other factors such as the balance of payments, which may in its turn be affected by the cir- culation (but may also fluctuate for many other reasons) and by all the psychological imponderabilia which in- fluence a market exposed to speculation. Therefore in the absence of any means of directly proving and measuring the relation between exchange and circulation, we must confine ourselves to a careful appreciation of the argu- ments advanced in favour of its possibility. We come back, therefore, to the arguments enumerated above when, in seeking the initial cause of an exchange crisis, we discussed whether we were right in seeking “Le papier-monnaie,” by Subercaseaus, contains (Ch. ITI) various instances drawn from the 19th and early 20th centuries which completely invalidate the belief in a constant relation between the exchange rates and the volume of the circulation and incidentally show that in the case of certain countries such as Chili from 1905 to 1908 the coincidence of the two phenomena can be explained by the influence of factors which reacted both on the note issue and on the balance of payments. Finally, it should be observed that even in the time of Ricardo, who did so much to popularise this simple theory, the strict relation of cause and effect between inflation and the rate of exchange was denied by some technical writers (see the “collection des grands économistes,” Vol. XIII, “Le haut prix des lingots” and the annexed documents). See also, in spite of his drawing the opposite conclusion, Mr. Cannan, “The Paper Pound of 1797 to 1821.”

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