Theorie des Geldes und der Geldwirtschaft

[Title Page and Preface]: The title page and preface of Richard Kerschagl's 1923 work on monetary theory. The author outlines his organic approach to the problem of money within the broader context of the total economy, distinguishing his views from pure planned economies and expressing skepticism toward both radical free-market and socialist systems. [Table of Contents]: A detailed table of contents for the book, divided into three main sections: The Money (nature, value, theories), The Money Economy (creation, inflation, indexation), and Monetary Policy (stabilization, central banking, international relations). [Introduction: Methodology and Theoretical Framework]: The introduction establishes the book's methodological foundation, utilizing deductive reasoning for theory and descriptive-historical methods for policy. Kerschagl aligns himself with the Vienna School (Spann, Wieser, Schumpeter) while explicitly distancing himself from the rigid Metallism vs. Chartalism debate, though he adopts some terminology from Knapp's State Theory of Money. [I.1. Nature and Function of Money]: Kerschagl defines money through its function within an organic, division-of-labor economy rather than through historical curiosities. He explains the transition from direct to indirect exchange using marginal utility theory (Grenznutzen) and identifies money as a purpose-oriented tool (Zweckbegriff) secured by the state's role as a central payment hub and the necessity of bridging time and space in transactions. [I.2. The Internal Value (Binnenwert) of Money]: This section explores the internal value of money, defined as its purchasing power (Binnenwert). Kerschagl applies relative value theories, specifically marginal utility, to money. He argues that money's value is unique because it lacks direct consumption utility; instead, its value is derived from the goods it can acquire, mediated by individual income levels and the general price level (measured via index numbers). [I.3. The External Value (Außenwert) of Money]: Kerschagl defines the external value (Außenwert) or exchange rate (Kurswert) as the price of one currency in terms of another. He discusses the technical differences between physical notes and bank transfers (Auszahlung), the concept of gold points in metallic standards, and how arbitrage functions to correct price disparities between different international markets. [I.4. The Relationship Between Internal and External Value]: This section analyzes the tension between internal purchasing power and external exchange rates. Kerschagl contrasts the Purchasing Power Parity theory (Cassel) with the Balance of Payments theory. He explains how inflation creates a 'positive tension' (export premium) where the external value drops faster than internal prices, temporarily boosting exports at the cost of real wages and capital substance, and argues that stabilization ends this artificial advantage. [Stoffwert und Nennwert des Geldes]: This section examines the relationship between the material value (Stoffwert) and the nominal value (Nennwert) of money. Kerschagl discusses the historical transition of money from a commodity with intrinsic consumption value to a functional medium of exchange, positioning his view within a state-centric theory of money. He defines technical terms like the 'Münzfuß' (monetary standard) and Knapp's 'hylogenic norm,' explaining how these concepts facilitate international exchange parities. The text also critiques the rigid dichotomy between metallism and chartalism, arguing that while the state's legal decree expands monetary function, it does not create the economic function of exchange itself. Key thinkers mentioned include Mises, Knapp, and Wieser. [Metallismus und Chartalismus]: Kerschagl analyzes the debate between metallism (money value tied to metal) and chartalism (money value tied to state decree) from a socio-economic perspective. He outlines a six-stage evolutionary scale of money, from primitive consumable goods to abstract tokens in highly developed economies. The author argues that neither system inherently guarantees price stability or 'correct' money creation; rather, the choice between them involves balancing technical efficiency (chartalism) against psychological trust and international exchange stability (metallism). He emphasizes that money's value is ultimately rooted in the broader organization of production and distribution within a society. [Die Quantitätstheorie]: This segment provides a critical evaluation of the Quantity Theory of Money, tracing its development from Ricardo to Irving Fisher and Leon Walras. Kerschagl critiques the theory's mechanical assumption of a direct inverse relationship between money quantity and value. From a methodological and 'universalist' standpoint, he rejects the theory for failing to account for the organic connection between money, production, and income formation. He argues that modern subjective value theory renders the classical quantity theory obsolete by dissolving aggregate quantities into individual income streams and subjective valuations. The section concludes by noting that money is a dynamic social phenomenon that resists static, purely mathematical explanations. [Foundations of Money Creation: Subjective and Objective Perspectives]: Kerschagl distinguishes between subjective and objective money creation, focusing on how new money enters the economy and influences income distribution. He argues that while the physical material of money (commodity value) historically played a role in limiting supply and ensuring external value, the essence of money as a medium of exchange is independent of its substance. The section introduces the problem of balancing money supply with economic needs and mentions key thinkers like Walras, Gesell, and Mises. [Metallic Standards: Monometallism, Bimetallism, and Gresham's Law]: An analysis of money creation based on metallic standards. Kerschagl examines monometallism and bimetallism, explaining how fixed exchange ratios between two metals (like gold and silver) often lead to the 'bad' money driving out the 'good' (Gresham's Law). He critiques the assumption that metal production can naturally keep pace with economic growth and discusses the inherent instability of duometallism where ratios fluctuate freely. [Stabilization and the Theory of Goods-Based Money Creation]: Kerschagl explores the idea that price stability is best achieved when money creation runs parallel to goods production. He discusses Leon Walras's theoretical model of a state-managed bimetallic system that adjusts money supply based on production, noting that such a system requires extreme central authority and oversight, bordering on socialist economic planning. [Classical Money Creation: Commercial Bills and Lombard Loans]: This section details what Bendixen calls 'classical money creation' based on commercial bills (Warenwechsel). Kerschagl explains how money enters circulation during the production process and disappears upon the sale of goods and repayment of the bill. He contrasts this with Lombard loans (loans against securities), which he views more as credit policy than pure money creation, as they lack the direct link to the creation of new consumer goods. [Alternative Foundations and Typology of Money Species]: Kerschagl critiques money creation based on land (mortgages), citing John Law's failure, and argues that land is a static asset rather than a flow of new goods. He proposes a three-part typology of money: 1) limited by material value, 2) based on goods production (bills), and 3) limited by central authority (decree). He also critiques Knapp's legalistic 'hylogenes/autogenes' distinction, favoring an economic functionalist view. [The Foundations of Cashless Payments and Compensation]: An examination of cashless payment systems as a form of economic compensation. Kerschagl argues that clearing systems and giro accounts increase 'payment intensity' and efficiency by reducing the physical movement of money. He discusses the role of the state and central banks as compensation centers and explains how cashless systems represent a technical evolution from direct barter to indirect exchange to pure accounting. [The Nature of Giral Money and the Concept of Inflation]: Kerschagl addresses whether bank deposits (Giralgeld) constitute money, concluding that they do insofar as they perform the function of money in the economy. He then transitions to a deep analysis of inflation, defining it as an oversupply of money signs relative to goods. He describes how state-driven money printing leads to price increases, income shifts, and a 'flight from money' into tangible goods. [Inflationary Dynamics, Social Product, and Monetary Recovery]: The final section of the chunk analyzes the socio-economic consequences of inflation, where the state consumes a larger share of a shrinking social product. Kerschagl warns against 'unproductive' money creation even when backed by goods if those goods are uncompetitive on the world market. He outlines requirements for stabilization: balancing the state budget, cautious central bank credit policy, and restoring international trade and the division of labor. [The Index as a Remuneration System in Inflationary Periods]: Kerschagl analyzes the use of price indices for wage adjustments during inflation, arguing that universal indexation is economically impossible as it leads to capital depletion and rigid income stratification. He highlights the social danger of devaluing intellectual labor relative to manual labor and suggests that indexation causes a lack of interest in currency stabilization. As alternatives, he proposes profit-sharing systems or sliding scales based on production rather than consumption, emphasizing that the root causes of inflation must be addressed before indexation can be successfully dismantled. [Devaluation, Valuation, and Depreciation]: This section defines and distinguishes between various methods of currency adjustment following inflation, such as devaluation, valuation, and depreciation. Kerschagl argues that while the state can technically fix new exchange rates or metallic parities, it cannot directly control the internal purchasing power (Binnenwert) of money through purely technical measures. He emphasizes that true currency recovery (Währungssanierung) depends on the health of the overall economy and sound money creation, rather than mere technical adjustments to debt or metallic content. [Past, Present, and Future of the Monetary Economy]: Kerschagl examines the evolution of money from commodity-based to abstract forms, critiquing Hildebrand's linear progression from natural to money to credit economies. He argues that clearing and compensation systems (Abrechnungswirtschaft) are not a separate stage but a technical refinement of the monetary economy that has existed in various forms throughout history. He concludes that while technical improvements in cashless payments are desirable, a complete transition away from a monetary economy is neither historically likely nor politically feasible given the complexity of modern distribution. [The Origins of Money]: This section explores the historical and ethnographic origins of money, challenging the notion of a purely autarkic individual economy. Kerschagl argues that indirect exchange and clearing systems (such as those in ancient Egypt) appeared much earlier than often assumed. He posits that the use of a medium of exchange inherently involves credit (stalling consumption) and requires a prior formation of capital to facilitate the 'detours' of trade. He concludes that there is no sharp historical boundary where 'money' begins, as it emerges organically from the division of labor. [Foundations of Monetary Policy]: Kerschagl outlines the three primary goals of monetary policy: linking money creation to goods production, maintaining internal price stability, and ensuring stable international exchange rates. He discusses the tools available to central banks, including the suspension of metallic standards (hylische Norm), credit restrictions, and discount rate adjustments. He argues that while technical 'exodromic' policies can smooth exchange rate fluctuations, they cannot override the fundamental economic realities of the balance of payments and relative purchasing power levels between nations. [The Problem of Currency Stabilization]: Kerschagl examines the feasibility and desirability of currency stabilization, distinguishing between the stabilization of internal purchasing power (price level) and external exchange rates. He reviews theoretical approaches to price stabilization, including Walras's bimetallic system and Irving Fisher's 'compensated dollar' plan. The author argues that while exchange rate stabilization is technically easier through market intervention and gold reserves, long-term stability requires alignment with the internal price level and underlying economic productivity. [Prerequisites and Objectives of Stabilization Policy]: This section details the economic benefits of a constant money value, such as preserving the functions of money as a store of value and unit of account, which are essential for capital formation and saving. Kerschagl outlines three prerequisites for successful stabilization: production costs aligned with world prices, a balanced balance of payments, and a regularized money creation process free from political inflationism. He also discusses the concept of 'quantity stabilization' where the money supply remains fixed while value fluctuates with social product. [Inflation and the Balance of Payments]: Kerschagl analyzes the causal relationship between inflation and a passive balance of payments, using post-WWI Austria and Hungary as primary examples. He argues that both phenomena are symptoms of excessive consumption relative to production. While a passive balance of payments can trigger inflation if the state prints money to cover deficits, inflation itself worsens the balance of payments by increasing the nominal burden of foreign debt and encouraging the sale of national assets. He concludes that monetary stabilization is a prerequisite for correcting trade imbalances. [Foundations of Centralized Foreign Exchange Control]: The final section examines the theory and practice of centralized foreign exchange management (Devisenbewirtschaftung). Kerschagl describes it as a 'emergency measure' used when gold reserves are insufficient and inflation is high. He discusses the technical difficulties of enforcing such controls in peacetime compared to wartime, the necessity of coupling exchange controls with trade regulations, and the limitations of these measures if underlying inflationary pressures are not addressed. He views these controls as a potential bridge to full currency reconstruction rather than a permanent solution. [The Question of Gold in International Monetary Relations]: This section examines the role of gold in post-WWI international monetary relations. Kerschagl discusses various proposals for returning to a gold standard, including the 'gold note' and Keynes's suggestions for depreciation. He contrasts these with Cassel's more skeptical view of gold's immediate necessity. The author argues that while a return to gold requires a stable balance of payments and resolved state debts, it is technically feasible given the high concentration of gold in central banks. He advocates for a 'gold-core currency' (Goldkernwährung) rather than a pure metallic circulation, emphasizing gold's role as a stabilizer for international exchange rates and a check against state-driven inflation. [European Central Banks and Note Circulation: Statistical Analysis]: Kerschagl provides a detailed statistical overview of European central banks' note circulation and metallic reserves from 1914 to 1922. Through six comprehensive tables, he demonstrates that despite massive inflation in some states (like Germany), many others (Switzerland, Spain, Netherlands) actually improved their gold coverage ratios compared to pre-war levels. He categorizes European inflation into three groups based on the magnitude of currency expansion and notes that several Western and Scandinavian countries achieved significant deflationary successes by 1921. The data is intended to show that a return to gold is not as 'absurd' as some theorists suggest. [Concluding Remarks: The Value Problem and Future of Monetary Theory]: In the concluding chapter, Kerschagl reflects on the limitations of current monetary theory, particularly the unresolved 'problem of value.' He argues that while the Marginal Utility school (Vienna School) provided great insights, the ultimate essence of value remains a philosophical question that economics alone cannot solve. He also touches upon the debate between centralized and decentralized money creation, suggesting that the economy itself 'creates' money, while central banks merely manage it. He concludes by positioning monetary theory as the ultimate 'test' for any general economic system, as it deals with the distribution of value across the entire economy. [Bibliography]: A comprehensive bibliography of monetary and economic literature cited in the work, featuring key 19th and early 20th-century thinkers such as Bendixen, Cassel, Fisher, Knapp, Mises, and Wieser.