Theorie des Geldes und der Umlaufsmittel

[Title Page and Preface to the Second Edition]: The title page and preface to the 1924 second edition of Mises's seminal work on money. Mises reflects on the impact of the first edition, the rise of inflationism during and after World War I, and the failure of the 'historical school' of economics to understand monetary phenomena. He outlines revisions made to the text, including updates to his views on capital interest theory, the sufficiency of the Currency School for explaining crises, and the introduction of the distinction between statics and dynamics in monetary theory. [Preface to the First Edition]: The 1911 preface where Mises situates his work within the development of the Austrian School, specifically building on Menger and Wieser's subjective value theory. He critiques the existing banking literature for being overly descriptive or legalistic rather than economic. He acknowledges the influence of Böhm-Bawerk's interest theory and discusses the relationship between monetary theory and policy. [Table of Contents]: A detailed table of contents for the entire work, divided into three parts: The Nature of Money, On the Value of Money, and Fiduciary Media and their Relation to Money. It lists chapters covering the functions of money, measurement of value, state influence, the quantity theory, social consequences of value changes, and banking policy. [Part I, Chapter 1: The Function of Money]: Mises defines the economic conditions for money: division of labor and private property. He explains the evolution from direct to indirect exchange, noting that money emerges as the most marketable (saleable) good. He critiques the tendency to list multiple 'functions' of money, arguing that all—such as being a value carrier or payment medium—are secondary to its primary function as a medium of exchange. [Part I, Chapter 2: On the Measurement of Value]: Mises argues that subjective value cannot be measured, only ranked (ordinal utility). He critiques attempts by Fisher and Schumpeter to quantify utility. He explains that money is not a 'measure' of value but a price indicator that facilitates economic calculation by providing a common denominator for exchange ratios on the market. [Part I, Chapter 3: The Forms of Money]: Mises distinguishes between 'Money' (Sachgeld/Commodity Money) and 'Money Substitutes' (Geldsurrogate). He introduces a classification of money types: Sachgeld (commodity), Kreditgeld (credit), and Zeichengeld (token/fiat). He provides a rigorous critique of nominalism and Knapp's 'State Theory of Money,' arguing that the state can define legal tender for debts but cannot create the economic quality of money by decree. [Part I, Chapter 4: Money and the State]: Mises examines the state's role in the monetary system. While the state can influence the market as a large participant and through its power over coinage and legal tender, it is ultimately subject to market laws. He discusses how Gresham's Law thwarts state attempts to fix exchange ratios (bimetallism) and explains that successful monetary reforms require the state to act as a market participant (buying/selling metal) rather than just a legislator. [Part I, Chapter 5: Money in the Classification of Goods]: Mises debates whether money is a production good or a consumption good, concluding it is neither, but a third category: a medium of exchange. He critiques Roscher and Böhm-Bawerk for classifying money as social capital. He argues that while money is 'private capital' (a means of acquisition for the individual), it is not 'social capital' because an increase in the quantity of money does not increase societal wealth, unlike an increase in actual production goods. [Part I, Chapter 6: The Enemies of Money]: Mises analyzes socialist and utopian proposals to abolish money. He distinguishes between 'money' and 'labor certificates' in a planned economy, noting that the latter lack the independent value-formation of money. He also critiques 'money reformers' who blame money for social ills and those who advocate for 'elastic' credit systems (like Solvay), linking their errors to the Banking School's theories. [Part II, Chapter 1: The Nature of Monetary Value]: Mises begins the second part on the value of money. He defines the objective exchange value of money as its purchasing power. Unlike other goods, the subjective value of money is derived entirely from its objective exchange value. He discusses how the value of a commodity money (like gold) is determined by the interplay between its industrial utility and its monetary utility. [The Historical Foundation of the Objective Exchange Value of Money]: Mises applies the Menger-Böhm-Bawerk price law to money, arguing that money's subjective value is derived from its anticipated purchasing power. He introduces the 'regression theorem,' explaining that the current exchange value of money is linked to its value in the past, eventually tracing back to a point where the money-commodity had value solely for industrial or non-monetary use. This refutes theories that money arises from mere convention or fiction. [Continuity and Inertia in Price Formation]: Mises critiques Zwiedineck’s theory of price inertia, arguing that while prices often change slowly, this is due to the stability of underlying factors rather than a causal link between past and present prices for ordinary goods. However, he distinguishes money as a unique case where the historical component is a logical necessity for current valuation, as individuals require a known past exchange value to form subjective estimates of money's utility. [Critique of Existing Money Value Theories]: Mises reviews the history of monetary thought, critiquing production cost theories for failing to explain credit/token money and Davanzati’s quantity theory for its lack of empirical basis. He addresses the 'circularity' objection raised by Helfferich and Wicksell—that marginal utility cannot apply to money because its utility presupposes its exchange value—by demonstrating that the value being explained is today's value, while the value presupposed is yesterday's, thus resolving the logical loop through the regression theorem. [The Individual Basis of Monetary Demand]: Mises critiques Helfferich's attempt to view money's utility from a collective or national perspective. He asserts that all value judgments must originate from individual subjects. He defines the distinction between 'inner' objective exchange value (changes originating from the money side) and 'outer' objective exchange value (changes originating from the goods side), setting the stage for a detailed analysis of supply and demand for money. [The Quantity Theory and the Mechanism of Price Changes]: Mises evaluates the Quantity Theory, acknowledging its core insight that supply and demand affect money's value but critiquing its mechanical formulations. He refutes Laughlin's 'claim' theory of money by using the example of Austrian currency history, showing that money's value is not merely a reflection of future redemption chances but is rooted in its current function as a medium of exchange. He argues that the Quantity Theory must be grounded in subjective value theory to be scientifically valid. [The Non-Proportionality of Money Supply Changes]: Mises critiques the mechanical view that changes in money supply result in proportional changes in prices (e.g., doubling money doubles prices). He argues that because new money enters the economy at specific points, it changes the relative wealth and subjective valuations of individuals differently. This leads to non-proportional price shifts and permanent changes in the structure of demand. He specifically attacks Irving Fisher's mathematical equations for ignoring these dynamic, individual-level processes. [Hoarding, Velocity, and Demonetization]: Mises refutes the 'Banking School' idea (Fullarton) that hoards act as a buffer to stabilize money's value. He argues that 'hoarded' money is simply part of the individual's cash balance serving a specific demand for security. He also discusses the effects of decreasing monetary demand, citing the historical demonetization of silver as a primary example of how a reduction in a commodity's monetary function leads to a collapse in its objective exchange value. [Causes of Changes in the Objective Exchange Value of Money Rooted in Indirect Exchange]: Mises examines specific causes for changes in the objective exchange value of money arising from the nature of indirect exchange. He critiques Adolph Wagner's view that the superiority of the supply side leads to a constant tendency toward rising prices, arguing instead that free competition accelerates price adjustments. He also provides a detailed rebuttal of Friedrich von Wieser's theory that the transition from a natural economy to a money economy inherently lowers the value of money by incorporating new cost elements into monetary calculation. Mises argues that the expansion of exchange merely reshuffles subjective valuations and that price increases in one area (e.g., rural products) are offset by price decreases elsewhere (e.g., urban markets). [Excursus: The Size of the Monetary Unit and Lotz's Critique of Laughlin]: This excursus addresses two points: first, the influence of the size of the monetary unit on purchasing power, concluding that while it matters for retail 'rounding' and customary payments, it does not affect wholesale prices. Second, Mises defends his critique of Laughlin regarding the value of the Austrian silver guilder against Walter Lotz. He argues that Lotz's reliance on 'insider' reports from financiers is unscientific 'reporting' rather than economic theory, emphasizing that the problem of why a currency is valued at a specific level remains even if future redemption is expected. [Alleged Local Differences in the Objective Exchange Value of Money]: Mises argues against the popular notion that the purchasing power of money varies by location. He asserts that under free trade, the price of a good in one location equals its price elsewhere plus or minus transport costs. Apparent differences in the 'cost of living' are attributed to differences in the quality or nature of the goods available (e.g., urban vs. rural) or to subjective factors, rather than a fundamental difference in the value of money itself. He critiques Wieser's view that national wage levels and production costs create permanent gaps in the local value of money. [The Exchange Ratio Between Different Kinds of Money]: Mises explains that the exchange ratio between two different types of money (e.g., gold and silver) is determined by their respective purchasing power against other goods—a concept later known as purchasing power parity. He critiques the mercantilist 'balance of payments' theory, asserting that international money flows are the result, not the cause, of changes in monetary demand and supply. He maintains that money distributes itself among nations according to marginal utility, and that trade balances naturally equilibrate through price changes unless interfered with by the issuance of fiduciary media. [The Problem of Measuring the Objective Exchange Value of Money]: Mises analyzes the theoretical impossibility of accurately measuring changes in the value of money. Since there is no good with an immutable value, any index number system relies on arbitrary fictions. He critiques Wieser's proposed 'budget method' based on income types, arguing that changes in social stratification, consumption habits, and subjective valuations over time make long-term comparisons impossible. While index numbers may serve as crude tools for political or historical purposes, they lack scientific precision because price changes do not affect all goods simultaneously or uniformly. [Social Consequences of Changes in the Value of Money]: This chapter explores how changes in the internal objective exchange value of money redistribute wealth and income. Mises notes that legal systems and the public typically treat money as 'value-stable,' which leads to unintended consequences in long-term contracts. Inflation benefits debtors at the expense of creditors only if unforeseen. Furthermore, inflation falsifies economic calculation (accounting), leading to 'illusory profits' that result in capital consumption. He explains the 'export premium' as a form of selling out national capital. The core argument is that money's value changes step-by-step through the economy, creating winners (those who receive new money first) and losers (those who receive it last). [Monetary Policy: Inflationism and Restrictionism]: Mises critiques inflationism and restrictionism (deflationism) as tools of state policy. Inflationism is often used as a hidden form of taxation to fund unpopular government spending (war, social subsidies) because it masks capital consumption and misleads the public. Mises argues that inflation eventually leads to a 'crack-up boom' and the demonetization of the currency as the public flees to stable assets. Restrictionism is politically unpopular because it benefits creditors and hampers exports. He concludes that the ideal of a perfectly stable money is unattainable through state intervention, making a commodity standard (gold) preferable due to its independence from political whims. [The Monetary Policy of Statism]: Mises provides a scathing critique of 'Statism' (Etatismus) and G.F. Knapp's 'State Theory of Money.' He argues that the statist view—that money is a creature of the state and its value depends on state prestige—is catallactically void. He explains why price controls (Höchstpreise) inevitably fail and lead to socialism or economic collapse by destroying the market mechanism. He also refutes the statist 'balance of payments theory' of exchange rates and the demonization of speculators, asserting that only the limitation of the money supply can stabilize a currency. [Classification of Monetary Theories]: Mises classifies monetary theories into 'acatallactic' (those outside a theory of exchange, like Knapp's nominalism) and 'catallactic' (those integrated into exchange theory). He critiques Knapp's misuse of the term 'metallism' and his failure to understand classical and modern value theory. Mises also examines Schumpeter's attempt to build a catallactic 'claims theory' (Anweisungstheorie) of money, arguing it is fragmentary because it arbitrarily excludes various spheres of money circulation (hoards, capital markets) to maintain its focus on consumer income. [Banking Operations and Fiduciary Media]: Mises distinguishes between two types of banking: credit intermediation (lending existing funds) and the issuance of fiduciary media (Umlaufsmittel). He introduces the critical distinction between 'commodity credit' (Sachkredit), which involves a sacrifice by the lender, and 'circulation credit' (Zirkulationskredit), where the bank issues fiduciary media (notes or deposits) not covered by money. He argues that fiduciary media function as 'ready money' for the holder and that their issuance creates a specific profit for the bank without a corresponding sacrifice by a depositor, thereby expanding the total supply of money in the broader sense. [The Evolution of Fiduciary Media and Clearing Systems]: This chapter traces the development of fiduciary media from deposit banking and state coinage. Mises discusses how clearing systems (skontration) reduce the demand for money in the broader sense by offsetting claims. He analyzes the 'Gold Exchange Standard' (Goldkernwährung) as a system where fiduciary media (like the Indian Rupee) replace metallic circulation, following Ricardo's ideas. He also explores the theoretical possibility and practical political obstacles to an international clearing system or a 'World Bank' issuing international fiduciary media. [Fiduciary Media and the Demand for Money]: Mises critiques the Banking School's doctrine of 'elasticity,' which claims fiduciary media automatically adapt to the needs of trade without affecting prices. He argues that the demand for credit is not fixed but depends on the interest rate set by banks. By lowering the discount rate below the 'natural' rate of interest, banks can artificially expand the supply of fiduciary media. He explains that seasonal fluctuations in money demand (e.g., at quarter-ends) are managed by banks through circulation credit, which stabilizes the value of money but is not a 'natural' or 'automatic' process. [The Redemption of Fiduciary Media]: Mises examines the necessity and limits of redeeming fiduciary media in money. He argues that no bank can remain liquid during a general panic (run) because its liabilities are due immediately while its assets are not. The true purpose of a redemption fund (reserve) is to settle balances for customers dealing with non-clients (especially international payments). He discusses 'bank-like coverage' (short-term bills) as a practical but theoretically imperfect method of limiting issuance. He also notes the trend toward holding reserves in foreign exchange (Devisen), which saves costs but potentially undermines the gold standard if adopted globally. [Money, Fiduciary Media, and Interest: The Theory of the Trade Cycle]: In this pivotal chapter, Mises develops his theory of the trade cycle. He builds on Wicksell's distinction between the 'natural' rate of interest (determined by the supply of real capital) and the 'money' rate. When banks expand circulation credit, they push the money rate below the natural rate, making longer, more capital-intensive production processes appear profitable when they are not supported by real savings. This leads to an artificial boom characterized by rising prices for producer goods. Eventually, the scarcity of consumption goods (the subsistence fund) forces a reversal: prices for consumer goods rise, interest rates spike, and the 'malinvestments' of the boom are revealed as losses, resulting in a crisis. Mises concludes that while banks can postpone the collapse by further credit expansion, they cannot prevent it, and the longer the delay, the more severe the eventual crash. [Introduction to Circulation Credit Policy]: Mises introduces the historical tension in European and American monetary policy between the Currency School's desire for restrictions to prevent crises and the political drive for 'cheap money' and low interest rates. He outlines the structure of the chapter, which will examine these problems in the pre-war and post-war contexts. [Pre-War Circulation Credit Policy and the Peel Act]: Mises analyzes the influence of the Peel Act of 1844, noting a paradox where legislation followed Currency Theory despite academic criticism from the Banking School. He critiques the Currency School for failing to recognize that bank deposits (fiduciary media) function identically to banknotes, a gap that allowed credit expansion to shift from notes to deposits. He also discusses the technical superiority of notes in small transactions and the eventual necessity of central bank intervention during panics. [Discount Policy and International Capital Markets]: Mises clarifies the true purpose of discount policy: maintaining bank solvency by aligning domestic interest rates with the international natural rate of interest. He argues against the possibility of 'isolating' a national currency while participating in world trade, as capital mobility forces an international equalization of interest rates. He specifically critiques the Bank of France's 'gold premium policy' as a temporary and ultimately ineffective tool for avoiding discount rate hikes. [Techniques for Influencing Gold Movements]: This section details various 'small means' used by central banks to manipulate gold points, such as providing worn coins for export or offering interest-free loans for gold imports. Mises critiques the German effort to lower interest rates by promoting cashless payments (checks/giro), arguing that replacing gold with fiduciary media does not lower the natural interest rate and only risks solvency if not aligned with international conditions. [Post-War Monetary Problems and the Gold Exchange Standard]: Mises examines the post-WWI monetary landscape, characterized by the transition to the Gold Exchange Standard. He notes that the value of gold has become dependent on the policy of the U.S. Federal Reserve. He warns that the Gold Exchange Standard strips gold of its independence from political influence, potentially leading to a total abandonment of gold in favor of managed paper currencies. [The Case for Free Banking and Effective Gold Circulation]: Mises argues for a return to effective gold circulation (physical coins) as a barrier against government inflationism. He re-evaluates 'Free Banking,' concluding that while it cannot prevent war-time state intervention, it is superior to state-monopolized banking, which has failed catastrophically. He suggests that prohibiting small banknotes might be the only effective legal check on inflation. [Critique of Irving Fisher's Stabilized Dollar]: Mises provides a detailed critique of Irving Fisher's plan to stabilize the dollar's purchasing power using index numbers. He argues that the plan is scientifically flawed because index numbers are arbitrary and cannot account for the non-uniform way price changes propagate through the economy. Furthermore, he asserts that such a system remains subject to political manipulation and fails to solve the social consequences of monetary fluctuations. [Conclusion: The Future of Money and Fiduciary Media]: In the final section, Mises reflects on the predictions made in the first edition (1912) regarding the collapse of the monetary system due to inflation. He concludes that the only path to a stable currency is a return to the principles of the free market and the protection of private property, which are the necessary foundations for any sound monetary policy.