Richard Kerschagl, Die Geldprobleme von heute (1922)

Richard Kerschagl’s 1922 treatise diagnoses the postwar European currency crisis by refusing to isolate money from the economy that gives it function. The preface presents the book as an “organic-logical” inquiry into money value, inflation/deflation, and anti-inflation policy; it will separate causes from symptoms rather than catalogue remedies.

Das Buch soll nicht aufzählen, sondern aufzeigen, es kann auf die organischen Zusammenhänge zwischen Geldwesen und Wirtschaft hinweisen, es kann die Krankheitsursachen von den Symptomen trennen und funktionale Beziehungen sich bemühen klarzustellen.

English translation: The book aims not to enumerate but to demonstrate; it can point out the organic connections between the monetary system and the economy, it can separate the causes of the disease from its symptoms, and it can strive to clarify functional relationships.

Its thesis is the methodological sentence that closes the first chapter:

Das Verstehen der Währungsprobleme aus der Wirtschaft kann allein uns nicht nur den Weg zu erfolgreichem Weitergehen der theoretischen Forschung, sondern auch zur praktischen Lösung des Geld- und Währungsproblems zeigen!

English translation: Understanding currency problems from the standpoint of the economy can alone show us not only the path to successful further theoretical research, but also to the practical solution of the money and currency problem!

The structure follows that claim: inner and outer money value; causes of depreciation; inflation and deflation as economic problems; techniques of reducing note circulation; statistical evidence; English deflation attempts; cashless payment; and Brussels/Cassel’s program of international reconstruction.

Kerschagl’s first conceptual move is to distinguish domestic purchasing power from the foreign exchange value of money. The “inner” value is mediated by uneven prices, omitted labor payments, and the income position of each actor; the “outer” value is the exchange quotation abroad, influenced by speculation, world credit, damaged productive capacity, and indirect trade. Hence neither index numbers nor exchange rates can be read as simple mirrors of note quantity.

His causal argument begins with excessive notes but turns immediately to distribution. If all incomes rose proportionally, more money would merely rename values. Inflation becomes destructive because new money enters as unequal income through state credit, war expenditure, wages in favored branches, and profiteering. It changes relative purchasing power and converts scarcity into social conflict.

Nicht der Überfluß an Geld allein ist es, der die ernste Bedrohung unserer Volkswirtschaft darstellt.

English translation: It is not the surfeit of money alone that constitutes the serious threat to our national economy.

The state’s obligations, discounted or pledged at the note bank, transform fiscal need into banknotes. At the same time war produces “Entgüterung”: labor, raw material, and capital are withdrawn from productive use or destroyed. Loss of confidence then becomes a rush from money into goods, while foreign depreciation reflects the world’s estimate of a country’s ability to supply goods and labor, not paper volume alone.

Kerschagl’s theory of deflation mirrors this diagnosis. Note withdrawal can help only if budgetary disorder, income struggle, and goods scarcity are addressed. Genuine credit must rest on real surplus, not another paper fiction:

Nur die Kuh, welche wirklich Milch hat, kann welche geben.

English translation: Only the cow that actually has milk can give any.

The practical center is production and restraint:

Arbeiten und Sparen, das ist die einzige Möglichkeit, der wirtschaftlichen Depression und der Inflation wirksam entgegenzutreten.

English translation: To work and to save—that is the only way effectively to counter economic depression and inflation.

This principle frames his treatment of Rašín’s Czechoslovak note-stamping and forced loan, wealth levies, and depreciation. All are technical supplements whose success depends on timing, credit conditions, and the economy’s health. England provides the major test case: abrupt reductions of Currency-Notes produced money tightness and industrial danger, while later ceilings on fiduciary issue, budget consolidation, bank-rate policy, and gradualism better respected production and credit. Kerschagl admires English persistence but not mechanical deflation.

The statistical chapter attacks such mechanism directly. Tables of note circulation, exchange quotations, index numbers, gold cover, and Austrian data do not yield proportional laws between money quantity, prices, and exchange. Neutral gold inflows, state borrowing, speculation, seasonal supplies, and income shifts intervene. Statistics are valuable only when theory asks the right questions.

Man darf aber ja nicht versuchen, blindlings nach vermeintlichen „Ursachen“ und „Wirkungen“ zu greifen, wenn solche scheinbar „offen“ zutage treten.

English translation: One must not, however, attempt to grasp blindly at supposed "causes" and "effects" merely because they seem to lie "openly" on the surface.

Cashless payment is treated in the same restrained way. Giro and cheque systems can save labor, concentrate capital, reduce pressure on the note press, and rebuild trust, but they are not a monetary philosopher’s stone.

Der bargeldlose Zahlungsverkehr kann keine Wunder wirken; er kann nicht verdecken, daß ein Großteil unserer Geldausgabe rein auf dem Kreditbedürfnisse des Staates aufgebaut ist und leider zum größten Teile für unproduktive Zwecke Verwendung findet.

English translation: Cashless payment traffic can work no miracles; it cannot conceal the fact that a large part of our monetary issue is based purely on the credit needs of the state and, unfortunately, is for the most part put to unproductive uses.

The final discussion of the Brussels Financial Conference extends the argument internationally. Currency reconstruction requires reduced armaments, administrative economy, rational coal and raw-material allocation, determinate reparations, food credits, and cooperation rather than continued economic war. Kerschagl treats money as a social institution embedded in income, state credit, production, confidence, and world division of labor. Technical currency policy can relieve symptoms, but stable money requires rebuilding the economic organism.