Soll der Staat eine Politik der Geldknappheit betreiben?

This file is a short newspaper report from the Deutsches Volksblatt on a June 1922 lecture by Joseph A. Schumpeter, followed by the paper’s own editorial response. Its scope is therefore not a treatise but a compressed public intervention in Austria’s postwar monetary crisis: first Schumpeter’s argument against an artificial policy of “money scarcity,” then a counterargument defending selective credit restriction as a possible route to stabilization and restructuring.

Schumpeter begins by distinguishing kinds of monetary tightness. In normal capitalism, credit may become scarce when business activity outruns available lending funds; banks may then raise rates or restrict credit. But he insists that Austria’s 1922 situation is not that ordinary cyclical case, nor simply the deliberate deflation pursued in England or Czechoslovakia.

Aber es ist ebenso zweifellos, daß unsere heutige Situation damit nichts zu tun hat.

English translation: But it is equally beyond doubt that our present situation has nothing to do with this.

His central question is practical and political: should the state, before doing anything else, further throttle credit? Schumpeter’s answer is essentially no, because in Austria such a policy would not correct the true source of the crisis—state-driven inflation for consumption—but would instead bind productive activity while leaving public expenditure untouched.

Unsere Frage ist die, ob wir als erste und vorläufig einzige Maßregel den Kreditverkehr noch weiter drosseln sollen?

English translation: Our question is whether, as the first and for the time being sole measure, we should further throttle credit.

The lecture’s structure moves from diagnosis to instruments to expected effects. Schumpeter lists possible means: heavier taxes, forced loans, and restrictions on discounting, rediscounting, Lombard loans, securities, and foreign-currency collateral. Taxes may be necessary, but forced loans would signal the bankruptcy of bourgeois finance and be harder to limit than taxation. Most important, credit restriction without expenditure restraint would fall on production rather than on the fiscal cause of inflation.

Eine Beschränkung der vorhandenen Kreditmöglichkeiten ohne gleichzeitige Beschränkung der Staatsausgaben würde einfach darauf hinauslaufen, daß der produktiven Tätigkeit eine neue Fessel auferlegt wird.

English translation: A restriction of the available credit facilities without a simultaneous restriction of state expenditures would simply amount to placing a new shackle upon productive activity.

Schumpeter’s core conceptual move is to separate “bad” inflation for consumption from credit expansion tied to productive business. He rejects the hope that tightening credit would force currency hoarders to sell foreign exchange for crowns. Consumers may need crowns for spending, but producers can respond differently: instead of surrendering foreign assets, they may stop producing. Thus monetary scarcity could worsen the balance of payments and deepen the technological backwardness of the productive apparatus.

Aber der Produzent hat noch eine andere Alternative und diese liegt nicht allzuweit: er kann einfach aufhören zu produzieren.

English translation: But the producer has yet another alternative, and it does not lie far off: he can simply cease to produce.

For Schumpeter, liquidity is not indulgence but damage control. If the state cannot yet halt the real disease—consumptive inflation—then a liquid money market may at least slow capital destruction by allowing productive credit to continue. The striking paradox is that “money abundance” for production may be the less destructive form of inflation, because new means of payment are matched by new goods.

Im Augenblick brauchen Staat wie Volkswirtschaft einen flüssigen Geldmarkt als Hemmschuh auf der abschüssigen Bahn des Aufbrauchens unseres Kapitals.

English translation: At the present moment both the state and the national economy need a liquid money market as a brake on the downward slope of consuming our capital.

The newspaper’s editorial response disputes the one-sidedness of Schumpeter’s warning. It accepts that rate increases might harm production, but argues that the decisive issue is not only the quantity of credit but its use. Credit should be examined and granted for production, industry, legitimate trade, and commerce—not speculation.

Der Kernpunkt der Frage liegt nicht nur darin, wieviel Kredit gewährt wird, sondern vor allem darin, zu welchem Verwendungszwecke derselbe gegeben wird.

English translation: The heart of the question lies not only in how much credit is granted, but above all in the purpose for which it is given.

The editorial then advances a harsher restructuring logic. Restricting credit may automatically reduce speculative borrowing and force uneconomic firms—those producing above world parity—to close. Where Schumpeter sees this as a dangerous contraction of production, the editorial treats it as painful but necessary liquidation.

Allein es nützt nichts, eine Krise, die kommen muß, hinauszuschieben.

English translation: But there is no use in postponing a crisis that is bound to come.

The relevance of the text lies in this tension. Schumpeter offers an early, crisis-centered argument against undifferentiated deflation: monetary restriction is not neutral when fiscal inflation continues, and it may sacrifice productive capacity without curing the cause. The editorial, by contrast, anticipates a stabilization view in which credit scarcity disciplines speculation and accelerates structural adjustment. The file as a whole captures a live 1922 debate over whether Austria’s collapse required liquidity to preserve production or scarcity to force monetary and industrial correction.