Richard Strigl, “Währungspolitik in der Krise” — Summary

Richard Strigl’s essay is a sharply Austrian intervention into the monetary controversies of the early Depression. Its central thesis is that a special “crisis” monetary policy—cheap money, currency devaluation, or resistance to price deflation—is not a cure for crisis but a disguised form of inflation that falsifies calculation, misdirects capital, and delays the economy’s necessary adjustment. Strigl begins from two features that made monetary policy seem urgent. First, the interest rate did not follow the “normal” cycle: instead of remaining low through depression and preparing recovery, it fell rapidly after 1929 and then rose again, leaving the economy seemingly thrown back into an earlier phase.

Man könnte da von einer Paradoxie des Ablaufes der gegenwärtigen Krise sprechen

English translation: One might speak here of a paradox in the course of the present crisis

Second, although crises normally bring falling prices, some prices—especially cartel prices and wages—proved resistant. This rigidity encouraged proposals for devaluation or “redeflation,” associated by Strigl with Keynes, and for anti-deflationary stabilization, associated with Cassel. Strigl compresses these varied programs into one governing demand:

Zwei Forderungen haben wir gehört: Niedriger Zinsfuß, kein weiterer Preisabbau.

English translation: Two demands we have heard: a low interest rate, no further reduction of prices.

The essay’s decisive conceptual move is to deny that these are separate aims. A lower money rate is not merely a lower production cost; it is a monetary intervention. Strigl insists that the interest rate functions first as a regulator of the monetary system and only indirectly as a cost element. Thus the call for relief from high interest is equivalent to the call to prevent falling prices.

Billiges Geld bedeutet mehr Geld, bedeutet höhere Preise.

English translation: Cheap money means more money, means higher prices.

Against reformers who distinguish limited devaluation from inflation, Strigl redefines inflation by its cause rather than by its dramatic symptoms. Inflation is not only a collapse of currency value; it begins wherever policy stimulates production “from the money side.” He first notes familiar injuries: state credit is weakened, economic calculation is shaken, and a debt-loving mentality is rewarded precisely when crisis demands restriction and saving. Devaluation may also reduce real wages only temporarily, since unions or scarcity of skilled labor can restore nominal wages. Strigl even remarks that the wage issue is overemphasized compared with the more fundamental question of labor performance.

The deeper argument concerns relative prices and capital allocation. New means of payment do not enter the economy evenly. They reach particular groups first, raise some prices before others, and thereby induce production in lines that appear profitable only under monetary privilege.

Die Preise sind in der Verkehrswirtschaft die Lenker der Produktion

English translation: In the exchange economy, prices are the directors of production

This is Strigl’s Austrian core: monetary expansion changes the structure of production before it changes the general price level. The favored industries expand, not because real saving or consumer demand justifies them, but because new money temporarily alters their price relations. Their prosperity can last only as long as the monetary injection continues.

Die künstliche Produktionsanregung bedeutet Fehlleitung von Kapital.

English translation: Artificial stimulation of production means the misdirection of capital.

Strigl therefore treats inflation as capital destruction. He accepts the usual example of a merchant who sells at an apparent profit but cannot replace stock because money has depreciated. Yet he considers that only a surface explanation. The graver loss occurs when capital is committed to investments that would never have been undertaken under sound-money conditions. Such production is a “greenhouse plant”: it cannot become a permanent possession of the national economy once monetary forcing ends.

The concluding section applies the theory to the United States and England. In America, call money rates fell rapidly after the 1929 crisis; in England, authorities resisted higher rates, expanded fiduciary note possibilities, and finally abandoned gold parity. For Strigl, these cases show that policymakers mistook the desire for recovery for a need to expand money. The depression’s failure to lead toward renewed prosperity is therefore attributed not to insufficient monetary easing, but to easing that came too fast and to a price adjustment that was obstructed.

Jede künstliche Förderung der Wirtschaft von der Geldseite her ist bereits Inflation

English translation: Every artificial promotion of the economy from the monetary side is already inflation

The essay’s relevance lies in its compact opposition to interwar managed-money programs and price-level stabilization. Strigl does not merely defend gold orthodoxy; he builds a theory of crisis policy around interest, relative prices, and capital structure. His final claim is austere: monetary policy may burden or distort the crisis process, but it cannot abolish the real adjustments a crisis requires.

Es kann auch die Währungspolitik die Krise nicht beseitigen.

English translation: Monetary policy, too, cannot remove the crisis.