Published as a journal article, this lecture delivered to the German Main Association of Industry in Teplitz-Schönau on 15 March 1924 argues for restoring an international gold standard after the monetary disorders of war and reconstruction. Mises’s case is comparative rather than utopian: gold does not guarantee constant purchasing power, but it offers a more dependable constraint on political manipulation than monetary systems governed by price indices. The lecture moves from inflation and deflation through the difficulties of measuring purchasing power to the international organization required to sustain gold.
The opening places monetary reconstruction within the breakdown of intellectual exchange between nations. Economic interdependence has survived the narrowing of national horizons; developments abroad therefore demand attention, especially in monetary affairs. Mises treats the English and American debates over gold as questions affecting continental Europe, not as experiments whose consequences can remain confined to their countries of origin.
His account of recent experience rejects both inflationary financing and its deflationary reversal. Inflation’s apparent prosperity conceals economic disintegration, while continued note expansion ultimately destroys the monetary system. Yet recognition of this danger does not establish that raising money’s value is beneficial. Falling prices and appreciating currencies bring their own disruptions. Mises includes Czechoslovakia alongside Britain, France, and the United States, presenting deflation as a widespread error rather than a peculiarity of his audience’s country. Restoration should not mean mechanically reversing depreciation.
The defense of gold begins by answering the charge that its monetary use is an antiquated attachment to a costly material. For Mises, the decisive consideration is institutional: dependence on mining conditions is preferable to dependence on political decisions.
Die liberale Wirtschaftspolitik, die die Goldwährung empfohlen, zum Siege geführt und verteidigt hat, hat in der Goldwährung vor allem den Schutz gegen Regierungseingriffe in die Gestaltung des Geldwertes gesucht.
English translation: The liberal economic policy that recommended the gold standard, brought it to victory, and defended it sought in the gold standard above all protection against government interventions in the determination of the value of money.
This criterion organizes his criticism of proposals to stabilize purchasing power through price indices. He grants that an index-based currency would satisfy his requirement if monetary value could be measured as objectively as length or area. His objection is that index construction cannot deliver that independence. Commodity selection, consumption weights, changing qualities, new products, and the choice of mathematical average introduce competing judgments into the supposed measuring instrument.
The Economist index supplies a concrete illustration: its heavy representation of textiles made the interruption of American cotton supplies during the Civil War appear as a dramatic general price movement. Mises distinguishes a change originating in particular commodities from one originating on the monetary side. Enlarging the basket does not resolve all difficulties, since finished goods change with fashion and technology, while consumption patterns alter the weights appropriate to comparison.
Und die Anwendung aller dieser Mittelwerte ist gleichermaßen berechtigt.
English translation: And the use of all these averages is equally justified.
The sentence follows his enumeration of arithmetic, geometric, and harmonic means, the mode, and the median. Its significance is political as well as methodological: if alternative calculations produce different results, selecting an index determines gains and losses among creditors, debtors, and social groups. Disagreement would consequently move from scholarly discussion into struggles over income and wealth. Mises acknowledges that gold itself redistributed purchasing power, citing its depreciation between 1896 and 1912. His contention is that these defects remain preferable to making contractual payments dependent on changing legislative and judicial judgments.
The lecture then qualifies its own defense by examining how reserve practices have weakened gold’s independence. Mises distinguishes currencies with substantial circulating gold from the Goldkernwährung, in which notes circulate domestically and redemption maintains the gold relationship. Central banks increasingly replace physical reserves with interest-bearing foreign claims. Individually economical, this practice cannot become universal: somewhere, actual monetary gold must still be held.
Es ist klar, daß diese Politik nicht die Politik aller Staaten der Welt sein kann.
English translation: It is clear that this policy cannot be the policy of all the states of the world.
This systemic limit frames his engagement with Keynes. Concentrating gold in the United States makes its value increasingly dependent on American policy. Mises accepts that the existing arrangement cannot persist unchanged, but disputes that abandoning gold would be an easy remedy. Divergence between dollars and gold would provoke disputes over international debts, impair foreign-income receipts, and burden exporters through currency appreciation. Similar problems would confront Britain. Exchange-rate instability would especially damage economies deeply integrated into international trade.
Irving Fisher’s proposal receives a separate criticism. Fisher would retain gold redemption but vary the gold quantity represented by the dollar according to a price index. Mises sees this as replacing, rather than merely supplementing, the existing standard. It inherits the index’s indeterminacy; he also mentions further objections without developing them within the lecture.
Mises’s alternative is international coordination to distribute responsibility for holding monetary gold. He envisages substantial physical reserves or denominations requiring gold circulation, backed by American financial leverage. His concluding proposal extends to punitive tariffs against countries refusing stabilization. The tension is significant: monetary independence from governments would be secured through forceful interstate action.
Auch die Goldwährung ist keine ideale Währung, sie ist aber unter den gegebenen Verhältnissen die bestmögliche Währung.
English translation: The gold standard, too, is not an ideal currency system, but under the given circumstances it is the best possible currency system.
The conclusion nonetheless accepts foreign-exchange-backed restoration as a necessary first stage, though not the final destination. The lecture’s enduring conceptual move is to connect disputes about monetary measurement with institutional discretion and international collective responsibility. Its gold standard is defended not as perfectly stable money, but as the preferable framework for limiting domestic monetary conflict and restoring dependable international exchange.
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