Emil Lederer, [Aussprache zu Kredit und Konjunktur]

Emil Lederer’s 1929 conference contribution examines the causal relationship between credit and the business cycle. Delivered as a brief intervention in an ongoing discussion, it responds principally to Schlesinger, while drawing on points made by Löwe and Altschul. The supplied text is a digital republication, identified in the accompanying research as a 2021 edition, with its precise release date unverified. Lederer’s central contention is that monetary and banking analysis cannot explain economic expansion by treating credit as an independently decisive cause. His argument proceeds through three questions: whether monetary expansion is sufficient for an upswing, whether it necessarily comes first, and whether it is always necessary.

Lederer acknowledges Schlesinger’s combination of practical banking knowledge and theoretical clarity. His objection concerns the explanatory perspective: analysis of money movements risks remaining at the economy’s outer surface while neglecting its internal productive relationships. Compressing economic activity into an index may describe changes in monetary value without explaining the process generating them. He therefore challenges the isolation of any single causal factor:

Und ich möchte die Frage aufwerfen und nach drei Richtungen hin prüfen, ob es nicht vollkommen unzulässig ist, irgendeinen Faktor, sei es auch den wichtigsten, als primäre und allein entscheidende Ursache hinzustellen, da wir ja in einem Interdependenzsystem stehen.

English translation: And I would like to raise the question and examine it in three directions: whether it is not entirely inadmissible to present any factor, even the most important, as the primary and solely decisive cause, since we are dealing with a system of interdependence.

The first question concerns sufficiency. An increased money supply does not by itself establish that an upswing will follow. Its consequences depend on the economy’s productive possibilities, particularly available reserves of means of production. Lederer includes new technical methods among these reserves in a theoretical sense: they too can enlarge productive possibilities. Credit growth alone consequently cannot reveal what must happen next. Monetary movements require interpretation through the material conditions under which production can expand.

The second question reverses the presumed causal direction. Credit expansion may respond to opportunities arising within economic activity rather than initiate them. Lederer illustrates this with a deliberately homely comparison:

In einer Zeit, als in Deutschland die Menschen wieder anfingen, korpulenter zu werden, mußten die Kleider etwas weiter gelassen werden. Es wäre vielleicht verfehlt zu sagen, daß das Auslassen der Kleider die Ursache für das Korpulenterwerden gewesen sei.

English translation: At a time when people in Germany began to grow stouter again, their clothes had to be let out a little. It would perhaps be mistaken to say that letting out the clothes was the cause of their growing stouter.

The analogy distinguishes an accommodating adjustment from an initiating cause. Yet Lederer does not make credit merely passive: economic development induces additional credit and money, which then provide a condition enabling further expansion. His account is reciprocal, linking productive opportunities and financial accommodation rather than simply replacing monetary causation with its opposite.

The third question concerns necessity. Referring to developments in America and to Altschul’s intervention, Lederer argues that falling costs can permit an increase in total production without additional credit. A universal compression of costs would, in principle, suffice. This leads to his crucial distinction between absolute and relative monetary quantities:

Also ist eine gleichbleibende Geldmenge steigende Geldmenge, wenn die Kosten sich allgemein komprimieren.

English translation: Thus an unchanged quantity of money is an increasing quantity of money when costs generally fall.

The apparently paradoxical formulation means that an unchanged nominal money supply can become larger relative to the costs it finances. Lederer accepts this relational understanding, but turns it against theories assigning money and credit unqualified causal primacy. In the cost-reduction case, such a theory would have to locate the supposedly initiating monetary force precisely where monetary quantities remain unchanged.

The contribution’s relevance lies in this compact separation of sufficiency, causal priority, and necessity. Lederer preserves the importance of credit while insisting that its effects depend on productive capacity, technical change, and costs. Monetary magnitudes explain economic movement only through their changing relations to the rest of the economy.