Richard Reisch’s rejoinder defends the Austrian National Bank’s stabilization policy against Dr. Spitzmüller’s demand for a stronger krone. Writing as the bank’s president, Reisch distinguishes an increase in currency circulation from excessive money creation and argues for maintaining the established dollar exchange rate. His broader claim is that monetary reconstruction requires a dependable external standard rather than deliberate appreciation. The argument moves from the mechanism of currency expansion to the distributional consequences of changing money’s value, then to the financial and constitutional grounds for retaining the existing parity.
Spitzmüller treats the increase in note circulation during 1923, associated with the bank’s purchases of foreign exchange, as evidence of continued inflation. Reisch challenges the premise that the earlier circulation already satisfied the economy’s requirements. Without an absolute measure of monetary need, an increase alone cannot establish excess. Comparisons of circulation per head, expressed in gold values, require qualifications for differences in commerce, credit, and national wealth. Nevertheless, Austria’s relatively modest circulation, scarce credit, and high interest rates suggest to him that expansion accommodated recovering monetary demand. He therefore separates the terminology of inflation from the substantive diagnosis:
Es ist also reine Geschmacksache, das Wort Inflation in diesem Zusammenhange zu gebrauchen oder nicht.
English translation: It is therefore purely a matter of taste whether or not to use the word inflation in this context.
The remark does not make monetary expansion irrelevant. It redirects attention from the quantity of notes considered in isolation to their relation to economic needs and exchange conditions. Reisch also regards the unchanged exchange rate as evidence against inflation in the technical sense. His central explanation concerns the reciprocal character of foreign-exchange purchases: the bank cannot indefinitely issue crowns against dollars unless market participants accept crowns at the corresponding valuation.
Demgegenüber muß ich erneut folgendes anführen: Die Österreichische Nationalbank kann Devisen zu dem gedachten Kurse nur insolange erwerben, als auch die Krone zu dem korrespondierenden Preise Abnehmer findet.
English translation: Against this I must again point out the following: the Austrian National Bank can acquire foreign exchange at the rate in question only as long as the crown, too, finds buyers at the corresponding price.
On this account, an excessive supply of crowns would produce a movement in the opposite direction, as holders exchanged them for dollars. Reisch sets exchange restrictions aside in explaining this mechanism. The established rate of 71,060 crowns per dollar is thus presented as analogous to the fixed purchase and sale prices of gold under a gold standard. Monetary elasticity means adjustment through transactions at a stable parity, not an unlimited power to expand circulation.
The deeper disagreement concerns which kind of stability policy should pursue. Spitzmüller would prioritize domestic purchasing power over the external exchange rate. Reisch connects this approach with Keynes’s A Tract on Monetary Reform and the proposal for a managed currency. He doubts that vulnerable Austria should undertake what he considers an untested experiment. Moreover, prices reflect conditions in production, labor, and international exchange that monetary appreciation cannot simply eliminate. A stronger crown would redistribute gains and losses while disrupting calculations formed under the existing valuation.
Die oberste Aufgabe des Geldes bildet, wie immer wiederholt werden muß, die möglichste Wertstabilität, jede Schwankung, ganz besonders aber jede absichtlich und bewußt herbeigeführte Schwankung, ist schädlich und gefährlich; auch der Staat ist nicht berechtigt, zur Entlastung seines Budgets (Kursverluste bei Valutaschulden) solche Veränderungen anzustreben.
English translation: The foremost task of money, as must repeatedly be emphasized, is the greatest possible stability of value; every fluctuation, but especially every deliberately and consciously induced fluctuation, is harmful and dangerous; nor is the state entitled to pursue such changes to relieve its budget (exchange losses on foreign-currency debts).
Stability here means adherence to an external gold-based standard, not an invariant domestic price level. Reisch acknowledges fluctuations in gold’s own value, particularly following the wartime redistribution of gold internationally. His defense is comparative: domestic purchasing power is difficult to measure, while attempts to regulate it invite discretionary interventions. Gold’s importance is consequently institutional as well as economic. A common external standard limits policies whose effects would favor some creditors, debtors, producers, or consumers over others.
Reisch also distinguishes the continuing benefit of stable money from the transitional consequences of choosing a particular parity. Stabilization necessarily fixes losses inherited from inflation and affects existing transactions. Yet retrospective claims that a stronger crown was desirable do not demonstrate that it was attainable. The immediate task was to end uncertainty at a defensible rate supported by adequate foreign-exchange reserves.
The bank’s financial reconstruction reinforces that position. Appreciation would reduce the crown value of foreign-exchange assets acquired at the established parity, threatening its capital and credibility. Shareholders’ commitments, guarantees, and foreign borrowing likewise constrain revaluation. Reisch treats these obligations as foundations of restored monetary confidence, making a change of parity more consequential than a technical adjustment.
The conclusion nevertheless acknowledges a constitutional deficiency: the new gold relation was established administratively rather than legislatively. Reisch welcomes statutory confirmation but opposes reopening the valuation already achieved.
Denn wirtschaftliche Tatsachen sind stärker als staatsrechtliche Erwägungen und der Wille des Gesetzgebers.
English translation: For economic facts are stronger than considerations of constitutional law and the will of the legislator.
The rejoinder thus combines a defense of monetary rules with an argument from accomplished stabilization. Its central tension is that gold parity should restrain discretionary intervention, although the particular parity requiring legal recognition emerged from administrative judgment under crisis conditions.
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