Richard Reisch, Stabilisierung oder Steigerung des Kronenwertes (1924)

Richard Reisch’s article presents discussion remarks defending Austrian currency stabilization against former bank governor Spitzmüller’s proposal to raise the krone’s value. Writing as president of the Austrian National Bank, Reisch links monetary theory to reserve management, post-inflationary reconstruction, and institutional credibility. His central contention is that appreciation offers no general remedy for inflation’s losses: it would unsettle prices, incomes, and contracts while endangering the reserves and confidence on which recovery depends. The argument moves from the bank’s balance sheets through the economic consequences of appreciation to the institutional commitments implicit in its establishment.

Reisch first rejects the allegation that official circles suppress monetary debate. He advocates sober criticism between premature optimism and demoralizing pessimism, then answers the charge that expanding note circulation proves renewed inflation. The National Bank’s statements of 15 and 23 January 1924 show reserves and circulation contracting together by approximately 380 billion crowns. For Reisch, this demonstrates restored monetary elasticity. Notes issued against liquid foreign exchange can be withdrawn when demand contracts; notes issued against unrealizable government treasury bills could not respond in the same way. The decisive distinction concerns the assets supporting an issue and its reversibility, not simply the quantity of notes.

Reserve accumulation consequently serves stabilization rather than contradicting it. The bank purchases foreign exchange when available so that it can meet subsequent withdrawals. Reisch describes its intermediary function precisely:

Wir schieben uns also gleichsam als Vermittler zwischen den auf dem Devisenmarkt zeitlich nicht zusammenfallenden Verkehrsakten des Angebotes und der Nachfrage ein und dienen so als Ausgleichsreservoir, wie wir ähnlich ja auch bei der Notenausgabe im Eskontgeschäfte wirken.

English translation: We thus interpose ourselves, as it were, as an intermediary between transactions of supply and demand that do not coincide in time on the foreign-exchange market, and thereby serve as a balancing reservoir, much as we also do when issuing notes through discount operations.

Maintaining a fixed purchase price encourages reserve inflows; reducing it might simply discourage sellers. Reisch therefore disputes the inference that abundant dollar purchases demonstrate a “natural” tendency toward appreciation. He also defends continued exchange controls. Recent outflows coincided with their relaxation, suggesting that Austria remained vulnerable to currency hoarding and capital flight. Legitimate economic demand should be satisfied, but unrestricted conversion was not yet a prudent objective.

The next stage addresses the relationship between domestic purchasing power and exchange value. Against Spitzmüller’s separation of the two, Reisch argues that they normally converge and that, over time, external value governs domestic adjustment through world-market parity. Domestic price increases need not establish monetary depreciation: world prices, tariffs, taxes, and the gradual rise of artificially depressed rents offer alternative explanations. Neither rising prices nor growing circulation alone proves inflationary banking policy.

Reisch’s strongest objection to appreciation is that its apparent benefits cannot be isolated from their counterparts. Cheaper imported coal might reduce railway expenses, but a more valuable krone would also put pressure on railway tariffs. Lower state expenditure would accompany reduced tax bases and demands for lower taxes. Exporters receiving unchanged foreign-currency earnings would obtain fewer Austrian crowns and face pressure to reduce wages. Appreciation thus initiates a chain of adjustments whose uneven timing produces involuntary gains, losses, and crises.

In Wirklichkeit handelt es sich den Wirtschaftenden eben nicht um das Geld, sondern um die für Geld erhältlichen wirtschaftlichen Güter — Sachgüter und Leistungen —, die von Wirtschaft zu Wirtschaft in möglichst gleichen Werten getauscht werden.

English translation: In reality, economic agents are concerned not with money itself, but with the economic goods obtainable for money—material goods and services—which are exchanged between economic units at values as nearly equal as possible.

This distinction between monetary measurement and real resources organizes the article’s policy conclusion. Changing the measuring unit does not create wealth; it redistributes burdens during adjustment. An economy weakened by war and inflation should not undergo such disruption without compelling necessity. Reisch turns Spitzmüller’s appeal to sound commercial calculation against appreciation itself:

Ich habe bisher immer geglaubt, daß jedes solide kaufmännische Kalkül vor allem ein wertstabiles Geld voraussetzt.

English translation: I have always believed that every sound commercial calculation presupposes, above all, money of stable value.

Stability should be secured through the closest practicable connection to gold. Reisch acknowledges that a somewhat higher stabilization rate might once have been attainable, but regards earlier stabilization and stronger reserves as more valuable than that uncertain gain.

His treatment of inflation’s victims makes the distinction especially clear. Inflation enabled the state to acquire resources subsequently consumed in war and postwar disorder; appreciation cannot restore those destroyed goods. How losses should be distributed among creditors, debtors, and the public remains a separate legislative question. Any tolerable appreciation would offer negligible restitution to holders of prewar monetary claims while exposing the wider economy to renewed disturbance.

Aber das Mitgefühl mit den Besitzern von Geldforderungen darf uns nicht zu Utopien verleiten.

English translation: But sympathy for the holders of monetary claims must not lead us into utopian schemes.

Finally, Reisch treats the National Bank’s constitution as an implicit commitment to stabilization, even before definitive currency legislation. Appreciation would devalue its foreign-exchange assets in crown terms, impairing its capital unless the state compensated it. The supposed fiscal benefit could therefore become a fiscal burden. The article closes by making confidence an economic condition of reconstruction. Its distinctive contribution is to defend stability simultaneously as a workable monetary mechanism, a protection against disruptive redistribution, and an obligation arising from the institutions created to restore public credit.