Richard Kerschagl, Zur neuesten anglosächsischen und deutschen Fachliteratur über Währungspolitik (1929)

Richard Kerschagl’s review article surveys postwar monetary-policy literature through a central controversy: whether stabilizing purchasing power is a desirable and practically attainable objective. Its structure moves from American proposals and accounts of Federal Reserve operations through competing British policy prescriptions to German histories of stabilization and theories of money creation. The comparison exposes a recurrent discrepancy between confidence in monetary management and uncertainty about its instruments. Kerschagl does not offer a comprehensive alternative programme; his critical emphasis falls on the institutional and theoretical assumptions that advocates of stabilization too readily leave unsettled.

Irving Fisher’s Illusion des Geldes supplies the strongest statement of stabilizationist ambition. Kerschagl observes that Hahn’s preface effectively treats the desirability of price stabilization as settled, leaving only the discovery of an adequate technique. Fisher promises greater capital formation, improved consumption, economic prosperity, and social justice, yet acknowledges that a definitive operational solution remains unavailable. His proposals range from regulating gold production and varying the gold content of certificates to sustaining industrial activity through public orders and using central-bank instruments. Kerschagl’s objection emerges from this imbalance between extensive promises and provisional mechanisms, especially Fisher’s suggestion that American practice has already solved much of the problem.

The accounts by R. Burgess and Goldenweiser qualify that suggestion. Kerschagl praises Burgess’s description of the American money market while emphasizing his skepticism about directing credit toward particular uses. The paper submitted for rediscount does not reliably establish what the borrowing bank will finance. Consequently, aggregate credit control cannot simply become selective encouragement of agriculture and restraint of stock-market lending. Discount-rate changes, moreover, operate importantly as signals rather than as mechanically effective commands. Goldenweiser similarly stresses the difficulty of identifying credit uses and the contingent importance of personal contact. His account of open-market operations supplies a particularly clear corrective to simple causal expectations:

Adding credit to the total in use or withdrawing credit from this total is like pouring water into or pumping it out of a lake; the net effect in either case is not the result of a single influence, but of a combination of all the influences at work.

This passage supports Kerschagl’s distinction between possessing policy instruments and controlling their eventual effects. Goldenweiser also makes discount policy dependent on banks’ need for Federal Reserve accommodation. American operational experience thus appears considerably more cautious than the stabilizationist appeal to its authority.

The British literature introduces disagreement about both the purpose and institutional form of monetary policy. Mac Kenna recommends the Federal Reserve model and argues that credit should contribute directly or indirectly to an increased flow of goods. Deposit expansion cannot therefore be equated indiscriminately with rising prices: the accompanying movement of production matters. His criticism of continuing government borrowing follows from this productive-credit criterion. Kerschagl nevertheless finds his praise of American arrangements insufficiently critical, while noting his admission that stabilization still presents substantial theoretical and practical questions.

Mason offers the contrasting ideal of an automatic gold standard:

The principal advantage of the gold standard as opposed to any form of managed currency consists in its automatic character. It functions independently of any government and there is nothing secret about its operation.

Here the desired safeguard is independence from discretionary management, accompanied by automatic monetary adjustment to production and external trade. Mason also gives stable interest rates a central place and shows little enthusiasm for discount policy. Kerschagl credits the consistency of his guiding principles without finding his attempted refutation of Mac Kenna wholly successful. Their opposition reveals that monetary writers disagree over the appropriate objective of stability as well as its instruments.

D. T. Jack’s account of European currency restoration broadens the discussion to international interdependence. American deflation and the resulting appreciation of gold could impede other countries’ return to gold. Stabilizing gold’s value consequently raises questions about production, reserves, and central-bank cooperation. Kerschagl reports these proposals but also notes how briefly Jack treats the problem of controlling gold production.

The German works shift attention toward the interpretation of an accomplished stabilization. Schacht’s account combines personal recollection with the primacy of sound currency as a basis for economic recovery. Kerschagl highlights its implication that modern monetary policy may impose extensive demands on economic activity, even acquiring features of planning. He recognizes Schacht’s struggle for national monetary autonomy while registering the political colouring of his treatment of Helfferich’s Rentenmark proposal. Elster’s theoretically organized history reverses the emphasis: the Rentenmark had already completed stabilization, making the subsequent Reichsbank reconstruction secondary. Kerschagl praises Elster’s objectivity but thinks he understates the international gold standard’s importance for the mark’s external exchange value.

Walter G. Behrens’s Das Geldschöpfungsproblem brings the review back to the feasibility of price stabilization. Distinguishing money from money capital and consumer goods from capital goods, Behrens challenges the assumption that money creation can be made to correspond systematically to consumer-goods production:

Diese Voraussetzung aber ist weder erfüllt noch erfüllbar unter der Herrschaft der kapitalistischen Wirtschaftsordnung.

English translation: This prerequisite, however, is neither fulfilled nor capable of being fulfilled under the capitalist economic order.

Kerschagl values the originality of this challenge. Behrens confines the theoretical possibility of stabilization to socialist planning, where money’s role in price formation would itself require clarification. The review thus ends by deepening its opening question: stabilization is not merely a technical task awaiting better instruments, but a project whose feasibility depends on how money, production, and economic organization are understood.