Alfred Amonn · 1943
Alfred Amonn’s article defends the quantity theory through conceptual clarification, monetary history, and an appended reply to W. Zollinger. Its central claim is conditional: monetary expansion can raise prices and must do so under specified circumstances, but explaining an actual inflation requires establishing those circumstances. Amonn distinguishes functional relationships, conditional causal propositions, and empirical judgments about particular monetary developments.
Beginning with Cantillon and Mill, Amonn reconstructs the movement from the stock of money to monetary circulation, including velocity and credit instruments. Fisher’s exchange equation constrains the relationships among its variables without independently establishing causal direction.
Die Gleichung besagt, dass das Produkt von zwei Grössen gleich ist dem Produkt von zwei anderen Grössen.
English translation: The equation states that the product of two magnitudes is equal to the product of two other magnitudes.
Causal explanation requires additional knowledge about which quantities can change independently. Amonn argues that money, velocity, and traded goods can do so, whereas the aggregate price level, under free price formation, responds to them. Increased production or hoarding may offset monetary expansion, but possible compensation is not necessary compensation.
Der Einwand gegen die «ceteris paribus»-Klausel kann nur besagen, dass eine Geldvermehrung nicht immer und notwendig zu einer Preissteigerung führen müsse, nicht aber, dass eine Vermehrung der Geldmenge nicht zu einer Preissteigerung führen könne.
English translation: The objection to the "ceteris paribus" clause can only mean that an increase of money need not always and necessarily lead to a rise in prices, but not that an increase in the quantity of money could not lead to a rise in prices.
This distinction between possibility and inevitability anchors the defense. Quantity theory need not predict inflation after every increase in money to identify a genuine mechanism of price increases.
The Currency–Banking controversy supplies an institutional test. Amonn explains the opposed positions partly through differing practices of note issuance: commercial discounting of large-denomination notes versus smaller notes financing government expenditure. He characterizes the Banking position as follows:
Nach diesen «läuft» die Banknote nicht «um» wie das «Bargeld», sondern kehrt automatisch nach kurzer Frist wieder an die Notenbank zurück.
English translation: According to these, the banknote does not "circulate" as "cash" does, but returns automatically to the bank of issue after a short interval.
Against the inference of automatic price neutrality, Amonn argues that commercial notes release other means of payment and that their aggregate circulation depends on the discount rate. Government consumption credit presents a sharper problem: purchased goods leave the market while the money becomes producers’ income, without automatically returning to the issuing bank. Subsequent taxation or borrowing may withdraw the money but cannot undo its earlier effects. Saving does not necessarily suspend the mechanism, since funds lent onward normally finance expenditure. Productive credit may eventually enlarge supply while first increasing demand for inputs and consumption goods.
Amonn’s reformulation also concerns what the theory measures. Heterogeneous goods cannot be treated as one physical aggregate, and the objects exchanged for money include services, land, and securities. This breadth preserves theoretical consistency but limits immediate conclusions about consumer prices: additional expenditure may raise asset prices instead. Keynes’s Vom Gelde consequently appears as a development of quantity theory. Distinctions among income, business, and savings deposits, and between industrial and financial circulation, explain why consumer prices can change without a change in total money or remain stable despite monetary expansion. Purchasing-power indices likewise reflect particular groups’ consumption interests. Amonn therefore emphasizes money actually offered, including credit-based purchasing means, in relation to goods offered.
Applied to Germany’s postwar inflation, this framework acknowledges scarcity and monetary feedback. Reduced supply could raise prices independently of monetary expansion, but Amonn argues that it cannot explain inflation’s eventual scale or its continuation during production’s recovery. State financing increased incomes and prices, encouraging further commercial credit. Such accommodation depended on monetary authorities’ decisions, not an unavoidable requirement of circulation.
The appendix sharpens the argument against Zollinger while stressing substantial agreement. Amonn distinguishes nominal from real purchasing power, individual from aggregate purchasing power, and possession of money from expenditure. Whether expansion is called a cause or a prerequisite matters less than identifying the spending mechanism and its conditions. A concluding thought experiment asks whether a fully employed economy could replace taxation with newly printed notes—or newly mined gold retained domestically—without raising prices. By excluding scarcity and crises of confidence, it isolates additional monetary demand. The article thus defends conditional monetary causation while emphasizing institutions, differentiated circulation, and the limits of explaining particular inflations.
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