Alfred Amonn, Das Ziel der Währungspolitik

Alfred Amonn’s article, published in a volume nominally dated 1921 and apparently issued in 1922, distinguishes monetary policy’s ultimate objective from its instruments and intermediate targets. Across five sections, it develops an argument for purchasing-power stabilization and applies it to Austria’s inflationary crisis. Recovery requires stability in money’s relationship to goods, not restoration of a prestigious exchange parity.

Amonn begins with the prewar orientation of European monetary policy:

Die Bestrebungen und Maßnahmen der Währungspolitik der europäischen Staaten in den letzten Jahrzehnten vor dem Kriege waren vornehmlich auf Erhaltung eines bestimmten Wertverhältnisses zwischen der inländischen und den ausländischen Geldeinheiten gerichtet.

English translation: The endeavors and measures of the currency policy of the European states in the last decades before the war were directed chiefly at the maintenance of a definite value relation between the domestic and the foreign monetary units.

Gold reserves and convertibility supported this objective. Yet stable international parities alone cannot explain the preference for gold:

Jenes Ziel des festen intervalutarischen Kurses hätte nämlich ebenso gut erreicht werden können, wenn an Stelle der Goldwährung überall die Silberwährung eingeführt worden wäre.

English translation: That goal of a fixed inter-currency rate could, namely, have been attained just as well if the silver standard had been introduced everywhere in place of the gold standard.

Gold’s deeper justification lay in its comparatively stable relationship to goods. Purchasing-power stability, understood as preservation of the price level, is therefore theoretically prior to exchange-rate stability. Gold’s historical performance depended on a contingent correspondence between gold production and other output, not an intrinsically reliable mechanism.

Amonn’s account of monetary value extends beyond the quantity of currency:

Auf der Geldseite kommen nun folgende Faktoren als für dieses Wertverhältnis bestimmend in Betracht: Erstens die Geldmenge und ihre Umlaufgeschwindigkeit und zweitens der ungedeckte, das heißt der nicht auf Geldguthaben basierte Kredit.

English translation: On the money side the following factors now come into consideration as determining this value relation: first, the quantity of money and its velocity of circulation, and second, uncovered credit, that is, credit not based on money balances.

He groups these factors under nominal purchasing power, distinguishing them from real purchasing power, represented by goods produced and exchanged. Their relationship determines the purchasing power of the monetary unit. His qualified quantity theory recognizes uneven price movements and expenditure directed toward securities or foreign currencies rather than goods. Regulation of circulation and lending must consequently account for production.

The second section places stabilization within a hierarchy of ends: monetary stability supports undisturbed economic development, which serves economic welfare. Changes in purchasing power disrupt calculation, redistribute income, provoke industrial conflict, and destroy capital. Deflation can be particularly damaging through its effects on entrepreneurial capital. Stabilization is justified by its economic consequences, not by attachment to a particular monetary standard.

The third section retains fixed exchange rates as a subordinate objective. Exchange fluctuations disturb trade and investment, but no country can independently guarantee international stability. Stable domestic purchasing powers would in principle support exchange stability through purchasing-power parity; imperfect stabilization nevertheless leaves a role for international coordination. Amonn also allows temporary price increases where new credit finances production whose subsequent expansion absorbs the additional purchasing power.

The fourth section challenges Emanuel Hugo Vogel’s advocacy of krone appreciation. Amonn distinguishes monetary value’s level from its movement: a low but stable exchange rate need not impair money’s functions. Appreciation does not enlarge the real product available for consumption. Instead, it redistributes claims toward creditors and recipients of fixed incomes, potentially injuring workers and production. Foreign purchasing capacity depends ultimately on exportable goods, services, investment receipts, or foreign credit, not the currency’s numerical strength. Reversing depreciation cannot undo its historical consequences.

The final and longest section explains why Austria cannot simply freeze current prices or exchange rates. Domestic purchasing power exceeds the krone’s external valuation because restrictions obstruct arbitrage, currency markets respond to inflation faster than goods prices, and controlled prices suppress measured living costs. Speculative balances abroad add latent demand. Existing monetary relationships thus lack a sustainable equilibrium.

Fiscal reconstruction must precede stabilization. Appreciation cannot cure the deficit merely by reducing nominal import costs: it also raises the real burden of fixed state obligations. Monetary financing already transfers resources to the state through concealed taxation, particularly burdening vulnerable fixed-income groups. Amonn proposes balancing the budget without the printing press, allowing outstanding inflation to pass through prices, potentially absorbing latent purchasing power through a loan, and removing restrictions obstructing equilibrium. Policy should then preserve the resulting purchasing-power level.

The conclusion warns that widespread restoration of gold currencies could raise gold’s value and generate destabilizing deflation. International monetary organization offers an alternative whose prerequisites Amonn considers absent. His governing distinction remains between nominal appreciation and real recovery: stabilization requires fiscal and institutional preparation, not simply a stronger quoted currency.