Richard Kerschagl, Wirtschaftssystem und Konvertibilität (1955)

Richard Kerschagl’s article examines currency convertibility as an institutional feature of economic systems, not an independently applicable monetary technique. Its governing proposition links the organization of money to the conditions under which production, distribution, and exchange occur:

Die enge Verknüpfung jedes Währungssystems mit dem jeweiligen Wirtschaftssystem ist eine jener wichtigen Erkenntnisse, die in den vergangenen Jahrzehnten zu wenig beachtet worden sind.

English translation: The close connection of every monetary system with the respective economic system is one of those important insights that have received too little attention in the past decades.

Kerschagl attributes contemporary central-banking difficulties partly to the persistence of nineteenth-century monetary doctrines under altered economic conditions. Metallic backing presupposed automatic adjustment comparable to that envisaged by liberal free trade. Even the Banking School’s discretionary discount policy depended on broadly market-determined credit conditions. Where substantial sectors receive credit on nonmarket terms, interest-rate policy cannot work as those doctrines anticipated.

The historical discussion reads monetary ideas through their underlying social projects. Romantic aspirations to restore an estate-based order were incompatible with a fully developed monetary economy:

Sie wollten wirtschaftlich ein Zurück zum Ständestaat; der Ständestaat aber war ein Staat der Bindungen und ein Staat ohne echte Geldwirtschaft.

English translation: Economically they wanted a return to the corporative state (Ständestaat); but the corporative state was a state of ties and a state without a genuine money economy.

This connection between social hierarchy and economic constraint supports Kerschagl’s broader insistence that monetary arrangements cannot be assessed separately from the order they serve. He likewise regards Marx’s metallism as inconsistent with socialism, which he associates more closely with administratively managed paper money:

Dem Sozialismus als solchem entspricht viel eher eine rein staatlich gelenkte Papierwährung, wie sie auch die meisten modernen Sozialisten, von Otto Bauer angefangen, verkündet haben.

English translation: Socialism as such corresponds far more to a purely state-directed paper currency, such as most modern socialists, beginning with Otto Bauer, have also proclaimed.

His criticism of Keynes extends this reasoning: subordinating monetary management and interest rates to full employment cannot, in his view, leave the capitalist system unchanged. The doctrinal survey therefore rests on a demanding conception of systemic coherence, treating intervention as a possible transformation of economic organization rather than merely a correction within it.

Kerschagl next contrasts internationally connected currencies with autarkic monetary systems. Metallic standards facilitate international comparison and conversion. International paper currencies instead require attachment to a metallic core currency or contractual exchange-rate arrangements. Such agreements cannot remain purely monetary, since divergent fiscal and monetary policies generate inflation and price disparities; their durability ultimately requires supranational oversight. Autarkic arrangements insulate domestic money through foreign-trade monopolies and restrictions on private capital movements. Money still buys goods, but its holders lose unrestricted choice over expenditure.

Rationing brings this restriction into the domestic sphere. By requiring both money and a purchasing entitlement, ration cards divide functions previously united in monetary purchasing power. Equal nominal incomes can consequently command unequal quantities of goods. Kerschagl examines responses to income exceeding rationed supplies: restricting incomes, taxing away the surplus, encouraging saving, or permitting expenditure in black markets and freely priced markets. Each creates difficulties, whether through weakened production incentives or diversion of resources from regulated distribution. The central consequence is money’s loss of generality: personalized entitlements and differentiated markets undermine nominal income as a common measure of command over resources.

The discussion of trade policy adds a pragmatic account of transition. Kerschagl distinguishes classical movement toward free trade from postwar liberalization that removes licensing and foreign-exchange allocation barriers while retaining tariffs. The latter nevertheless widens access to foreign currencies and goods. Clearing and quota agreements need not inherently obstruct convertibility; the European Payments Union illustrates the potential contribution of multilateral clearing. Their significance depends on operation and economic context, not technical form alone.

The conclusion treats convertibility as graduated and multidimensional, distinguishing conversion into gold, foreign exchange, and goods. Its importance varies with economic structure: limited under autarky, it may be indispensable to internationally integrated trading economies. Kerschagl thus combines criticism of intervention’s monetary consequences with flexibility about transitional institutions. Full convertibility requires compatible economic conditions, but partial arrangements can help create those conditions rather than simply represent failures to attain an abstract monetary ideal.