Mises’s German essay, also serving as the preface to the forthcoming English edition of Theorie des Geldes und der Umlaufsmittel, interprets the Depression through his theory of credit expansion and defense of monetary independence from political discretion. Moving from British stabilization and the American boom to devaluation, exchange controls, and international lending, it argues that monetary manipulation cannot replace capital formation or remedy the effects of interventionist policy.
The opening distinguishes changing policy circumstances from enduring economic relationships:
Die Fragen, mit denen sich die Währungs- und Bankpolitik beschäftigt, wechseln in ihrer äußeren Erscheinung von Monat zu Monat und von Jahr zu Jahr.
English translation: The questions with which monetary and banking policy is concerned change in their outward appearance from month to month and from year to year.
Economic analysis, Mises argues, must penetrate these appearances and trace consequences beyond immediate relief. He defines its practical responsibility accordingly:
Die Aufgabe der Wissenschaft besteht aber gerade darin, die entfernteren Wirkungen der Maßnahmen vorauszusagen und uns damit zu befähigen, Maßnahmen zu meiden, die ein Übel von heute dadurch zu heilen suchen, daß sie ein weit größeres Übel für morgen bereiten.
English translation: The task of science consists, however, precisely in predicting the remoter effects of measures and thereby enabling us to avoid measures which seek to cure an evil of today by preparing a far greater evil for tomorrow.
Britain’s restoration of sterling’s prewar gold parity exemplifies this problem. Prices and wages had adjusted to a lower gold value; restoring the old parity intensified downward pressure on prices and widened the discrepancy between prevailing wages and those attainable on an unrestricted labor market. Mises acknowledges arguments for restoration but distinguishes the costs of the chosen parity from the operation of gold currency itself. Failure to explain those costs damaged the institution’s reputation:
Daß man die Maßnahme ergriffen hat, ohne die Öffentlichkeit vorher über die mit ihr notwendig verbundenen Nachteile genügend zu unterrichten, hat die Gegnerschaft gegen die Goldwährung außerordentlich gestärkt.
English translation: That the measure was adopted without first sufficiently informing the public about the disadvantages necessarily bound up with it has extraordinarily strengthened the opposition to the gold standard.
His account of the American boom likewise contrasts apparent prosperity with its underlying conditions. Credit expansion sustained the upswing while preparing its eventual collapse, although the timing remained unpredictable. In his interpretation, governments then prolonged the Depression by obstructing adjustment through wage maintenance, business rescues, unemployment benefits, public works, and resistance to tighter credit. These measures prevented the realignment of costs, prices, production, and sales that he considered necessary for recovery.
The essay next identifies a change in the purpose of currency depreciation. Whereas earlier governments issued inconvertible notes to finance expenditure, recent devaluations sought to arrest falling wages and prices and improve exporters’ competitive position. Mises questions the privileged status assigned to the price level of 1926–1929. Price indexes cannot make its restoration politically neutral: alternative methods produce different results and distribute advantages differently. Both the measurement of purchasing power and its desired level consequently become objects of conflict.
The defense of gold is institutional, not a claim to monetary perfection. Dependence on gold production introduces uncertainty, but Mises regards this as less dangerous than dependence on political discretion. Departures from fixed parity turn exchange values into instruments of commercial rivalry without eliminating gold’s monetary significance. Changing currencies’ gold content also redistributes wealth from creditors to debtors.
Exchange controls extend this critique. Where governments maintain an official exchange value above the currency’s actual value, compulsory surrender of exporters’ foreign receipts at unfavorable rates restricts their supply to central banks. Mises interprets the resulting foreign-exchange shortage and associated “transfer difficulties” as consequences of policy, not independent barriers to debt payment. Their wider effect is to undermine international credit.
His remedy requires more than domestic stabilization. International lending needs a special law of obligations, guaranteed and effectively enforced by the League of Nations, protecting transactions against unilateral national interference. A gold-based framework would reinforce this legal security. He also challenges a simple opposition between creditor and debtor countries: repudiation may relieve current obligations while depriving capital-poor countries of foreign savings needed for development.
The conclusion places monetary reform within a broader critique of autarky, protectionism, militarism, and politically subsidized production at unfavorable locations. Stable currency cannot compensate for policies that weaken international specialization and peaceful exchange. Nor can renewed credit expansion substitute for capital: it would generate another artificial boom and subsequent crisis. Mises thus links monetary stability to enforceable obligations and the international division of labor, presenting gold as a restraint on political discretion within a larger argument about the limits of monetary remedies.
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