Reinventing Money Thomas H. Greco Jr.

When I could visit Rittershausen in the eighties, I was allowed to copy some of his essays and manuscripts. Professor Rittershausen always tried to spread his libertarian ideas as wide as possible, in German and other languages. He asked me to go on publishing and translating his writings - even without payment. Many of his ideas are still very important for our time. Among these writings, there were several drafts, versions 1-5 from 1930 to 1952 of a manuscript "Geldtheorie" (Monetary Theory), together with notes and other materials relating to it.

There was a recopy of approximately 80 pages of the last version. I read it at that time and was very much impressed. But unfortunately my copy got lost in the mail. The last version can now only be found among manuscripts and papers spread on 20 meters of bookshelfes, not yet indexed, in the archives of Cologne University.

Thus, presently, nothing else could be done than trying to reconstruct this version. However, in the briefcase of the 5.version still e.g. pages 40-51 are missing; many handwritten notes are on bad photocopies and sometimes illegible. And often, it was uncertain where they should be placed. Prof. Rittershausen had changed the structure and page numbering many times. So my reconstruction efforts were not easy.

I add some earlier handwritten notes, often read from grey on grey photocopies. Unfortunately, I cannot guarantee that I always correctly deciphered his handwriting, that contained abbreviations in many cases.

Rittershausen had moved so many times that he had probably lost several writings, too.

After the recopy had been finished, Rittershausen and his assistants probably did not worry any longer to order the previous versions. They could even have thrown away some of it.

If I remember right, clearing as the basis of all means of payment and payment methods was emphasized in the recopy still more than in the version available here. Please also see the notes added in 1954, 1956 and 1972, appended in this reconstructed manuscript (presently only available in the German version). His opinion about monetary theory had kept changing over time.

John Zube

Definitions

Money

is set-off (clearing). It can appear in form of clearable claims or certifications of such claims.

The value standard of a currency

is the means of price expression; it is either imposable or accepted out of self-interest by the members of a payment community and it is highly estimated as a hoarding means.

Introduction

We see of late international efforts to give up an independent monetary theory as a subject of scientific research and to integrate it into the general economic theory. Obviously, this can only be done by treating what is merely a single teaching, e.g. the theory of the expansive and contractive effects, which applies only to the special case of fixed rate (legal tender or forced currency) money, as we will call it here. Thereby, all other historically and presently so important problems would be disregarded and would be withdrawn from research e.g. the peculiar agio-phenomena on the rare metal coin markets, the changing gold price development in free or half-free markets, the famine in India due to delivery strikes of Indian farmers, the Maria Theresia Thaler as an oriental coin of the present, the various disagio (discount) phenomena of most currencies of the present, the question of credit restrictions etc … Therefore, one cannot consent to this proposition.

Apart from that, it must be admitted that the world’s monetary theory finds itself in a lamentable condition. The restriction of money’s definition to physical objects, the non-consideration of book money, the so far persistent irresolvability of the problems money supply and circulation speed, just to mention some questions, has limited the theory’s achievements very much and has exposed it to severe criticism. While monetary theory had reached some kind of developmental climax at the time of Knapp, Knapp himself, nevertheless, through his confusion of terms, has become one of the originators of its decline. By treating private monetary phenomena like the private banknote under the title "State Theory" he overshadows his most valuable research results. The task consists in carefully preserving his valuable contributions.

Above all, it is necessary to prove that behind money, there hides the central phenomenon, which cannot be captured quantitatively, but merely resembles, to use a parable, the electrical current or the process of legal thinking. While the quantitative and physical arrangements of this clearing principle in today's historical money coins, money certificates, bank notes, etc. will have to be exactly observed, they will have to be regarded as physical only conditionally and indirectly.

The aspect of the value standard or the value unit, in whose neighborhood we find hoarding and accumulation, will have to keep completely separate the phenomena of transfer processes.

Apart of both these two, the rate phenomena of money and those of its issue and reflux will take up much space in our examinations.

Already 20 years ago, I published substantial parts of my theory. The years after 1933 made me stay mum and forced me to change over to price theory and the science of finance. However, in the meantime, I always had the impression that my cognitions, based on broad experiences in banking practice as accounting general and aided by intensive theoretical research, should not be withheld from the public, even if, once again, they are released too early, because these thoughts can, perhaps, become important later on.

In this I have much to thank for my friend Ulrich of Beckerath, Berlin, as well as Mr. Henry Meulen, London.

Rittershausen

Chapter 1: The functions of money

§ 1. The function of payment and clearing

One tends to assume that a certain uniform 'money supply' (quantity of money or money circulation) corresponds to the 'goods' supply (quantity of goods and services etc. that are ready for sale), and this conception is usually refined by the terms 'velocity of money' and, on the goods side, 'sales volume'. This concept of money supply (quantity of money or money circulation) has obviously been inferred from the historical-sociological form of money, i.e. coins and notes, whose quantity was measurable. However, historical-sociological statements can state nothing that is certain about the theory. Money and banking have taken a completely different development in the meantime.

We do not want to speak here about the fact, that through enterprise money and clearing, by their various kinds, offer a rich variety, so that the hypothesis of a uniform quantity of money amounts to the use of a too poorly characterized theoretical instrument. Here we will deal at first with the quantitative considerations.

There are new phenomena, which are not compatible with this conception. The phenomenon of cheque money (giro account money, current account money, non-cash payment systems) has to be dealt with, without throwing the significant truths of the older monetary theory overboard. The concept of account money (deposit money or deposit accounts), with which one wanted to express the newer developments, still includes a remnant of notions of materialness and of the participation of this kind of money in the hoarding process, since wealth is invested in these accounts. The quantitative money concept, however, can no longer cope with the daily practiced procedure of skontration (clearing, settlement, offsetting, balancing, are much more common terms; even in German this term is only used by professionals, like Rittershausen), in which mutual claims are simply cleared, i.e. cancelled or subtracted from each other, neither with the retrogressive transfer, that would not move a claim from the debtor to the creditor, but rather a debt, thus something negative, from the creditor to the debtor.

Generally, one can comprehend the total payment transactions of a country in such a way that one divides the entire population into two groups: the creditors and the debtors, according to the two-sidedness of all debt/credit obligations & entitlements. Since nearly everyone is both creditor and debtor as well, almost everyone will have to send a proxy into the other group. Claims and debts will thus be presented by each group to the other group, and both groups will present exactly the same amount to each other. Since only due claims are applicable, one can all at once have all due or soon due claims and debts expire by simple declaration according to § 387 of the German BGB (Buergerliches Gesetzbuch - civil law book)

on "Aufrechnung" (set-off, clearing, settlement). (1) The money supply would then be zero. Payment in pieces, metallic coins or paper notes would be completely displaced. "Then money would be abolished, because giro payments (account transfers, non-cash-payments) use no money!", thus G.F. Knapp continues (3), who raises the same question. He continues to say: "However one need not be worried. Indeed, money would be abolished, however, what remains would be payment. Our economical condition does not depend upon money (in the meaning of cash money) although we like to term it a monetary economy;

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(1) Civil law book (German Civil Law, "Buergerliches Gesetzbuch: BGB.):

Set-off (Clearing, Settlement)

§ 387

When two persons owe services of similar matter to each other, then each party can set off his claim against the claim of the other party, as soon as he can claim the service due to him and as soon as he can provide the service he is obliged to deliver.

§ 388

Set-off takes place via declaration towards the other party. The declaration is ineffective, if given with preconditions or a termination clause.

§ 389

Set-off has the effect that the claims, as far as they align with each other, become extinct by that point in time, at which they meet with each other as suitable for clearing ….

§ 391

Set-off is not excluded by the fact that there are different locations for service provision or delivery for these claims. ........

§ 395

Set-off against a claim of the Reich or a Federal State as well as against a claim of a municipality or another local federation is permissible only if the service has to be delivered to the same payment office with which the claim of the one who is clearing, has to settle.

The same regulations in foreign law books, (paragraphs in brackets):

Belgium (1289-1299), Bolivia (1297-1309), Brazil (1009-1024), Chile (1655-1664), China (334-342), Columbia (1714-1723), Costa Rica (8o6-8l3), France (1289-1299), Guatemala (2326-2336), Honduras (1473 1480), Italy (1285-1295), Japan (505-512), Lithuania, Latvia, Estonia (private law 3545-3564), Mexico (2185-2188), the Netherlands (146l-147l), Austria (1438-1442), Panama (108l-1088), Peru (2252-2263), Portugal (765-777), Rumania (1143 53), Russia (129 b), San Salvador (1525-1534), Switzerland (120-126), Spain (1195-1202), Uruguay (1497-1514), Venezuela (1353-1363). In England and in the USA there is only "set off" and "clearing".

it merely seems to depend on it, because we almost always do carry out our payments by the delivery of money. This is, however, merely a special case. What is essential is the obligation denominated in standard of value units (1): This obligation, however would not be likewise abolished with the abolition of physically expressed money but would be retained and handled in another way, a non-cash way, or value accounting and transfer and settlement or clearing way."(3)

Knapp thus rightly declares that as a result of the transition of the money supply towards zero (and the velocity of circulation towards infinite), there would not arise even the smallest disturbances in economic life. A part of the population, those with particularly rich, fast and massive development of claims and debts, namely those people, who frequent or utilize stock exchanges, have known already for generations similar arrangements, the so called "ultimo liquidation". Naturally, these settlement practices have no unfavorable influence on business. On the contrary, they were rather created because of their favorable impact on the economy. One day perhaps their exemplariness will be recognized and extended to the entire business economy, if they are not yet introduced there. There will be no disturbance of business, because the primary function of money is solution, i.e. the dissolution via mutual cancellation of due commitments. It is clearing that can accomplish this solution in the fastest and most effective way. In contrast to this stands the "control" or "restriction" of the alleged money circulation much favored today. These are not facilitating frequent dissolutions of debt commitments but make them more difficult. According to the sentence, stressed by me through underlining, the basic procedure of today's money and banking practice is the generation of obligations, created by business transactions and expressed in units of value, and their continuous elimination by clearing. This process is neither a question of a "quantity" of money, which emerges or which is created, or which might possibly just be needed, nor a question of a "quantity" of obligations, but it is a question of legal & juridical processes accompanying economic phenomena, which by themselves are not comprehensible in terms of quantities.

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(1) Underlining by the author.

(3) (S. 2); State Theory of Money, 1909 in German, translated much later and incompletely into English, par. 8a.

The economic processes, with which we are concerned here, are, on the one side, those, which make up the main content of the economy: production, services, trade, credit, work and consumption. To these must be added taxes and other enforced payments, gifts and other voluntary services, inheritances, procedures within families and enterprises and many special cases. The respective legal occurrences correspond to them:

The generation of obligations from sales contracts, disbursements of loan values and fulfillment of loan contracts, carrying out work contracts etc.

Here it is important that everywhere the quantitative measurability of some physical monetary matter is missing. Further, that the variety of the generation of economic processes does not align with the possibilities of the generation of legal processes. Therefore, it is quite permissible to sum up, statistically and quantitatively, the goods turnovers (goods sales) of a certain period, as it is done for instance for the value added tax statistics. It is, however, well known, that the resulting payment liabilities need not at all be equal with the total sum of the turnovers, because certain commercial stages can be skipped. Likewise, one can add the claims of one observation period that arise constantly for the most diverse economic reasons, but, here, too, one will reach a quite different sum than the one resulting from that statistics of turnover sales or from that which a quantity-theoretician would like. For example, the turnovers of the money market are not included in the turnovers of goods sales. The sum of claims is deceptive, too: It contains the enormous sum of money market claims. Furthermore, the partly immediate, partly subsequent set-off procedures are not subtracted, which already settle a part of the claims right in the beginning. E.g., the internal clearing accounting of industrial trusts, or those, which by clearing prematurely terminate the existence of claims in the sense of monetary quantities. A statistics of the sum of payments, including the sum of clearings, could be set up. However one of the "money supply" is not possible, i.e. of the physical money, including account assets, without consideration of their use to achieve payments or clearings. This sum would include many claims, which their owner would not at all want to settle, a lot of "inactive" money, which is no "money" at all, it thus would miss the point of the problem of the quantity of the money supply. All previous attempts to define the "active" quantity of money had to fail, because the

real clearing process is carried out in time zero, so that all "money", in the sense of claims, rests continuously, although with changing owners.

"Rising money supply" frequently means lack of debt-dissolving, thus insufficient payments, sinking money supply may mean a good liquidation of debt relationships, i.e. more payments. By adherence to the means of an outdated theory, it is not possible to escape the labyrinth of the scientifically inadmissible term 'money supply'.

With acknowledgement of the possibility of the money supply approaching zero, quantitative conceptions of money must be abandoned. The improved Quantity Theory becomes not refuted thereby but confirmed: the velocity of money becomes infinite. Thus quantitative discussions for purposes of bank practice and practical economic policy do not become false, but illusory, and the quantity formula becomes limited to the minimum border area, for which alone it seemed to supply results, namely for the world of the 18th or 19th century, in which one could, perhaps, still observe a relevant "money supply". Indeed, money supply is today still of importance, even in the context of the clearing theory, but only secondarily, only with reservations, e.g. with regard to note issues. Furthermore, the quantity of money in circulation, in present practice, is not yet = zero, but so many compensatory influences are effective so that any consideration of the quantity of money will provide false results.

If the basic process, which monetary theory has to discuss, is the dissolution of emerged or, if you will, "created" claims and obligations, denominated in units of value, then the prevailing theory has still to be discussed, which sees the "creation" of money as a privilege of the issuing banks on the one hand, and on the other as kind of an impermissible passion of the business banks. Arbitrarily and without a word of justification, one disregards the whole abundance of the economic and social life, from which arise every hour and every minute, all kinds of monetary claims and obligations just like nature, for instance, lets vegetation grow. One ignores that the banks only take over the claims and obligations that already had originated before in the business world and in private circles, just like a wholesaler would buy up the production of the goods of large and small firms. The banks are discounting bills, which, after sales of the respective commodities, were drawn before by the supplier on the buyer. They merely grant bank overdraft credit, thus buy receivables, which originated before through previous goods sales of

an industrial company. They merely execute transfers, or they do take over obligations, which already existed, and which, for off-setting or debiting, they confront with the obligations of their other customers. That wrong theory of money creation through central banks with which we will concern ourselves later, is being developed more and more to a theory of an exclusive "creation" of money by the central banks. For the "money supply", one argues, could by its increase bring about inflation, that is a destruction of the economy. In order to eliminate this danger, one single institution exclusively, they say, would need to control the generation of the "money supply" (to control the quantity of money or money circulation), because, according to these teachings, it would be as dangerous as dynamite. Consequently, private banks, they say, should be denied any option to "create" money. This is called the demand for the nationalization of deposit money. This, by the way, is a demand, which was first raised in the communist manifesto of Karl Marx (1848) as demand No. 5. This is realized only in today's Russia by extremely strict penalty clauses not only against the banks, but against the entire population. Fortunately, it was not yet noticed that the main part of those monetary claims does neither arise at the central banks nor at business banks, but in private enterprises and families. The prohibition of private generation of monetary claims or the so called centralization of money "creation" in one note-issuing bank would of course mean the end of any liberal economic constitution, an issue we will address later.

Money, however, is not dealing with the creation of claims, but with a kind of opposite process, i.e. exclusively with the resolution of previously arisen claims denominated in value standard terms. Regularly, this resolution can be achieved through the claim's fulfillment by way of payment or clearing. Besides these two options one has also to take into consideration their finalization through non-payment, bankruptcy, composition, the statute of limitations, devaluation, expropriation and other forms of losses. Monetary economy deals exclusively with the regular fulfillment through payment or clearing.

This is split into different methods: Transfer, commercial bill payment, cheque payment, skontration (clearing), and retrogressive transfer (e.g. of an IOU). Transfers can be and mostly are included into the accounting practice of skontration (clearing). In particular, the process of skontration consists predominantly of the systematic

matching of opposite and due claims and their simultaneous annihilation on both sides, thus offset (or clearing or settlement or balancing). In principle, this process is independent of the size of the existing assets of the participants. It can no longer be understood as the movement of some "quantity", of some money circulation or of some account credit.

All "payment processes", from gold coin circulation, to banknotes, on up to bank deposits (non-cash payment using "checkbook money"), all these are merely primitive substitutes for clearing. All theories that do not accept clearing or "offset" as the primary feature in payment transactions do inevitably lead one to accept Gesell's idea of intentionally depreciated or demurrage money. Since increases in the quantity of money are precluded, advocates of these theories must seek to increase its velocity of circulation.

Clearing is the all embracing fundamental principle of the first money function, which we consider here, and which is generally called the "payment function". (1) This term "payment" should actually remain; although it contains a logical unevenness, which we must point out:

In the term "payment" one has to criticize that: in the history of law, "payment", just like the respective synonyms of other highly developed languages, means counting-up physical money pieces, coins or notes. In German: payment (Zahlung) = Zählung = counting, lat. enumeratio. Clearing, however, in German law, is treated in a completely different chapter of the civil law book. It was further developed there particularly with help of the development of contract law, since there was freedom of contract, as well as by its cheque law. The clearing houses that were established in the previous Reichsbank, respectively in today's federal states' central banks, in England in the Bank of England and correspondingly in almost all countries of the world, are based on private agreements of the participating banks. Usually they are private associations, which give themselves statutes and which regulate clearing according to their statutes' provisions. In the English language the process is called clearing, still more however "set off". Neither considerations from the history of law, nor an investigation of the prevailing language usage can come to the conclusion that such processes of clearing are generally regarded as "payments". Thus we consider it more correct to speak of a clearing function of money instead of a payment function, as soon as we transform the notion of money from physical forms into non-physical forms.

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(1) Further money functions are the accumulation (hoarding) function and the price formation function.

Thus we see clearing to be the higher concept. Even the much-used term abstractness meets logical doubts, since in logic, by an abstract term one does not understand a term without any concrete characteristics, but a term with which these characteristics are thought to be latently combined. Clearing is a mathematically-organizational process; one could also say a legal and organizational process.

In the last decades, the concept of money went through a crucial transformation; it has gone into a crisis, from which the new concept has not yet come out quite clearly. The world's financial crisis is interconnected with a crisis of the money concept and with a crisis of monetary theory.

Since the times of classical Greece money was thought to be physical coins. Around the turn of the century, Knapp and other researchers drew the distinction between valutary money (German: valutarisch) (i.e. => legal tender standard money) and accessory money: Valutary (forced and exclusive or monopolized, unified and centralized) money is not only means of payment, but also represents the standard unit.

In contrast to that, accessory (optional, competitive, private, refusable, discountable) money is only means of payment, but it is never the value standard unit. Therefore valutary money has to be always accepted at its nominal value and is not subject to a market rate, while accessory money is subject to a market rate.

Valutary money, according to Knapp, must be accepted at its nominal value, i.e., it is not subject to free market rating, while accessory money is subject to it.

The valutary money must be accepted in general circulation at its nominal value, it is subject to legalized compulsory acceptance, while accessory money does not have to be accepted by anybody, except by its issuer, when the debtor has to make payments to him.

Since Knapp includes paper money equipped with compulsory acceptance (legal tender) in the term valutary money, here, for the first time, paper money becomes money in its main sense. Therefore accessory paper money gets the name "secondary money".

By the title of his book "State Theory Of Money", which is obviously a wrong title, since gas works or buildings can be nationalized, however a theory cannot, George Friedrich Knapp has caused far reaching errors concerning the omnipotence of the state in money affairs among all those people, who did not read the further remarks of his book. The fact that Knapp, in reality, was rather a representative of a non-statist monetary theory follows from the probably most important chapter of his work, § 8 b, dealing with giro payments. After he justified the extension of the term money to valutary paper money, he explains in respect of giro payment:

"The term payment, until now quite bound to delivery of pieces of money, must thus be extended again, if we want to do justice to giro payment."

He then comes to speak about the details of the clearing bank privately established by Hamburg merchants in 1619 and states that the merchants participating in this bank were members of a private payment community, after, in his initial remarks, he had only mentioned the state in the context of a payment community. Now he goes even beyond that. He declares that the state can create a currency, not because it is the state, thus having the sovereignty, but instead, because it is a payment community:

"The fact that in the Hamburg clearing bank a standard unit of value, the Mark Banco, has been independently created, without connection to the unit of value of any national money, is a particularly instructive aspect: Any payment community can create a unit of value.

The state can do this, because it is a payment community, not because it is the state.

The state is just the most common, and oldest payment community, but it is not the only one."

And then he gets to the point that will particularly interest us here: the concept of payment:

"Seen from the view of giro transactions (clearing), we comprehend that payment exists without transfer of material pieces. Thus we see ourselves forced to define the concept of payment in a different way than it was so far. If there is to be a single and uniform understanding of the term of "payment", one which encompasses payment in pieces as well as giro payment (clearing, offset, balancing), then transfer of material things must not be a substantial requirement of payment. The essential characteristic of all payment can thus be found only in giro payments, it must, however, also be provable as hidden even in specie payments. We want to try to define the general concept of payment in the following way:"

He continues:

"Payment is a process, which, in every case, presupposes a community; whether this community is the state, or the clientele of a bank or any payment network, is a subordinated question; the payment community could even extend beyond the state, e.g. in auto-metallism (the exclusively circulating currency in form of gold or silver coins - the author), a payment community consisting of all those (citizens of the different nations - the author), who commit themselves to use silver, ore or gold as their exchange medium.

However, as soon as autometallism is overcome, the payment community must have a regiminal (administrative - the author) guidance: there must be powers, which legally and juridically regulate the kinds and processes of payment. Each of the payment communities then has a central point, from which it is led: In the case of state money it is government authority, in the case of private payments it is, for example, a bank. Conceding all this, a view of a more comprehensive definition of payment will result: It is not physical delivery of pieces that is required; a juridical transfer of counter-claims suffices, one denominated in value units, and these are counter-claims which are directed to the particular central office. Such transfers can come about by physical delivery of chartal pieces (charta = card = certificate or note - the author), thus of money; however they do not have to, since in giro payments there is no physical delivery of pieces; the transfer takes place by bookkeeping instead ... "

"... at the same time, thereby the term means of payment is extended; pensatory (pensare, lat., to weigh) (paying in precious metals by weight - the author) and chartal (paper - the author) means of payment are already known to us. But now and in addition enters, - if this expression is permitted - the giro or clearing (offset, balancing) means of payment. All three kinds allow the transfer of claims directed to a central office, but only the first two carry out this transfer through physical delivery of objects. The third kind does not use physical transfer any more, but only bookkeeping-transfer."

Knapp now gets into difficulties with valutary coins, e.g. gold coins, and valutary paper money (both called by him: definitive money). Holders of definitive money, just like owners of coined money, do not have claims. Thus he expressed his Theory Of The Contingent Claim:

"However, the term claim can be extended, and we have already done that tacitly. There are also claims on the central office, which emerge only eventually; merely once certain conditions are fulfilled; i.e. only when a debt is due to the central office. For the holder, any definitive means of payment constitutes an eventually emerging claim on the central office. He has, at the moment, when the central office raises a claim against him - neither before nor afterwards - a counter claim which he shows by the handing over of the definitive means of payment and uses for repayment.

The concept of a mere eventual counterclaim is missing in our jurisprudence, while the term absolute counterclaim is completely common.

Every lawyer knows that claims are effaceable through compensation; here he thinks of absolute counter-claims, that the debtor uses for clearing (set-off, balancing, settlement), instead of resorting to physical means of payment."

By means of the juridical hypothesis of the contingent claim Knapp can understand gold coins and valutary paper money as mere claims, too, and can include them in his comprehensive theory of clearing, although his attention was not called to the set-off regulations in the world's civil law books.

Now he is able to define the term 'means of payment' (in our comprehensive sense of clearing):

"... in a payment community any transferable disposition of value units is means of payment when the holder can, by transfer to the central office, establish an at least conditional counter-claim to this location."

One should consider: Knapp's actual definition - not of money, but of means of payment - is clearing, entirely and solely. The somewhat striking restriction at the end with the words "an at least conditional" is neither due to paper money, nor to giro money, but, exclusively, to the case of metal coins, which is a case seemingly beyond the general rule, namely that of valutary metallic money. (1) By the theory of contingent claims, this is inserted in the clearing-organisation, which remains solely instead of 'money supply'.

Knapp continues:

"Therefore any material content has disappeared from the term means of payment. Likewise, the concept of a mobile thing is no longer included in it, either, both in the sense of essentiality, so that giro or clearing accounts as well fall among the possible means of payment."

In the sense of his previous remarks, Knapp should have to add that "giro money", as far or because it cannot be generally imposed, i.e., it is not valutary but has only accessory (optional) character, and thus must not at all be called money but merely means of payment.

But we would like to go further on this point: Since Knapp, as a jurist and a scientific economist, has made clearing the central phenomenon in the sphere of money, and since modern language usage designates giro money and the other forms of clearing as money, then only the following two ways

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(1) … and the valutary paper money.

remain: either to confine the money concept to the valutary money, whether it consists of metal or paper, and to give to accessory paper money, token coins and giro money the disqualifying designation "means of payment". Or, alternatively, one has to include all clearing not only in the concept of means of payment, but also in the concept of money. In reality this choice does not exist at all, because in the legal and juridical systems of all developed countries (2) clearing (set-off) is not only defined as a possible form for the liquidation of obligations, but as such a form, which everyone has to accept up to the size of his debts. It does not depend on whether compulsory acceptance at face value (legal tender) is declared in coinage or banking law, or in any other law. In any case, compulsory acceptance exists. Thus clearing (set-off, balancing) is a means of payment, which indeed is not absolutely valutary (imposable upon the creditor), but whose delimitation is certainly only individual and in terms of size. Through this limitation purely by size, as well as through the presence of bank accounts for practically every payee, set-off can normally be regarded as a feature, which moves the means of clearing into such proximity to valutary money, that their difference becomes insignificant. Thus the largest part of clearing would be equipped with a quasi valutary character. Facing this fact, it appears today no longer justifiable to confine the concept of money to money pieces and bank notes of valutary character, when the Giro payments in turnovers, perhaps 10 to 20 times larger in volume, by a substitute mechanism are likewise approximately valutary. Thus we come to the conclusion that, going beyond Knapp, the concept of money should include coined money, paper money of all kinds and the clearing money or the clearing organization respectively. Certainly, in this case, the other money functions: pricing function and the hoarding function, remain still open questions for us, and it will turn out, that any money, which has only payment functions, but not the two other functions, would only be imperfect, in particular, it would not be currency (standard money, local currency used as value standard as well as predominant means of payment.).

We want to state in advance, that the difference between means of payment and value standard will remain.

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(2) See footnote 1) on page 2.

Seen from this position, the much quoted remark by Knapp, does make sense, namely, that money would be a creation of the legal order. A state-worshipping view wanted to interpret Knapp in such a way as if he would, thereby, have left to the state, that regulates the legal order, unlimited discretion and power of money, e.g. every possible debasement of money and wronging and harming of creditors. Knapp, however, very urgently declares, at the end of that paragraph 8 a, that he had to add something now: money would be a creation of the legal order in communities, whether they are governmental ones or private ones. (1)

In short, this sentence reads: payments are a regiminal (administrative) phenomenon. Before, he had explained that he understood a regiminal phenomenon could also be the administration of a private business enterprise; thus in no way would he understand a regiminal phenomenon to be what that view had wrongly ascribed to him, as if he would have spoken only of a governmental phenomenon. By this expression he means what we would call today an organizational phenomenon; the organization e.g. of clearing-houses (balancing and set-off centres), by which certain claims are confronted with each other in pairs, so that they can be offset. This method does not move any quantity of physical money ('money supply') but it is an essential feature of the process of payments. This, however, presupposes the unit of value, more precisely the currency standard. He repeats that the value standard unit arises only in communities, and that it is the precondition for payment transactions. A payment order would be possible, in which not a single piece of metal- or paper money would be moved, namely: clearing.

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(1) Spaced by the author

§ 2. The function of price expression

In the process of payment and clearing transactions the concept of value standard is thus presumed. We have to deal with it now.

Usually one says that, by the introduction of money, the barter exchange was split into two acts: the sale of commodity A for money, and the use of the amount of money received to buy commodity B. Thus, instead of exchanging commodity A for commodity B, two purchase contracts are concluded. Both are settled at a certain price. In what, however, would prices be formed? Obviously in certain value units. One can also say prices are expressed by a certain number of value standard units. Thus prices exist previous to payment, because the fulfillment of the pecuniary claims specified in the purchase contracts is different from the purchase contracts (illegible: and from the self-debts?). But all purchase contracts must contain a price. And to determine prices, one needs value units. Such value units are always value standard standard units.

One recognizes the value standard of the currency of a country by the name of the value unit, in which prices in the markets of a country are usually formed.

It remains to be clarified whether, e.g. in a gold standard country, the price of a commodity, say, of ten units, which the parties agreed upon, is to be understood to mean that they have agreed upon a banknote of ten value units or upon a piece of gold of ten value units. The solution could be this: in case of a gold standard, always the effective gold units are meant. That follows not only from the fact that, afterwards, the money certificate might turn out to be counterfeit, but also from the possibility that this accessory money note may have a disagio (discount) that reduces its value to less than 100 % in gold units. In this case, in a gold standard currency, the seller has obviously the right to demand an additional payment worth the discount rate difference. Under a non-gold standard currency, i.e. a paper money with a paper value standard, in wich such a note is legal tender (forced currency, with compulsory acceptance and compulsory value) then the seller has to be satisfied with the handed-over paper money, after he had agreed upon the price of 10 units (in the paper money's paper value units) even if the rate of this paper money is perhaps only 50 %, reckoned in gold weight units, of its nominal value, in foreign money markets.

Thus, after the conclusion of the two purchase contracts

firstly 2 claims exist, which are expressed in exchange media units. Money in the sense of a currency's value standard unit had already been there before, for, without it, one could not have expressed prices in the sales contracts. But money, in the sense of means of payments or set-off, has not yet emerged, in our example. As yet one has not at all paid or cleared the debts involved.

Thus, it is somewhat careless to say that, by the split of the exchange process into two acts, a monetary economy would have come to life. Not money, in the sense of means of payments, was required, so far, but, apart from the value standard unit, at first only claims are sufficient, so that one could speak of a credit economy.

Most claims, which - as described in the first paragraph - arise daily and hourly in various forms in economic life, are such claims from proceeds. We do not talk about unit prices, but the price per unit multiplied by the number of pieces, meters, cubic meters, hectoliters, etc., agreed in the purchase contract, thus the proceeds price multiplied by quantity is called total price or proceeds of sale.

There is, further, the case of delivery upon payment: Products are acquired and money is handed out at the same time. In this case, for a jurist, the time between emergence of the claim and of its payment is too short to take notice of it. Nevertheless, one can explain this case with the clearing of the claim of the seller against the claim represented in the money notes. In numerous other cases we have not delivery upon payment but sale on terms (credit). Here, the claim remains "unpaid" for a longer time. Then the claim becomes dissolved only upon payment or clearing.

We see, upon dealing with this example, that it is not the means of payments, especially not in sales on terms (credit), which play a role in accomplishing and expressing prices. It is a platitude that one can buy without money.

Instead, money in the sense of the value standard unit of a currency must exist prior to money in the sense of means of payment or clearing, so that prices can be expressed with it. When the purchase contract is concluded, the claim for its proceeds results, agreed in value standard units of the national currency, and only afterwards, usually considerably later, one has to think about solving this claim.

The generation of claims from daily commercial transactions was already emphasized in § 1. It was stated that money in its clearing function has nothing at all to do with the generation of these claims, and, that it has rather the function to terminate the existence of that claim.

New in these remarks is just this: it becomes clear, that, unconditionally, in every case, already before the conclusion of a purchase contract the value standard unit of a currency must exist, which is fundamentally and obviously different from the clearing or set-off process itself.

This value standard unit of a currency can be physically expressed, but also non-physically. Under the gold standard, the currency standard unit is constituted by a specific weight of gold. Often one tries to define this value unit by the value of a certain quantity of gold. This is impermissible. Each measuring unit must be defined by another unit. So e.g. the liter is equal to the contents of a cube, whose side length is 10 cm. The measure of volume is thus defined by the measure of length. Legally, the metallic currency standards, however, are only in rare cases defined by declaration of the fine weight metal per unit. For coin-technical reasons nearly everywhere is indicated, how many coins (of a certain number of units) are to be made from an ounce or a kilogram of the precious metal, the fineness of the metal being designated in detail. The German coinage law of 30^th of August, 1924 formulated this:

§ 1.

The gold standard applies in the German Reich. The accounting unit is the Reichsmark, which is divided into 100 Reichspfennigs.

§ 2.

As Reich-coins are to be minted:

1. as gold coins: Coins of 20 RM and 10 RM.

…

§ 3.

From 1 kg fine gold

139 1/2 gold coins of RM 20, - - or

279 gold coins of RM l0, - -

shall be coined

The mixing proportion is 900 parts gold and l00 of parts copper. The shape and design of the coins is determined by the finance minister of the Reich. ...

The commentary of Koch & Schacht appropriately says: "A gold standard is that value standard system, in which the value of money is set in relationship to a certain quantity of gold; it is characteristic for it that only gold coins are minted freely. The payment power of silver coins and the total of their circulation is limited. … The accounting unit, upon which the new German coinage system is built upon, is the Reichsmark. It is not expressed in the value standard metal (gold), but by a silver coin (1). The relationship of this coined accounting unit to the value standard metal of this currency is no longer a physical one. However, the Reichsmark derives its value from a gold coin, which itself determines the fixed coin price (Muenzfuss) (§ 3) of the German money. Namely, from the 10 RM gold coin ... Indeed, 1395 Mark pieces are not coined from a pound fine gold, but, instead, gold coins worth 1395 Reichsmarks."

One recognizes that it is not crucial, whether the particular currency standard unit is concretely made from the currency standard metal. It is sufficient that the whole of the circulating gold coins fulfills this requirement. In this the coins are pieces of metal, which are publicly and by their coinage characterized as money. By the mint standard one understands the indication of the number of coins per kg of precious metal. According to the coinage law of 1924 the gross weight of a 10-RM-piece including the added copper quantity of 10 % was 3.9824771 gr, while the fine gold weight was 3.58422939 gr.

The given example should be sufficient for clarifying the case of the value standard unit of a currency that is expressed in precious metal.

However, just to mention a second important case, the value standard unit of a currency can be physically constituted by a paper money certificate, e.g. a note of the respective central bank. The important thing in this case is the fact that this note is valutary, i.e. legal tender means of payment. The expression "legal tender" does not mean that the remaining means of payments are illegal and thus impermissible, which they are not by any means. This expression merely says that the creditor must accept this note, that this note can be imposed upon him and that thus this certificate, too, is a value standard of the currency. Our later remarks on compulsory acceptance will further examine this question.

In addition, there is the case - at least it is conceivable - where a value standard unit for clearing is not physically represented, e.g.

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(1) by the 1 RM silver piece.

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(Rittershausen added a note here which mentioned):

a) "Page 16a add newly: market rate money." - (this topic however is discussed in chapters 2, §8 in the improved structure, tr)

b) Page 17a add newly: "set-off". - (this topic is however treated in chapters 2, §9 under "clearing" in the improved structure, - J.Z.)

c)"chapter 'the index currency' (is already there!)." (such a title of a chapter is not listed in the structure, perhaps it belongs either to chapter 1 §2 the price expression function or §3 the hoarding function. At that time I found in the material only an old newspaper article directed about the Gesellians. Perhaps he wanted to insert that article here? I probably put it to his other articles on index currencies. Which one of them did he want to introduce here? That can only be clarified by visiting the Cologne university library for the original version of the clean copy of his last and 5. manuscript of the "Geldtheorie". - J.Z.)

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the deposits in a bank, are means of payments with legal tender power and a paper money value standard.

Initially we stated that the value standard unit of a country is ascertained by checking which units are used for expressing purchase prices in trade. Since the currency's value standard unit is imposable, which is a juridical rule for the payment of debts, the value standard unit of a currency has still a second meaning: it may not be rejected by the creditor in the dissolving of debts (payment, clearing). If the creditor does this nevertheless, then the debtor is entitled to deposit the amount of the refused money at court, thus legally fulfilling the contract, so that he can no longer be sued.

The predominance of the importance of imposability, asserted by some authors, over the significance of the value standard unit in the expression of prices may not be assumed to be correct. For both functions of the value standard are equally important. From both functions it follows that the claims arising in commercial transactions are expressed in value standard units and have to be settled by clearing procedures also expressed in value standard units, possibly in such as have to be accepted. Therefore the function of expressing prices and imposability are closely connected.

We had said that the payment function of money is independent, so that there is a variety of monies, that do have the payment or clearing functions, but not the characteristics of a value standard unit. Usually, only a part of the kinds of monies is valutary, i.e. is the value standard of a currency. From this circumstance follows a substantial difficulty: A large part of the debtors does not use valutary means of payments when paying debts, while the creditors have always the legal right to demand valutary means of payments. Thus all holders of valutary means of payments appear as privileged, all at the same time. Therefore, in cases of great shortages of valutary means of payments or of the value standard units of the currency, all purchase contracts for goods can be understood as dealings in futures or forward contracts, or future delivery contracts for scarce valutary money or value standard units, in analogy to the commodities futures markets known to be risky. In times of credit crises these masses of forward contracts of valutary currency can, usually, not be fulfilled. Massive delays of payments and inabilities to pay are the consequence.

It is an essential task of the monetary theory to overcome this difficulty. In discussing imposabiltiy we will have to deal with this question.

A value standard of a currency is the means to express prices. To do so it is the value unit. And with it, it is, so to speak, the "measure of value".

One has attempted, when defining the value standard unit to resort to the experiences we have had with physical measuring units. However, it must be decisively denied that one can draw binding conclusions for monetary theory from certain similarities between the value standard measure and the physical science measures. (1) For instance, one has demanded that the value standard measure be temporally and spatially unchangeable, something that would be self-evident for physics. However, the value of the gold unit, measured in terms of purchasing power, is not completely unchangeable, since price fluctuations of goods cannot be avoided. Experience has shown that this flaw of the gold standard is negligible, since the task of the gold value standard unit quite contrary to physical units of measurement, is not invariability. Rather it is decisive that the main part of the population sees it, subjectively, as suitable for temporary and lasting preservation of wealth.

The hoarding propensities of the population are based on very complicated psychological phenomena and are in no way amenable to physical investigations.

Still another difference to the physical measure units must be emphasized:

The materialization of physical measure units is used again and again anew; a metering rule e.g. is being used for many years in a cloth store, in the hand of the same owner. The value measure, however, is at the same time means of payment; in immediate delivery for immediate payment transactions it continues to move from the buyer to the seller and in many cases daily from him to other businessmen. In this process, each time anew, an evaluation is made not only of the commodity, but also of the money piece, by the considerations of the customer and of the seller, whether the respective commodity and the piece of valutary money in front of them are really of equal value to each other. Thus a businessman can never measure the prices stipulated in his store with the same piece of money, instead, ever changing pieces of money are used, even though they are of same kind and quality. Add to this, that the persons interested in physical measuring units always employ the same tests, while the psychological processes

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(1) Here, I am especially indebted to my friend Professor Dr. Ing. O. Loebel, for his astute remarks. (See the Munzer/Loebl discussion in the Beckerath papers, tr)

in evaluating commodities in terms of monetary units are completely different on the demand curve from those on the supply curve. Thus, a useful further development of the concept of a measuring unit for economic values on basis of analyses of natural sciences should neither be permissible nor should it be expected.

The function of price expression cannot be completely separated from the payment function. In an emergency, the means of price expression must be usable as money of par value, even if the large mass of the clearing processes may happen without its assistance. But clearing for itself can be separated, without completely losing its money character because of this separation. The hoarding now to be discussed, must, likewise and in principle, remain connected with clearing and price expression functions.

§ 3. The hoarding function

At first sight, there seem to be only three characteristics for money:

· the value standard unit,

· claims and

· an organization, which sets the latter opposite each other.

Upon further investigation another monetary function is seen: the hoarding function in its double shape, realization of liquidity and of security of economically active people.

I. Liquidity

a) Primitive liquidity

All people who have to make payments frequently need a stock of claims, which can be used for paying purposes. These claims must be specially qualified. In particular they must be claims against banks or other claims, which can be transformed into claims against banks. Likewise useable are bullion, coins, shares or other valuables, which are either money themselves or which can be transformed into money at any time.

"The population's propensity to hoard values, which can be used immediately for payments, is called liquidity. Everywhere, people are dispensing with complete use of the current goods production for immediate consumption and retain a part of the output for exchange purposes" (Veit).

Some wealth is built up from goods that are not consumed and is held in the form of liquid means. For the economic system prevailing today, Otto Veit differentiates the following scale of exchange qualities, and with it grades of liquidity of goods:

Money

· gold coins

· change coins (divisional coins?) and notes in small denominations,

· notes in large denominations,

· assets at the central bank,

· daily withdrawable deposits in commercial banks,

Money market papers

· bills of exchange and treasury notes discountable at the central bank,

· bills of exchange discountable at other banks,

Term deposits and savings accounts

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Text in parentheses added by the author.
22

· securities - acceptable as collateral by the central bank, (securities with fixed interest rate.)

· securities (with fixed interest rate and shares) - officially traded at the stock exchange,

· securities - traded unofficially at the stock exchange,

· goods traded at the stock exchange in hands of the sellers,

· securities - traded on the free market,

· ready for sale goods in hands of the sellers according to marketability

· (works of art and antiques of market value),

· mortgages and other debts on land according to their order of priority,

· real estate - vacant building land,

· real estate, built upon or cultivated,

· (machines and equipment),

· claims from bank credits according to their maturity,

· not yet ready for sale goods in the process of production,

· (private debtors),

· (claims of groups of heirs of partnerships not traded at the stock exchange and other wealth difficult to liquidify).

One could make a number of annotations on this scale; however, here and now, it should be accepted without contradictions as essentially correct. The most liquid values are on top of the list, the least liquid values at its end. The need for liquiditity is fundamental and ineradicable; it is general and not limited to monetary and credit economies only. People living under barter conditions as well, yes, even animals, do differentiate between objects, which are immediately useful to them, without which they would not survive, and objects, which they do also need but only later. For instance, someone living purely by barter would have falsely disposed of his energies if, one day, at noon, he had provided only for weapons, boats or other long-term tool, but not for food, which he can consume immediately. Predators as well do differentiate between wild game pieces just eaten and animals in free hunting-grounds. All dispose by aiming at a supply of both in appropriate proportions, particularly of course humans in the modern economy.

b) Liquidity of the Bears of the stock exchange.

To the liquidity requirement in this natural form must be added the still stronger liquidity need of the bears at the stock exchange. Keynes and Kunwald had, too narrowly, called only the latter type the "need for hoarding".

In the modern economy of credit and expectations price formation does no longer take place exclusively in a static way, according to § 2, at the crossing of the supply and demand curves estimated for that moment. Those businessmen considering their demand and finding that they would buy e.g. more dress cloth in case of cheaper prices calculate only for the moment and do not consider future expectations and future fears. In any case, statics operates in this way. In an expectations economy, which, by the way, is in no way identical with the dynamic economy, future expectations are considered: If they are under the impression that the expected price reductions would continue, then they do not buy, in spite of cheaper prices, while waiting for still lower prices. In a fully developed expectations and credit economy, this inclusion of future prices in supply and demand calculations is generalized and concentrated in the stock exchanges: The Bears expect price reductions, therefore they accumulate money and sell commodity futures without again stocking up on them, even without possessing the sold commodities at all, as yet (trading in futures). The Bulls expect price increases, therefore use up their liquidity, to buy commodities, partly on credit beyond their own funds (trading in futures as well). Both parties wrestle with each other. If they are equally strong, then the Bulls borrow their liquidity from the Bears. The total liquidity is then unchanged or normal. However, if the Bears prevail, then large amounts of liquidity are accumulated, the corresponding values rise in price, while the less liquid values experience price falls. The new savings, which take place simultaneously, flow to the Bears, who, because of their price expectations neither buy nor invest. In case of a one-sided bullish mood, it is the other way round.

In the perfect credit economy, when the banks are ready to grant owners of vendible wealth credit of some per cent of this wealth, price formation (on markets for commodities, securities and real estate) does no longer consist of an exchange of the commodity or service just sold against another commodity, but of an exchange of liquidity against goods, or of goods against liquidity. This exchange

is facilitated by credit, i.e. by a loan-based acquisition of the still missing liquidity. Interest is then the reward for the renunciation of liquidity.

Thus the liquidity of the predominant Bears increases the first mentioned "primitive" liquidity, probably including the credits drawn, or liquidity is diminished by bullishness becoming predominant. "Bear liquidity", as we want to call it, is not fundamentally different from "primitive" liquidity, for both are based on expectations, on renunciation, on expectations for the future. It is the same liquidity, in a refined form.

II. Security (Wealth Accumulation, Higher Appraisal of e.g. land and building values)

a) Essence

One century of gold-standard currency, of the sanctity of the rights of savers and of the refusal to interfere with them even on the side of the political opposition, did satisfy the need for security, which a currency should also fulfill, as its name, in German already states. They had served so perfectly, that the newer monetary theory has forgotten about such security needs. Goods in unlimited supply are counted among the free goods and become worthless, be they as useful or even as indispensable as they may, e.g. air for breathing. The hoarding function of money does not only provide for liquidity needs, as Keynes, Veit and others seem to state, somewhat one-sidedly. Rather, its composition is more complicated. Generally speaking, psychology in our science has so far not had its say continuously but only selectively, on some points. At least the need for hoarding, which we understand here in a broader sense than the "modern monetary theory" does, embraces more, at least still the need for security and durabilty of value storage. In the long run, a currency cannot exist, if it satisfies in no way the value storage needs of the population. Then it falls victim to refusals to accept it. The theory of a very dangerous repudiation, which, as all theoreticians admit, can terminate the life of a currency, has always been recognized, but its premises have not been correctly assembled into the theory.

Let us return to the liquidity scale of Veit, which was compiled out of the needs of the banking business. However, the private citizen or entrepreneur when facing banks has still to consider the difference between monetary values and real values. In the case of a metallic value standard he cannot suffer losses from currency coins. In the case of monetary values he can suffer losses only if the debtor of the respective claim document, which is expressed in monetary units, will become individually weak. In the case of real values, on the other hand, he can suffer losses from the associated usual risks, thus to price fluctuations in the case of goods and properties. In the case of the paper value standard of a paper money, however, those, who possess the paper value standard units of a currency or claim documents denominated in it, can, by depreciation, lose an unlimited amount, up to 100 % of their assets. In contrast, owners of tangible assets can only be exposed to the same considerable dangers, which they would have faced under a metallic standard as well; however, these dangers would, applying intelligence, never go up as far as 100 %. Consequently, Veit's view is correct only for the case of the gold standard. In this case people would sort their values according to the order of his scale to always stand prepared for unexpected events and payment claims. If, instead, a paper value standard prevails, which in itself is already risky and whose risk is increased by an economic policy that "silently" and continuously sacrifices the interests of money creditors, then this liquidity scale cannot be considered as completely satisfying the concept of hoarding.

The liquidity need of the individual does not stand alone. Besides, one has to consider the security needs. While the liquidity need wants to provide for suddenly arising means of payment requirements of the next days and weeks, the need for safe keeping would like to put values aside and wants to hold them in readiness, eventually for medium and long-terms. Such values allow a secure existence later, even in a distant future, particularly in old age. For the case of an unstable value standard of a currency the following scale of values preferred for secure hoarding might be applicable:

1. Primary hoarding goods:

· Precious metal as form of bullion and coins,

2. Secondary hoarding goods:

· Jewelry, watches, diamonds, antiques and other precious goods,

· Durable food,

· Textiles not exposed to changes of fashion, pieces of clothes, carpets, furniture, cameras, office machines, etc

· Stocks and partnerships,

· Occupied houses managed or inhabited by yourself,

· Building blocks and market gardens

· Trade goods,

· Furniture, almost everything that is movable.

3. Things to be rejected, because they are monetary values:

· Money (acceptable as hoarding good only under the condition, that there are debts of equal amount)

· Paper money and banks deposits, short-term money market papers, savings bank accounts and bank deposits,

· Long term bonds & mortgages.

The scale of these "securities" differs from those of Veit like the Bulls differ from the Bears: The first half of the liquidity scale contains only monetary values, that of the scale of the securities contains only tangible assets. Those who go into money distrust the price development of tangible assets. Those who go into tangible assets distrust the development of monetary values. Here we achieve a fundamental result, one that remained hidden for decades due to an all too narrow (trimmed) definition of hoarding (probably because it was unpleasant): Under the gold standard (together with other metallic standards of a certain type later called by me "self worth currency") security and liquidity coincide, under a paper value standard of a currency ("fixed rate currency") both fall apart in the course of time or immediately.

The kind of liquidity goods and the kind of hoarding goods preferred by the main part of the population is of greatest importance for the economy and for the policies of government. One has to state not only that different scales of liquidity and security goods are to be used under different currency types, but the householders and managers of economical enterprises will consider the following: They will want to make allowances to both the liquidity aspect and

the security needs at the same time. So they will make a selection from both scales. In this it is remarkable that, in almost all "civilized countries" during the last decades and to an increasing extent, the state has exerted its influence on the kind of liquidity and security offered. In particular, the State has eliminated precious metals as means of liquidity and secure accumulation by abolishing the gold standard in most countries. Instead, it offered monetary values issued predominantly by the government (bonds etc.). These, however, are not or only secondarily considered by those operating in a fixed rate currency economy (cours forcé currency, fiat money, paper money, fixed rate paper value standard currency) for reasons of currency fears, so that an ever larger demand can be noticed for merchandise (commodities, goods) among the later ranks in the security scale.

Therefore the issue of security needs has to be addressed in greater detail. The need to store and secure abstract economic values is generally underestimated. However, in the social world it is one of the strongest needs of all that are effective. It is so alive and intensive that it often proves to be stronger than altruistic ideals and other economic considerations, even stronger than hunger and love. As a very primitive feeling operating in the lowest layers of consciousness, it includes a need to view, touch and possess the property, and, on the other hand, a longing for stability, which is ineradicable and turns to other means (e.g. stockpiling, pensionable executive positions, hereditary serfdom etc.).

This need is primarily directed toward certain economical hoarding or accumulation goods, the value of which is promoted by beauty and rarity and, psychologically, has become a content of the masses' consciousness. Not the need for practical-technical use is decisive, but the need for a value carrier, not the conceptions of sober banking people and money specialists, but the erroneous unconscious conceptions of the mass of the population, formed over thousands of years. At present, practically only gold, silver and, under the gold standard, alternatively also certain kinds of paper money and bank account money, come into question as such primary economical accumulation goods. Since with the latter the sensuous shine and feel is missing, so nevertheless apparently the kind of printing, beauty of the pictures and newness conditions seem to play a role.

b) Price formation of security goods: the demand

With all other goods demand rises, or at least it remains unchanged, when their prices decline, even when they are strongly reduced. But demand for a security good declines, when its price declines excessively. Because here, the accumulation need is directed toward possession for reasons of value preservation, thus toward stability. If the value-keeping material proves to be less reliable, through the fact that its exchange value steeply declines, then and thereby its suitability for satisfying accumulation needs decreases just because of that. E.g. if silver were to be found as frequently as copper, so that annually 200,000 wagon loads instead of 814 were produced, then, although by this multiplication of supply, it would conquer very widely extended usage, at the same time and to a large extent, it would also lose its previous use as an accumulation good. Watch casings e.g. would no longer be made of silver, but out of stainless steel, which is much more suitable and harder, or of nickel. Price formation of accumulation goods thus always takes exactly the opposite direction of that of all remaining goods; a fact, which was hardly ever considered by the entire literature and hardly ever utilized in economic policies.

c) Reduction of the "money supply" in times of boosted inflation.

From this it follows that during strong money depreciations, e.g. due to large additional note issues, the "quantity" (1) of that money, which is payment commodity and accumulation commodity at the same time, shows a decrease, instead of an increase. Indeed, at first there is a rise of the quantity of means of payments in circulation (by the amount of the additional note issue plus the dissolved money hoards), but this "money" is merely a "limping" money, it can only continue to fulfill the payment function, but no longer the one crucial function, the security function. Thus, because of its depreciation, paper money and bank deposit money becomes useless as an accumulation good, as far as it served so far as such, and is no longer in demand; together with the hoarding function, these kinds of money finally lose

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(1) This quantity of money does not correspond to the term "money supply" of the modern theory, since not all payments are performed by the accumulation goods; nevertheless, the expression is often used in this context.

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(Rittershausen inserted here a sheet 29 A, with a rough and handwritten sketch for the supply- and demand curve of accumulation goods. It is partly reproduced here. Vertically: the price, horizontally: the supply)

|________________________ Supply

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also the payment function and thus the proper character of money. The sudden restriction of the money functions upon the payment function alone does activate the quantity of the security good so far not used for payments; thus it suddenly increases, and this in a dangerous way, the quantity of money available for payments only. Thereby such an excessive and disproportionate further depreciation of money occurs (price increase, black market in case of price controls etc..) that prices increase faster than the note supply could be increased by the printing press. With the remaining monetary values the goods turnovers can no longer be sufficiently achieved. Even technically, a comprehensively applied liquidity plus hoarding for security purposes, whether for hours or years, is indispensable for the accomplishment of the daily payment transactions. Liquidity [in means of payment], when hoarding for security purposes runs contrary to it, i.e., does not run parallel to it, is not sufficient, on its own, to keep turn-over means [means of payment] in circulation. A terrible restriction of the means of circulation occurs. There is no money, because that money, which visibly remains, is no longer a full money. Thus the circulation of Reichsbanknotes in Germany in 1923 declined from approx. 3,000 Million to 100 Million, reckoned in Goldmark and a very large percentage of the enterprises had to close because of money shortage, although note printing plants and numerous private printing plants, which were asked to help out, were working day and night. At the same time, the value preservation need was stormily directed toward other goods, which can be called secondary security and accumulation goods. Here, in particular, shares came into question, real estate, jewelry and luxury goods, furniture, and, finally, "everything which was not riveted or nailed down." With elementary force, the security and accumulation need is particularly directed toward certain currencies of stable value, if available, e.g. illegally circulating foreign exchange, which became at once money, even before legislation was able to sanction their emergence.

While thus the demand for security goods (paper value standards) declines when they are strongly depreciated, a dissolution of security hoarding takes place and new security goods are searched for, the demand for security goods will increase and they will be hoarded excessively when their value increases strongly, because the value of the investment therein rises. Thus price reductions of money, in case of strong changes, have a reverse effect on supply and demand than have price changes in general commodities.

d) Price formation and security goods: Supply

The second difference between security goods and the usual consumer goods is the fact that the hoarded stocks, which serve for value storage needs, do not disappear from the market. They are not consumed, i.e. not destroyed, because nearly all buyers acquire such goods just because they can exchange them, when necessary, against other goods, thus because they neither do consume nor want to consume them. In the market, a balance is being found between new supply of and new demand for consumer goods and capital goods (means of production). Installed means of production and used up consumer goods drop out of supply. In case of depreciation and repudiation (rejection) of a hoarding or security good, however, the whole mass, hoarded possibly over centuries, appears in the market. Therefore, the consequence of repudiation of a security good (accumulation commodity, metal or paper money, bank deposit money) is an imbalance for the market of this commodity and the possibly enormous savings invested there, thus a disaster, which swells avalanche-like, while price reductions of any other commodity lead directly to market adjustments. In the case of silver, for instance, the hoarded world stocks amount to approx. 350,000 tons, while annual production amounts to about 8000 tons. For gold, the stocks and production (valued in US dollars) come to 30 billion and 1.4 billion; for the German economy alone, converted to D-mark paper money, perhaps to 150 billion and 15 billion. There are no similar conditions for most of the remaining goods. Among long-lived consumer goods the supply of housing is similar, as demonstrated here. (1)

e) The displaced security need

The false theoretical development of the last 2 decades tried to understand, in one-sided way, the quite recognized hoarding as a striving for liquidity, attempted to suppress the security needs and to divert them to paper- and bank deposit money; however, the power of the irrational primal instinct for security in metal was underestimated. The accumulation-hoarding need is most strongly

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(1) see quotation

met by the effective circulation of rare metal coins of full value. From experience, paper money can serve for accumulation only to a smaller extent. Through displacement (repression of the natural options) one achieved, psychologically, only misallocations which caused disturbances. E.g. the effective gold circulation was generally called a prodigality, because one did not recognize, what element of general security and stability was provided by such an effective metal circulation. Perhaps it represented the capital investment with the highest efficiency of all. By increasingly taking gold out of circulation and villainizing silver coins by forgery-like minting below value, one took away from the people the objects for their original and traditional hoarding and accumulation needs, anchored in the deepest layers of consciousness (1) and directed them to the unmethodical search for new accumulation goods, unwisely without offering to them suitable ones.

Investment in stock exchange values, offered as a substitute, was too often disappointing, and did not satisfy security needs. On the contrary, it increased insecurity, all the more, because an economic and stock exchange-constitution based on the paper value standard of a forced and exclusive paper currency suffers from particularly large price fluctuations. Excessive international capital migrations, refuge capital, political uncertainty psychoses and flight into commodities were the results, which then entailed still larger uncertainty.

On the other hand, the presence of full worth money in real circulation of a country has to be judged favorably, as long as the mass-psychology attitudes do not change. The views of the masses have not changed. This is demonstrated by a look at the material composition of military medals and high political and military badges of rank of all countries, from Russia to the Hitler Reich to the United States. In England and by English theoreticians coin circulation was very highly estimated up until the 1890s. In Germany, after the end of the inflation in the year 1924, one could only regain confidence of the people for its currency by re-establishing silver coin circulation, and this with great success. After 1933 the new government first re-coined the 65 % silver 5-Mark-pieces into coins with 90 % fineness (decree of November 7^th, 1933), thus affirming the usefulness of full worth metallic circulation and creating

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(1) see Rothacker.

confidence.

The existence especially of a full-metal-value circulation is the only known and completely effective means to restore a displaced and disturbed hoarding and accumulation function, thus also a means to prevent the destruction of the value standard of a currency by domestic distrust. It is an automatically functioning brake against the sudden effects of political crises and other crises of confidence. Beyond the economic sphere, it is a strong element of political confidence. In contrast to an almost childlike viewpoint of so-called "money theoreticians" and a completely pre-scientific one in terms of mass-psychology, the silver specialist Kunwald stresses this importance of hoarding and accumulation and thus of the effective metal circulation with the following words:

"The coin speaks - how well did the Romans know that! In daily circulation, it speaks louder to the man of everyday life than laws, which he does not read. It daily tells people not only about power, but also about reliability and loyalty of the highest national authorities ... By experience, no social structure of rule bears up against the unreliability of the monetary system."

Indeed, we have realized that in Europe, Africa and Asia. E.g. the fall of the British Empire by voluntary dissolution of the central governance followed absolutely the renunciation of the gold standard in England, which was regarded as hauling down the flag, as generally known in the liberated countries.

f) The end of the consumption vs. hoarding and accumulation decision.

To this must be added the likewise not sufficiently considered importance of hoarding for the price formation in commodity markets. Money and commodities only match when hoarding and accumulation is accomplished. In the heart of buyers, the "propensity to consume", as Keynes called it, struggles with the propensity to save, to remain liquid, to hoard. When the hoarding function of money is disturbed, only the one-sided propensity to consume remains for its holder. Nobody wants to save any more. No longer is there the problem of deciding whether to keep or to spend money, directed by the interest rate. There remains only the job of choosing between different goods, often some that are not immediately or soon needed at all. The consequence is a run on commodities, in various degrees, up to the sellout of consumer goods, also of investment options, -- while saving activity, the stock exchange, the industrial and public loan market suffer.

As proven by experience in Germany from 1947 to 1951, the following extreme case can happen: Interest formation comes to an end, since everyone wants to become debtor, while nobody wishes to become a creditor. Interest as the price for renouncing some liquidity goes up to near infinite. Anyhow, it exceeds all rational rates that could be justified from the profit point of view of industry. With this the private financing of industry ends as well. Only government remains to finance industry, through revenues from taxes; and industrial companies, with already existing plants, finance "themselves" through high profits. This special form of financing oneself out of one's own monopoly profits, in enterprises too little limited by competition, happens coercively, at the expense of the consumers. Just like it happens with taxes. This special form of financing is increasing ever more, because in developed credit economies, credit as an engine for start-ups and of new competition is of paramount importance. Then it ceases to exist, and with it, competition disappears, too. Due to the one-sided propensity to consume, the one-sided bull-market-mood without a bearish position, thus due to disturbed hoarding and accumulation, the system of competition is crucially weakened, and instead, monopolism and a system of state supremacy is favored, the price level is excessively high, and exploitation in the sense of Marx is caused. By that, the foundation of democratic-liberal systems of government becomes eroded. Without a complete hoarding and security function of money, in practice without a gold standard, preservation and continuity of western civilization could become doubtful. For without it, there is no private capital, no capital market, an insufficient degree of competition, no free and durable enterprise.

Those additional commodities bought as a substitute

for normal hoarding and security options, are mostly uneconomically misdirected. Production capacities become overstretched, raw materials and workers are wasted, since normally they are not currently needed, since hoarding and secure accumulation would be more suitable. Social security needs of the broad masses are displaced into illusory solutions, like "right of co determination", because their natural satisfaction remains blocked.

Thus, to disturb hoarding means to intensify imbalances in commodity markets, wild demand for goods, therefore a tendency for price rises and for deterioration of quality. Economic policy, industry, savers and workers have, therefore, an urgent interest in recovering the hoarding and accumulation function of money. For example it was impossible to establish an equilibrium of commodities and money up to the end of 1923 and to June 1948. Not only did national price control fail at these occasions, but the state deficit became ever larger, because, finally, nobody wanted to buy bonds and save any more, so that the government's budget, e.g. in 1951, was still more overloaded with investment expenditures for industry. Starting from November 1923, after the introduction of money with stable value and partly also of metallic money, a reverse movement of unforeseen power started: The flight from commodities into money began. Every single Mark of stable value was regarded as precious good, and in contrast to this, the previously imagined value of those goods melted down, suddenly, goods that before one had assumed to need, rather urgently. Many less commodities were demanded. Suddenly, even the national budget could be balanced because of restored hoarding (loans for the government) and this cause of imbalances disappeared, too. After the German currency reform of 1948, in wrong psychological judgment, one initiated by an American student of economics, neither gold nor silver were offered to the German people, addicted to hoarding. The consequence was a rare and floating condition: money regained the payment-, price-expression- and liquidity function, but was strictly rejected (at least until 1951) as a means of hoarding and accumulation, so that further favorable consequences did not eventuate.

In conclusion, it must be pointed out, that disturbances of hoarding and accumulation affect also production in an extremely unfavorable way. For not only do the consumers flee from money to goods, when the security factor is not present,

but the sellers, too, do the same. Manufacturers hoard raw materials and workers (see the manifold regulations issued from 1941 to 1944 in Germany to fight of this evil); traders keep good commodities for themselves and pass on only inferior goods (see the "private libraries" of the bookseller & the pseudo-artistic commercial articles); farmers eat their eggs themselves; something they would have regarded as a crime in times of healthy wealth accumulation (functions); and workers loiter away their time and do private work.

If one wants to deal with this reluctance to supply and to perform merely with wage-concessions, like "incentive wages" etc., then one merely treats symptoms. The result will be: Further price increases, still greater monetary depreciation, a still stronger erosion of the hoarding and accumulation function of money.

In economic policy practice, it is usually the decline in production that enforces a change of the course of economic policies. It was not the own insight, but only the strike of the workers and savers in 1923 and 1948 that had forced the ruling powers to stabilize the currencies and thus to attempt to re-establish the hoarding and accumulation function of money. Hugo Stinnes and Friedrich Minoux, his former general manager, repeatedly declared, still in 1923, prior to the stabilization, it is "still too early" (i.e. one's nest was not yet fully feathered), and the governments as well as the trade unions yielded to this vested interest view. Nobody appeared in parliament as a spokesman for the people, whose standard of living had sunk to approx. 1/10 of the previous one. In 1948, behavior of the allied and of the German carriers of sovereignty was unfortunately the same. In both cases, reorganization was enforced only through strike of the producers and the savers; the other motives were secondary compared to this driving power.

g) An economical satisfaction of the striving for security

The satisfaction of security needs appears first like the hypothesis of consumption. It is well known, that one wanted to remove "consumption" considerations from the "rational" economics, as a supposedly irrational factor. However,

the economical satisfaction of this need is, indeed, a problem of economy, whose treatment is even very productive. In any case, to meet hoarding and accumulation needs costs something. The only question is, whether the costs of the irrational covering of the misled hoarding and accumulation drive are not very much higher, perhaps even 10 or 100 times as high as the costs of the metallic value standard. Here only some results of such investigations shall be briefly given.

1. The hoarding of trade goods is uneconomical, since the billions invested therein are depreciated within 10 to 30 years by wear (clocks e.g.) and getting out of fashion (cameras, etc..). Still more uneconomical are very luxurious goods (e.g. of clothes, meals) and the hoarding of foods, which spoil.

2. Hoarding in precious metals, coins and bullion, is very economical. 99 % of the goods necessary for this are already present and do not have to be produced first and taken from the national product. The present owners (the American taxpayers) are not satisfied with today's removal of the hoarding and accumulation item gold from circulation, at their expense, and look for its redistribution, even look for their own security in gold. However, it is crucial, that under a pure gold currency all monetary obligations denominated in gold units (fixed interest securities), the outstanding mass of hoarding and accumulation goods become security goods at the same time, because liquidity and safety precautions do match to a large extent; so that they do not only cost nothing, but strongly stimulate credit. Compared with this result the cost of gold that is so utilized is negligible.

This simultaneous covering of liquidity and security urges does not exist under (fixed rate-) paper currencies (see page ....), because there only the liquidifiers remain partially in money, while the hoarders go for goods. Thus, the whole machine, whose effectiveness lies in the fertilization of long-term credit, runs dry, so to speak, runs even backwards because of the additional and economically useless hoarding and waste of trading goods. What a beautiful machinery did today's laymen accomplish - only it doesn't work!

3. One has to keep in mind that the price formation function of a single hoarding commodity should not be overloaded. As many as possible stable value accounting- and security and accumulation measures are to be made available, when trade desires them, and commodity prices must be left as far as possible to their free formation. If, by national decree, all commodity prices, possibly also foreign exchange rates, stock quotations and wages would become fixed, then gold would therefore be the only price-free commodity. Its price formation would then become completely abnormal, since all spare funds, under various psychological motives, would attempt to make gold purchases or might, suddenly, dissolve their gold hoards. By such excessive fluctuations, gold would be prevented from playing its proper role as a hoarding and security accumulation metal, since its price formation would move by leaps and bounds.

Something similar happens in the foreign trade in goods and gold. When, by quotas or tariffs, all or nearly all goods are inhibited in their freedom to move, then gold can be the only tariff- and quota-free commodity. Then, under balance of payments changes, the balancing function of gold would be overburdened, it would flow out or in excessively. Therefore it is necessary that many goods can be exported and imported freely, so that these would primarily take over the balancing function, and gold having to cope merely with the still remaining balances. Likewise it is better when several popular hoarding and accumulation goods are available in the internal economy, so that the whole security function is not based on one single commodity alone, e.g. on gold, but is better distributed.

§ 4. Importance and relationship of the money functions with each other

We summarize: Money, as means of payment or clearing, serves to transfer claims and debts, and, as currency (value standard), serves to measure and to keep values.

Not all kinds of money fulfill all of these three functions. Money, which serves only as a legal-organizational means to settle, without being value standard money, is also called means of payment or means of clearing (offsetting or settlement). It is deemed to be imperfect and dependent money, or "accessory" money (money substitute). In order not to deviate too much from linguistic usage, we do not (in contrast still to Knapp) deny it money character.

The function of measuring values and expressing prices is the nature of a standard. The standard is money of a higher degree than mere means of payments. Means to express prices are always and at the same time means of payment or means of clearing; a currency unit, which could not at the same time be used as such a means, could not express prices, because it could not allow value comparisons in the formation of prices, and therefore cannot be standard-money. Standard money is called "valutary" (German: "valutarisch"); thus it has not only the functions of expressing prices and of paying, but this payment function is special: Valutary money, the standard currency, is always either legal tender (money with compulsory acceptance and forced value) (compare § 11 "paying power") or it contains in itself a generally recognized and undoubted internal value: it is self worth money (e.g. metal money).

To raise a standard money, which ranks second in money quality, to perfection, the third money function is still required: the function of hoarding, which has two purposes: the function of liquidity and the function of safety. Without the hoarding function price formation in a perfect credit economy cannot come about, namely the free choice of individuals between purchase and non-purchase, and without it a money's function of preserving value is not given either. The money of a perfect currency thus comprises all three money functions, a standard only two, means of payments only one.

Apart from these three main functions of money some secondary functions are to be mentioned still: Money can be used for tax and tariff payments, also as gift. It can

also be handed over, in simple exchanges for goods over the counter. Juridically this is not or not always a question of resolving debts that had previously been generated. All this applies also to "accessory" money.

Value standard money, as far as it is not metal money of real value, but paper money that, by government regulation, can be forced upon others (legal tender), can also be used as a kind of unnoticed tax in favor of the State, as a "requisitioning certificate" (de Viti de Marco), and generally as an instrument of business cycle- and export policies. Thus and for this special form of money we can also determine a further function. Perhaps one could further say that it actually creates the credit economy and its special way of connecting production and sales by incomes and income use. However, this characteristic of money might go beyond the teachings of the functions of money.

Later, the main business branches of the banks will correspond to the three functions of money: payment activities, the trade in liquidity and the trade in securities.

(J.Z.: pages 40 to 51 seem to be missing in this manuscript, if one considers only the page numbering. But according to the contents list, no chapter is missing. Rittershausenhas probably transferred the material previously contained in pages 40 to 51 to later chapters. On this page, Rittershausenhas changed so much by handwriting, also in the original contents list, that, perhaps, I did not correctly transcribe all details.

One of his notes is, however: "(40-51 are missing)" - Did he still wish to insert something here or merely point out that the side numbering is interrupted in the newer version? - J.Z.)

(There are 5 versions of the manuscript, with even the 5th remaining unfinished. He took parts of the earlier versions into the later ones. I haven't got the complete set of the 5th version, especially not a ca. 80 pages transcript. The photocopy of it did get lost somehow and is not readily accessible at the University of Cologne. Thus I could only partly reconstruct the latest version and I do not claim that I did so always quite correctly, although I tried, using the pages of all versions that I had in photocopies, made with his consent and that of his wife, while I lived for a while in their house, browing through his library and papers. He wanted me to translate some of his writings into English, e.g. his Fischer Lexikon. It did not feel up to it and was and am more interested in his monetary writings, still not made fully accessible to the current "science" of economics. - J.Z., 16.2.06.)

a 52

Chapter 2: The different kinds of money. The units.

Preface

(Handwritten notes: "Definition of the spoon [Withers?]

§ 1: Payment is clearing, has nothing to do with liquidity. But § 2: Price expression: Is that equal to barter with something? No, the uniform value standard of a currency would be missing there. § 3: Hoarding? Here more liquidity.)

The different kinds of money

We differentiate three kinds of money, i.e.

(later five! - 3: a, b, c were changed in the contents list to 5 after he added metallic redemption money and clearing: § 5 - § 9. - J.Z.)

1. High-quality liquidity

§ 5. Self worth money,

§ 6. Redemption money,

§ 7. Fixed rate money

§ 8. Market-rated money

(§ 9. Clearing: However note: "no, take out, is a function!")

2. Liquidity of lower degree

Clearing

Liquidity

Here, one must be aware that under "kinds" (§§ 5-8) only the physical money is meant. (Only the kinds of money, which are physical or appear as accounts, can be divided into kinds, a "nothing" cannot be divided). When, as shown in § 1, two equivalent claims face each other, which are then extinguished by set-off and make way for a 'nothing', and when I consider this reduction to nothing (mutual cancellation, skontration) as a monetary activity, then this money cannot be included in the theory of its kinds. If, however, as we did in § 1, we consider the credits (debts) that are then and thus confronted with each other, as money, which is a question of definition, wherein the qualification must be made that quantitative discussions are here inadmissible because of the possibility of clearing, then one can speak here as well of a "kind" of money.

For the further justification of our classification the following may serve: One can discuss money according to different subdivisions: according to the material, out of which it is made, according to the functions, according to the inclination of the large mass of the population to possess money of a certain kind, briefly: to hoard it, finally, according to legal or juridical regulations of acceptance. The grouping according to materials did not satisfy, because there is money without any intrinsic value, e.g. book money, which at least seems to defy this classification principle. Moreover, and apart from this, it was demonstrated, that completely contrary experiences could be observed with one and the same money, made from a certain material, because from the same material wholly different kinds of money with completely different economic and legal effects can be produced. Thus, by means of this old

b 53

classification much confusion was caused. - The classification according to functions would certainly meet the nature of money more closely, however its functions do obviously depend on its physical, legal and economical configuration, i.e. in particular on its payment power (chapter 3), its rate, its issue and its reflux, (chapter 4) (J.Z.: in the last contents list available there is no chapter with such a title! - see the later chapter 3: "Two contrary theories of the State." - J.Z.) so that a classification according to functions should not define the kinds of money. Concerning the kinds of money the decisive thing is, that in the economy, especially today, there is not a homogeneous quantity of money on one side and a quantity of goods on the opposite side, like the primitives of today might imagine. The most diverse monetary phenomena, differentiated by their emergence and their disappearance, separated by enterprises, differently shaped, according to the "entities, enterprise and household (private and public ones) hook up with each other in a circular flow, face each other, are balanced and perform the equivalent to the goods cycle, without facing it in terms of quantities. - Therefore we will make the legal and business regulation of payment power, i.e. the acceptance, the basis of our classification. As will be shown later, upon it depends the "entrepreneurial" subdivision of the phenomena of money.

Therefore and first of all, our classification differentiates between tangible asset money (self worth money) and money without material asset value. The essential point in every economic phenomenon is the emergence of value and of prices. For both kinds of money these occur in completely different way. The price formation of "self worth money" takes place in the goods markets, since this money is firstly a commodity and it is traded as such in the goods markets. The last named money "without material value", in absence of all goods character, obtains its value in a different way: by its "acceptance", which will be discussed in more detail later, and of which very different kinds exist.

The usual simplification of monetary theory down to considering only one kind of money appears to be inadmissible; obviously and by no means can all monetary phenomena occurring today on the Earth's surface, not to mention the examples of monetary history, be expla