Prof. Rittershausen’s groundbreaking work is now available in English!
Translation by T. Megalli with assistance of John Zube
MONETARY THEORY – Special Edition
For better understanding, this special edition has additional explanations, relevant informations and comments by John Zube, who personally knew Prof. Rittershausen and corresponded with him.
UNEMPLOYMENT AS A PROBLEM OF TURNOVER CREDITS AND THE SUPPLY OF MEANS OF PAYMENT Excerpted by Thomas H. Greco, Jr. from a document supplied by John Zube (PP41RiU). Bold emphasis is mine; all caps emphasis is Zube’s.
Excerpts from Part A
Banks Of Issue And Banknotes As Means For Organising Mutual Turnover
This section provides a good description of how sound money represents goods that are already in the market or on their way to market, and contrasts that with money that is issued on unsound bases. It should be readily comprehensible to the layperson. — t.h.g.
Excerpts from Part B
The Gradual Destruction Of The Classical System, From 1909 To 1932, As Cause Of The Difficulties Encountered In Re-Integrating The Unemployed
This section provides an analysis of the historical policies and errors of government intervention, with particular reference to the case of Germany during the first third of the twentieth century, but also with regard to the other industrialized countries that pursued a similar course. It draws from this analysis certain conclusions, and makes recommendations that are reasonable and well grounded. It may be difficult for the layman to follow, but the informed scholar will find in the full text a rich vein of insight. – t.h.g. 2004-1-12
Excerpts from Part C
The Clearing Principle And The “Vier Gesetzentwuerfe” (Four Law Drafts) To Re-Integrate The Unemployed In The Economic Process
This section provides a good theoretical foundation for the organization of independent credit clearing circles. – t.h.g
THE REVALORISATION OF GOLD —
A PROBLEM OF EXCHANGE AND INTERNATIONAL TRADE
(Below is a summary of this article by Professor Dr. Heinrich Rittershausen published in 1938. At present, the entire paper is available only in German. It can be downloaded here.)
Present day gold policy means revalorisation of gold, i. e. the artificial keeping up of the price of gold. This is carried out with the help of extensive credit and sterilisation measures, especially by Exchange Equalisation Funds, etc. The many deplorable effects of the revalorisation of commodities are also to be expected from gold revalorisation. The latter can only succeed in raising prices in terms of paper; the increase in commodity prices in terms of gold will be rendered impossible through the revalorisation of gold itself. Criticism of the gold Standard has gone too far. Before the War this System of necessity provided great fluidity. The balance of payments was equalised through changes in international price relationships, gold which had flown out was repatriated, and undue concentration of gold, gold out-flows and disturbances to international trade were prevented. The present day Exchange Equalisation Funds have provided no substitute for this mechanism; in practice they directly counteract its effects. They prevent the equalisation of international price Systems and prove an obstacle to international supply and demand. Exchange Equalisation Accounts are unthinkable in connection with the pre-war gold standard. They are based upon present day gold exchange and managed standards in which case Gresham’s law may come in to Operation, since it assumes a fixed parity with gold or foreign exchange. Certain difficulties resulted from this fixed parity; displacement of gold, creation of disturbing price differences between different lands, and finally the impossibility of lands with fixed price systems to participate in and to respond to the variations of international trade. The fundamental cause of these difficulties is not gold policy, but the fixed parity, and in general any combination of gold and paper standard. The pure paper standard avoids this difficulty, and alone presents a mechanism similar to that of the gold standard. The extension of this System, together with the change-over to an optional gold standard is apparently the only way to avoid the further demonetization of gold, and in place of the negative attitude of the Exchange Fund Policy, to build up new conditions for international trade.