Two. Any metal currency with uncertain materials and exchange rate of materials, if it is common currency, should be called limited legal compensation currency.

The circulation of limited legal compensation currency, or

1) as a "subsidiary" currency, that is, a currency whose ratio is determined by another common currency in the same currency area:

(1) Determine the proportion according to another limited legal compensation currency;

(2) determining the proportion according to one kind of paper money;

(3) Determine the ratio according to the currency in circulation.

Its circulation, or:

2) Limited legal compensation currency dominated by foreign exchange. If it is circulated in this currency area as the only common currency, but preventive measures are taken, in order to pay in other currency areas, the means of foreign exchange payment (in the form of ingots or coins) are controlled by itself (foreign exchange reserve fund): foreign exchange is limited to the compensation currency system.

A) If it is the only common currency, but not oriented to foreign exchange, this limited legal compensation currency shall be called local limited legal compensation currency.

At this time, the limited legal compensation currency can not only set the bid rate separately when purchasing foreign exchange payment means or purchasing "foreign exchange" for this purpose, but also set the price rate of foreign exchange payment means by the government as a whole.

[about 1) and 2)]: There used to be Talle, but now there are 5 francs of silver coins, all of which are "attached". All kinds of silver shields in the Netherlands are "oriented to foreign exchange" (oriented to gold), (they were "native" in a short time after casting was banned), and now the rupee is also "oriented to foreign exchange"; 19 10 After the promulgation of the Coinage Ordinance on May 24th of the lunar calendar, China's currency ("yuan") is also "local", as long as the material exchange rate not mentioned in the articles of association does not exist (the suggestion of the US Committee to take foreign exchange as the orientation was rejected). (Sometimes all kinds of Dutch guilders are also local, see the picture above. )

When using limited legal methods to make monetary compensation, for the owners of precious metals, from the perspective of private economy, the material exchange rate is very economical. Even so (for this reason), it is still forbidden to use it to prevent the material exchange rate of another metal whose price rate is set too low from becoming unprofitable and invalid, and the stock of limited legal tender (see the next paragraph) made of this metal is now blocked and will be used for non-monetary and more profitable purposes. The reason why we should try to avoid this situation lies in the management of reasonable coin payment policy: that is, another metal is foreign exchange payment means.

B) If the limited legal compensation currency (that is, common currency) is contrary to the situation in a), although there is legal free casting, it is unprofitable for the private economy, so there is actually no free casting, so it should be called blocked currency. At this time, it is unprofitable because the monetary price of metal is at a disadvantage compared with the market price: either 1) compared with circulating currency or 2) compared with paper money. This currency used to circulate, but in case 1), the market price ratio changed under the multi-standard metal currency system, or in case 2), a financial disaster occurred under the single-standard metal currency system or multi-standard metal currency system, which made the banking institutions in various countries unable to pay the metal currency, forcing them to forcibly promote the bill currency and suspend the exchange of the bill currency. These two situations make it impossible for the private economy to have an effective material exchange rate. The relevant currency is no longer in circulation (at least under reasonable circumstances).

C) In addition to the common currency with limited legal compensation (only referred to as "currency with limited legal compensation" here), there may be metal coins with limited legal compensation, that is, the currency that is forcibly accepted within a certain "critical" amount as a means of payment. At this time, compared with the standard currency, its casting will generally (not necessarily) deliberately adopt the method of "insufficient value" (to prevent the danger of being melted), and then it will often (not necessarily) become a temporary currency, that is, it can be exchanged in some specific banking institutions.

This situation belongs to daily experience, nothing particularly interesting.

The status of all tokens and limited legal compensation currencies of many metals in currency is close to that of pure paper currency (today's paper money), and they are different from the latter only because they always have some important other uses in monetary materials anyway. The limited legal compensation currency of metal is very close to the means of circulation. If it is a "temporary currency", that is to say, if sufficient preventive measures are taken, it can be converted into a currency of circulation.

(34)

Of course, the ticket currency will always be the administrative currency. For sociological theory, some specific forms of official documents (including documents printed with specific intention forms) are just "money", which can never be truly represented by it (pure and non-convertible paper money has no such requirement at all).

In formal law, it can be the holder's formal and convertible debt certificate:

A) Personal certificate (e.g.1certificate of an English goldsmith in the 7th century);

(b) Certificates (bank notes) of chartered banks;

C) Certificates of political organizations (national banknotes).

If it can be freely convertible "effectively", that is, it is only a means of circulation, that is, "temporary currency", then it may:

1 fully waiting for satisfaction: stocks;

② Only meet the needs of cash cashiers: means of circulation.

Satisfaction can be arranged as follows:

1) Standard metal inventory determined by weight (bank currency);

2) Through metal currency.

The earliest paper money is usually used as temporary (convertible) money, it is usually used as a modern means of circulation, and it is almost always used as a bank note. Therefore, it is completely valued according to the existing face value of metals.

(1) Of course, the first half of the last sentence is not applicable in some cases: one banknote is replaced by another new banknote, and it is not applicable when national banknotes are replaced by bank banknotes, and vice versa. However, at this time, there was no first currency issue.

(2) About the sentence at the beginning of B: There must be some means of exchange and payment, which is not an official document, that is, it is neither a coin nor a physical object, which is completely beyond doubt. However, at this time, we don't want to call them "money", but-according to different situations-call them "calculation units" or names with similar characteristics. The intrinsic essence of "money" is precisely that it is linked to the number of official certificates-this is not "secondary" at all, but only an "external" feature.

In the case of actual suspension of the temporary currency circulating so far, it is necessary to distinguish whether this is an estimate made by the relevant participants: that is, it is "considered":

A) interim measures;

B) In the foreseeable time, this is a firm measure.

In the first case, because everyone tries to make various foreign exchange payments with metal currency or metal ingots, they generally stop the "discount" of the ticket payment means to the metal payment means with the same face value. But this is not absolutely necessary, and discounts are generally appropriate (but not necessarily so, because the demand of the former may be extremely urgent).

In the second case, after a period of time, the established ("self-sufficient") paper money system will develop. Then we won't talk about "discount" anymore, but (from a historical perspective! ) said "depreciation".

Because it is even entirely possible that, for whatever reason, the price of coinage metal, which was originally based on the face value of paper money and was circulated in the past and now blocked, plummeted in the market compared with the foreign exchange payment method, while the price of paper money fell less. This will inevitably have consequences (as has happened in Austria and Russia): it is completely understandable that banknotes that have been "self-contained" within the service life can be purchased with a "smaller" face value. Therefore, if it is said that in the initial stage of using pure paper money, as far as foreign exchange is concerned, it may mean that the face value of paper money is smaller than the face value of silver coins with the same name, because this lower price is always the result of the current inability to pay, then, for example, in Austria and Russia, the further development of the situation depends on the demand for means, the scale of paper money issuance, and the achievements of currency issuers in improving foreign exchange payment means (in this case, These three factors can and are actually formed in this way in the past, and now they may be formed in this way, which makes the valuation of related banknotes in the "world market exchange", that is, the ratio of them to foreign exchange payment means (today's gold), the pricing development is more and more stable, and sometimes it will rise again, while the former coin metal is declining in terms of gold price, for the following two reasons: a) the production of silver. The real ("self-contained") paper money system is precisely the old exchange rate of metal currency that is no longer expected to be effectively "restored".

(35)

Today, the country's legal system and administrative management, in the field of its coercive power, can realize the formal legitimacy of a currency and the formal effectiveness of the government as an "official currency". If it fundamentally maintains the ability to pay in this currency, this view is correct. Once it makes a currency that has been "attached" or "temporary" so far become a freely circulating currency (in the case of metal currency) or an independent paper money (in the case of bill currency), it no longer has the ability to pay, because these currency varieties will accumulate on it until it only owns them, that is, it must be imposed on others when paying.

Napp correctly expounded the general formula of "obstructive" monetary system reform.

Of course, this does not explain the substantive validity at all, that is, it does not explain the exchange ratio between it and other physical goods, so it does not explain whether and to what extent monetary management can exert influence on it. As long as it involves goods (and domestic services) that already exist or are manufactured in China, political forces may also control the production and issue laws with the highest (or possibly the lowest) price through the quantity distribution of consumer goods, which can also be proved by experience, just as this influence has its obvious perceptible limitations (this point will be discussed separately). However, in any case, such measures are obviously not monetary management measures.

In fact, modern and reasonable monetary management has set a completely different goal: to use foreign currency to influence the substantive pricing of domestic currency, that is, to influence the stock market price called "foreign exchange quotation" of foreign currency varieties, and generally to strive for "fixing" this price, that is to say, to maintain stability as long as possible (in some cases, to maintain a high price as much as possible). In addition to prestige and political power, there are financial interests (plans to borrow foreign loans in the future), as well as the interests of large profit-making classes, that is, the interests of importers, the interests of domestic industries processing foreign raw materials, and finally the consumption interests of those who are eager for foreign products. These are all crucial. Undoubtedly, from a practical point of view, today's "monetary payment" policy is first and foremost a foreign exchange rate policy.

These views, as well as the following discussion, are entirely based on the views in Nape's Monetary Theory of the Country. This book is one of the greatest books in Germany in both form and content: exquisite writing and keen academic thinking. However, almost all professional critics focus on the problem of being abandoned (relatively few, naturally not insignificant).

Britain may have reluctantly adopted the gold standard in those days, because silver, the raw material for coinage, was priced too low in terms of currency ratio, so all countries organized and managed in a modern way undoubtedly turned to the pure gold standard currency, or to the gold standard currency supplemented by silver coins with limited legal compensation, or to the limited legal compensation for the white silver standard currency or the regulated bill currency, and (in the latter two cases) they all came from a currency aimed at obtaining gold to meet foreign needs. The transition to the pure paper money system is only the result of political disaster. It appeared as a remedial measure to deal with the situation that the official currency used so far could not be paid, although the pure paper money system has been widely used now.

For that kind of foreign exchange policy purpose (fixed exchange rate, today is the ratio with gold), it is not only your own but also the effective exchange rate of gold materials (gold exchange rate) is a possible means. This view is correct. The value of official certificate coins and the exchange rate of gold may also be strongly impacted in reality. Although there may be opportunities to obtain foreign exchange payment means and pay foreign exchange expenses by transporting gold and exchanging money, it is always convenient for this opportunity because of its own gold exchange rate, and as long as its own gold exchange rate exists, it can only be blocked or prohibited through natural circulation, and this opportunity can be strongly interfered for a period of time. On the other hand, according to experience, in a normal peaceful environment, a region that implements the paper money system can achieve a fairly stable "foreign exchange rate" if it has an orderly legal situation, favorable production conditions and a planned monetary payment policy aimed at raising gold for external payment, even though it has to make significantly higher sacrifices for financial or gold demanders under other conditions. (If the foreign exchange payment method is silver, that is, all major commercial countries in the world adopt the "silver exchange rate", the situation is of course exactly the same. )

(36)

The typical and basic means of foreign exchange monetary payment policy (specific measures will not be discussed here) are:

1. In areas where the exchange rate of gold materials is adopted:

1. In principle, through commodity exchange, the satisfaction of circulation means without cash compensation is guaranteed, that is to say, the "reliable" person (reliable entrepreneur) is required to bear the payment guarantee of the goods sold, and the transactions at the risk of the currency issuing bank are limited to the transactions that are guaranteed, to the transactions that are paid by transfer, and finally to the financial management for the country.

2. The "discount policy" of currency issuing banks, that is, if there is an opportunity for foreign payment to generate demand for gold currency, and this demand threatens the country's gold reserves, especially the gold reserves of currency issuing banks, then the interest deduction on foreign exchange purchases will be increased to stimulate foreign currency holders to take advantage of this interest opportunity and cause difficulties to domestic demand.

Two. In areas where non-gold limited legal compensation currency system or paper money system is adopted:

1. As mentioned above 1, 2, adopt discount policy to prevent large-scale credit acceptance; besides

2. Adopt the policy of gold discount, which is also a means often used in the gold standard currency system where silver coins are used as auxiliary currency to pay in a limited way;

3. Implement the gold purchase policy in a planned way by buying and selling foreign exchange, and influence the "foreign exchange rate" in a planned way.

However, this policy, which was originally purely oriented to "monetary payment", will also become a substantial economic adjustment.

Currency issuing banks are in a strong position among banks that issue credit, and credit depends on the credit of currency issuing banks in many cases. Through this powerful position, the currency issuing bank can urge other banks to adjust the "money market", that is, uniformly adjust the conditions of short-term (payment and enterprise) credit and further adjust the profitable credit in a planned way, but in this way, the direction of commodity production has also been adjusted: this is the capitalist, formal voluntary and substantive economic behavior system which is closest to the "planned economy" among the relevant political groups.

This typical measure before World War I was taken on the basis of monetary policy. The starting point of monetary policy is to "consolidate" or stabilize the exchange rate. Even if it is very desirable to change, it is best to gradually increase the foreign exchange rate (in countries that adopt limited legal compensation currency system and paper money system). Therefore, this monetary policy is ultimately based on the material exchange rate of the largest trading region. However, there will also be some powerful interest groups closely related to monetary financing institutions, and their intentions are completely opposite. They hope to have such a monetary payment policy, that is

1. It lowers the foreign exchange rate of the domestic currency and creates export opportunities for entrepreneurs.

2. It reduces the exchange rate of currency against domestic products by increasing currency issuance, that is, the exchange rate of silver and gold materials coexist (which will mean that the exchange rate of silver and gold materials will replace the exchange rate of gold materials), and it is also possible to reduce the exchange rate of currency against domestic products by issuing paper money in a planned way, which is the same as improving the currency (face value) value of domestic products. The purpose is to create profit opportunities for profitable enterprises to produce goods. As far as the face value of domestic currency is concerned, the rise of commodity prices is considered to be the fastest consequence of the appreciation of domestic currency, so it is also the fastest consequence of the decline of domestic currency prices in foreign exchange comparison. This deliberate process is called "inflation"

So, on the one hand:

1. When the production price of precious metals drops sharply and the output increases sharply (precious metals are plundered at a low price), adopting (any kind of) material exchange rate will at least have an obvious and perceptible price increase tendency for many products in areas where the precious metal currency system is implemented, and maybe all products will have price increases in different degrees. Although this is not indisputable (in terms of its far-reaching influence), it is very important. On the other hand, there is no doubt that:

2. In the areas where (self-contained) paper money is implemented, the management of monetary payment policy generally makes their currency issuance only meet the financial needs of war when the financial situation is tight (especially during the war). Similarly, countries that implement material exchange rate or limited legal compensation for metal currency, at this time, not only-this will not necessarily lead to the constant change of monetary system-stop the exchange of their ticket circulation means, but also, in addition, by issuing paper money that is purely oriented by finance (again: war finance), make a transition to a definite and pure paper money system. At this time, metal coins became subsidiary currencies, because in the end, with the transition to a pure monetary system and the unimpeded issuance of paper money, large-scale inflation actually appeared, which brought various consequences. This situation is also certain.

A comparison of all these cases (1 and 2) shows that:

As long as there is free metal currency in circulation, the possibility of "inflation" is extremely limited:

1. "Mechanically speaking," because the amount of precious metals that can be used for coinage purposes is flexible, but after all, there is a fixed limit.

2. "Economically speaking" (under normal circumstances), because money can only be produced on the initiative of private interest classes, the desire to make money is oriented to the payment needs of the market economy.

3. At this time, inflation can only occur if the limited legal compensation metal currency (such as silver coins in countries that adopt the gold standard today) is replaced by free currency. It is true that the production cost of metal with limited legal compensation currency is greatly reduced and the output is greatly increased, so this form of inflation will appear widely.

4. The inflation of circulation means can only be imagined, because of the extension of credit and the gradual increase of credit as a circulation means. Although it is flexible, it is subject to fixed restrictions due to the solvency of currency issuing banks. Here, only when banks are in danger of not being able to pay, there is a chance of serious inflation, that is, paper money is usually restricted by war.

Like Sweden, there is also a potential gold "inflation" restricted by wartime exports. This special situation is very special and will not be discussed here.

B where there is a self-contained paper money system, the chances of inflation itself may not always be greater-because almost all countries have transitioned to the paper money system during the war-but in most cases, the chances of inflation consequences developing are obviously much greater anyway. Financial difficulties and the pressure of rising inflation prices to raise salaries and wages can clearly feel a tendency that is conducive to the county magistrate's financial management, that is, even if there is no absolute hardship and coercion, it is possible to get rid of this difficulty through major sacrifices, and continue to implement the inflation policy. There is no doubt that, as the situation of the Allies (during and after the First World War), the other situation of Germany and the third situation of Austria and Russia show, this difference is only in quantity, but in any case, this difference is obvious.

Therefore, the monetary payment policy, especially when the subsidiary limited law is used to compensate metal currency or implement the paper currency system, may also be an inflation policy (whether it is multi-standard metal currency inflation policy or "undifferentiated paper currency" inflation). In the United States, a country that is relatively uninterested in foreign exchange rates, the monetary payment policy was once a veritable inflation policy in a very normal period, without any financial motives. Today, many countries that allowed the expansion of means of payment in wartime still maintained their inflation policies after the war because of difficult pressure. The theory of inflation is not detailed here. First of all, it always means a special way to create purchasing power for some specific interest groups. Here, I just want to point out that the monetary payment policy in a planned economy, especially paper money, seems much easier to lead, but it is this kind of leadership that is particularly easy to serve unreasonable interests (from the perspective of stabilizing the exchange rate).

Because the monetary payment policy, that is, the monetary system, is formally reasonable in the circulation economy, according to the significance discussed at present, it can only mean excluding some interests: 1. They are either not market-oriented-for example, national financial interests-2. They are not interested in keeping the proportion of foreign exchange as stable as possible as the best basis for reasonable calculation. On the contrary, they are interested in inflation and the means to maintain it. Of course, whether this last thing is popular or blamed is not a question that needs to be answered by experience. However, there is no doubt that this happens in experience. In addition, in the circulation economy, making money and means of circulation is the business of the relevant classes who are "mercenary", rather than the demand for "appropriate" money quantity and "appropriate" money form. A viewpoint oriented to substantive social ideals is likely to take this fact as a reason for criticism. If their argument is correct, only administrative money can be "controlled" by people, not circulated. Therefore, administrative currency, especially the paper money that can be printed in any quantity and variety at a low price, is fundamentally a special means of making money from a-no matter-actually reasonable point of view. However, this statement is logically convincing in form-however, in the future, like today, it will be personal "interests" that will dominate the world, not an "ideal" of economic management. Faced with this fact, the value of this argument naturally has its limitations. However, in this way, there is also a possible conflict between formal rationality (in the sense insisted here) and substantive rationality (for a monetary payment management that does not consider the coin metal problem from the perspective of material exchange rate, it can be imagined in theory); And the key to the debate is only on this issue.

Obviously, this whole debate is about Nape's masterpiece "The Monetary Theory of the Country" (1905, 1 edition; 19 18 2nd edition [192 1 3rd edition; 1924 4th edition]), the natural discussion only stays in this range, and it is also a very brief summary in this range, without any subtle discussion at all. Contrary to the author's original intention, it may not be completely without the author's fault. As soon as this book came out, it was immediately emasculated by its value judgment, and naturally it was warmly welcomed by the Austrian monetary payment management authorities who "spammed paper money". These events do not prove that Nappe's theory is "wrong" at any point, but it may show that it is not perfect in terms of substantive monetary utility, which is certain anyway. This point will be discussed further later.

Addendum to national monetary theory

Napp has successfully proved that any recent monetary payment policy, whether directly implemented by the state or regulated by the state, is determined by the "foreign currency exchange rate" when trying to transition to the gold standard monetary system or the indirect gold standard exchange rate monetary system as close as possible: pay attention to the exchange rate of domestic currency against foreign currency, first of all, the exchange rate of British currency against foreign currency. Due to the "currency equivalence" with Britain, the gold standard country with the largest transaction area and the most extensive connection with payment in the world, Germany first stopped the circulation of silver coins, then France, Switzerland and other countries in the "monetary union", as well as the Netherlands and finally India, changed their silver coins as free circulation currencies to limited legal compensation currencies, and indirectly made arrangements for external payment of gold exchange rate. Austria and Russia are close behind. The "monetary payment" management agencies in these currency areas implement "self-contained" (that is, non-convertible banknotes that play a monetary role) and also adopt indirect gold exchange rate measures so that at least foreign countries can be paid with gold at any time. In other words, in fact, they feel that only a (as far as possible) fixed foreign exchange rate is important. Therefore, Napp believes that the exchange rate of coinage materials and overall materials is only of this significance. He concluded that other indirect gold exchange rate measures and direct material exchange rate measures (see Austria and Russia! ), in line with the purpose of this "foreign exchange rate". Although-other things being equal-this is by no means absolutely correct for the material exchange rate. Because as long as there is no mutual prohibition between two currency areas that use the same material exchange rate (either gold exchange rate or silver exchange rate), the fact that the material exchange rate in the same sense will undoubtedly greatly contribute to the consolidation of the exchange rate. However, as long as this is true-and under normal circumstances, in fact, it is true to a large extent-it does not prove that only the former viewpoint can be considered when choosing the "material" for coinage. Today, when choosing coinage materials, the first is metal currency (gold coins and silver coins come first today), and on the other hand, bill currency (the characteristics of multi-standard and limited legal compensation currency, as mentioned earlier, we have reason to put it on hold for the time being).

That view holds that besides, paper money and metal money play the same role. Formally speaking, there are great differences: paper money is always "administrative currency", and metal currency may be administrative currency, but it is not necessarily; Paper money can (completely) not use the physical exchange rate. The difference between "devalued" paper money and silver, which may be "devalued" as industrial raw materials when it is generally stopped as currency in the future, will not be equal to zero (Nappe occasionally admits this view). There is no doubt that paper once existed, and it still does (1920). Like precious metals, it is not a commodity that can be stored at any time. However, 1. Possibility of objective production; 2. There is a huge difference between the production cost and the considered demand, and in any case, metals are so strongly restricted by existing mineral deposits, so it can be said that under normal circumstances, it is indeed possible (before World War I! ) At any time (comparatively speaking), no matter how many pieces of paper are used as administrative banknotes (even copper coins-in China-can be compared with silver coins, especially gold coins), it is "doing whatever you want". And it costs (relatively speaking) negligible "cost". The most important thing: the denomination of paper money can be determined at will, regardless of the amount of paper used. When casting metal currency, it obviously only appears in the form of tokens, that is to say, it is far from the same scale and significance. This is not the case with cast metals. Although the quantity of coin metal is elastic, in any case, compared with the possibility of papermaking, its quantity is much more certain and cannot be compared with the possibility of papermaking. In any case, its quantity is much more certain and cannot be compared with papermaking. In other words, the amount of cast metal is limited. It is true that if the monetary payment management institution is only guided by the foreign exchange rate, that is, guided by the (as far as possible) fixed exchange rate target, then at this time, it has also established restrictions on the standards, even if it is not a "technical" restriction: Nappe may not agree with this. At this point, he is right in form-but only in form.

What about "bring your own" banknotes? Here, Knapp will also say that the situation is the same (Austria and Russia, please): the technical and mechanical obstacles of metal shortage are gone. Is this meaningless? Nap is undecided about this problem. He might say, "Death is hopeless". However, (we have to put aside the fact that this kind of paper is absolutely discontinued at present), there is no doubt in the past and now that there is 1. Interests of leaders of political and administrative institutions