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Monetary and Economic Policy Problems Before, During, and After the Great War

Ludwig von Mises

Publication Year: 2012

Published by: Liberty Fund

Title Page, Copyright

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pp. 2-7


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pp. vii-viii

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pp. ix-x

This volume, like the other two in this series, was made possible by the continuing support of Hillsdale College, which arranged for the translations of virtually all the articles, essays, and lectures contained in the volume. I would like to particularly thank Dr. Larry Arnn, Hillsdale College president, ...

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pp. xi-xiv

This three-volume set of the Selected Writings of Ludwig von Mises has been published in reverse chronological order. The current volume, the last prepared in the series, in fact, is devoted to some of the earliest of Mises’s writings on a variety of economic issues. ...

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pp. xv-lxx

The articles and lectures included in this volume by the Austrian economist Ludwig von Mises were written in the years before, during, and after the Great War of 1914–18, as the First World War used to be called. They focus on the monetary, fiscal, and general economic policy problems of, first, the Austro-Hungarian Empire ...

Part 1. Austro-Hungarian Monetary and Fiscal Policy Issues Before the First World War

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Chapter 1. The Political-Economic Motives of the Austrian Currency Reform

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pp. 3-30

The fact that from the middle of 1888, changes in the value of the Austrian currency had taken on a pattern disadvantageous to domestic production gave a direct impetus for the reform of the Austro-Hungarian monetary system, a reform that had been dragging on for decades before this. ...

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Chapter 2. The Problem of Legal Resumption of Specie Payments in Austria-Hungary

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pp. 31-82

The currency reform that began in Austria-Hungary in 1892, and for whose introduction great material sacrifices were required by the two halves of the empire, still awaits formal conclusion through the legal resumption of specie payments. At the present time, the lawful money of the monarchy remains a paper currency. ...

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Chapter 3. The Foreign Exchange Policy of the Austro-Hungarian Bank

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pp. 83-94

The monetary system of the Austro-Hungarian monarchy has, during the last few years, aroused general interest in economic circles both at home and abroad. Theorists were first attracted to this question by Prof. G. F. Knapp’s excellent work,2 which found as many ardent admirers as opponents. ...

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Chapter 4. On the Problem of Legal Resumption of Specie Payments in Austria-Hungary: A Reply to Walther Federn

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pp. 95-103

The remarks that I published in this journal last year about the problem of legal resumption of specie payments in Austro-Hungary2 have received a response by Walther Federn3 in this journal’s first issue for this year. The author says that my claim that the Austro-Hungarian Bank made foreign exchange available at all times ...

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Chapter 5. The Fourth Issuing Right of the Austro-Hungarian Bank

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pp. 104-116

The Austrian law of August 8, 1911 (Imperial Law Gazette no. 157), and the Hungarian Article of Law no. XVIII of 1911 (which are substantially the same) brought to a provisional close a disagreement that has continued for several years.2 They extended the note-issuing right [Privilegium] of the Austro-Hungarian Bank ...

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Chapter 6. Financial Reform in Austria

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pp. 117-130

After more than a century of chronic budget deficits, about twenty years ago Austria succeeded in reestablishing a balance in its public finances. From 1889 to 1909 the national accounts generally showed a surplus. The situation changed again in 1908, and the estimate for 1909 predicted a deficit, ...

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Chapter 7. The General Rise in Prices in the Light of Economic Theory

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pp. 131-155

The problem of rising prices, which has for many years occupied the attention of our best minds, cannot be dealt with in the usual statistical-empirical manner. The collection and comparison of price data is not a substitute for the intellectual work of theoretical economists; ...

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Chapter 8. On Rising Prices and Purchasing Power Policies

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pp. 156-167

In the middle of the nineteenth century, prices increased dramatically all over Europe and reached their peak in 1874. At that point, prices began to decline and continued their downward movement until the mid-nineties. Since about 1896 a new upward movement in prices has set in, and its end point is nowhere in sight. ...

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Chapter 9. Disturbances in the Economic Life of the Austro-Hungarian Monarchy During the Years 1912–1913

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pp. 168-182

The economic upturn on the world market, which had surpassed its three predecessors in almost all sectors of manufacturing, reached its zenith in 1912; however, 1913 brought a market reversal and the weakening of the business cycle.3 ...

Part 2. Economic Policy Issues in the Midst of the Great War

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Chapter 10. On the Goals of Trade Policy

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pp. 185-208

The elements of a foreign trade policy can be designed based only on an understanding of what emerges from the free play of economic activity: a regional division of labor that results in the greatest supply of goods at the least cost. From this point of view, protectionist policies can never be justified on economic grounds. ...

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Chapter 11. Inflation

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pp. 209-215

The first one is for the government to issue war bonds. Subscribers pay the specific amount for the bonds by drawing upon their own capital or borrowing the money from third parties who have the liquid assets to lend. A practical and important example of this is the major banks that use their customers’ deposits and savings ...

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Chapter 12. On Paying for the Costs of War and War Loans

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pp. 216-226

The favorable outcome of a war is not solely dependent on the number of soldiers, or the valor and brilliance of their military commanders. An equally important factor is the capacity to provide the army with supporting material, arms, and military equipment of every kind. ...

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Chapter 13. Remarks Concerning the Problem of Emigration

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pp. 227-232

Aside from its general political and economic harmful effects, emigration also involves military disadvantages as well. In the decade before the war the monarchy permanently lost at least 250,000 conscripts in this way. ...

Part 3. Austrian Fiscal and Monetary Problems in the Postwar Period

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Chapter 14. Monetary Devaluation and the National Budget

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pp. 235-239

There exists a close relationship between changes in the quantity of money and changes in the money prices of goods and services. If the quantity of money is increased while other conditions remain the same, then the prices of all goods and services will rise. ...

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Chapter 15. For the Reintroduction of Normal Stock Market Practices in Foreign Exchange Dealings

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pp. 240-243

Increasingly, goods are offered for sale with the stipulation that payments will be accepted only in foreign currency. Already a significant part of wholesale business and real estate transactions are being facilitated through the use of foreign money. The crown is starting to lose its standing even in retail business. ...

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Chapter 16. On Carl Menger’s Eightieth Birthday

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pp. 244-247

Scientific development does not take place in a simultaneous and uninterrupted ascent; periods of great achievement are followed by periods of intellectual exhaustion; the masters are followed by the imitators, until men of genius again bring forth a new flowering. ...

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Chapter 17. How Can Austria Be Saved?

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pp. 248-251

In spite of the wretched condition in which we find ourselves I consider our situation not to be an unfavorable one. Vienna and Austria would have a positive future ahead of them if we didn’t do everything to worsen our own situation. What is occurring is practically the opposite of what needs to be done. ...

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Chapter 18. The Claims of Note Holders upon Liquidation of the Bank

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pp. 252-258

The notes issued by the Austro-Hungarian Bank from the beginning of the war were only pro forma banknotes; in reality, they were government notes. In order to avoid the unfavorable impression that issuing government notes would have made on the general public, the regime chose not to finance the war with its own notes, ...

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Chapter 19. The Austrian Currency Problem Thirty Years Ago and Today

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pp. 259-263

From March 8 to March 17, 1892, the government-convened Currency Inquiry Commission met in Vienna. The chairman was Finance Minister [Emil] Steinbach;2 beside him stood the memorable Eugen von Böhm-Bawerk3 as section head. ...

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Chapter 20. The Restoration of Austria’s Economic Situation

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pp. 264-270

The current economic situation is the most dangerous facing the Austrian state and its people since the crisis began with the overthrow and economic partition of the former Austro-Hungarian Monarchy. The possibility for an immediate catastrophe confronts us. ...

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Chapter 21. The Austrian Problem

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pp. 271-273

In his recently published book The Suicide of a Nation, Dr. Siegfried Strakosch undertakes a thorough investigation of the problems facing the Austrian economy. Dr. Strakosch, who is active in industry and agriculture, and who, as a writer on agricultural policy, has earned a reputation ...

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Chapter 22. The Gold-Exchange Standard

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pp. 274-278

The Bismarck-Bamberger coinage reform of 1871–73 put an end to the fragmentation of the German currency and at the same time shifted the German currency system from one based on silver to one based on gold. The idea behind it was the view that in everyday commercial transactions wider scope needed to be assigned ...

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Chapter 23. The Social Democratic Agrarian Program

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pp. 279-281

In spite of the collapse of the ideology of socialism, and the failure of its prescriptions for universal happiness, the Social Democratic Party has not disappeared from the scene. It continues to exist, even after renouncing its original program. And although it will not admit it, its new program now means: ...

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Chapter 24. America and the Reconstruction of the European Economy

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pp. 282-286

Politically, Europe can expect no help from America for the solving of its own problems. Even in purely economic policy matters it is a fantasy to expect a remedy from the United States for the plight of Europe. ...

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Chapter 25. The Currency and Finances of the Federal State of Austria

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pp. 287-295

The basic ideas of the reconstruction plan that federal Chancellor Dr. Seipel decided to carry out when he assumed his duties in summer 1922 were extremely clear and simple: the rejection of any further use of the printing press to fund state finances, restoration of a balanced budget, and fixing the gold value of the crown.2 ...

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Chapter 26. The Economic Crisis and Lessons for Banking Policy

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pp. 296-300

At least until very recently, English and American banks have acted, in principle, purely as bankers in the classical sense of the term. That is, they have viewed their primary business to be the lending of money. The development of German banking activity made them not merely banks but also put them in the business ...

Part 4. Interventionism, Collectivism, and Their Ideological Roots

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Chapter 27. The Economic System of Interventionism

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pp. 303-307

Two economic systems are struggling for supremacy. On the one hand there is the capitalist system—that is, private ownership of the means of production—advocated by liberalism; on the other hand, there is the socialist or communist system—that is, collective ownership of the means of production supported by socialists of all shades.2 ...

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Chapter 28. Economic Order and the Political System

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pp. 308-315

Economic and political liberalism go hand in hand, and appeared in history at the same time. Only in the second half of the nineteenth century did political parties begin to believe that in the long run it was possible to successfully combine liberalism and democracy with interventionist, statist, and socialist economic policies. ...

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Chapter 29. Remarks Concerning the Ideological Roots of the Monetary Catastrophe of 1923

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pp. 316-322

The ideas that shape the policies of nations do not drop from the sky. They are conceived by thinkers. Whoever wants to write the history of an age must first study the writings that have shaped public opinion. The ideas that guided German policies in the twentieth century were those created by German political philosophy ...


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pp. 323-324

Appendix A. Maxims for the Discussion of Methodological Problems in the Social Sciences: Paper Delivered at the Private Seminar

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pp. 325-332

Appendix B. Short Curriculum Vitae of Mayer Rachmiel Mises of Lemberg

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pp. 333-336


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pp. 337-354

Production Notes

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p. 433-433

E-ISBN-13: 9781614879008
E-ISBN-10: 1614879001
Print-ISBN-13: 9780865978331

Page Count: 432
Publication Year: 2012

Edition: None

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Subject Headings

  • Austria -- Economic policy.
  • Austria -- Economic conditions -- To 1918.
  • Austria -- Economic conditions -- 1918-1945.
  • Monetary policy -- Austria -- History -- 20th century.
  • Fiscal policy -- Austria -- History -- 20th century.
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