When a Money Stock Independent of the State Was at Least Discussable

Two days ago I came across an item that makes an interesting followup to John Cochran's response to Krugman and DeLong. As Cochran notes, DeLong's post is a long meandering post that ostensibly tries to explain what Mises was getting out in his monetary theory. It turns out that not everyone who has read Mises' monetary theory has had difficulties in understanding.

Upon the publication of the English translation of Mises' The Theory of Money and Credit, a reviewer in the January 21, 1935 Manchester Guardian had this to say:

Austrian ideas are increasingly affecting economic thought at London and elsewhere; and many of the conceptions round which controversy rages to-day (and will rage tomorrow) derive from Mises. Both in the treatise itself and in the introduction written for this English edition that author sets down his views boldly. He holds that one of the worst fates that can befall a community is that its money should become the plaything of politics. Hence he is for gold against paper, for the currency school against the banking school, for the restrictionists against the expansionists. And he sees in the extension of fiduciary media by the banks a danger only less menacing than the inflationary tendencies of Governments.

Note that the reviewer tosses out phrases like "gold against paper," "the currency school," and "the banking school" as if his readers know of which he was speaking. The review "gets it." The reason Mises argued for gold and currency school theories is that he understood the dangers and destructive consequences of state control of money. That makes Mises' work as timely as today's headlines. The reviewer even picked up on Mises' conviction that fiduciary money issued by private banks is only marginally less dangerous that state controlled inflation.

There is absolutely no indication that Mises' arguments are obtuse, hard to follow, or otherwise in need of special gnostic gifts to divine their meaning.There was once a time, it seems, when economists and indeed intelligent citizens could understand basic monetary theory instead of wallowing in willful ignorance.

Those interested can read a host of reviews of The Theory of Money and Credit and all of Mises' other works in the Annotated Bibliography compiled by Bettina Bien Greaves, a long-time participant in Mises' New York seminar.