Part 6 The western countries.

The necesary “Socially ” currency stock.
The pyramid of the bank-money is therefore
built up on basis of papermoney.
Private fiducery currency is exately the same.
All credit money needs a definite amount of
In reality this is a question of a mass of bills which after clearing have to be honnored financially.
The mass of currency thrown in circulation in a capitalist society has two roles ,
That of constituting the equivalent of the comodities it enters in to this circulation
( value defined by money here and the money acts as means of circulation)
and that of representing the values of the bills which ,taking into account neutralice each other
( here value , money acts as means of payment ) here we see the two functions of money
already described. Money as means of payment effecting the payment of bills like money acts
as means of circulation has a definite velocity of circulation.
Bank-money is based on public paper-money and as long as it’s latter is convertible and remains
based on the stock of metal-currency in the bank of issue , the use of paper tokens sholdent
give any problems regarding the currency.
The fact that only a fraction of the bank-notes are covered by metal in hand and that only
a fraction of the bank-money are covered by bank-notes meerly represent a “social” saving
in circulation devises . Made possible by the behavior of the public which was discovered
In order for the currency mechanisms working to function proberly it’s suffiicient to keep
the use of convertible fiducery currency whitin the limits of the necessary “socially”
stock of currency.
In earlier times some of the biggest writers have seen in this a sort of proof that money
has never being a commodity with it’s own value but always had a rate determined by
the public authorities.
In reality the transition from money based on gold/silver standard to partly inconvertible
money after the first world war lead to two quite different phenomenas.

1: A real currency depreciation caused by the enormous expenditure on arms and war,
( Isn’t it what we do right now in a little smaller scale )
Togeather with a constantly growing in public debt.
2: The increasing intervention of the state in economical life , the growing organisations
of certan sectors of the economy of the capitalistic ( bourgouis ) class as a whole.

A currency with an intrinsic value is essential to a pure market economy based on exchange.
The more element’s of economis organisations there are introduced into the economy even
more completely can an abstract form of currency a value , money of account be
substituted for this currency of intrinsic value.
As long as a country has a normally balance of payments the convertibility of it’s
paper currency is secured by a relative modest stock of currency-metal.
But when the ballance of payments begin to regulary became a debit ballance
only a substantial stock of metal-coins can maintain the convertibility of
the paper currency otherwise the outflow of gold can cause speculation and panic.
Therefore if the majority of importent countries abandom the metal as a currency
value ( gold-stanard ) the other countries had to follow ( It happend in the 1930 ties )
otherwise their national currencies will became the object of international speculation
and withdrawn from circulation.