Ludwig von Mises on Money and Inflation.pdf - The Ludwig von ...

exchange, the weight and content of which was determined by the government
offices and acknowledged by the laws and by the courts. I cannot
enter into the whole history of money. But what resulted was the gold
standard. e system of the gold standard, the gold exchange standard,
is practically the only monetary system in the world. is was not done
by governments; it was done through the market; it was done by parties
exchanging on the market.
In the history of money, which is identical with the history of government
attempts to destroy money, we must distinguish two great periods.
And these two periods are not separated from one another by some monetary
fact or by some specific monetary problem—they are separated from
one another by the great invention made in the 15th century by a man
named Gutenberg. If the governments need more money—and they always
need more money because they don’t earn it—the simplest way for
them to increase the quantity of money since Gutenberg is just to print it.
Just as the government says “dollar”—but let us not use the term of a
country with money which still functions today—let us say “ducats.” You
have agreed upon a definite quantity of ducats. And then, because the
government doesn’t want to restrict its expenditures, it declares: “What I
have printed in my printing office, in my government printing office and
called a Ducat is also a Ducat, the same thing as a gold Ducat.” ese
things started when there were private banks to which the government
gave privileges. At the time you made this agreement a Ducat meant a
definite quantity of gold. But the government now says it is something
else. When the government does this, the situation is similar to what it
would be if you agreed to deliver a horse to another party but instead of
a horse you delivered a chicken, saying, “is is all right . . . I say that
this chicken means a horse.” It is such a system that destroys the markets,
you know.
I want to say something about the reason why the gold standard was
adopted in the first place and also why today it is considered as the only
really sound system of money. It is because gold alone makes the determination
of the purchasing power of the monetary unit independent of
the changes in ideas of governments and political parties. Gold has one
advantage. It cannot be printed. It cannot be increased ad libitum [at
pleasure]. If you think that you, or an institution with which you are connected
doesn’t have enough gold money, you cannot do anything about it
that would increase the quantity of gold money in a very simple and cheap
way. e reason why there is the gold standard, why the gold standard was
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