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

what later became the United States through inflation, then the inflation
was justified. e catastrophe couldn’t be avoided then. But the catastrophe,
the breakdown of this currency in 1781 after the Revolutionary
War, did not mean the same thing that it would have meant years later
when the economic conditions changed. In the years of the Revolutionary
War the American colonies were a predominantly agricultural country;
most of the people were owners or workers of an agricultural piece of land
and could survive the catastrophe which the breakdown of the American
currency, the Continental Currency, meant after the Revolutionary War.
Getting food was not then a matter of going to the market. ey didn’t
use money to buy food or hardly any other things. When the Continental
government inflated in 1781, the man who had a small farm and who
worked with his family on this farm and had a few dollars, he lost these
few dollars because of the inflation, but that didn’t affect him very much.
erefore, the whole problem of inflation was only of minor importance
for the Americans at the end of the Revolutionary War.
We cannot compare conditions today in the United States with those
in the United States of 1781. Today we no longer have the simple system
which existed at that time under which the money economy meant very
little for most people. We have had other such examples in the past. But
under the conditions of a highly developed society, under the division of
labor under the conditions of society in which practically everybody depends
on working for other people and is paid by money and uses this
money in order to buy things, under these conditions which I do not have
to describe because they are known to everybody, a breakdown of the currency
would mean something quite different. ere is no excuse for a
government that resorts to inflation today saying, “But, don’t forget, we
have an old tradition of inflation. We are an independent nation today because
we had an inflation in the War of Independence, in the Revolution.”
You cannot compare conditions.
ere was also, for instance, the great problem of the United States,
the greatest historical problem for the United States, the Civil War in the
1860s. ere were the Northern States and the Southern States. And the
Southern States were in a very bad situation because they had very little
industry. eir agricultural production was great, but their industries were
not in a position to produce the needed armaments. From the first day
of the Civil War, this was a very unfortunate situation for the Southerners
especially as the Navy of the North was in a position to prevent trade
between the Southern States and the European countries which would
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