Re: Income tax and employment

["Esteban Perez" <eperez@xxxxxxxxxxxx>]

I don t know exactly the role played by Lowe in the stabilization process. Lowe joined the ministry of finance in 1922. Standard references on the subject such as Feldman (1993) or Meier s Recasting Bourgeois Europe (1975) do not mention Lowe when they analize the stabilization. Feldman mentions Lowe but when he was with the War Office Demobilization. In Meier I think he does not appear. It would be interesting to know Nell s source (role in practical management may mean many things). In Friedrich s book Before the deluge Lowe sounds modest about his contribution to the stabilization process. Perhaps Lowe s role has not been accurately recognized.

Lowe studied with Simmel, believed in the QT and curiously enough expressed derogatory views on German economists during the hyper period, in similar terms as those used by Ludwig Von Mises.
What did he think about Knapp?.

As I understand the initial stabilization plan was proposed by Karl Helfferich. It was a rye standard. This was a commodity reserve currency. He proposed the creation of a national mortgage bank backed by industry, agriculture and commerce. The bank would issue notes pegged to the price of rye. This was in August 1923. Rudolf Hilferding opted for a gold standard rather than a commodity based standard. The main argument against the Hilferding plan was that it would not provide sufficient liquidity. Hans Luther was the finance minister that finally worked out a accepted program for currency reform. Luther s plan was based on Helfferich s initial proposal but backed by gold which in turn was backed by a mortgage on land and assets. This was in November 1923.

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>>> "Forstater, Mathew" <ForstaterM@xxxxxxxx> 05/08/02 11:20am >>>
According to A. Lowe (who, Nell writes in the New Palgrave, "was largely responsible for the planning and management of the currency reforms that brought the great hyper-inflation to an end") the Rentenmark was "backed by a general mortgage on the industrial and agricultural property of the country" (1935, p. 19).  Lowe believed it to be a case in which the success of policy depended on a co-operation of economic and non-economic (sociological and psychological) factors.  (Adolph Lowe, Economics and Sociology, 1935).

-----Original Message-----
From: Esteban Perez [mailto:eperez@xxxxxxxxxxxx]
Sent: Tuesday, May 07, 2002 3:37 PM
To: pkt@xxxxxxxxxxxxxxxx; rosserjb@xxxxxxx; has27@xxxxxxxxx
Subject: Re: Income tax and employment

The Rentemark was in fact introduced on Nov. 15 1923. That is towards the end of the hyper. It was the result of different proposals by Helfferich, Hilferding, Luther, and perhaps Schacht who received the credit for its success. It was supposed to be backed by productive assets (if I remember correctly) not just land. Luther who passed the Rentemark law on October 27 treated the rentemark as "a medium of exchange that would be accepted by law in all offices handling money in the Reich".

"The new appellations 'rentebank'  and 'rentemark' also had a happy psychological advantage, since they not only reflected the fact that new money was based on annuities paid on the mortgage of the assets of the productive classes but also conjured up memories of the highly successful  19th century Rentebriefe which were state guaranteed bonds issues after the emnacipation of the peasants on which the redempetion of peasant holdings was paid to the landlords". Feldman. The Great Disorder. p. 752-753.
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>>> "J. Barkley Rosser, Jr." <rosserjb@xxxxxxx> 05/07/02 03:05pm >>>
     Well, actually the German rentenmark was in
principle backed by land, as its name indicates.
But, this did not work out too well once the hyperinflation
really got going.
Barkley Rosser
----- Original Message -----
From: "Henry Schappach" <has27@xxxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Sent: Monday, May 06, 2002 3:26 PM
Subject: Re: Income tax and employment


> Fiat currency by definition is "currency backed by the full faith and
> credit of the _____________ government". One may insert the name of any
> country or government since fiat currency is not redeemable for gold or
> silver or anything of any intrinisic value.
>
> One of the most famous photographs of the 20th. century shows a German
> peasant pushing a wheelbarrow that contains a huge mound of fiat
> deutschmarks. The peasant is pushing the wheelbarrow to a bakery to
> exchange the heaped amount of fiat deutschmarks for one (1) loaf of
> bread. This famous photo was taken a few years after World War 1.
>
> What happens today or tomorrow when the peoples of any country lose
> faith in "the full faith and credit of any country's fiat currency?"
>
> Idealism is wonderful and I would dearly love to embrace a philosophy
> where no one goes hungry or is in want or need. But we live in a
> realistic and not an idealistic world and the "full faith and credit of
> any country in fiat money" can reach a point where the peoples of any
> country (and those who believe in globalization) can be strained to the
> point where there is no longer credibility in the fiat money of any one
> or more nations.
>
> I don't like doom and gloom scenarios but feel there is a need  to
> address "realism". I do not have the ability to address the question(s)
> but would like someone with much better economic credentials to do so.
>
> Henry A. Schappach
>
>