Chapter dzdz: Ļe Image of the Gold Standard ȀȈȄIn Russia, also, gold-standard opponents argued that monetary reform
would not be worth the trouble, since a new war would only make the
paper money irredeemable again. Ļe reply was that irredeemable paper
money should be abolished now so that new issues could be put into circu-
lation if the occasion arose. Ļe currency reform could be a “reconstruction
of war material” (Schultze-GävernitzȀȇȈȈ, p.ȃȅȁ). Starting from the gold
standard, the government would have better wartime financial alternatives
than if it started from irredeemability.
Early inȀȇȆȈ, when the world-market price of silver had sunk so low
that the Austrian gulden was again worth as much as its supposed silver
content, or even slightly more, the coinage of silver on private account
threatened to inflate the money supply and price level. Ļe Austrian and
Hungarian governments responded by closing their mints to the free
coinage of silver. Ļat action had been taken in a legally very informal
way, however, leaving the possibility that the silver standard would come
alive again. For some years the gulden floated at a value above that of its
supposed silver content.
ByȀȇȈǿ, a different aspect of the loose link remaining between the
gulden and silver—one working through speculation about domestic re-
demption and coinage policy and American silver-purchase policy—came
to the fore, providing one of the strongest motives to reform. Ļe Austrian
financial press and Parliament seemed preoccupied with the progress of
the Sherman Silver Purchase Bill in the U.S. Congress, and unusual day-
to-day jumps in the price of silver and the gulden’s exchange rate were
generally attributed to news from Washington.
Finance Minister Steinbach warned Parliament onȀȃMayȀȇȈȁthat
forces supporting and opposing free coinage of silver in the United States
were almost evenly balanced; powerful influences on the Austrian cur-
rencycouldcome from that direction. “Ļe rate fluctuations of the yeardzǺǻDz,
which you all remember, gentlemen, have brought us asmall foretasteof
what would happen if silver coinage were made free today in the United
States of North America” (Austria, Parliament, Chamber of Deputies
ȀȇȈȁ, p.ȄȈȂǿ).
Another aspect of legal untidiness was the existence of four distinct
types or concepts of gulden:(Ȁ)the ordinary fiat gulden (“gulden of Aus-
trian currency”), in which currency and bank deposits were denominated
and in which most prices and debts were expressed;(ȁ)the silver gulden,
in which some bonds and preferred stocks were still denominated and
which could again become separated from the ordinary gulden if silver