THE MONETARY SIN OF THE WEST
Translated by Roger Glémet
"...After the war Rueff became one of the leading French members of the classical liberal Mont Pelerin Society, the president of the Inter-Allied Reparations Agency (IARA), and the minister of state of Monaco. Rueff was strongly in favour of European integration and served from 1952 to 1962 as a judge on the European High Court of Justice.
He advised General de Gaulle after de Gaulle became French President in 1958. The 1958 Rueff Plan (also known as the Rueff-Pinay Plan) balanced the budget and secured the convertibility of the franc, which had been endangered by the strains of decolonization.
In the 1960s, Rueff became a major proponent of a return to the gold standard and critical of the use of the dollar as a unit of reserve, which he warned would cause a worldwide inflation. A member of the Académie des Sciences Morales et Politiques, Rueff was elected to the Académie Française in 1964. Foreseeing the emerging European Community Common Market, Rueff recommended cutting barriers to competition in his second report. Along with co-writer Louis Armand and helped by an ad-hoc committee of experts, the "plan Rueff-Armand" - as the press would call it - is published in 1960. The full title of the report is "Rapport du Comité pour la suppression des obstacles à l'expansion économique", which translates as "Report on suppressing barriers to economic growth"..."
The problem of Western currency is more topical than ever. For ten years now, the international monetary system has been patched up by many expedients that were intended to extend its assured life. It cannot endure very long in the present state. The following pages afford a description of its modifications over time. They provide a diagnosis and make a prognosis possible. Some qualification is necessary, however, as regards the rate of foreseeable evolution. The art of monetary expedients has been refined to such a point over the last ten years that no one can predict what artificial devices can be generated by the fertile minds of experts. One thing is certain, however: while additional innovations may stave off the gradual deterioration of the system for a while, they cannot change the outcome. As far as prognostication is concerned, events can never be wrong. But unfortunately, events have already passed judgment. It is to be hoped that they will not continue to show that in the monetary field, as indeed in other fields, the same causes always bring about the same effects, and those who persist in ignoring the past are irrevocably doomed to live the same sequence of events again..."
[Mrt: Interesting part: "Nathanaël or Paper-Gold" pg.131]
"...During the ministerial meeting of 17-18 July 1967, the participants
consistently affirmed and solemnly reaffirmed that any reform
would only be implemented once the U.S. balance-of-payments
deficit had been eliminated, failing which such reform would only
look like an expedient to enable the deficit to be settled for a little
while longer without any gold transfer.
There are two procedures—and only two—for correcting a
balance-of-payments deficit: either administrative action through
authoritative controls of capital outflows, or introduction of an
adequate money-management technique...."
"Nevertheless, the high monetary authorities of the United States,
urged on by zealous mediators, state that "gold as an exchange instrument
is bound to disappear" and want to substitute "papergold"
The first reason, they say, is that "one does not see how enough
gold could be made available to meet international payments requirements."
With the gold price at its present level, they are certainly right.
But they forget that since the price of gold was fixed at this level
($35 an ounce) in 1934, all prices in the United States have more
than doubled. Gold requirements are not related to a specific weight
but to a specific value. The decision that maintained the price of
the yellow metal at a level unrelated to the general price level has
in fact reduced by more than 50 percent the nominal value of gold..."
BY THE SAME AUTHOR
The Age of Inflation, 1964
Balance of Payments, 1967
The Gods and the Kings, 1972