Exchange Controls
Devaluation not only failed to prevent capital flight; it frequently intensified it. Most Latin American republics, whose currencies depreciated in 1929 and 1930, resorted to exchange controls in 1931 and 1932. In Europe, Den…
The Franc–Pound Conflict
Despite the lack of highly precise data, it is known that a significant portion of the foreign exchange accumulated by France between 1926 and 1928 consisted of pounds sterling. Thus, part of the gold held by the Bank of Engl…
Devaluation and the Balance of Payments
As price increases were more rapid in France than abroad, the government was compelled to devalue the franc on several occasions. For these structural reasons, a deficit in the French balance of payments emerged; what is cert…
Competition in Short-Term Foreign Lending
The Federal Reserve Act, which established the United States central banking system in 1913, granted national banks, for the first time, the right to engage in acceptance operations. By 1917, total dollar acceptances arising …
Use of Credit
Through its various forms, credit is essential to finance the expansion of operations, not only because it makes growth possible, but also because it allows the exploitation of leverage when the cost of borrowed capital (cred…
Cash Flow Projection Horizon
The period over which the net cash flows generated by a project are to be considered is of paramount importance for evaluation purposes. It is necessary to define a specific horizon, since it is entirely unrealistic and impra…
The rules of the game
Monetary policy, however, was supposed to reinforce the effects of these automatic mechanisms for adjusting external payments, not hinder them. Holders of inventories financed through borrowing, on the one hand, saw the burde…
Discount rate policy and the “rules of the game”
Discount rate policy did not have the same scope in all countries and did not always follow the so-called “rules of the game.” Here too, the United Kingdom enjoyed a clear advantage linked to the structure of London’s interna…
Adverse Influence on Debtor Countries
Alongside this action that was favorable to both borrowers and lenders, situations periodically emerged that were consistently advantageous to creditors but difficult for debtor countries. These situations were generally char…
The International Gold Standard: Myths and Realities of the Nineteenth Century
Long considered definitively consigned to history, the recent difficulties of the international monetary system and the controversies they provoke demonstrate quite clearly that this is not the case. This should be welcomed, …