PREFACE TO ENGLISH EDITION

'shortage offoreign exchange'('Devisennot') arisesinthesecountries.
Foreignexchangeis infactunobtainableattheprescribedprice,and
the centralbankis debarredfrom recourse to the illicit marketin
whichforeign exchange is dealtin atits properpricebecauseit
refuses to paythis price. This'shortage' is then madethe excuse
for talk about transfer difficulties andfor prohibitionsofinterest
andamortizationpaymentsto foreign countries. Andthis hasprac-tically brought international credit to a standstill. Interest and
amortization are paidonolddebtseitherveryunsatisfactorilyor
notatall,and,asmightbeexpected,newinternationalcredittrans..
actionshardlycontinueto beasubjectofseriousconsideration. We
are no longer far removed from a situation in whichit willbe
impossibletolendmoneyabroadbecausetheprinciplehasgradually
become accepted that any governmentis justified in forbidding
debt-payments to foreign countries at any time on grounds of
'foreign-exchange policy'. Therealmeaningofthisforeign-exchange
policyis exhaustively discussed in the present book. Herelet it
merelybe pointed out that this policy has muchmoreseriously
injured international economicrelations duringthe last three years
than protectionismdidduringthe wholeofthe precedingfifty or
sixty years, the measuresthat weretaken duringthe WorldWar
included. This throttling ofinternational credit can hardly be
remedied otherwisethan bysetting asidethe principlethat it lies
withinthe discretionofeverygovernment,byinvoking theshortage
offoreign exchangethat hasbeencausedbyits ownactions,to stop
payinginterest to foreign countriesandalsoto prohibitinterest and
amortizationpaymentsonthe partofits subjects. Theonlywayin
whichthis canbeachievedwillbebyremovinginternational credit
transactions from the influence ofnationallegislatures andcreating
a special international codefor it, guaranteedandreallyenforced
bythe LeagueofNations.Unlessthese conditionsarecreated, the
grantingofnewinternational creditwillhardlybepossible. Since
allnationshaveanequalinterest in the restoration ofinternational
credit,it mayprobablybeexpectedthat attemptswillbemadein
this directionduringthe nextfew years,providedthatEuropedoes
notsinkanylower through warandrevolution. Butthe monetary
systemthatwillconstitutethe foundation ofsuchfuture agreements
mustnecessarilybeonethat is.basedupongold. Goldis notan
ideal basisfor a monetarysystem. Likeall humancreations, the