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.However, what is easy is not always right.There are true and reliable methods for bringing about new and correct currencyrelationships in the leading area countries. Purchasing power parity is one, whichis described in recent research as being clearer than equilibrium rates.It is notpossible to say today what these rates of the leading area countries will be like dueto the war conditions and the varying inflation rates in each one.How about Gold?What role will gold have to play in the new currency order of the world? A quickanswer to that is that it will not have one where currency is concerned! The 100th birthday of Georg Friedrich Knapp is presently being celebrated.His definitiveservice was to finally settle the theory of metallic value and replace it with the National Theory of Money. Only now can the world draw the practical benefits.Doors have now been opened with the realisation that the value of money is totallyunrelated to the physical security of gold or silver.This does not mean, though, that gold is no longer of value.Despite lacking thecommercial usability of copper or tin, it will keep its value as long as governmentsand individuals are prepared to exchange goods for it.And as long as the USA,which owns the most gold in the world, is prepared to pay a fixed high price for it,gold will be the most highly valued commodity in global trade.While that is so,gold can act as an extraordinarily useful economic reserve besides payment creditsor free foreign exchange for the settlement of intercontinental paymentrelationships.Here is a quotation from a speech made by the Reich Economic Minister to theSouth-East Europe Company in 1941 about the attitude to gold: We are not against gold, the commodity, a priority which is neither a good nor abad one.It depends on how it is used.We have never objected to its use forultimate settlement, but it has to be distributed differently than it is in the worldtoday.Also a stability in its value has to be guaranteed internationally whichrequires no longer using trade and currency methods or revising the factors thatbrought about the collapse of the old global economic system of the gold currency,credit and trade&.Besides, Germany (for completion maybe one can saycontinental Europe) will have at its disposal, when peace is agreed, enough goldfor the necessary international transactions, as long as overseas debts are not acurrency problem for us.As far as Germany is concerned, the gold problem is nolonger a problem .This could not be formulated more clearly.The European Currency BlocHere we come to an end.If our deliberations have made one thing clear, it is therealisation that currency questions rule out an isolating perspective both in Europeand internationally.They have to be looked at against the backdrop of the politicaland economic events in the world in order to appreciate the true importance andpossibilities to create solutions.The geo-political development of the 20th centuryis driving towards the European economic community.The currency order canremain just as untouched by it as any other economic area.We tried to show that after two and a half years of war we have made someimportant steps towards establishing a degree of unification for the currency, aswell as politically for the European continent.An accurate parallel to this is the German Custom s Union of 1834, which developed the economic area of Germany.Now on a totally different political level, European co-operation is being broughtabout by the modern instruments of settlement agreements, European economictreaties and the new order of the European currency bloc.The overriding aim of the monetary and political reform of our continent is a farreaching integration of credit markets and the regulation of inter-nationaltransactions between each European country, which is as free and non-bureaucraticas possible.Above all this, there stands the overriding task of establishing aneconomic area with full employment and safeguarded supplies. Pamphlet #08European Trade and Economic Treaties - by Dr.Carl Clodius,Ambassador of the Foreign Office, Berlin,The Period of the Old Trade PolicyTrade policy has undergone major changes in the last 20-30 years, which up to1914 was used to describe the settling of basic economic issues between individualeconomies.Around the turn of the century, a classic type of treaty only coveredthree important areas: right of settlement i.e.the individual s right to trade freely,duty issues and transport issues, especially shipping ones.The trade treaty was notgenerally decisive for the shaping of economic relationships, but there were some,which actually had quite radical effects, such as the German-Austrian Treaty at thestart of the century.The development of economic relationships between twocountries was, in general, not affected significantly by trade treaties.Of course, agood treaty could strengthen one of the partners and vice-versa.In any case, thefunction or type of these treaties scarcely determined the overall functioning ofeconomic life.The first major change came in 1914 when all participants in the war becameinterested in having state control of their economic relationships.This entailedallowing exports of vital goods and the import of non-vital ones for the war.Chaotic years followed the war in the absence of practical trade policies until 1924.Europe s economic fate then was determined by Germany.It is a remarkable omenthat it was not clear, at first, to those at the time that even the vanquished Germanywas not strong enough yet to make an impact on Europe.From 1918 onwards,Europe s economic development depended on Germany, not England or France.Europe s economy remained sick as long as its heart was sick, as long as economicchaos prevailed in Germany, and as long as the drift towards economic catastropheremained a possibility.The first step towards recovery was the creation of thestabilised Mark in 1923.From 1924 onwards, there began a normal period ofinternational economic relationships, particularly in Europe.Between 1924 and 1929-30 there was the temporary impression that theserelationships would revert to the methods and structure of pre-World War I times.Germany s treaty with Italy in 1925 was the first one it ever signed with a majornation on the basis of economic equality and its outline was not so different fromone of the classic treaties of pre-war times.The same is true of the treaty withFrance in 1927.At the centre of these treaties was the institution of the customsoffice with which one expected to control the flow of goods between countries. The second major collapse came with the world economic crisis precipitated by thecrisis at the New York Stock Exchange in November 1928, followed by thecollapse of the Credit Institute in Vienna and of a major Berlin bank in 1931.Thencame the most visible expression of collapse with the depreciation of the EnglishPound in September 1931.What has been termed as the world economic crisis wasbrought to an end by a world leading powers decision to devalue, which wasfollowed by lots of other countries, leading quickly to the formation of the so-called Sterling bloc.It was at this time in 1931 that the period of old trade policy (i.e.control by treatyof basic principles while leaving the rest to free initiative) came to an end and neverto return.It is a vain exercise trying to prophesise about precise facts but I stillwould like to say that the possibility of such a period returning is not very strong
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