Fifteen years after the Global Financial Crisis: Recessions and Business Cycles in the History of Economic Thought

Paul Einzig’s Views on International Clearing

Faudot Adrien, University of Grenoble Alpes

Paul Einzig (1897-1973) was one of the most prolific watcher and commentator of the economic events of his time. Starting to publish articles from 1919 to his death in 1973, he was mostly known as a commentator rather than a pure economist. For the students of international monetary economics, he remains however even today an academic reference especially for his study of foreign exchange markets. A Romanian-born émigré in London, Einzig published dozens of books during the 1930s, on the most topical problems of this particularly troubled period. This paper will introduce the reader to his writings on international clearing. Einzig analyzed the international liquidity crisis that hit Europe in 1931. He had an acute understanding of the resulting exchange controls and clearing agreements spreading throughout Europe. He was one of the first economists to see clearing agreements as a new instrument for the re-birth of Germany’s economy and logically called for Britain’s reply with the adoption of similar measures in the mid-1930s. His analysis also called for the generalization and multilateralization of clearing. A few years later, he was an enthusiast supporter of the Keynes’ proposals for an International Clearing Union. The paper shows that Einzig’s interest in international clearing has nurtured his analysis of the nature of money as well as the problems of foreign exchange markets.

Area: Eshet Conference

Keywords: Paul Einzig, clearing agreements, interwar period, monetary theory

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