The Theory of Money and Credit - Ludwig von Mises [223]
To ascribe to the state theory a large share of the blame for the collapse of the German monetary system, does not imply that Knapp directly provoked the inflationary policy that led to it. He did not do that. Nevertheless, a doctrine that does not mention the quantity of money at all, that does not speak of the connection between money and prices, and that asserts that the only thing that is essential in money is the authentication of the state, directly encourages fiscal exploitation of the "right" of creating money. What is to prevent a government from pouring more and more notes into circulation if it knows that this will not affect prices, because all rises in prices can be explained by "disturbed trade conditions" or "disturbances in the home market," but on no account whatever by anything to do with money? Knapp is not so incautious as to speak of the valor impositus of money as did the canonists and jurists of past generations. All the same, his doctrine and theirs lead indifferently to the same conclusions.
Knapp, unlike some of his enthusiastic disciples, was certainly not a government hireling. When he said anything, he said it from genuine personal conviction. That speaks well for his own trustworthiness, but it has no bearing on that of his doctrine.
It is quite incorrect to say that the monetary doctrine of etatism springs from Knapp. The monetary doctrine of etatism is the balance-of-payments theory, which Knapp only refers to casually in speaking of the "pantopolic origin of the exchange rates." [8] The balance-of-payments theory, if an untenable, is at least a catallactic, theory of money. But it was invented long before Knapp's time. It had already been propounded, with its distinction between the internal value (Binnenwert) and the external value (Aussenwert) of money, by the etatists, by Lexis, for example. [9] Knapp and his school added nothing to it.
But the etatist school is responsible for the facility and rapidity with which the state theory of money succeeded in becoming the accepted doctrine in Germany, Austria, and Russia. This school had struck out catallactics, the theory of exchange and prices, as superfluous from the series of problems with which economics was concerned; it undertook the attempt to represent all the phenomena of social life merely as emanations of the exercise of power by princes and others in authority. It is only a logical extension of its doctrine to endeavor eventually to represent money also as being created merely by force. The younger generation of etatists had so little notion even of what economics really was concerned with, that it was able to accept Knapp's paltry discussion as a theory of money.
3 Schumpeter's Attempt to Formulate a Catallactic Claim Theory
To call money a claim is to suggest an analogy to which there is no real objection. Although this comparison, like all others, falls short at certain points, it may nevertheless make it easier for many to form a conception of the nature of money. Admittedly analogies are not explanations, and it would be a gross exaggeration to speak of a claim theory of money, for mere construction of an analogy does not take us even halfway to any sort of monetary theory that can be expressed in intelligible arguments. The only possible way of building a monetary theory upon the claim analogy would be to regard the claim, say, as a ticket of admission to a room of limited size, so that an increase in the number of tickets issued would mean a corresponding diminution of the amount of