Currency Devaluation and Public Finance, 1929-1937

i. The purpose of this paper is to study the nature of the influence exerted by currency devaluation on the finances of Central Governments throughout the world during the period I929-37. The treatment is throughout qualitative, not quantitative, and nothing more than broad generalisations are attempted. In particular, the different mechanisms by which devaluation has been introduced or buttressed are necessarily ignored. Indeed, the term currency devaluation itself is taken in a sense rather wider than the strict one. It will be regarded as including not only the de jure reductions of the gold value of currencies (e.g., Belgium, I935), but also de facto adjustments of a similar nature (e.g., United Kingdom, 193I). 2. In the Tables which follow, the year in which devaluation took place is marked by the figures being shown in heavy type. This date is, of course, quite clear only in the comparatively few cases where the readjustment h-as been instantaneous. For the purpose of this paper it has been taken as that at which the first marked fall in the gold value of the currency occurred. It should be noted that results appearing in the year of devaluation are more likely to be substantial if it was effected in the early, rather than the later, months. Comparison of the short-run effects in different countries must therefore be undertaken with care. 3. The period chosen for survey excludes the devaluations following the post-war currency collapses. It does not therefore provide any instances of the difficulties of public finance in such periods, but is concerned only with the relatively minor effects of limited adjustments. On the

Currency · De facto · Devaluation · Economics · International economics · Monetary economics · Political science · Value (mathematics) · Fiscal Policies and Political Economy · Law