The Review of Austrian Economics, 18:3/4, 345–347, 2005.
2005 Springer Science + Business Media, Inc. Manufactured in The Netherlands.
(Eds.), Carl Menger and the Evolution of
Payments Systems. Cheltenham, UK and Northampton, MA, USA: Edward Elgar ISBN
1-84064-918-6, pp. 191.
Over the course of the past few decades historians of economics, as well as economists more
narrowly focused on Austrian economics, have reassessed the theories of Carl Menger.
Generally viewed as an “incomplete neoclassical” before the “de-homogenation” (Jaff´e
1976) of the marginalist triumvirate of Jevons, Menger, and Walras began, many economists
now view him primarily as the developer of a theoretical framework for historical analysis
(cf. Vaughn 1994). Explaining changes over time is a central element of such a project. If
such was Menger’s goal, then the importance he attached to his theory of the development
of the institution of money is readily understandable.
Most English-speaking economists know Menger’s theory only from his shorter presen-
tations in the Economic Journal (1892) and in Chapter VIII of his Principles of Economics
(1976, 1994). His long version of “Money,” which appeared in 1909 in the Handw
der Staatswissenschaften, has never before been published in an English translation. It forms
the foundation upon which the remainder of the Latzer-Schmitz volume is built.
Following a short introduction by the editors, Erich Streissler provides a brief analysis
of Menger’s article. Streissler places Menger’s article in historical context, noting that the
essay rests almost entirely on ideas propounded earlier by Wilhelm Roscher and Adam
Smith. Streissler points out the fact that Menger refers to the work of the “grandmaster of
German monetary thought” in the preceding generation, Karl Knies, only to contradict him.
While Menger also draws on German legal scholarship, “On the whole, . . . the article is
Menger at his most original” (11). Streissler notes that the ﬁrst third of the article consists of
the material published in the Economic Journal. This part, and the “short but very original
treatment of the demand for money” (17) at the end of the article are, he believes, the most
valuable parts of Menger’s longer work.
No doubt Streissler is correct in this judgment. But as one who had previously read only
the shorter versions of Menger’s “Money,” I was fascinated by the attention devoted to
both institutional and legal detail. In particular, I was surprised by the attention Menger
pays to the beneﬁcial effects of government actions. He discusses the beneﬁts of a uniform
coinage, the difﬁculties imposed by (full-bodied) coins minted from different metals, and the
important role played by government in enhancing the efﬁciency of the payments system.
“Only through this combination of government measures pertaining to coinage technique,
administrative law, and private law does a country’s system of types of coin become a system
of legally strictly fungible units of account . . . ” (48). Menger also expresses an appreciation
for the use of careful price surveys to construct price indexes (67) and notes that it is not only
“within the power of states and associations of states to regulate the quantity [of money]