Economic Effects of Implementation of Conditional Currency Convertibility Based on Primary Commodities

Abstract

The quotations given previously from Professor Hayek, Professor Kaldor, Lord Keynes, Benjamin Graham, and others illustrate the wide measure of agreement that exists concerning the economic benefits that would result from the operations of a system of currency convertibility based on primary commodities, if a feasible means of implementing such a system could be devised. As we have also seen, of the various proposals that have been made, the system of conditional currency convertibility formulated by Mr Grondona is the only proposal that constitutes an economically sound and practical means of achieving this objective today. It is therefore of considerable interest to examine in detail the various economic consequences that would result from the implementation of the Grondona system through the establishment of a Commodities Reserve Department (CRD) by one or more major, primary commodity importing countries.