ABSTRACT
A little over a year ago, Professor G. F. Knapp of Strasburg, known as the author of an epoch-making work on the liberation of the peasants in Prussia, and one of the pillars of the German Historical School, surprised the world of economics with a work on the monetary system that in the strictest sense of the word is abstract and theoretical in nature: Die staatliche Theorie des Geldes [The State Theory of Money]. To be sure, there was reason to suspect that he was very well equipped for this kind of writing too, since he is known to have written perceptive studies in mathematical statistics in younger years, which were highly regarded by specialists in the field. However, in the lengthy interim, in conformity with most adherents of the Historical School, Knapp had virtually renounced all theory on principle; that he has now taken so bold a leap into the field of deduction and constructive logic is therefore undeniably a surprise, but, at least for the present writer, a welcome surprise. At the time of writing, Knapp's work has already been the subject of lengthy and thorough reviews in all the German specialist journals and several foreign ones, and has been criticized or praised all according to the reviewer's own theoretical standpoint. However, one thing one hardly receives any idea of from all these profoundly serious sequels pro and con is the incomparable stylistic appeal of Knapp's descriptive art, his masterly didactic exposition, his pleasantly expansive, half solemn, half ironic discourse, spiced throughout with those quiet little satirical sallies that are peculiar to Knapp, and that have doubtless awakened many a happy memory of his unsurpassed lecturing style among his numerous disciples, who by now are spread over the entire globe. One has to have heard and seen Knapp in action to be able fully to appreciate a passage like this (p. 40), referring to those people who because of practical misgivings wish to deny even the theoretical possibility that paper currency may be real money:
Now if the layman, thinking in practical terms, objects that he at least does not want the paper [money] system, he thinks it is dangerous, a menace to the best interests of the general public — he may be right, but then he is leaving the bounds of theory, as indeed he is more than happy to do. For by nature, man is inclined to agitate: in understandable concern for the common weal he desires to devote his efforts to the realization of good ends. Who would wish to oppose him!
But this is not the position of the theorist: his role is to pay equal attention to all [monetary] systems, whether good or bad. His prime concern is not to hand out advice, but to explain the essential features. For him, there is a world of difference between the fundamental facts and what is important in practice. He is not inclined to agitate, but to philosophize. He has a liking for the system that is dangerous in practice, precisely because it affords the clearest insight into fundamentals — but to be sure, he takes great care not to recommend a system of this kind. Indeed, he makes no recommendations, what he does is to explain phenomena. He leaves to the agitator action aimed at achieving the best good. Nothing is more common than for the most effective agitator to be the weakest theorist.
