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the theory of split currency

Austrian-econ is an academic economists' list focused on so-called
"austrian" economics, like Hayek, Von  Mises, etc...

Notice the last little bit about Patrick Leahy...

Bob Hettinga

--- begin forwarded text

Date: 	Sat, 28 Sep 1996 20:13:48 -0700 (PDT)
From: Fred Foldvary <[email protected]>
To: Austrian Economics <[email protected]>
Subject: the theory of split currency
Organization: JFK University
Mime-Version: 1.0
Sender: [email protected]
Precedence: bulk
Reply-To: [email protected]

Is there a name for a dual or split currency, in which
there is one currency for domestic use and another, different
appearing, currency for foreign usage?

Does anyone know of any country which has had such a
split currency?

Is there any literature on such split currency?

Here some thoughts on how it could function in the U.S.:
1) Domestic currency would not be legal tender outside the U.S.
2) Foreign US dollars would not be legal tender in the U.S.
   It would be illegal to hold foreign dollars in the U.S.
   Travelers would be required to convert them at customs.
3) The export of domestic currency would be illegal.
4) All exchanges between domestic and foreign currency would
be required to be made in official exchanges, with the amounts
recorded and reported to the government.
5) All previous currency would be declared of no value after
a certain date.  All conversions to new currency would be

What would be the implications for banking, international
trade, and the market process?  Would it affect the measurement
of the money supply, and monetary policy?

A motive for the government would be to control the underground
economy, tax evasion, and the trade in illegal substances.

This scenario is not entirely hypothetical.  I have read that
Senator Patrick Leahy introduced Senate Bill #307 to create
such a split currency.  The Bill failed to pass the Senate,
but this shows the concept is out there.

Is this worth investigation and theoretical examination?

Fred Foldvary

--- end forwarded text

Robert Hettinga ([email protected])
e$, 44 Farquhar Street, Boston, MA 02131 USA
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