Foreign Exchange Control Is Tantamount to the Full Nationalization of Foreign Trade, and It Is the Main Vehicle of European Dictatorships

At any rate, foreign exchange control is tantamount to the full nationalization of foreign trade. For the United States, this would not mean very much, as the amount of its foreign trade is a comparatively small part of its total trade. But for almost all other countries, nationalization of foreign trade results in dictatorial powers for the government. Where every branch of business depends, to some extent at least, on the buying of imported goods or on the exporting of a smaller or greater part of its output, the government is in a position to control all economic activity. He who does not comply with any whim of the authorities can be ruined either by the refusal to allot him foreign exchange or to grant him what the government considers as an export premium, that is, the difference between the market price and the official rate of foreign exchange. Besides, the government has the power to interfere in all the details of every enterprise’s internal affairs; to prohibit the importation of all undesirable books, periodicals, and newspapers; and to prevent everybody from traveling abroad; from educating his children in foreign schools; and from consulting foreign doctors. Foreign exchange control was the main vehicle of European dictatorships. When Hitler came to power in 1933, in order to impose his dictatorship upon the whole German nation he had nothing to do but to enforce the foreign exchange control established by one of his predecessors, Mr. Bruening, in 1931.

—Ludwig von Mises, “A Noninflationary Proposal for Postwar Monetary Reconstruction,” in Selected Writings of Ludwig von Mises, vol. 3, The Political Economy of International Reform and Reconstruction, ed. Richard M. Ebeling (Indianapolis: Liberty Fund, 2000), 95.