Paul Einzig’s Contribution to the Economics of International Clearing

Paul Einzig (1897-1973) was a prolific financial journalist, best known as a commentator on economic life rather than a pure economist. Nonetheless, he remains an academic reference, above all for his study of foreign exchange markets. This paper introduces the reader to his writings on international clearing published in the 1930s and 1940s. The article shows the original approach adopted by Einzig, with one foot in academia and another in the world of financial practitioners and with a great freedom of speech. Einzig had an acute understanding of the international liquidity crisis that hit Europe in 1931 and the resulting exchange control and clearing agreement dynamics that spread throughout Europe. He saw clearing agreements as a new instrument for rebirth of Germany's economy. In 1935, he called for universalization and multilateralization of clearing. A few years later, he was a supporter of Keynes' proposals for an International Clearing Union. Einzig's interest in international clearing nurtured his later insights on foreign exchange markets and the post-war international monetary system.