Genoa: Easy is the descent into Hell.

Aeneas and the Sibyl, ca. 1800, Yale Center for British Art

Originally posted on Thursday, April 10th, 2014

In the Aeneid, Book Six, Line 126, Virgil writes: Facilis decensus Averno.  

Translated:  “Easy is the descent into Hell.”

In full context:

Facilis descensus Averno;

Noctes atque dies patet atri ianua Ditis;

Sed revocare gradum superasque evadere ad auras.

Hoc opus, hic labor est.

As translated by Dryden:

The gates of Hell are open night and day,

Smooth the descent, and easy is the way.

But to return, and view the cheerful skies,

In this the task and mighty labor lies.

The international conference held in Genoa in 1922 was designed to recompose the international order, including that of the gold standard.  But a shortcut mistakenly was taken, allowing for a false admixture of paper and gold as official central banking reserves.  This  expedient proved the proverbial good intentions paving the road to the Hell of the Great Depression which would ensue within a decade.

This, courtesy of archive.org, is the text of the accords in relevant part:

Article 29.

An essential requisite for the economic reconstruction of Europe is the achievement by each country of stability in the value of its currency. No country can gain control of its own currency so long as there is a deficiency in the annual budget which is met by the creation of paper money or bank credits. It is for every country to overcome such a deficiency by its own independent efforts; only then will its way be open to currency reform.

Article 30.

Measures of currency reform will be facilitated if the practice of continuous co-operation among central banks can be developed. A permanent association or entente for the co-operation of central banks, not necessarily confined to Europe, would provide opportunities of coordinating credit policy, without hampering the freedom of the several banks. It is suggested that an early meeting of representatives of central banks should be held with a view- to considering how best to give effect to this recommendation.

Article 31.

It is desirable that all European currencies should be based upon a common standard.

Article 32.

Gold is the only common standard which all European countries  could at present agree to adopt.

Article 33.

In a number of countries it will not be possible for some years to restore an effective gold standard; but it is in [t]he general interest that European Governments should declare now that this is their ultimate object, and should agree on the program by way of which they intend to achieve it.

Article 34.

In each country the first step towards re-establishing a gold standard will be the balancing of the annual expenditure of the State without the creation of fresh credit unrepresented by new assets

Article 35.

The next step will be to determine and fix the gold value of the monetary unit. This step can only be taken in each country when the economic circumstances permit; for the country will then have to decide the vital question, whether to adopt the old gold parity or a new parity approximating to the exchange value of the monetary unit at the time.

Article 36.

These steps might by themselves suffice to establish a gold standard, but its successful maintenance would be materially promoted, not only by the proposed association or entente of central banks, but by an international convention to be adopted at a suitable time. The purpose of the convention would be to centralise and co-ordinate the demand for gold, and so to avoid those wide fluctuations in the purchasing power of gold, which might otherwise result from the simultaneous and competitive efforts of a number of countries to secure metallic reserves. It is suggested that the convention should embody some means of economising the use of gold by maintaining reserves in the form of foreign balances, such for example, as the gold exchange standard, or an international clearing system.

Few besides France’s great “poet of finance” Jacques Rueff recognized, and warned, of the catastrophe that must, and did, ensue as the expedients unraveled and the world was plunged into the economic Hell of the Great Depression.