Georg Friedrich Knapp Was Not a “Chartalist”

Abstract

“Chartalism” is generally conceived as a doctrine that states that money is a creation of the state. The father of chartalism, Georg Friedrich Knapp, even devoted the title of his magnum opus, The State Theory of Money, to highlighting this connection. Our purpose is to show that the chartalist theory, as developed by Knapp in his book, did not really argue that means of payment were necessarily a creation of the state. A close reading of his book reveals that means of payment could emerge outside the state and that even other pay-communities were able to create chartal means of payment. That is the main reason why Knapp’s theory of money was not radically incompatible with Carl Menger’s.