Conditional Currency Convertibility Based on Primary Commodities: The Grondona System

A system for achieving convertibility of currency based on primary commodities which is fundamentally different from each of the proposals described in the previous section was devised in the 1940s by the Australian economist, Leo St Clare Grondona. To date it remains the only proposal that satisfies all the conditions described in section 3.4, and it has been endorsed by all those who have studied it in detail, including a number of eminent economists, businessmen and politicians. The system has also been strongly praised by economic journalists in much of the British press, including the leading business journals and daily newspapers (see Appendix A). Grondona’s proposal has unfortunately been largely ignored by academic economists — in part, perhaps, because the subject of sound money has been unfashionable for much of the post-War period (particularly in Britain where Grondona worked), and in part perhaps because Grondona was not himself an academic. (The single piece of published economic research directly related to Grondona’s proposal is discussed in section 5.1; the results of this work provide evidence that the proposal would be uniquely effective.) The details of the system in its final form were first published as a book in 1958,1 and were subsequently republished in 1962,2 19723 and 1975,4 as well as being described in a number of lengthy papers5,6,7 and articles.