18 
MONEY 
sovereign in circulation, so that the ratio fixed for 
the rupee was not with a domestic coin but with one 
circulating in another country, and could therefore 
only be seen at work in the business transactions 
between the two countries, commonly called the 
axchanges. Hence the name “ gold-exchange stan- 
dard ” applied to the monetary system of India 
and other countries with silver currencies kept to the 
standard of gold. But we must beware of imagining 
any natural pre-eminence of gold over silver. The 
same system might be applied with equal ease to 
keeping the value of a gold coin at some fixed ratio 
with the value of the silver coin of another country 
or indeed with the value of any other clearly cognizable 
commodity or even with a collection of commodities 
such as appears in the formation of an index number 
of prices. The Swedish Government came near 
adopting a plan of this kind in 1916, when it put 
hindrances in the way of the entry of new gold, but 
the object to be aimed at was not properly understood, 
and the manufacture of paper substitutes for coin 
was not adequately limited, so that the experiment 
proved completely abortive, the value of the Swedish 
currency eventually falling not only down to but 
considerably below its original parity with gold. 
(See Gustav Cassel, Money and Foreign Exchange 
after 1914, pp. 79-100.) 
The conclusion of this section is that given demand 
for a coin, adequate restriction of supply will keep 
its value up to any required level above that of its 
metallic contents. It is not, of course, a useful 
corollary of this to say that adequate additions to 
supply would keep its value down to any required 
level below that of its metallic contents: that is 
perfectly true, but adequate additions cannot be 
made, because a coin worth less as a coin than the 
bullion of which it is made will always, law or no law,