VALUE OF NOTES
39
ultimately be melted to be turned into something
else. Consequently where the unit of account is a
coin regulated in supply, the value of money is never
lower, may by chance occasionally be equal to, and is
ordinarily higher than it would be under free and
gratuitous coinage. How much higher depends on
the particular standard of restriction adopted: it
may be higher by a given percentage; it may be
higher by the amount necessary to make it conform
with the variations of some other money, as the
Indian rupee was kept higher by the amount necessary
to make it one-fifteenth of £1; or it may be kept
as much higher as the restricting authority judges
desirable by some rough estimate, or as much higher
as will preserve stability of value as indicated by some
index number of prices.
It is no objection to this conclusion to say that the
value of a coin restricted in supply may be reduced by
the competition of paper currency. That is merely
one of the numerous things which tend to reduce the
demand for the coin, and may make the demand
insufficient to keep its value over that of its bullion
contents. The case will come under notice again in
the course of the arecument of the next section.
§ 5. The value of money or general level of prices where
the unit of account is a bank-note or currency note.
In modern times metal discs stamped with certain
designs and lettering are not the only things with
which people buy and for which they sell. They also
use scraps of paper on which are figures or words (or
both for safety) indicating amounts of the unit of
account, for example ““ £1,” ‘‘ Ten shillings *’ (which
is half a pound sterling). There is usually other
reading matter on the scraps, but it is not commonly
read or regarded as of any more importance than
(what is to most people quite unintelligible) the