176 MODERN MONETARY SYSTEMS
tary instruments of metal or paper. On the contrary,
whatever the cost of production, they have been con-
verted at fixed rates and to an unlimited extent into
the monetary units of countries where either or both
were accepted for free coinage. And even if the value of
these monetary units may have been fixed by the quantity
of precious metals which has been minted and so, very
indirectly, by the cost of production, it should not be for-
gotten that this quantitative influence has been also
exercised by the “substitutes” for metal currency, or in
other words by fiduciary currency and even by such
banking processes as enable unused money to be reduced
to a minimum and the effective circulation to be pro
tanto increased.
And so the value of monetary units appears to be inde-
pendent of the circumstances which would have determined
the value of the standard metal if the latter had been “a
commodity like any other.” On the contrary, it is the value of
the standard metal which is bound up under the system of free
coinage with that of the monetary unit, the variations in which
are measured by the average rise and fall in prices, whatever
may be the instrument in which such units are embodied.
Thus in each country the true measure of value, and
therefore the true “standard” of values, is the national
monetary unit, the abstract unit of account with which the
precious metal is legally bought at a fixed rate, and not
the metal itself.
It is true that there is one final objection to this idea.
Under any given monetary system it is customary to
consider, where there are several monetary instruments,
that one of them acts as a basis for the system—in the case
of bimetallism both are held to serve this purpose. For
instance, under a monometallist-gold 7égime gold is
considered to be the standard and the other monetary
instruments only have value in so far as they represent
gold and are legally and in fact convertible into it.
Further, gold, once it is exported, maintains its value
although through being exported it has lost its character
of legal tender currency. The standard metal is therefore
