b MODERN MONETARY SYSTEMS 
There is, however, a legal ratio between the gold and 
silver currencies, since the silver as well as the gold coins 
represent a given constant number of units of account. 
Lastly, bank notes must of necessity be convertible into 
gold representing the same number of monetary units. This 
naturally follows from the fact that gold coin is the only 
unlimited legal tender. 
It is evident that this system is based on gold: the other 
monetary instruments being deemed to be of value only inas- 
much as they represent gold; indeed, it is because they can all, 
in fact, be converted into gold coin, which in turn can be ex- 
ported and thus, by the system of free coinage, converted into the 
gold coin of some foreign country, that the system has an 
element in common with the systems in all other countries 
where gold is accepted for free coinage. 
It 1s therefore called the gold monometallist system or 
the system of the gold standard. It is the traditional monetary 
system of England. 
Second type: Monometallism— Silver Standard. —Silver is 
alone accepted for free coinage ! or by weight, and can be 
freely exported and imported ; it is the only unlimited legal 
tender. Under this system gold coin does not as a rule 
circulate side by side with silver, or, if it is in circulation, 
there is no fixed exchange ratio between it and gold. On the 
other hand, subsidiary coin of other metals can circulate 
with a fixed exchange ratio corresponding to fractions of 
the monetary unit which the silver coin represents. Bank 
notes are convertible into silver. 
The basis of this system is therefore silver, and silver 
thus becomes the common standard of countries where this 
metal is accepted for free coinage. This is still the mone- 
tary system of China.2 
! Alternatively, coins already minted are allowed to enter; for example, 
the Mexican dollar was for a long time admitted to the Far East with the 
same effect. 
2 It has been abandoned by nearly all countries in the Far East. Even 
French Indo-China is no longer fully a silver standard country; for silver 
is not accepted for free coinage and foreign silver coin is no longer admitted. 
The Indo-Chinese piastre is unlimited legal tender, but its minting is 
controlled by the Government. 
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