212 MODERN MONETARY SYSTEMS 
circumstances prevalent during the war. The conversion 
office in Brazil, it has been said, ceased to function after 
1914; the same is true of the office in Argentina at a later 
date; finally the gold exchange standard has been shaken 
even in India. But this observation is subject to a certain 
number of serious qualifications which deprive it of its 
significance. In the first place the conversion office in 
Brazil was not set up in such a way as to ensure the regular 
working of the system of the gold reserve; for on the one 
hand it did not make the entire internal circulation con- 
vertible in general, but only the notes issued by itself. 
Again, it was only authorised to accept gold from abroad 
in limited quantities; and this restriction had the double 
effect of eliminating the import gold point—as in fact 
happened in practice—during periods when the balance of 
payments showed a large surplus and of preventing the 
conversion office from constituting a gold reserve sufficient 
to meet requirements during periods when the balance of 
payments was in deficit. As regards the Argentine, the 
conversion office, after having kept the exchanges per- 
fectly regular from the end of 1904 up to 1914, Was no 
longer required after the beginning of the period of 
hostilities (law of September 30th, 1914) to guarantee the 
convertibility of notes into gold. Nevertheless the Argen- 
tine exchange was well kept up until the end of the period 
of hostilities. It was not till after this date that the rate of 
1 M. Décamps has pointed out (op. cit., p. 177), as a definite proof of 
instability, the rise in the Argentine exchange to 533d. in 1917; but it 
should be observed that at that time it was the pound which was fluctuating 
in relation to gold and not the Argentine peso. In the middle of 1919 we 
still find the peso at 51d. (the normal parity being 47°6d.); but this rate is 
near the normal parity in relation to the United States dollar. On the other 
hand, M. Décamps observes (0p. ¢it., p. 172) that without the conversion 
office the Argentine exchange might have risen to somewhere near its 
previous parity during the years in which the balance of payments was 
peculiarly favourable. This may be true, but the parity was not less 
arbitrary than the new parity and, as the return to the former parity 
had been rejected for economic reasons, it is impossible to find here 
any serious argument in favour of an unstable exchange—the only régime 
which could in practice have been substituted for that of the conversion 
office.