12 MODERN MONETARY SYSTEMS 
which have a gold one. F inally, it can be seen how mono- 
metallist countries on gold and monometallist countries 
on silver could restrict the fluctuation of their exchanges 
within narrow limits by effecting settlements with each 
other through bimetallist countries. 
In conclusion, it will be observed that exchange prob- 
lems are of much greater importance for countries which 
have different currencies. The mechanism of setting off 
indebtedness remains the same, but in the absence of 
drafts on foreign countries there is no certain method of 
settlement by which the purchase price of a draft payable 
in the home currency, or, in other words, the rate of con- 
version of the home currency into a foreign currency, can 
be restricted. In these circumstances the exchange rate 
can fluctuate far outside the export and import gold points. 
In practice—and doubtless also in theoryl—its fluctua- 
tions may be considered as unlimited and it is this circum- 
stance which most commonly gives rise to difficulties in 
the working of monetary systems. 
§ 3. Principal stages in modern monetary history. 
With the help of the above elementary knowledge 
of a technical kind, the attentive reader will be able to 
understand the following historical account, which will 
give us a more detailed acquaintance with monetary 
phenomena, and thus enable us to proceed to reconstruct 
our theory on somewhat new foundations. 
It is not possible to review the monetary evolution of 
each country in turn, but it will be seen’ that modern 
monetary history is in general dominated by a few 
important events. 
In the first period, covering the first three-quarters of 
the 19th century, the field is held by Bimetallism, which 
gives stability to the monetary relations of monometallist 
countries on gold or silver and only a few countries which 
have lapsed into a paper 7égime are left outside the scope 
of its regulating influence. 
1 On this subject, see infra, Part II, Ch, III.