RECOVERY OF THE EXCHANGES 4s 
such as Japan and Russia, had undertaken a radical reform 
of their monetary systems. They too accepted the mone- 
tary depreciation which had taken place, but introduced 
gold into their home currencies or into the holdings of 
their Banks of Issue in sufficient quantities to enable them 
to adopt the gold standard, and to stabilise their exchanges, 
without the help of any special machinery for conversion. 
Special mention, however, must be made of the case of 
Austria-Hungary, where monetary reform, although con- 
ceived on this traditional plan, kad not been carried to a 
conclusion, and therefore produced a régime which was, in 
fact, exactly analogous with that of the gold exchange 
standard. By a law passed in 1892 the gold crown had 
been made the monetary unit of the Empire, and, in order 
to withdraw the notes of former issues and restore the 
monetary system of the dual monarchy, the State had 
obtained foreign loans the proceeds of which had been 
imported in the form of gold bullion. The way had thus 
been opened for inaugurating a reliable gold currency;! 
but the Bank was not bound by law to reimburse its notes, 
and the public, accustomed to paper, allowed such little 
gold as was in circulation to flow back to the Bank. 
Thus the Bank was in law and in fact exempt from 
guaranteeing the internal convertibility of the note issue; 
on the other hand, it could keep nearly the whole of the 
gold in the country for foreign payments ; and it perfectly 
fulfilled the task of keeping the exchange within limits 
approximating closely to the gold points, by supplying 
without commission either bills previously bought in the 
open market, or gold for foreign payments. Thus the 
Bank was pursuing with all its implications the policy of 
handling foreign exchange, by means of which certain 
Banks of Issue attempt to control the market. And by 
pushing this policy to its extreme, the Bank succeeded in 
1 Before the reform of 1892 the gold stock of the dual monarchy was 
estimated at about 200 million gold crowns, of which 160 millions were 
held by the Bank. In 1910, the gold currency reached 1670 million crowns, 
of which nearly 1400 millions were held by the Bank. (See “La réforme 
monétaire en Autriche,” by Dub, Revue Economique Internationale, 1910.)