MODERN MONETARY SYSTEMS 5 
numerical ratio between them, the pound sterling may be 
said to be worth 2 5'221 francs at par. 
Moreover, as the system of free coinage enables French 
money to be transformed ad /ibitum into English money 
and vice versa, as many pounds can in fact be obtained 
with French gold recoined in London as that gold contains 
25221 francs, and vice versa, so long as free coinage is 
accompanied by its normal concomitant of free export 
and import. 
It is also characteristic of our time that fiduciary cur- 
rencies are more and more finding a place in monetary 
systems. Banks of issue are growing in importance, and 
although their notes were originally mere promises to pay 
in cash a certain number of monetary units, the public has 
become accustomed to accept them in payment of their 
nominal value, as though they were themselves true money. 
The legislation of most countries has sanctioned and ex- 
tended this practice by making them legal tender. This 
means that individuals are obliged to accept them from 
each other but have the right of demand, if so desired, that 
they should be redeemed by the bank. In general, how- 
ever, such redemption is only demanded with a view to 
payments abroad. In this way notes have become a real 
internal currency convertible either into gold or into 
silver or into either of these two metals. 
Once in possession of these data it is easy to define the 
main types of monetary systems. 
(a) Systems based on Metallic Currencies. 
First type: Monometallism; Gold Standard.—Under this 
system, gold is alone accepted for free coinage and can be freely 
imported and exported; gold is the only unlimited legal tender, 
or, in other words, alone has lawful currency for payments up 
to any amount. Silver, like copper, nickel or any other 
monetary metal, only provides subsidiary coins the legal 
tender of which is limited—usually to a very small sum ; iz 
is not accepted for free coinage, the State reserving the right 
to mint in such quantities as appear to be convenient for 
the transaction of business.