Modern monetary systems

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Monograph

Identifikator:: 1753210836

URN:: urn:nbn:de:zbw-retromon-128414

Document type:: Monograph

Author:: Nogaro, Bertrand http://d-nb.info/gnd/117039713

Title:: Modern monetary systems

Place of publication:: London

Publisher:: King

Year of publication:: 1927

Scope:: XII, 236 S.

Digitisation:: 2021

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part II. The explanation of contemporary monetary phenomena and currency theory

Collection:: Economics Books

172 MODERN MONETARY SYSTEMS hesitate to support this idea; a producer of gold may be aware that he enjoys a privilege which is now unique,! namely, of selling his produce at a fixed price; for having estimated his cost of production in money he receives a fixed sum in money for his bullion, either in the form of coin struck from it or in the form of any legal tender currency. So when either by custom or by law a metal can be transformed at will into money and virtually exist as money either in virtue of the system of free coinage or because it is accepted by weight,? the State, although it apparently withholds any interference, creates a very special position for this metal which decisively influences its exchange value; for instead of being subject to the action of supply and demand as on an ordinary market, it enjoys the advantage of a quite special market where it will be accepted in unlimited quantities in return for a constant number of monetary units.3 The significance of this last observation has been con- tested by certain economists as being more apparent than real. As the value of a currency can only be ascertained by taking its average exchange rate in relation to all com- modities, it matters little in their view whether an amount of bullion of a certain weight can always be exchanged for the same number of pounds sterling, dollars or francs; 1 This privilege is not nowadays without disadvantages as will be seen later, see p. 173 2 It should be remembered that the system of weighing money is still used in China. 3 The general suppression of the free coinage of silver in countries which were formerly bimetallist reinforces our theory; for we have seen that the rate of silver, once it is no longer tied up with the rate of the currency, fluctuates like any other commodity, Governments themselves buying it thereafter through the ordinary process of bargaining—and that it may fall so far as its cost of production allows. The rate of gold, on the other hand, which is still used for currency, may continue to fluctuate, in relation to the mass of goods for which it is exchanged, but these fluctu- ations will be independent of its cost of production. It should be added that the industrial consumption of precious metals, although it is considerable, cannot directly influence the value of a metal which is accepted for free coinage, since it is always open to the seller to have it minted and the purchaser can in fact melt down coin in order to obtain the metal he requires.

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