Modern monetary systems

Bibliographic data

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 I. Modern monetary systems and their operation

Collection:: Economics Books

MODERN MONETARY SYSTEMS IT represented a given known weight of fine metal, the num- ber of francs necessary to pay £1000 could be ascertained in advance ; it amounted at par to 25,221 francs, and ex- penses in respect of transport, insurance, loss of interest, etc., only had to be added to this sum in order to ascertain the maximum price in francs of £1000 sterling delivered in London (export gold point). Similarly, the same costs only had to be deducted from 25,221 francs in order to ascertain the minimum value of £1000 sterling in French money transferred to Paris, for the French creditor who is obliged to have this sum transmitted in the form of specie and to have it recoined (import gold point).! This is the reason why, as between two countries which use the same metal and where that metal can be freely exported, imported and coined, a draft will not fetch a higher price than the cost of transmitting gold. This is the reason why, on the same assumption, the exchange rate is strictly limited by the gold points in the case of countries with a gold currency and by the silver points in the case of countries with a silver currency. Fluctuations in the rate of exchange are exceedingly small and the exchange may be said to be stable. It is easy to see how bimetallist countries, so long as they existed, were able, thanks to the concurrent use of two metals both of which could be freely exported, imported and coined, to transact business on a firm basis both with countries which have a silver currency and with those 1 It should be observed that francs are bought and sold in London in the form of drafts on Paris and that sterling is similarly negotiated in Paris in the form of drafts on London. The two markets are in complete harmony if only for the reason that when, for instance, the pound sterling under the influence of a French credit balance on England costs less than 235-221 francs in Paris where drafts on London are plentiful, it is also the case that under the same influence less than 25-221 francs will be given for [1 sterling in London, where drafts on Paris are scarce. The exchange may be quoted in home currency—called “ quoting uncertain” or in a foreign currency, called “quoting certain.” In Paris, for instance, the pound is quoted in francs, so that a rise in the rate registers a fall in the value of the franc. Nevertheless, whenever we have to use the expression “the exchange rises” it should be understood to mean that the home currency has gone up in value, and vice versa.

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