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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Document type:: Monograph

Structure type:: Chapter

Title:: Part I. Modern monetary systems and their operation

Collection:: Economics Books

RECOVERY OF THE EXCHANGES 37 internal requirements—but of the system of free coinage in order to sever the connection between the rate of the cur- rency of the country and that of silver. (2) The acceptance of gold in payments by foreign countries at a fixed rate corresponding to the parity between it and the internal silver currency. (3) The constitution of a gold reserve, by means of gold coin and bullion or a foreign credit in some currency circulating at gold par, so that gold or foreign bills may be available at the same rate in the event of a scarcity of commercial paper, or, in other words, of an unfavourable trade balance. It is evident that the essence of a monetary reform carried out on these lines is its effect on the exchange, in confining it within the import and export gold points as effectively as if there were a plentiful currency upon which to draw. This very exact and straightforward method is not directly connected with variations in the internal stock of currency, and such variations, unless they are exceedingly wide, may be presumed to exercise no influence whatever upon its operation. Only two conditions are essential during the period in which stabilisation at the fixed rate is to take place. The first 1s that the gold reserve should be sufficient to counteract any considerable and prolonged deficit in the trade balance, 7.e., that a supply of gold or drafts payable in gold should always be available for the payment of debts abroad. The second is that the price of silver should not rise above the fixed parity ; otherwise there is a risk that silver coin, having a greater value abroad than at home, will be exported in spite of measures of prohibition, and that it will be necessary to forestall the drain on specie by altering the parity, thereby admitting a relative failure in stabilisation.! 1'This in fact happened when silver appreciated after the war.

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