CHAPTER 1
MODERN MONETARY SYSTEMS
§ 1. Definition of monetary systems.
In order to understand monetary phenomena some
knowledge of monetary systems and their operation is
necessary. Now monetary systems involve the concurrent
use of various kinds of monetary instruments—gold,
silver or other metals, paper—and they are distinguished,
not only by the number and character of the various currencies
 used, but also by a whole complex of legal requirements
 and actual circumstances which varies considerably
as between one country and another. The use of coin and
the concurrent use of several metals as money are very
ancient ; but there are two essential characteristics which
distinguish modern monetary systems whatever differences
 there may be in the methods employed. One is the
system of minting and the other is the issue of fiduciary
currency, usually notes.
In France, under the old régime, the right of minting
was an attribute of sovereignty, but the State purchased
bar gold and silver at variable rates and used it to strike
coins such as the gold louis or the silver crown. The State
then proceeded to tariff these coins and put them into circulation
 as representing a certain number of units of
account which 1t fixed and a/rered as it wished ; thus as late
as the end of the 18th century the French gold louis, which
was originally tariffed at 20 livres, was raised to 24 livres.!
1'This is a measure which in less crude form brought about the same
result as the “increases” in money practised in the Middle Ages. These
“increases” consisted in reducing the amount of metal in a coin while
claiming to preserve its value, thus raising its legal tender. (See A. Landry,
“Essai économique sur les mutations des monnaies.”)

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