THE THEORY OF EXCHANGE 161 
it is possible to raise by successive stages carefully spaced out 
the value of the internal currency in relation to the external 
currency, the mechanism of conversion being quite independent 
of the particular rate adopred. And the prospect of such 
later recovery makes it possible to avoid, whenever it is 
thought that the right moment has come, the devaloris- 
ation which would result from a change in the definition 
of the monetary unit, without affecting the main 
principle of stabilisation. For stabilisation does not so 
much imply a fixed and unvarying rate of conversion as a 
system of stable exchanges restricted over a given period 
to the normal limits set by the possibility of regular con- 
version, and thus removed from the vicissitudes of 
speculation. 
This method evidently amounts to adopting the system 
of the gold exchange standard or of the gold reserve; and 
it has hardly anything against it except the ignorance in 
European countries of the exact way in which it works, 
although fundamentally it is identical with our traditional 
system of the gold standard.! 
! In the second chapter of Part III, p. 209 et seq., will be found an exact 
demonstration of the fundamental identity between the gold exchange 
standard and the former gold standard. 
M