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 cur- 
rencies used, but also by a whole complex of legal require- 
ments 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 differ- 
ences 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 cir- 
culation 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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