174 MODERN MONETARY SYSTEMS 
that production. If, on the other hand, the cost of pro- 
duction falls, production will be stimulated, but for the 
reasons shown above a given weight of metal will always 
be exchangeable for the same number of monetary units, 
whether in the form of coin struck from the same metal 
or in any other currency. Thus a metal accepted for free 
coinage will always be exchangeable for a constant number of 
monetary units, whatever its cost of production; the exchange 
value of the weight of metal corresponding to the monetary 
unit is therefore not directly influenced by the cost ; as for the 
value of the monetary unit itself, in so far as it is admitted 
that it is influenced by variations in quantity, it may be said 
that it is perhaps indirectly influenced by the fact that varia- 
tions in the cost increase or diminish the number of monetary 
units put into circulation. But under a modern monetary 
system this quantity does not depend solely on the amount of 
the standard metal, since other metals and substitutes for 
metal currency are in circulation and since the volume of the 
actual circulation is a function of the development of methods 
of clearing in any given country. Finally, it is easy to 
imagine and to prove that there are variations in the 
volume of currency which are totally independent of the 
stock of metal or of any other product which has a 
marketable value and is intended to be used for monetary 
purposes. 
The working of bimetallism, which is inexplicable on 
the basis that the exchange value of the monetary unit 
is determined by the rate of the “commodity” of which 
it is made, is easily explained in the light of the above 
considerations. The cost of production of each of the two 
metals has no influence on the exchange value of the coin, 
neither do the respective quantities of the two metals have 
any influence on the exchange value of the two kinds of 
coin struck internally from them and their fluctuations have 
only had a slight influence in monetary relations with non- 
bimetallist countries in connection with their require- 
ments for the purpose of settling indebtedness vis-a-vis 
such countries.! 
1 See above.