CHAPTER 1 
THE ATTEMPT TO DISCOVER A STABLE STANDARD 
§ 1. The nature of a monetary standard and the measure of 
values. 
In a preceding chapter we have attempted to lay down 
what is customarily understood by a monetary standard in 
current language and in the language of economists. We 
have seen that in defining a monetary system which in- 
cludes various kinds of instruments of exchange, the 
economists have used this phrase to describe that instru- 
ment which appears to be the basis of the system and 
from which the other monetary instruments appear to derive 
their own exchange value owing to convertibility. We have 
observed that in fact the only objective criterion which in 
a monetary system distinguishes the basic currency is to 
be found in international payments, and that it is the cur- 
rency which can also circulate abroad—usually after mere 
physical transformation—which is held to be the standard 
currency. Finally, we saw that although this currency, 
which remains legal tender abroad, is usually metal, its 
position as a standard currency is not essentially due to its 
being a commodity. For under the system of free coinage 
a monetary metal has a special market which enables 
it to be exchanged with certainty for a given number of 
units of account, the value of which, while originally it 
was connected with that of a commodity currency, has 
become independent of the value of the material in which 
it is embodied. And so, when we speak of the gold stan- 
dard, the expression has a different meaning, viz., that a 
monetary system so defined involves a stable exchange 
ratio—metallic par—between its monetary unit and the 
183