CHAPTER 11 
THE RETURN TO NORMAL EXCHANGES 
§ 1. Remarks on the nature of the exchange and on the idea 
of stability. 
Taking the example of certain countries in which 
irregular price movements have been in direct relation to 
exchange fluctuations, we have just seen that the problem 
of obtaining a stable monetary standard may be directly 
bound up with the problem of exchange stability. The 
latter problem deserves to be studied by itself; for there 
are countries which, having escaped the more serious up- 
heavals due to an unlimited depreciation of the monetary 
unit whether external or internal, have been seriously dis- 
turbed in their economic life by an unstable exchange. 
Even when the internal purchasing power of a currency 
has not been so far affected as to lose its normal function 
of a standard of values over any considerable period, ex- 
change fluctuations have nevertheless putserious difficulties 
in the way of commerce and industry by removing a sure 
basis for transactions with foreign countries. More than 
this, if irregular exchanges are prolonged even though the 
actual depreciation may still be slight, there is always the 
threat of some sudden aggravation and of unlimited deprecia- 
tion with all the series of disasters involved thereby. For in 
spite of what Mr. Cassel says, the example of countries 
like Poland or Germany has shown that, once the limits 
of the gold point have been crossed, there is no factor 
other than a return to the convertibility of internal cur- 
rency into external currency which can arrest the fall of a 
currency which has become a prey to all the vicissitudes of 
speculation. The problem of stable exchanges, and there- 
fore of stabilising the exchanges, is one of those practical 
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