NORMAL EXCHANGES IF] 
the adoption of the latter system in no way prevents the 
former par from being replaced by a new par as has been 
done in several countries such as Japan and Russia, which 
have adopted this classical method of monetary recon- 
struction. On the contrary, it should be observed, as we 
have already stated above, that in the latter case the devalor- 
isation is final, whereas under the much more elastic 
system of the gold reserve it is possible to fix a provisional 
parity adapted to the actual requirements of foreign trade 
and one which in no way excludes the possibility of a 
gradual recovery by successive stages. If therefore we look 
at the facts as they are and if we consider how many 
countries there are where a depreciated exchange cannot 
be brought back to the former par without a serious crisis, 
we shall conclude that the problem of stabilisation should 
be solved by setting up new gold points; and it would seem 
that preference should be given to a system which allows 
the problem to be solved without it being necessary to take 
a decision in advance as to the ultimate devalorisation of 
the monetary unit. 
In order, however, to explain the nature of this problem 
to the reader, we still have to reply to the objection that 
the system of the gold reserve cannot stand any prolonged 
deficit in the balance of payments. It is indeed true that 
the gold exchange standard, like any other similar system 
based on the convertibility of the internal currency into a 
foreign currency, cannot work unless the reserve of gold 
or foreign currency, i.e., the volume of metal or of credit, 
is large enough or elastic enough to meet any possible 
demands for payments abroad to the extent to which 
private bills may be insufficient for this purpose. But the 
same problem arises with all other methods of using the gold 
standard, so much so that with an equal stock of gold it is 
much easier for a country to withstand a deficit in its 
balance of payments abroad if it sets aside all ts available 
gold for foreign payments than if it allows that gold to be 
lost in internal circulation. 
Nevertheless it may seem as though this theoretical 
objection had been confirmed by a superficial study of 
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