NORMAL EXCHANGES 227 
The above account was intended to present in a concrete 
form a method of monetary reconstruction strictly based 
on the principle of the gold standard. It is, moreover, a 
system which should be compatible with bimetallism, if 
the latter were universally adopted. Whatever may be the 
detailed methods employed, monetary reconstruction pre- 
supposes a return to the convertibility of the internal 
currency either by means of a stock of gold or of foreign 
bills, or with the help of external credits. 
At the time of writing, when monetary problems not 
only form the occasion for some fine intellectual fireworks 
but when the economic, social and therefore also the 
political life of so many countries is bound up with their 
solution, the author considers it his duty to draw the atten- 
tion of his readers to the practical conclusions which he 
had thought it possible to form in the present state of the 
science of economics. And some of those readers will 
perhaps recognise the importance of erecting practical 
schemes on the basis of a theory which has been somewhat 
renovated. 
For so long as we cling to those superficial propositions 
which reduce all monetary problems and their solutions to 
notions of quantity, it is difficult to see any issue to our 
present difficulties except in a policy of deflation. It is 
thought that deflation will bring about a progressive im- 
provement in the exchange and that the exchange will be 
stabilised by the mere abolition of forced currency and 
system of the gold standard. Nevertheless, while it is difficult to force 
exporters to hand over all the bills which represent their sales abroad, so 
long as they are afraid of a drop in the exchange and therefore desire to 
pile up a reserve abroad, it is easy to obtain foreign currencies when 
confidence returns and the exchange is stabilised. This happened in 
Czechoslovakia, where the central institute of foreign exchange at Prague 
was of assistance in bringing about monetary reconstruction. 
1 It is easy to see that a policy of “intervention on the exchange market” 
with the help of a stock of foreign bills or of a foreign credit quite 
naturally ends in a régime of convertibility whenever the intervening 
organisation is in a position to buy up all the surplus drafts or to sell all 
the surplus foreign valuta at an equally constant rate. This is what 
happened in Czechoslovakia.