RECOVERY OF THE EXCHANGES 39
deposited at the Manilla Office for the purchase of drafts
on New York, and only to put them back for the purpose
of meeting drafts drawn by New York on Manilla. Sums
paid into an Exchange Office were, however, allowed to
be used to buy silver for minting pesos, and later a Philip-
pine law of December 8th, 1911, gave authority for part
of the reserve of exchange offices to be invested locally.
Mr. Kemmerer (“Modern Currency Reforms,” p. 373)
objects to this provision as being contrary to the principle
of automatic contraction. It should be observed, however,
that this exception has in no way prevented the currency
from remaining at par; nor is this surprising, since the
maintenance of parity results from the mere fact that the export
and import go!d points are secured by the regular working of
the exchange office. Variations in monetary stocks could only
have dislocated the mechanism of stabilisation if they had
been large enough to produce such economic upheavals
as would have created a serious deficit in the Trade Balance,
so that the impossibility of maintaining a fixed rate for the
conversion of national currency into foreign currencies
would have brought about the disappearance of the gold
points.
§ 3. Similar Monetary Reforms in various countries with
paper currencies.
Apart from silver-standard countries whose monetary
relations with gold-standard countries had been disturbed
by the disappearance of Bimetallism, there were certain
countries on a paper currency which also suffered from
fluctuating exchanges, e.g., various South American States,
and in particular the Argentine and Brazil. For just at the
time when India was at last carrying out its monetary re-
form, the Argentine was attempting to stabilise the ex-
change ratio between its paper currency and gold coin by
methods identical with those which we have just described.
A law of October 31st, 1899, fixed a legal ratio be-
tween the paper piastre and the gold piastre at 44 centavos
(or hundredths of a gold piastre) to the paper piastre,
