50 MODERN MONETARY SYSTEMS 
An even more remarkable event was the prohibition, 
not only of the export, but also of the import of gold ; this 
had brought down the import gold point, and thus, when 
the Trade Balance was favourable, caused the national 
currency to rise above par. This was done in Sweden 
in 1916 at the request of the State Bank,! and seems to 
have been the first step of its kind deliberately taken in a 
country with a gold currency.? 
It should be observed, however, that the prohibition to 
the export gold in one of two countries, between which 
an exchange rate is quoted, is equivalent to an import 
prohibition in the other from the point of view of the 
exchange rate between the two countries. Hence this 
measure remained without effect except in a few countries 
such as Holland, where the export of gold was still 
permitted.® But in the end it divorced the national cur- 
rencies involved from all others, even from those on a 
gold basis.? 
certain cvienies, 7.0 the Dutch florin, had already occurred before the 
entry of the United States into the war. 
1 Mr. Cassel points out in his “Money and Foreign Exchange after 1914” 
(English translation, Constable 1922, p. 79) the rather petty reasons which 
were put forward by the Riksbank. He did, however, agree to this step being 
taken on the ground that the stock of gold was likely to arrest the rise in 
prices—a result which would seem likely to occur, in any case, because 
foreign goods would be bought more cheaply owing to a more favourable 
rate of exchange. 
2 Tt should, however, be pointed out that Brazil, by limiting the amount 
of gold which the Conversion Office was entitled to receive, had really 
taken a similar step, which enabled the exchange to rise above the parity of 
15d. fixed in 1906. Among countries with a silver currency, French Indo- 
China applied the same system; for it has a silver currency, but without free 
coinage and without allowing foreign coin to enter. See, on this subject, the 
authors “Probleme monétaire dans I’Indo-Chine francaise ” (Rev. Econ. 
Internationale, April 1921), and M. Oualid, “Le privilege de la Banque 
d’Indo-Chine et la question des Banques coloniales,” p. 124. The Swedish 
example was followed by other countries; from 1917 onwards Spain only 
accepted American gold at a rate below par. 
3 The Bank of Holland, which was not obliged to allow the export of 
gold, nevertheless made such payments as it thought necessary, and had 
some difficulty in inducing the Bank of Sweden to accept Dutch gold in 
respect of justifiable payments at the mint par of 2'480 crowns per kilogram 
of fine metal. 
4 See infra, Part II, Ch. II, on the theoretical implications of this