76 MODERN MONETARY SYSTEMS 
improvement in the general balance of payments, and 
even a rise in the exchange, which may be independent 
of the state of the balance of payments. Indeed it was to 
be normally expected that the rise in prices accompanying 
the revival of production after the war would sooner or 
later end in a crisis and in a fall in prices; at the same 
time it was normally to be expected that exports would 
revive after the removal of the restrictions of the war 
period, when freedom of communications had been re- 
established and markets had again been thrown open. 
Finally, it was normally to be expected that the splendid 
fiscal efforts of Great Britain should inspire the greatest 
confidence abroad, and thus make it easier to open new 
foreign credits or renew old ones, and to induce specu- 
lators to take a favourable view. And so it is perhaps 
some such psychological factor which must be considered as 
the essential connecting link berween these events which, 
incidentally, one is not surprised to find coinciding. The 
British exchange, a prey to speculation like every other 
exchange once it has jumped the physical barriers of the 
gold points, did not fail to profit by the vigorous and 
courageous policy of the British Government; of that 
policy deflation properly so-called, which in 1920 had 
only been projected in outline, was merely a secondary 
manifestation. Nevertheless the British exchange is on the 
whole still unstable. 
§ 10. Experiment in Czechoslovakia, based on the classical 
principles, produces at first a rise but not a stabilisation 
of the exchanges; a rise in prices takes place in spite of 
a contraction of the currency. Stabilisation attained in 
192 3 results, in practice, from convertibility. 
Among the few countries where a systematic attempt 
was made to reform the monetary system, Czechoslovakia 
deserves particular study. In this country, peculiar in that 
it is governed chiefly by university professors and “intel- 
lectuals,” the Finance Minister, M. Rasin, devoted him- 
self as soon as he came into power to establishing a sound