210 
INTERNATIONAL TRADE 
Differing widely from the monetary systems of the English-speak- 
ing countries are those of the Continent of Europe. In them also 
banking operations and currency supplies are intertwined, but in 
another way and with consequences not the same. The use of 
deposits and checks is small as compared with the English-speaking 
countries ; a difference which alone entails fundamental differences 
in the working of the entire monetary mechanism. 
A representative case for the Continent — representative, that 
is, for the purpose of the present inquiry — is, or rather was, that 
of France. With a specie standard and with specie convertibility 
(conditions happily so long maintained, and presumably to be 
restored in the future) the circulating medium consisted of gold, 
Bank of France notes, and silver in the form of the over-valued 
“limping” 5 franc pieces and of subsidiary coin. The silver is for 
our purposes negligible, being virtually fixed, moderate in amount, 
a passive element.! The gold and the Bank of France notes were 
the active elements, and they were also the flexible elements. The 
Bank’s notes were not restricted in amount, or regulated as regards 
the conditions of issue. There was indeed a maximum, but it was 
never permitted to operate as a real restriction. A large amount 
of gold coin was in every-day circulation, and, what was more 
important, a great store was constantly held in the vaults of the 
Bank of France. A drain of gold for foreign remittance was easily 
met from the Bank’s holdings; an inflow of gold from abroad 
was as easily absorbed in those holdings. The varying internal 
calls for cash, on the other hand, were usually met by notes paid 
out over the counter, mainly in the course of dealings with financial 
and commercial institutions. Internal movements of specie, out 
of the Bank and into it, tho subject to seasonal shifts and occa- 
sionally to commercial vicissitudes, showed no marked changes 
except over long periods of time. The Bank’s great stores of gold 
served as a reservoir, mitigating and smoothing the effect of the 
one irregular factor, the international flow of gold. Its large 
1 T doubt whether the possibility of sending the 5 franc pieces to and fro between 
the countries of the Latin Union should lead to any significant qualification of this 
statement.