THE GOLD EXCHANGE STANDARD 383

the rate of interest at large. While it fluctuates much, in each
country it still oscillates above or below the general rate of interest
on long-time investments. And this latter rate for a given country
is relatively stable. It tends on the whole to be higher in some
countries than in others. The discount rate also tends to be higher
in some than in others. Being permanently higher in one country
than in another, can its mere height exercise a permanent depressing
influence on prices in the country of higher rate? Changes in the
rate, to repeat, have a first effect on loans, on deposits, on available
funds; on the temper of the business public also, and thus on the
active or sluggish movement both of the purchasing medium and of
the goods purchased. But it would seem that it is degrees of movement
 or relative movements which alone are thus affected. The
extent to which people use loans and deposits at any given time
may indeed be influenced; things may be speeded up or slowed
down. But does not the use of loans and deposits (or of bank
money other than deposits) depend in the end on the ways and
habits of the people in handling their money incomes or purchasing
power? and so on the extent to which a given volume of legal
tender cash (or cash otherwise made actually acceptable) bolsters
up the structure of credit payments? Can these forces be permanently
 modified by mere changes in the charge which the business
 community has to pay for short-time loans? On the other
hand, the quantity of goods put on sale, and the way in which
they are put on sale — the flow of goods into the markets — also
depend on forces which in the last resort are independent of the
discount rates: the volume of production, and the ways and
habits of the people in buying and selling goods. No doubt bank
rates and credit extension have their effects, both mechanistic and
psychological, on the production and distribution of goods as well as
on the ways in which people use their purchasing power. But are
bank operations the determinants of continuing changes in all this
interplay of factors, and so determinants of prices one way or other,
up or down?
I cannot but believe that those who propose gold exchange
standards, stabilized exchanges, currencies managed by discount