MONEY

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is  taken  as  readily  as  standard  money,  and
the  proportions  of  each  in  use  are  settled
merely  by  the  habits  and  customs  of  the  people,
which,  generally  speaking,  give  expression  to
what  is  convenient.  A  person  in  England
will  make  certain  payments  with  cheque,
certain  payments  with  notes,  and  others  with
sovereigns  and  small  change  :  whenever  he
has  to  hand  over  money  for  goods,  he  will
select  the  form  of  payment  which  best  suits
his  convenience.  Hence  the  proportion  of
credit  money  to  commodity  money  in  use
tends  to  settle  at  a  figure  which  reflects
public  convenience.  When  the  amount  of
credit  money  outstanding  is  in  excess  with
reference  to  this  criterion,  it  is  essential  that
sufficient  bullion  should  be  held  in  reserve
against  its  redemption.  And,  inasmuch  as
the  demand  for  credit  money  fluctuates,
which  means  that  for  a  time  less  than  the
normal  volume  of  it  may  be  wanted,  bullion
reserves  should  be  at  least  adequate  to  allow
of  as  large  a  shrinkage  of  paper  money  as  is
thinkable  in  the  light  of  experience.  Moreover, ­
  in  calculating  what  is  needful  we  must
reckon  the  demands  for  bullion  for  the  purposes ­
  of  international  trade.  Gold  is  required
from  time  to  time  to  make  foreign  payments,
as  we  shall  learn  in  the  next  chapter.  At