194 MODERN MONETARY SYSTEMS 
in purchasing power applicable to long-term contracts 
there is no really practical solution for the legal problem 
arising out of the instability of a monetary standard or, 
more accurately, out of variations in the purchasing power 
of a currency. Hence our real problem is to prevent these 
variations themselves; but here we come back to the 
domain of economics. 
§ 3. Conditions for an economic solution of the problem. 
The problem of obtaining a currency with a constant 
purchasing power has long engaged the attention of 
economists. Walras, in particular, proposed in 1876 a 
monetary system involving the gold standard—gold alone 
being admitted free coinage—with a regulating subsidiary 
silver currency. This means that the issue or withdrawal 
from circulation of the supplementary silver would have 
been, in the view of the author, such as to compensate 
price variations by compensating variations in the volume 
of currency, i.e., contraction in the event of a rise and 
expansion in the event of a fall. There is a somewhat 
similar idea behind the plans put forward by Mr. Irving 
Fisher, even before the war, for a compensating dollar, 
that is to say a dollar with a varying content of gold. The 
same idea dominates the Cassel plans for monetary 
stabilisation ; for while the object of the latter is to 
stabilise the exchanges by maintaining purchasing power 
parity, it is by first regulating the monetary circulation 
of the country concerned that he proposes to regulate 
the internal purchasing power of its currency and thereby 
the desired parity between that internal purchasing power 
and the external purchasing power resulting from the 
exchange. 
Mr. Irving Fisher’s plan was formulated and discussed 
even before the war.2 
1 See his mathematical theory of bimetallism, which appears in the 
Fournal des Economistes of December 1876 and in various subsequent 
writings. 
2 See “De la Nécessité dune Conférence Internationale sur le Colt de la