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164 ECONOMIC INQUIRIES AND STUDIES
the inconvertible paper rtgz"me which began in the civil
war, and more recently in Italy, when it had incon-
vertible paper; and there are h.oards of gold at the
present day in Austria, Russia. and the Argentine
Republic, which are inconvertible paper countries.
2. The underrated metal may be used in actual cir-
culation at a market ratio different from the legal ratio.
Locke's proposal was that, as there would always be a
market ratio different from the legal ratio, a legal ratio
was superfluous or worse. Harris proposed that a legal
ratio should be fixed, but changed from time to time
as found convenient, the market being followed. But
practically in a bimetallic system, although the pro-
ceeding is encumbered and inconvenient, the underrated
metal can be, and is, commonly used to some extent at
a ratio different from the legal ratio.
Gold was always used in circulation in France as a
monetary merchandise, when silver was the overrated
metal, without any difficulty, but at a premium, not at
the legal ratio.
3. Coins of the underrated metal may circulate as a
species of token money, either because there has been
a heavy seignorage on them, or because they have
become worn and deteriorated, so that they occupy the
same place, and do the same work, as token coinage
of a different metal than the standard does in a mono-
metallic system. This was notably the case in England
with the silver coinage during -last century. Silver was
underrated, and gold had become the standard; but a
silver coinage of a very bad description remained,
which was used exactly as the silver-token coinage is
now used.
In these three ways, then, COlDS of an underrated
metal in a bimetallic system, and coins of different
metals in an inconvertible paper country, may remain
physicalIy in a country when they go out of use as
standard money, without being actually exported.
When export does, in fact, take place, it arises from
the formation of a surplus of the underrated metal,