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170 ECONOMIC INQUIRIES AND STUDIES
but admitting his contention, where is the overwhelming
necessity for considering a change in our monetary
standard? It would serve the purposes for which it is
used very well, with even greater fluctuations in pur-
chasing power than there have been.
The second point I wish to observe upon, is the way
in which Mr. Williams talks of "suppressing paper"
when bullion falls in price, -i.e., when prices rise, be-
cause then the notes cover a greater quantity of bullion
than before, and the notes are only to be issued against
bullion the Government holds; and of "increasing
paper" when bullion rises in price, z,".e., when prices
fall, because then more notes can be issued against the
same quantity of bullion, the assumption being that the
suppress.ion of paper will make bullion rise again, £.e.,
will make prices fall, and that the increase of paper
will make bullion fall again, z,".e., will make prices rise.
In this way, he thinks, fluctuations of prices will be
automatically corrected.
This is a manner of speaking about paper which I
do not understand. How is an issuing institution to
"suppress paper" or" increase paper" at will, unless
- it be inconvertible and managed paper? There is no
will in the matter, unless it be that of the customers of
the institution, whose demands for paper may vary in-
definitely according to customs and habits of every sort
and kind, and whose demands must be complied with
automatically in any credit system, if frequent shocks
to credit are to be avoided. Sometimes much paper
will be wanted, as happened, for instance, after the City
of Glasgow Bank failure in 1878, and the demand
must be met at any cost. No automatic regulation by
an issuing body is possible. At other times less paper
will be wanted, and, equally, no issuing body can force
it, thbugh the attempt at forcing may produce disastrous
results.
N ci doubt it may be said for Mr. Williams's idea
that there is much in the language of the authors of
the Bank Charter Act, notwithstanding their general