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FANCY MONETARY STANDARDS I~I
soundness on currency, to favour the notion that by'
putting out or drawing in paper prices could be affected.
Lord Overstone and others favoured an idea like this;
but surely they were too absolute on this point, and
there has been a great deal of experience since the Act
of 1844.
Certainly, if paper such as 'Mr. Williams suggests is
to be made a kind of standard, and is only to be issued
for the amount of bullion held at the time, it will be
necessary to provide that representative paper may be
issued containing promises to pay in the standard paper
of the Government, so as to prevent the mischiefs of a
cast-iron and rigid Government issue. A combination
of banks to pledge their mutual credit, such as the New
York banks entered into in 1873.when the.standard
was inconvertible paper incapable of increase, would
have much the same mitigating effect. But room for
mitigation there must be, and if there is mitigation, how
is the anticipated effect on prices to be produced?
I need hardly repeat what I have said elsewhere, as
to the complexity of the relations between the quantity
of money and prices and the different senses in which
the word II money" may be used; and how far apart
from reality are speculations like those here indulged
in as to the way in which prices may be regulated.
It would facilitate farther the study of the subject,
if, in the case of so novel a proposal, those who make
it, instead of writing of .. paper" in the abstract, would
give a specimen of one of their notes, so that one may
see what is promised, who makes the promise, and so
on. I cannot help thinking that the writing of a
specimen note in this case would have brought out
some of the difficulties of the undertaking.
A third matter, on which I desire to make a remark,
is the difficulty of obtaining prices for the co index
number," which Mr. Bagehot makes so much of, but
which 'Mr. \Villiams treats so lightly that he imagines
it will be quite a simple matter for a government to
make up its index number daily. Surely this is not a