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Full text of "War-time financial problems"

THE  GOLD  STANDARD            299

which several times brought us unpleasantly close
to disaster.

Mr Kitson, however, uses the "QuantityTheory
of Money "—the doctrine that the value or buying
power of money varies according to its quantity in
relation to that of the goods that it buys—chiefly
as a stick wherewith to beat the Gold Standard,
He shows, very easily and truly, that it is absurd to
suppose that the value of the monetary gold standard
is invariable. Thereby he is only beating a dead
horse, for no such argument is nowadays put forward.
The variability of the gold standard of value is ac-
knowledged, whenever a fluctuation in the general
level of commodity prices is recorded But gold is
the basis of our credit system, and of those of all the
economically civilised countries of the world, not
because its value is believed to be invariable, but
because it is the commodity which is universally
accepted, in such countries and in normal times, in
payment of debts. This quality of acceptability it
has got largely by custom and convention. Mr
Kitson speaks of the " selection of gold by the
world's bankers as the basis for money and credit/'
But it was selected as currency by common custom
long before bankers were heard of. And it was
selected because of its permanence, ductility and
other qualities, especially its beauty as ornament,
.which made man, eager to adorn himself, his women-
kind, and the temples of his gods, always ready to
accept it in payment, knowing also that, because of
xJbds acceptability, he would always be able to ex-
change it into any goods that he wanted.