IX PAPER MONEY AS A STANDARD OF VALUE 147 



considerable accuracy the average cost of all the chief 

 necessaries of life in the proportions in which they are 

 consumed by the whole community. 



But in order that money may retain the same purchas- 

 ing power, and thus constitute a real standard of value, 

 this same amount of money must always purchase the 

 same amounts on the average of all these commodities. 

 This can never be the case with gold or silver money, or 

 with the two combined, but I will now show that paper- 

 money may be so regulated as to have always the same 

 purchasing-power. 



Prof. Jevons states the chief objections to inconvertible 

 paper-money as follows : 



1. The great temptations which it offers to over-issue 

 and consequent depreciation. 



2. The impossibility of varying its amount in accordance 

 with the requirements of trade. 



The first of these objections does not arise when the 

 whole purpose of adopting a paper-currency is to secure 

 a permanent standard of value, and definite arrangements 

 are made to preserve that constancy. The second ob- 

 jection must have been stated without due consideration, 

 since nothing is more simple than to produce this " varia- 

 tion of amount ; " and when the variation is such as to keep 

 average prices steady, that steadiness will exist hecause the 

 quantity issued is in accordance with the requirements of 

 trade. This objection, which is stated at length under 

 the heading, " Want of Elasticity of Paper Money " (p. 237), 

 is really completely answered by the method of the tabu- 

 lar " Standard of Value " (p. 329), but the two things are 

 not brought together as parts of one system. 



In order to show how Prof. Jevons's " impossibility " 

 may be easily overcome, let us suppose the transition 

 period to have been passed over : all gold coin having been 

 called in or having ceased to be a legal tender, and paper- 

 currency issued to the same amount. The Registrar of 

 Prices, having determined that during the preceding year 

 the purchasing power of this money is two or three per 

 cent, greater than that of the standard as determined by 



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