278 REPORT— 1887. 



But we are not entitled here to make an assumption, which is the 

 characteristic of the following section. We must rather seek a rule 

 adapted to the case in which one large category of objects may be con- 

 siderably and uniformly elevated, another depressed; where the variations 

 do not present any true mean or normal type. Our formula should be 

 irrespective of such an hypothesis here equally as in the previous sections. 

 Upon reflection it will be found that the detriment incident to the 

 disturbance of prices, which it is sought to correct by the augmentation 

 of money, must be of the same general character as that which it is 

 sought to correct by the adoption of a Unit. That creditors do not 

 receive a constant quantity of real wealth, that debtors are disabled from 

 meeting their engagements — these are the sort of evils which it is the 

 object of both remedies alike to remove. Accordingly, the standards or 

 Units, which have been above defined, supply the proper measure of that 

 appreciation which it is sought to remove by augmenting the quantity 

 of money. The currency-doctor, injecting new circulating-medium into 

 the commercial system, may be satisfied that he has attained his object, 

 when the standard (which ' he has selected as the best) no longer shows 

 symptoms of deficiency ; in short, as soon as the Unit is unity. Thus it 

 appears that no generically distinct method of averaging is introduced 

 by this section. The reader may be referred to the previous sections for 

 a description of the different methods. It will be suflBcient here to note 

 the peculiarities incident to the purpose now in hand. The operation of 

 augmenting the currency, as conti'asted with the method of making con- 

 tracts in Units, presents the following four distinguishing characteristics : 



(1) The infusion of money is not adapted to correct the more transient 

 fluctuations of prices due to the oscillations of credit. As our Producer 

 Unit — including commodities other than finished products — is specially 

 directed to the correction of transient fluctuations, so it may be con- 

 jectured that the Unit appropi-iate to the present purpose (the Unit 

 whose equality to unity is the test of the price-level being kept constant) 

 is based chiefly on finished products, is of the nature of the consumption- 

 standard. Not without reason does M. Walras - adopt this standard as 

 the test of the currency being augmented in the proper degree. 



(2) The operation of the proposed remedy requires time. The detec- 

 tion of the evil — the secular as distinguished from the tidal variation of 

 price-level — also requires time. It follows that the epochs which are to 

 be compared in respect of purchasing power are separated by a con- 

 siderable interval. Hence the calculation of a Unit to express change 

 in the purchasing power of money must be of the less exact sort, above 

 distinguished as integral.^ 



(3) Again, the area which is aS'ected by the augmentation of currency 

 is very extensive, at least when (as in the case of Bimetallism) the added 

 circulation consists of pi'ecious metal. Accordingly, the appreciation 

 which is to be corrected by that remedy must relate to a very wide area, 

 the whole system of states in monetary communication ; that is, the 

 greater part of the civilised and uncivilised woi-ld. Now, the larger and 

 more diversified the public to which there is applied any regulation 

 based upon the mean requirements of the average man, the less perfectly 



' Or agreeably to Section X. a combination of difEerent standards. 

 - Them-ie de la Monnaie, p. 93. Of. Professor Marshall, loc. cit. Horton, Silver 

 and Gold, Appendix B. 

 ■' See p. 264. 



