2. Alternative Aims in MonetaryPolicy (i 92,3) 1

The instability of money has been com-pounded, in most countries except the UnitedStates , of two elements: the failure of thenational currencies to remain stable in termsof what was supposed to be the standard ofvalue, namely gold; and the failure of golditself to remain stable in terms of purchasingpower. Attention has been mainly concen-trated ( e.g . by the CunlifFe Committee) on thefirst of these two factors. It is often assumedthat the restoration of the gold standard, thatis to say, of the convertibility of each nationalcurrency at a fixed rate in terms of gold, mustbe, in any case, our objective; and that themain question of controversy is whether nationalcurrencies should be restored to their pre-wargold value or to some lower value nearer to thepresent facts; in other words, the choice be-tween Deflation and Devaluation.

This assumption is hasty. If we glance atthe course of prices during the last five years,it is obvious that the United States, which has

1 [ I.e . prior to the restoration of the Gold Standard in GreatBritain.]

186