part in THE RETURN TO GOLD 187

enjoyed a gold standard throughout, hassuffered as severely as many other countries,that in the United Kingdom the instability ofgold has been a larger factor than the instabilityof the exchange, that the same is true even ofFrance, and that in Italy it has been nearlyas large. On the other hand, in India, whichhas suffered violent exchange fluctuations, thestandard of value has been more stable than inany other country.

We should not, therefore, by fixing the ex-changes get rid of our currency troubles. Itis even possible that this step might weakenour control. The problem of stabilisation hasseveral sides, which we must consider one byone:

1. Devaluation versus Deflation. Do wewish to fix the standard of value, whether ornot it be gold, near the existing value? Or dowe wish to restore it to the pre-war value?

1. Stability of Prices versus Stability of Ex-change. Is it more important that the value ofa national currency should be stable in terms ofpurchasing power, or stable in terms of thecurrency of certain foreign countries?

3. The Restoration of a Gold Standard. Inthe light of our answers to the first two ques-tions, is a gold standard, however imperfect intheory, the best available method for attainingour ends in practice?