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ESSAYS IN PERSUASION

PART

is, in my opinion, the much less probable alter-native—there might be, as Professor Cassel haspredicted, a serious shortage of gold, leading toa progressive appreciation in its value.

Nor must we neglect the possibility of apartial demonetisation of gold by the UnitedStates through a closing of its mints to furtherreceipts of gold. The present policy of theUnited States in accepting unlimited imports ofgold can be justified, perhaps, as a temporarymeasure, intended to preserve tradition and tostrengthen confidence through a transitionalperiod. But, looked at as a permanent ar-rangement, it could hardly be judged otherwisethan as a foolish expense. If the Federal Re-serve Board intends to maintain the value of thedollar at a level which is irrespective of the in-flow or outflow of gold, what object is there incontinuing to accept at the mints gold whichis not wanted, yet costs a heavy price? If theUnited States mints were to be closed to gold,everything, except the actual price of the metal,could continue precisely as before.

Confidence in the future stability of the valueof gold depends therefore on the United States being foolish enough to go on accepting goldwhich it does not want, and wise enough, havingaccepted it, to maintain it at a fixed value. Thisdouble event might be realised through the col-laboration of a public understanding nothingwith a Federal Reserve Board understandingeverything. But the position is precarious; andnot very attractive to any country which is still