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ESSAYS IN PERSUASION

PART

we cannot argue from this to what can beachieved in normal times. I do not see that theregulation of the standard of value is essentiallymore difficult than many other objects of lesssocial necessity which we attain successfully.

If, indeed, a providence watched over gold,or if Nature had provided us with a stablestandard ready-made, I would not, in an attemptafter some slight improvement, hand over themanagement to the possible weakness or ignor-ance of Boards and Governments. But this isnot the situation. We have no ready-madestandard. Experience has shown that in emer-gencies Ministers of Finance cannot be strappeddown. And—most important of all—in themodern world of paper currency and bank creditthere is no escape from a “managed” currency,whether we wish it or not;—convertibility intogold will not alter the fact that the value ofgold itself depends on the policy of the CentralBanks .

It is worth while to pause a moment overthe last sentence. It differs significantly fromthe doctrine of gold reserves which we learntand taught before the war. We used to assumethat no Central Bank would be so extravagantas to keep more gold than it required or soimprudent as to keep less. From time to timegold would flow out into the circulation or forexport abroad; experience showed that thequantity required on these occasions bore somerough proportion to the Central Bank ’s liabili-ties; a decidedly higher proportion than this