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The Economics of Freedom
Both the institutions of irresponsible autocracy and embryonic democracy have tended to cover up the most essential function of money—its integrity as a fractional pledge of full value, so that it can be used as a safe basis for deferred payment—and it was necessary to clear away the overhanging branches of these phases of government to realize what money is in its simplest terms. That our short-cut lands us side by side with the more painstaking political-economists, is a matter for renewed congratulations, if they will permit.
Gide, characteristically, even while acquiescing in metallic currency, touches a significant flaw in our present unit, without realizing that the discovery of an obvious flaw in the logic of a science is quite as valuable a service as the discovery of a law. He is very clear-sighted when examining isolated phenomena, but appears to rest his case with a statement of contradictory evidence. He proceeds as follows: “However, it is right to recognize that though the precious metals are far better suited by their natural properties to serve as instruments of exchange than as a measure of values, yet they possess two special properties which enable them to fulfill this second function in a manner which if not perfect is at least superior to the use of any other imaginable measure of value. These two properties are firstly their very great facility of transport, secondly, their almost indefinite durability. Thanks to the first of these two properties, the value of the precious metals is, of all values, that which fluctuates least from place to place. Thanks to the second, that which fluctuates least from year to year. It is this double invariability (relatively speaking) in space and in time which is the essential condition of every common measure.” He sees plainly, at this stage, what is required, but a little later lays his finger on what we suffer owing to the fact that even these inadequate qualifications are not met, when he goes on to say, “If, then, the value of the precious metals offers substantial enough guaranties of stability in time when short periods only are under consideration, it altogether fails in this respect when long periods of time are included, say twenty- or twenty-five years, not to speak of several centuries. In this regard, then, our proposed measure of