does not depend upon our ability to redeem: it depends, first, upon Peter’s foreign ventures, second, upon Paul’s alarm, and, finally, upon our ability to make terms with both of them at the expense of the exerters of effort.
The orthodox may further assert that even the small amount we have is ample for our needs. It is—for the purpose of satisfying an uninterested demand; but, however ample at the moment, it is not constant or calculable and therefore has no conceivable relationship to national economic value. Because of the very fact that we hold here in momentary custody all this stock of gold subject to individual demand, other so-called gold-standard countries are in a state of panic. They are not devoid of potential wealth—fixed capital, equipment, ample acreage and a population eager to work; but they are bare of raw material and are insulated in time and space by their lack of the conventional medium of exchange and the conventional guaranty of deferred payment. If their bidding for this vital token grows more urgent, and faith becomes greater in their ability to break through our tariff barriers and tender services, there is nothing to prevent the loan of this gold to them at a handsome rate of interest by the present owners.[1] As a consequence, we may well be thrown into unnecessary confusion. This may sound absurd; but following the crash of 1907 we were taught to be very grateful to certain financiers who saved us by bringing back our basis of fundamental economic value—in a ship—at great sacrifice to the holders of real value[2]—here is the scientific absurdity!
So bemuddled are we by economic ritual that we take the havoc for granted, though we know that in physics it would be preposterous. Imagine for a moment that the British Government were in a position to lend one half of their Empire at 8% interest to Mars; and, owing to the resulting shrinkage in the mass of the Earth, our physical units of value were correspondingly affected. Boundaries would overlap, velocities would alter and trajectories would have to be calculated anew. We would object strongly to this alien interference
