chapter  VIII
8 Pages


T HE previous chapter dealt with the various forms in which units of money were supplied by the market, considered in respect of their efficiency as a means of effecting payments. The present chapter is concerned

with the second main question on the side of supply: the unit considered in respect of its stability of value, i.e. of its suitability to serve as the basis of contracts involving future payments. The question cannot be made a simple one; moreover its parts are so interrelated as to make any simple order of development difficult to find. It will be as well then to begin with setting down plainly the order in which the matter is to be treated. It will be convenient, in the first place, to deal with certain minor complications arising from the fact that the stock of money is not homogeneous. These being removed, the main causes determining the stability of the unit of value can be set out, not with a view to adding anything to the previous discussion, but in order that the argument may proceed directly from the basis on which it ultimately rests. It will then be possible to distinguish the main causes of instability, and to follow this up by a discussion of the social importance of the consequent disturbances. Any full discussion of the various methods by which these disturbances can be removed or alleviated is outside the scope of this book; but some indication will be given of the nature of the remedies, and this will be followed up a little further in the course of a more detailed discussion of the banking system.