ABSTRACT
While a number of reformers seek the world’s salvation in monetary internationalism, others believe that the solution of our problems lies in monetary isolationism. In fact, sometimes the same reformers advocate both, that is, they are whole-heartedly in favour of monetary internationalism but add that, should distrust and jealousy between the nations make this course impossible, the alternative is extreme monetary isolation. The isolationist school maintains that it is to the interest of the individual countries and in the long run even of mankind in general that the world should be broken up into communities entirely independent from a monetary point of view. They consider this desirable in order that each country should be free to work out its own salvation independently of other countries. It is pointed out that under an international monetary system the progress of the world as a whole depends upon the pace dictated by the least progressive of countries, just as the speed of a fleet depends upon the speed of its slowest unit. If one of the important countries refuses to expand credit for the sake of improving the welfare of her population, then other countries which dare to expand will have to pay the penalty as a result of adverse international pressure caused by the difference in their relative degrees of expansion. If one of the major countries, prompted by a deflationary mentality, chooses to restrict, then in order to avoid economic depression and financial crisis the other countries will have to follow it, however reluctantly, and however much they might wish to proceed in the opposite direction.
