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Nobody feels any poorer for the process, in fact, those who have new money in their pockets or in their bank balance feel richer, but the result of thus multiplying currency without any increase in the supply of goods and services to be bought inevitably helps the rise in prices which makes the war costly, puts the burden of it on to the wrong shoulders, and likewise cheapens the value of the English pound as measured in other currencies.
A monetary union could incorporate "several currencies, fully and permanently convertible into one another at irrevocably fixed exchange rates". This would be like having a single currency with various denominations, each printed by another member of the Union. This applies to all the territory of the single currency.
First, these countries are our customers. If they sink into recession, they won't be able to buy the goods we'd like to sell them. Second, they're also our competitors, so if their currencies lose their value and go down, then the price of their goods will drop, flooding our market and others with much cheaper goods, which makes it a lot tougher for our people to compete.
In adapting the new silver coinage to the ordinary uses of currency in the everyday transactions of life and prescribing the quality of legal tender to be assigned to it, a consideration of the first importance should be so to adjust the ratio between the silver and the gold coinage, which now constitutes our specie currency, as to accomplish the desired end of maintaining the circulation of the two metallic currencies and keeping up the volume of the two precious metals as our intrinsic money.
Twenty thousand francs if I could get an exact chart of the South Coast." "Why francs?" asked Anonyma. "Not francs. I find these various currencies so confusing, don't you? Of course I mean pfennigs." "Twenty thousand pfennigs?" said Anonyma. "Look here, are you trying to be funny?" "Far from it," said the man. "To tell you the truth, I am awfully nervous." "Of me?" "Yes. No. I mean of discovery."
Between 1905 and 1924, no exchange rates among the three currencies were available. When Norway became independent, the irate Swedes dismantled the moribund Union in an act of monetary tit-for-tat. The SMU had an unofficial central bank with pooled reserves. It extended credit lines to each of the three member countries. As long as gold supply was limited, the Scandinavian Kronor held its ground.
One cannot but smile a little at the present union of Sweden and Norway, when he finds that the countries have separate currencies, neither of which will pass at its full value in the other separate tariffs, and of course Custom-house examinations between the two, and, if the Norwegians had their way, would have separate diplomatic representatives abroad.
In this situation they have purposely covered all, that they ought industriously to have cleared, with a thick fog; and then, blindfold themselves, like bulls that shut their eyes when they push, they drive, by the point of the bayonets, their slaves, blindfolded indeed no worse than their lords, to take their fictions for currencies, and to swallow down paper pills by thirty-four millions sterling at a dose.
But while these currencies enjoy a precarious value abroad, they have never entirely lost, not even in Russia, their purchasing power at home. A sentiment of trust in the legal money of the State is so deeply implanted in the citizens of all countries that they cannot but believe that some day this money must recover a part at least of its former value.
Europe, for example, is now marked by checkered areas of labor surplus and labor shortage, of agricultural areas needing machines and industrial areas needing food. Here and elsewhere we can hope that our friends will take the initiative in creating broader markets and more dependable currencies, to allow greater exchange of goods and services among themselves.
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