Front Page Titles (by Subject) Difficulties of the Scheme. - Money and the Mechanism of Exchange
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Difficulties of the Scheme. - William Stanley Jevons, Money and the Mechanism of Exchange 
Money and the Mechanism of Exchange (New York: D. Appleton and Co. 1876).
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Difficulties of the Scheme.
The difficulties in the way of such a scheme are not considerable. It would, no doubt, introduce a certain complexity into the relations of debtors and creditors, and disputes might sometimes arise as to the date of the debt whence the calculation must be made. Such difficulties would not exceed those arising from the payment of interest, which likewise depends on the duration of the debt. The work of the commission, when once established and directed by Act of Parliament, would be little more than that of accountants acting according to fixed rules. Their decisions would be of a perfectly bonâ fide and reliable character, because, in addition to their average results, they would be required to publish periodically the detailed tables of prices upon which their calculations were founded, and thus many persons could sufficiently verify the data and the calculations. Fraud would be out of the question.
The only real difficulty which I foresee, is that of deciding upon the proper method of deducing the average. According to the method which I should advocate, a considerable number of commodities, say 100, should be chosen with special regard to the independence of their fluctuations one from another, and then the geometrical average of the ratios in which their gold prices have changed would be calculated logarithmically. This is the method which I employed in my pamphlet on the "Serious Fall in the Value of Gold, etc." and in the paper on the Variations of Prices since 1782, previously referred to (p. 323). A somewhat similar method had been previously employed by Mr. Newmarch. In the annual Commercial History and Review of the Economist newspaper, there has, for many years, appeared a table containing the Total Index Number of prices, or the arithmetical sum of the numbers expressing the ratios of the prices of many commodities to the average prices of the same commodities in the years 1845-50. Whatever method were adopted, however, the results would be better than if we continued to accept a single metal for the standard, as we do at present.
The space at my disposal will not allow me to describe adequately the advantages which would arise from the establishment of a national tabular standard of value. Such a standard would add a wholly new degree of stability to social relations, securing the fixed incomes of individuals and public institutions from the depreciation which they have often suffered. Speculation, too, based upon the frequent oscillations of prices, which take place in the present state of commerce, would be to a certain extent discouraged. The calculations of merchants would be less frequently frustrated by causes beyond their own control, and many bankruptcies would be prevented. Periodical collapses of credit would no doubt recur from time to time, but the intensity of the crises would be mitigated, because as prices fell the liabilities of debtors would decrease approximately in the same ratio.
The Quantity of Money Needed by a Nation
It might seem natural that one most important point for discussion in an Essay on Money would be the quantity of money required by a nation. Nothing would seem more desirable than to decide how much each person needs of paper, gold, silver, or bronze currency, so that the government might take care to provide sufficient for every one. In almost every country great complaints have from time to time been made as to the scarcity of the circulating medium, and the urgent need of more. All the evils of the day, the slackness of trade, falling prices, declining revenue, poverty of the people, want of employment, political discontent, bankruptcy, and panic, have been attributed to the want of money, the remedy suggested being in former days the setting of the mint to work, and in later times the issue of paper money.
The true answer to all such complaints is that no one can tell how much currency a nation requires, and that to attempt to regulate its quantity is the last thing which a statesman should do. In almost every case the apparent scarcity of currency arises from unskilful management of the metallic currency, bad regulation of paper representative money, illegitimate speculation, or some unsoundness in commerce which would be aggravated by a further increase of the paper currency. We shall find that to ascertain how much money is needed by a nation is a problem involving many unknown quantities, so that a sure solution can never be obtained.