8

A TKEATISE ON MONEY

BK. I

Managed Money is similar to Fiat Money, exceptthat the State undertakes to manage the conditionsof its issue in such a way that, by convertibility orotherwise, it shall have a determinate value in termsof an objective standard.

Commodity Money and Managed Money are alikein that they are related to an objective standard ofvalue. Managed Money and Fiat Money are alike inthat they are representative or paper money, havingrelatively little or no intrinsic value apart from thelaw or practice of the State.

Thus Managed Money is in a sense a hybrid betweenthe other two ; and, perhaps for this reason, its quali-ties are not so easily understood. The public knowsCommodity Money and it knows Fiat Money ; but,readier to recognise the Standard than the Form, itis apt to consider a Managed Money which has afamiliar commodity as its standard as the same thingas a Commodity Money, and a Managed Moneywhich has an unfamiliar standard as a Fiat Moneyin disguise. In fact, however, the best typicalmodem Moneys, whilst many of them still remainm ixtures of Commodity Money and Managed Money,approximate more and more to the form of ManagedMoney. Moreover, Managed Money is, in a sense,the most generalised form of Money—which may beconsidered to degenerate into Commodity Money onthe one side when the managing authority holdsagainst it a hundred per cent of the objectivestandard, so that it is in effect a warehouse warrant,and into Fiat Money on the other side when it losesits objective standard. For these reasons the theorywhich will be developed in the following chapters isexpressed with primary reference to a ManagedMoney; but the formulas reached will be easilymodifiable, if necessary, to suit the special condi-tions either of a Commodity Money or of a FiatMoney.