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A TREATISE ON MONEY

BK. IV

question of the degree of importance to be attachedto changes under any one or more of them. Assuredlya Central Bank ought to be completely informed, bothas to the absolute amount and as to the fluctuationsof the foreign banking resources of whatever descrip-tion held within its territory.

Another practical obstacle is the fact that, althoughmethods of Gold-Exchange Management have beengenerally blessed as a means of economising gold,and have been put into actual practice on a fairscale, Central Banks are still accustomed, by force ofhabit, to pay a disproportionate amount of attentionto movements of gold as compared with the attentionthey pay to other significant factors.

When all is said and done, moreover, it mustnecessarily be admitted that, in so far as nationalsystems develop devices and maintain large liquidreserves with the express object of having the powerto maintain internal equilibrium over the short period,without too sensitive a regard for external events,reciprocal action will necessarily become less depend-able—except in the event of major movements andover the long period. For sensitive reciprocal action,of the kind which the pre-War gold standard wassupposed to provide, involved every country in asubordination of internal equilibrium to every externalchange however trifling or transitory ; and the widerthe margin of safety in Central Banks ’ aggregate re-serves, the less willing will each be to respond recipro-cally to the vagaries of the others.

(vi.) The same Phenomena in the Absence of anInternational Standard

We have assumed so far that there is in existencean effective International Standard. In conclusion,we must consider the case where there is no suchStandard—as, for example, in many countries of the