Mr Kitson, however, uses the “Quantity Theory of Money”—­the doctrine that the value or buying power of money varies according to its quantity in relation to that of the goods that it buys—­chiefly as a stick wherewith to beat the Gold Standard.  He shows, very easily and truly, that it is absurd to suppose that the value of the monetary gold standard is invariable.  Thereby he is only beating a dead horse, for no such argument is nowadays put forward.  The variability of the gold standard of value is acknowledged, whenever a fluctuation in the general level of commodity prices is recorded.  But gold is the basis of our credit system, and of those of all the economically civilised countries of the world, not because its value is believed to be invariable, but because it is the commodity which is universally accepted, in such countries and in normal times, in payment of debts.  This quality of acceptability it has got largely by custom and convention.  Mr Kitson speaks of the “selection of gold by the world’s bankers as the basis for money and credit.”  But it was selected as currency by common custom long before bankers were heard of.  And it was selected because of its permanence, ductility and other qualities, especially its beauty as ornament, which made man, eager to adorn himself, his women-kind, and the temples of his gods, always ready to accept it in payment, knowing also that, because of this acceptability, he would always be able to exchange it into any goods that he wanted.

Any other commodity that earned this quality of universal acceptability could do the work of gold just as well.  But until one has been found, gold, as long as it keeps that quality, holds the field.  And bankers use it as the basis for money and credit, not because, as Mr Kitson says, they selected it owing to its scarcity, but because this quality of universal acceptability made it the thing in which all debts, both at home and abroad, could be paid.  “Given,” says Mr Kitson, “a self-contained trading community with a certain quantity of legal tender, just sufficient for its commercial needs, and it makes no difference either to the value or efficiency of the money or to the trade affected whether it be made of metal or paper.”  Quite so, but trading communities are not self-contained.  Their currency has to be convertible into something acceptable abroad, and that something is, at present, gold.  It is possible that the world may some day evolve an international paper currency that will be everywhere acceptable.  But such an ideal requires a growth of honesty and mutual confidence among the nations that puts it a long way off.  And how is its volume to be regulated?