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currencya gold-coin standardbut even they favor the coexistence with gold of governmental fiduciary currency plus deposits issued by banks holding fractional reserves in either gold or fiduciary currency. Even during the so-called great days of the gold standard in the nineteenth century, when the Bank of England was supposedly running the gold standard skilfully, the monetary system was far from a fully automatic gold standard. Even then it was a highly managed standard. And certainly the situation is now more extreme as a result of the adoption by country after country of the view that government has responsibility for "full employment."
My conclusion is that an automatic commodity standard is neither a feasible nor a desirable solution to the problem of establishing monetary arrangements for a free society. It is not desirable because it would involve a large cost in the form of resources used to produce the monetary commodity. It is not feasible because the mythology and beliefs required to make it effective do not exist.
This conclusion is supported not only by the general historical evidence referred to but also by the specific experience of the United States. From 1879, when the United States resumed gold payments after the Civil War, to 1913, the United States was on a gold standard. Though closer to a thoroughly automatic gold standard than anything we have had since the end of World War I, the gold standard was still far from a 100 per cent gold standard. There were government issues of paper money, and private banks issued most of the effective circulating medium of the country in the form of deposits; the banks were closely regulated in their operations by governmental agenciesnational banks by the Comptroller of the Currency, state banks by state banking authorities. Gold, whether held by the Treasury, by banks, or directly by individuals as coins or gold certificates, accounted for between 10 per cent and 20 per cent of the money stock, the exact percentage varying from year to year. The remaining 80 per cent to 90 per cent consisted of silver, fiduciary currency, and bank deposits not matched by gold reserves.
In retrospect, the system may seem to us to have worked rea-

 
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