A Dialogue by Sir Dennis H. Robertson The British monetary system, as it has emerged from the furnace of the last eight years, is thus on the face of it a somewhat eccentric contraption. Between some enquiring Socrates from another planet and an economist instructed to explain its nature some such dialogue as the follow. ing might well take place: Socrates: I see that your chief piece of money carries a legend affirming tha it is a promise to pay the bearer the sum of one pound. What is this thing a pound, of which payment is thus promised? CEconontist: A pound is the British unit of account.
Socrates: Indeed? Then what your Bank promises is to give me another promise stamped with a different number in case I should regard the number stamped on this promise as in some way ill-omened? (Economist: It would seem, indeed, to be promising something of that kind. Socrates: So that in order to be in a position to fulfil its promises all the Ban has to do is to keep a store of such promises stamped with all sorts of dif fe rent numbers? (Economist: By no means, Socrates—that would make its balance sheet a subject for mockery, and in the eyes of our people there resides in a balance sheet a certain awe and holiness. The Bank has to keep a store of Government securities and a store of gold.
Socrates: What are Government securities? (Economist: Promises by the Government to pay certain sums of money at certain dates.
Socrates: What are sums of money? Do you mean Bank of England notes? (Economist: I suppose I do.
Socrates: So these promises to pay promises are thought to be in some way solider and more sacred than the promises themselves? (Economist: They are so thought, as it appears.
Socrates: I see. Now tell me about the gold. It has to be of a certain weight, I suppose? Not of a certain weight, but of a certain value in terms of the promises.
Socrates: So that the less each of its promises is worth, the more promises the Bank can lawfully make? (Economist: It seems, indeed, to amount to something of that kind.
Socrates: Do you find that your monetary system works well? (Economist: Pretty well, thank you, Socrates, on the whole.
Socrates: That would be, I suppose, not because of the rather strange rules of which you have told me, but because it is administered by men of ability and wisdom? (Economist: It would seem that that must be the reason, rather than the rules themselves, 0 Socrates.