The question, what is money, has never been satisfactorily answered. Mr. Mitchell Innes states that there never was until quite modern days any fixed ratio between the monetary unit and any metal; in fact, there never was, until recently, such a thing as a metallic standard of value. For centuries at a time there were no gold or silver coins, but only coins of base metal of various alloys; that changes in the coinage did not affect prices; that coinage never played any considerable part in commerce; that the monetary unit was distinct from the coinage, and that the price of gold and silver fluctuated constantly in terms of that unit; thus it is clear that the precious metals could not have been a standard of value, nor could they have been the medium of exchange. There is not, and there never has been, so far as China is concerned, a law compelling a debtor to pay his debts in gold or silver or in any other commodity. The trade or the cost of living or even the whole economic life of the country is not so much affected by the standard of value known as money, as many people think. As has often been pointed out, trade with any country or trade between different countries is essentially a barter of goods for goods - its extent and nature being determined in the long run not by the standard of value in use in either country, but by the comparative cost of production of commodities and demand in different places. The adoption of gold or silver as the standard would not adversely or favourably affect the total of the indebtedness of the country and the wealth of China, at one and the same time. If silver were adopted the probability is that the gold loans would show a much higher value, but the national wealth would be, at least on paper, higher than it would be under other circumstances. On the other hand, if gold were adopted then the national wealth would decrease in terms of gold, while the indebtedness would be more favourable to China. Viewed from a broad standpoint, and without reference to the practical applications of the systems, the adoption of gold or silver should make very little difference, as regards even the volume of foreign trade. If gold were the standard the probability would be that the first effect would be towards an increase in the volume of imports and checking the volume of exports; if silver were the standard the first effects would be directly the opposite. But in the end there would always be an adjustment bringing an equilibrium in the state of affairs. For instance, if gold is the standard, and imports go on increasing day after day, there must come a time when the Chinese will have to sell some of their own goods in order to be able to buy more; or, if silver is the standard, and Chinese go on selling as much as possible, there must come a time when the Chinese will have to take foreign goods in settlement of the sums due to them on account of their produce. Fundamentally, and spread over a long stretch of time, the nature of the metallic standard practically makes no difference to the trade of the country, or even to the well-being of the country.

But we are not discussing this point from a philosophic standpoint. Although political economy does look far ahead, especially in Government polity, its main function is to devise means for immediate action. Also, any reform proposal should be such as is productive of as little dislocation as possible. Further, in trade economy or Government policy, the distant future is only of academic value; as an immediate dislocation may bring about such changes as to make all calculations about the distant future absolutely useless.