Note 159 — Chapter II

Elementary Principles of Economics, 1912, pp. 228–29. In the illustrations given by Prof. Fisher he appears, although he does not mean it, to make the success or failure of bimetallism hang upon the question whether or not the two metals are maintained in circulation. For in illustration which he gives to show the failure of bimetallism—Fig. 14 (b)—his film f shows gold to be entirely thrown out of circulation; while in the illustration he gives to show the success of bimetallism—Fig. 15 (b)—his film f shows gold to be only partially thrown out of circulation. But there seems to be no reason to suppose that there cannot be a third possibility, namely, that while the position of the film f is as in Fig. 14 (b) the level of the gold bullion and silver bullion may be as in Fig. 15 (b)—a possibility in which bimetallism succeeds although one of the two metals is entirely pushed out of circulation. For the success of bimetallism it is not necessary that both the metals should remain in circulation. Its success depends upon whether or not the compensatory action succeeds in restoring the relative values of the two bullions to that legally established between the two coins. If it succeeds in achieving that, the ratio would be preserved even if the compensatory action drives one metal entirely out of circulation.