e
purchasing power for their legal tender. Thus the force of law
preserves a measure of immediate purchasing power over some commodities
and the force of sentiment and custom maintains, especially amongst
peasants, a willingness to hoard paper which is really worthless.

The presumption of a spurious value for the currency, by the force of
law expressed in the regulation of prices, contains in itself, however,
the seeds of final economic decay, and soon dries up the sources of
ultimate supply. If a man is compelled to exchange the fruits of his
labors for paper which, as experience soon teaches him, he cannot use to
purchase what he requires at a price comparable to that which he has
received for his own products, he will keep his produce for himself,
dispose of it to his friends and neighbors as a favor, or relax his
efforts in producing it. A system of compelling the exchange of
commodities at what is not their real relative value not only relaxes
production, but leads finally to the waste and inefficiency of barter.
If, however, a government refrains from regulation and allows matters to
take their course, essential commodities soon attain a level of price
out of the reach of all but the rich, the worthlessness of the money
becomes apparent, and the fraud upon the public can be concealed no
longer.

The effect on foreign trade of price-regulation and profiteer-hunting
as cures for inflation is even worse. Whatever may be the case at home,
the currency must soon reach its real level abroad, with the result that
prices inside and outside the country lose their normal adjustment. The
price of imported commodities, when converted at the current rate o
exchange, is far in excess of the local price, so that many essential
goods will not be imported at all by private agency, and must be
provided by the government, which, in re-selling the goods below cost
price, plunges thereby a little further into insolvency. The bread
subsidies, now almost universal throughout Europe, are the leading
example of this phenomenon.

The countries of Europe fall into two distinct groups at the present
time as regards their manifestations of what is really the same evil
throughout, according as they have been cut off from international
intercourse by the Blockade, or have had their imports paid for out of
the resources of their allies. I take Germany as typical of the first,
and France and Italy of the second.

The note circulation of Ger