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of all will be considerably raised. Gold substitutes have been poured freely into the currency reservoirs of several nations, and the level, not only of their particular reservoirs, but of those of all other nations also, has been enormously raised. The standard of value has been altered everywhere. And the problem thus created can be no more escaped by the neutral States or by America—whose accumulation of gold has rendered it unnecessary for her to issue inconvertible paper money—than it can be escaped by the countries whose note issues caused the alteration. It is not in Europe alone that people with small fixed incomes feel the pinch of poverty and that workers clamour for higher wages. No branch of economics has been so much neglected as the study of currency problems. Issues of paper money are popularly imagined to be a panacea for all sorts of public ills. An abundance of money is vaguely said to be “good for trade"; and, at the present time, there are not wanting people who advocate still larger issues of currency notes. The effect of taking such steps would, however, certainly be to force prices to a still higher level, to reduce our gold reserve, and so to jeopardise our financial stability. Once the general principle be admitted that it is on the volume of the currency that prices ultimately depend, it becomes clear that we should regard the reduction of our currency note issues as the correct financial policy to adopt, and that we should pursue it to the extent of having no such notes in circulation beyond those for which the Government holds an equivalent gold reserve. This could only be done by gradual stages. If the reduction were on too heroic a scale the effects would be more injurious than beneficial. Reduced prices would be of no great benefit if they were achieved as the result of measures which led to a serious dislocation of trade. The immediate consequence of the withdrawal from circulation of a block of currency notes would be a reduction of the cash reserves held by banks, whose capacity to lend money would be correspondingly lessened. Money is borrowed from banks to carry on legitimate trade, for purposes of speculation, and for other less important reasons, such as the anticipation of incomes. When their lending capacity is only slightly lowered, banks are usually able to effect a fresh equation between the demand for loans and the supply of money, merely by differentiating more markedly than before between various classes of security to the disadvantage of the poorer sorts, and if this be done, no appreciable impediment is placed in the way of commerce. Cancelling a relatively small block of notes would, therefore, slightly diminish the control of money by the public without causing any real injury to trade. General prices would fall a little; and, as a result of the fall, conditions would readjust themselves on the basis of less money being required for the work of circulation. As the readjustment proceeded, bank reserves would grow again, and it would become more and more easy for the public to obtain advances on second class securities. A fresh block of notes should not be taken off the market until the disappearance of the temporary stringency created by the withdrawal of the first block. Constant repetition of this process would lead to a gradual but effective diminution of the surplus paper money, and a simultaneous decrease of prices. Great care would have to be taken not to remove from the market at any one time a quantity of notes sufficiently large to reduce banks' lending capacity to the extent of rendering them unable to give all requisite facilities to trade. But even if, on account of errors of judgment, a withdrawal were too large, or made prematurely, the consequences would be less serious than might at first be supposed. Although trade would suffer a shock which would cause some individual hardship, the resultant fall of prices would Set an automatic remedy in motion. If all the Allied countries took steps to reduce their inconvertible note issues, the purchasing power of gold would very speedily rise, and there would be a great and world-wide reduction of prices. As has already been pointed Out, gold always tends to a common level; and nothing could prevent its return flow back from America and the neutral States to the Allied countries, where the fall in prices would be initiated, just as nothing could prevent its outflow when the conditions were reversed. Bringing back gold to the currencies of the Allied nations would greatly facilitate and expedite further reductions of paper money. The process would be simplified and hastened if America would consent to export some of her surplus gold on loan to her Allies on the understanding that it would be devoted to the extinction of note issues. There remains, of course, the capacity of Germany and Austria to continue to issue notes and so to influence prices all Over the world. But just as the addition of water to any reservoir can only affect the level of water in other reservoirs when it is connected with them by pipes, so the German and Austrian curFencies can only affect those of other nations when there is trade Connection between our enemies and the world at large. An absolute blockade would completely choke the connecting pipes attached to the German and Austrian currency reservoirs. But, as it is still the fact that the enemy's foreign trade is not wholly cut off, it may be worth while to investigate the conditions which would follow if the Central Powers retained their inflated paper currencies whilst, as a result of the gradual elimination of note issues from the currencies of the Allied countries, world prices fell considerably. The temptation offered to traders in neutral States to try to sell goods in Germany and Austria would certainly be increased; but it would be the business of the Allied Governments to see that opportunity to trade did not keep pace with desire to do so. On the other hand, owing to a lower level of prices in their own countries, neutral traders would be less willing than now to buy German and Austrian goods. Trade would be more one-sided than ever. Goods might be imported into Germany and Austria at enormous difficulty and expense; but they would have to be paid for in gold, since it is quite certain that no merchants would accept paper money which has no exchange value whatever beyond the frontiers of the countries in which it is issued. It is probable that Germany would not regard the importation of goods at enormous prices as an unmixed blessing, if she had to deplete her stock of gold to pay for them. In these circumstances there seems no reason to fear that the beneficial effects of re-establishing the currencies of the Allied nations on a solid gold basis could be nullified by issues of inconvertible paper money by Germany and Austria. WALTER F. FORD.


THE recent declaration of the British Government, that they will use their best endeavours to facilitate the establishment in Palestime of a National Home for the Jewish people, not only constitutes an important event in the progress of the Great War, but inaugurates a new era in the annals of Israel. It sets the seal of official approval upon Zionist aspirations and provides a solemn pledge that their realisation will form an essential factor in the war settlement. The prospect of its fulfilment opens up a splendid vista in the new world that will follow the present epoch of carnage and desolation. But its real significance can most fully be appreciated by a brief review of the development of the Jewish national movement, or, as it is generally known, Political Zionism. The history of the Jewish national movement is distinguished from that of the national movement of all other peoples in the world. The Jews are proverbially known as a peculiar people, and it is therefore but natural that the manifestation of their nationalist aspirations should likewise present some peculiar features. Unlike all other peoples, the Jews waited for nearly nineteen hundred years after the loss of their independence before taking any energetic steps to secure its restoration; they have pursued their nationalist ideal, not in their ancestral country, but in the countless centres of their dispersion; and they have worked for the rehabilitation of their corporate life, not in opposition to the will of the State that had made them exiles and that has become a mere memory, but with the sympathy and the goodwill of nearly every State that has granted them asylum. And a further notable feature of their nationalist endeavours is that they have all along avoided the methods of violence, sedition, and treason, which are commonly regarded as essential factors of every nationalist movement, and have concentrated themselves on peaceful propaganda, practical organisation, and political negotiation. A people that has survived the countless succession of States and dynasties that have endeavoured to crush it could well afford to dispense with all the militant paraphernalia of nationalist agitation. The Jewish national movement is now but twenty years old, though the Jewish national ideal is nearly twenty centuries old. But there is no antithesis between the two; the movement is simply the logical and inevitable complement of the ideal, and the long span of centuries that had to be bridged before the ideal reached the stage of the real is accounted for by the state of subjection in which the Jews, for the most part, existed until very far into the nineteenth century. For nearly two thousand years the traditional love of Zion, the hope in the ingathering of Israel in the Holy Land, found expression merely in a religious form—in prayers and pilgrimages—whilst ever and again, in the gloom of the Middle Ages, it was fanned into flame by a false Messiah who heralded the return to Zion and then abandoned his deluded followers to despair. Not until the nineteenth century was any energetic desire evinced to convert the prayer into practice, the idea into a reality. Not until Western Jewry had already secured its political emancipation did it possess sufficient selfconfidence and energy to proceed to the greater task of its national regeneration in the land of its fathers. Even at the close of the eighteenth century the plan of repeopling the Holy Land with the children of Israel had been trumpeted forth by the great Napoleon; but although his cry died away like a voice in the wilderness it was re-echoed at intervals with increasing insistency in various countries throughout the next hundred years. In America the advocacy of the Jewish resettlement of Palestine was urged as early as 1818 by the politician, Mordecai Manuel Noah; in France it was put forward in 1830 by the historian, Joseph Salvador, who pleaded for a European Congress to solve the question; in England it was supported in 1852 by the pamphleteer Hollingsworth; in Germany it was advanced ten years later by Moses Hess, the Socialist, in his Rome and Jerusalem, and independently by Hirsch Kalischer, the orthodox Rabbi, in his Quest of Zion; in England, again, in 1876, by George Eliot in her famous novel, Daniel Deronda; and in Russia, in 1880, by the Hebrew writers, Moses Lilienblum and Perez Smolenskin, and soon after by Leon Pinsker too, who, in his historic pamphlet, “Auto-Emancipation,” eloquently argued that the settlement of the Jews in a land of their own was the only salvation from their sufferings, though he did not specifically propose Palestine for the purpose. The interest in the idea that had been aroused in the 'sixties soon bore fruit, for the work of colonisation was actually begun in 1870 by the establishment of an agricultural school at Mikveh Israel (“Hope of Israel”), near Jaffa, by the “Alliance Israélite.” In the following decade the Society of “Chovevei Zion” (“Lovers of Zion”) was founded at Odessa, and under its auspices a Conference was held in 1884 at Kattowitz, to promote the Jewish resettlement upon a more extensive scale, whereupon affiliated societies sprang up in various parts of Europe. The work of

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