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To the end of great German inflation when it has been recognised that the law of Greshema
It is erroneous. But it is incorrect. Actually it is not erroneous. Simply this law
Takes place only in that case when between various kinds of money it is established
The fixed exchange rate.
The chapter VII. The limited historical experience with use of parallel currencies
And trading coins (trade coins)
At the time of when coins from precious metals remained the only thing
The real and standard kind of money, and while all close substitutes of money
Were subject, at least, to exchange on them , unique
Gold and silver coins were versions of co-existing kinds of money.
All set of coins with which it was necessary to deal it former times,
It was reduced, finally, to these two versions, and their relative
Value within each group was defined by the maintenance of one or others
Metal (which the expert, but not the ordinary person could define).
The majority of governors in a legislative order tried to establish
The fixed exchange rate between gold and silver coins, creating
As, despite very early offers on fixing of this course
By means of system of the international contracts
- (G. Scaruffi, Social Statics (1850), Abridged and Rev. Edition,
Williams &Norgate, London, 1902)>, the governments nevertheless established the different
The exchange rates, each country went to loss of all coins from this metal, which
It has underestimated concerning courses of other countries. As a result this system
Has been subsequently more correctly named by system of the alternative standard,
As value of currency in it depended on the metal, which value in
Given time has been overestimated. Shortly before in second half XIX
Centuries, at last, have rejected this system, last attempt has been made
To establish the uniform international exchange rate of gold to silver equal 1:15,5.
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