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By Root 1391 0

it is clear what he understands by metallism. That those theories of money which are not nominalistic have no uniform characteristic, that there are catallactic and acatallactic theories among them, that each of these two groups is again divided into various opposed doctrines, is either unknown to Knapp, or willfully overlooked by him. For him, all nonnominalistic theories of money are but one. Nowhere in his writing is there anything to suggest that he knows of the existence of other monetary doctrines than that which regards metallic money as material valuable "in itself." He even completely ignores the existence of economic theories of value—not merely the existence of any particular theory but the existence of all of them. He invariably polemizes against the only theory of money known to him, which he believes to be the only theory opposed to nominalism, and which he calls metallism. His arguments are useless because they apply only to this one acatallactic doctrine which, with all other acatallactic theories, including nominalism, was long ago overthrown by economic science.

All controversial writers have to set themselves limits. In any field that has been much worked over it is impossible to confute all opposing views. The most important opposing opinions, the typical ones, those which seem to threaten most one's own point of view, must be selected, and the rest passed over in silence. Knapp writes for the German public of the present day, which, under the influence of the etatistic version of political economy, acquainted only with acatallactic theories of money, and even among these only with those which he calls metallistic. The success that he has met with here shows that he was right in directing his criticism only against this version, which is hardly represented in literature, and on the other hand in ignoring Bodin, Law, Hume, Senior, Jevons, Menger, Walras, and everybody else.

Knapp makes no attempt at all to determine what economics says about money. He only asks, "What does the educated man think of when he is asked about the nature of money?" [16] He then criticizes the views of the "educated man," that is, apparently, the layman. Nobody will deny him the right to do this. But it is not permissible, having done it, to set up these views of the educated man as those of scientific economics. Nevertheless, this is what Knapp does when he describes the monetary theory of Adam Smith and David Ricardo as "entirely metallistic" and adds: "This theory teaches that the unit of value (the pound sterling) is definable as a certain weight of metal." [17] The mildest thing that can be said about this assertion of Knapp's is that it is entirely unfounded. It most bluntly contradicts the views of Smith and Ricardo on the theory of value, and it does not find the least support in any of their writings. It will be obvious to all who have even only a superficial acquaintance with the value theory of the Classicals and their theory of money that Knapp has here committed an incomprehensible error.

But neither were the Classicals "metallists" in the sense that their only contribution to the problems of paper money was "indignation." [18] Adam Smith expounded the social advantages arising from the "substitution of paper in the room of gold and silver money" in a manner that has hardly been equaled by any writer before or after him. [19] But it was Ricardo, in his pamphlet "Proposals for an Economical and Secure Currency," published in 1816, who elaborated this point of view and recommended a monetary system under which precious-metal money should be entirely eliminated from actual domestic circulation. This suggestion of Ricardo's was the basis of that monetary system, first established at the end of the last century in India, then in the Straits Settlements, then in the Philippines, and finally in Austria-Hungary, that is usually known nowadays as the gold-exchange standard. Knapp and his fellow enthusiasts for "modern monetary theory" could easily have avoided the mistakes they made in explaining the policy followed by