1. Devaluation _versus_ Deflation. Do we wish to fix the standard of value, whether or not it be gold, near the existing value? Or do we wish to restore it to the pre-war value? 2. Stability of Prices _versus_ Stability of Exchange. Is it more important that the value of a national currency should be stable in terms of purchasing power, or stable in terms of the currency of certain foreign countries? 3. The Restoration of a Gold Standard. In the light of our answers to the first two questions, is a gold standard, however imperfect in theory, the best available method for attaining our ends in practice? Having decided between these alternative aims, we can proceed, in the next chapter, to some constructive suggestions. I. _Devaluation_ versus _Deflation_. The policy of reducing the ratio between the volume of a country’s currency and its requirements of purchasing power in the form of money, so as to increase the exchange value of the currency in terms of gold or of commodities, is conveniently called _Deflation_. The alternative policy of stabilising the value of the currency somewhere near its present value, without regard to its pre-war value, is called _Devaluation_. Up to the date of the Genoa Conference of April 1922, these two policies were not clearly distinguished by the public, and the sharp opposition between them has been only gradually appreciated. Even now (October 1923) there is scarcely any European country in which the authorities have made it clear whether their policy is to stabilise the value of their currency or to raise it. Stabilisation at the existing level has been recommended by International Conferences;[40] and the actual value of many currencies tends to fall rather than to rise. But, to judge from other indications, the heart’s desire of the State Banks of Europe, whether they pursue it successfully, as in Czecho-Slovakia, or unsuccessfully, as in France, is to _raise_ the value of their currencies. In only one country so far have practical steps been taken to _fix_ the exchange, namely in Austria.