INTERNATIONAL monetary specialists have long warned countries against disturbing the international economy by devaluing their currencies or imposing controls to cope with merely temporary balanceof-payments deficits. Instead, countries should "ride out" deficits until they disappear, meanwhile drawing on previously accumulated reserves of gold and foreign exchange. To forestall speculation based on fears of devaluation, the reserves should be more than ample.' This idea was embodied in the International Monetary Fund, the European Payments Union, and the European Fund, all designed to supplement national reserves with international drawing rights. Nowadays, worries about a shortage of international liquidity are commonly documented with statistics showing that total gold and foreign-exchange reserves have grown less than in proportion to world trade since some earlier period. Suggestions abound for remedying this shortage by raising the price of gold, by increasing the resources of the International Monetary Fund, or by other measures.2 The present paper is concerned neither with whether the sup-