CHAPTER 38 - Active and Passive Attitudes of the State Authority

Abstract

This chapter explains different active and passive attitudes of the state authority. Monetary policy can be defined as the attitude of the political authority toward the monetary system of the community under its control, aiming at furthering its own economic interests or that of the community. A policy can be either active—when it involves decisions to apply measures—or passive—when it involves decisions to abstain from applying measures. It has been observed that the extent of state intervention in the adoption of a monetary system depended largely on the way in which this system had originated. Where money originated through barter there was no need for intervention if money originated in internal trade. Bride money developed largely on private initiative, and in so far as it gave rise to a monetary unit this cannot be said to be due to monetary policy. In West Indies and on the North American mainland during the early colonial period a wide variety of primitive currencies was adopted spontaneously, though subsequently the monetary use of such currencies was confirmed and regulated by the state authority.