In the decade following 1929 all currencies of the world, save the Albanian franc, have undergone either devaluations in terms of gold or exchange restrictions tantamount to devaluations. These changes reflect not only the depreciation of several originally overvalued currencies to equilibrium, but also a nearly complete round of successive depreciations of individual currencies to temporary undervaluation. Each such undervaluation has set in motion forces tending to restore equilibrium, through rising supply and demand schedules in the undervalued-currency country, falling supply and demand schedules in the overvalued-currency countries, counter-depreciation in the latter countries and sometimes adverse tariff action. The proportions in which the effects have been divided among these four channels have differed among countries; consequently with the end of the round of depreciations, the re-establishment of something like equilibrium of exchange rates has come about without having involved equal degrees of devaluation by all countries. Thus the new exchange rates differ from those of 1929 in many ways additional to those necessary to cancel the disequilibrium of that year. That, toward the end of this decade, something like equilibrium of the major exchange rates has been established, is indicated by agreements that sharply limit the possibility of further depreciations to under-valuation and even the possibility of depreciations to counteract over-valuations which may arise in the future from changes in international reciprocal demand, etc. It is now opportune to examine the effects of these depreciations of the past decade upon the prosperity of the countries concerned.

There was much of the realist in Aristotle, more perhaps than in many political scientists of today. In defence of the moderns, however, it may be claimed that Aristotle had comparatively little to try his patience. The British Empire, which “defies classification,” along with its legal appendage the Dominion of Canada—with all the complications of a federal system—is no doubt sufficient to exhaust the patience of a political scientist who would be sure of his constitutional foundations.

Political scientists as well as others are impatient with the constitutional situation at present existing in Canada. They characterize this situation as uncertain; they want this uncertainty to be corrected so that they can get on with the job of progress. They say that not only are their efforts impeded by constitutional limitations but that many of the constitutional usages now relied on may be merely illusory. So there is a tendency to blame the law and the lawyers even to the point of ridicule. Certainly if all the proposed reforms really do spell progress the law and lawyers have a lot to answer for; and yet should we not be charitable to this law which is required to do the impossible: to stand still and go ahead at the same time?

In the nineteenth century, the dominant theory of the state restricted the latter's activity to external and domestic defence and the provision of an adequate law of contract by reference to which disputes between individuals could be settled. The theory, however, never represented much more than an ideal. In the twentieth century, it became necessary to abandon even the ideal. Already, before the turn of the century, technological progress had created problems which could be solved only by state action. The demand of organized labour for a measure of security and improved working conditions produced others. Still others resulted from the concentration of capital and mass production. These and other factors forced the state to intervene in spheres which had been traditionally reserved for private enterprise. With the war came even greater problems; and the state became more and more involved. In 1918, a vain effort was made in some countries to return to “normal” conditions; but for the most part the evolution continued unabated though not always in the same tempo or in the same angle of direction. In a few states it produced collectivism, in others a “new deal,” in others fascism; but in none did laissez-faire survive.