One difficulty (as we have seen) with metallic (gold and silver) money, or paper money convertible to gold, is that its denomination (one sovereign, one pound, one franc) is equated with a given (statutorily determined) amount of metal; this amount of metal is equivalent to a given amount of labour-time, which means that the value of the money—equal to what it can be exchanged for—is sensitive the labour-time necessary to produce that metal. Over time, we would expect, and actually observe, a secular rise in the general productivity of labour, the amount of labour-time a given amount of metal will represent will fall correspondingly. If money (whether metal money or token money) is denominated in units (weights) of gold, whether directly or indirectly (symbolically), then, given a secular rise in the general productivity of labour, such money will be devalued over time.

More (pdf, 269 KB): The Chapter on Money Part 2: Value and Price (pp. 136-144)