Page:Stabilizing the dollar, Fisher, 1920.djvu/100

46 inclined to hoard it in stockings or safes or bury it in the earth or drop it into the sea, it would have no tendency to raise prices. Instead, however, they will seek to make some use of it either by expending it for goods or by depositing it in banks. In one or both of these two ways the surprised recipient of Santa Claus' bounty will, in most cases, have disposed of his surplus a few days after the supposed visit of Santa Claus. Let us assume that half is disposed of by expending and half by depositing.

The part expended will evidently tend to raise prices; for the sudden expenditure of $20 per capita will mean a spectacular rush upon the shops. Suppose, as is probably about the truth, that the average individual expended or turned over his per capita $40 in about two weeks. This is about three dollars a day, or $300,000,000 a day for the entire country. If within five days from his Christmas present the average person should expend half of the additional $40, i.e. $20, the result would be $4 additional per day per capita, or $400,000,000 per day for the nation, or more than the entire original daily expenditure of money. Such a sudden briskness in trade would astonish the shopkeepers and lead them promptly to raise their prices; otherwise, in many cases, their stocks of goods would be entirely depleted in a few days.

At first sight, it might seem that it would, according to this supposition, only require five days for every one to get rid of his extra money, so that the flurry in prices would be only temporary. Such reasoning is, however, fallacious, for the only way in which the individual can get rid of his money is by handing it