Page:Stabilizing the dollar, Fisher, 1920.djvu/119

. 10] great borrowing, slowness of liquidation and of contraction of war currencies, economies of gold use and increase of deposit banking will tend to prevent it.

The chief indictment, then, of our present dollar is that it is uncertain. As long as it is used as a measuring stick, every contract is necessarily a lottery; and every contracting party is compelled to be a gambler in gold without his own consent.

Business is always injured by uncertainty. Uncertainty paralyzes effort. And uncertainty in the purchasing power of the dollar is the worst of all business uncertainties. To mention but one specific instance, uncertainty as to the price level makes it dangerous to loan on mortgage. The banker fears that a great shrinkage of farm values may wipe out the margin which protects his mortgage and so requires a large margin. A stabler dollar would make a smaller margin sufficient, thus permitting the farmer to mortgage up to a large fraction of his farm value and so helping him and the banker as well.

One of the chief marks of a high civilization is the reduction of risks and the lessening of the many perils of life and property to which human beings are exposed. Judged by this criterion our unstable dollar is a relic of barbarism.

10. Trade Cycles

One of the results of such uncertainty is that price fluctuations cause alternate fluctuations in business; that is, booms and crises, followed by contractions and depressions. An upward price movement is apt to end