Page:Stabilizing the dollar, Fisher, 1920.djvu/152

98 the circulating certificate will have its purchasing power restored.

Or, reversely, suppose that the index number falls below par, say one per cent below—the basket costing $0.99. This fact will indicate that the purchasing power of the dollar has gone up. Accordingly, the gold dollar will be reduced in weight one per cent and, at each adjustment period during which the index number remains below par, the now too heavy dollar will be unloaded and its purchasing power brought back to par.

Thus by ballast thrown overboard or taken on, our dollar is kept from ascending or descending far from the proper level—that is, from the equivalent of our composite basket of goods.

In short, the adjustment, like all human adjustments, takes place "by trial and error." There is always a slight deviation, but this is always in process of being corrected. The steering wheel keeps the monetary automobile not exactly in the straight line marked out, but always near it on one side or the other, so that its deviations will always afford the criterion needed for steering it back.

The answer to the third question, therefore, is that the stabilization machinery, while it cannot absolutely prevent slight aberrations from par, will persistently tend to reduce toward zero every deviation which comes along.

It does not matter in the least what the cause or causes of deviation may be. They may be connected with gold or bank credit or anything else. The deviation, no matter how caused, would bring a counter-balancing change in the gold dollar's weight and the