Page:Stabilizing the dollar, Fisher, 1920.djvu/173

12] On the other hand, the nations may not only avoid contracting their currencies but may still further inflate them. The huge task of reconstructing Europe may lead to new issues of paper money; and it is reasonably sure that there will be new expansions of commercial loans. It is almost certain that general deposit banking, now confined almost wholly to Anglo-Saxon countries, will spread over the continent of Europe, adding billions of virtual currency to the circulating medium. As A. C. Miller of the Federal Reserve Board says: "If the League of Nations, the reduction of armaments and the like become realities, then the accumulation of hoards of gold under the impulse of national fears or ambitions must be suffered to go the way of other outworn practices"; and this fact will tend toward inflation.

There are many unknown elements—including the rearrangement of European currencies and the policy as to Government debts (whether it shall be immediate payment out of capital, slow payment out of income, repudiation, or deeper debt). No one yet knows which group of influences will prevail,—the group tending toward inflation or the group tending toward contraction. Perhaps first one group and then the other will prevail in convulsive alternation, as in a mighty battle, just as, after the outburst of war, our gold first left us and then returned, convulsing foreign exchanges. Probably few periods in history—if any—have presented so puzzling an outlook. We may make our forecasts or guesses but no man lives whose eyes can see clearly through the mist.