Page:Stabilizing the dollar, Fisher, 1920.djvu/181

. 1, B] could evidently be restored to equality either by more gold or by less certificates. The simpler method would obviously be to withdraw from circulation and cancel the requisite number of certificates. Thus, if there were $990,000,000 of gold reserve and $1,000,000,000 of certificates against them, the Government would simply call in and cancel $10,000,000 of certificates obtained through taxes or otherwise. In this case the Government would lose that sum.

Reversely, if the reserve should exceed the certificates, the equality could be restored either by less gold or more certificates. The latter method would be the simpler. The Government would issue and put into circulation the requisite number of new certificates, in making Government expenditures. Thus, if the gold reserve were $1,010,000,000 and the certificates outstanding were only $1,000,000,000, the Government would print and issue $10,000,000 of new certificates. In this case the Government would be making a profit of that amount.

Thus the circulation of certificates would be regulated, by issue or retirement, so as always to be equal to the number of dollars in the reserve. As has been stated, the issue could be through the payment by the Government to the public for expenses of any kind from time to time, and the retirement could be through the payment to the Government of taxes or other revenues from time to time.

But, as promptness of regulation is desirable, it would be best to anticipate such expenditures or receipts so as to make the issue or retirement follow immediately after the appearance of any discrepancy between the reserve and the certificates. Such immediate issue or retirement could best be effected by depositing certificates with banks or withdrawing deposits therefrom. In this way the effect of issue or retirement on the volume of money "in circulation," i.e. outside of Government vaults, would be immediate.

These dealings with banks would not, of course, alter