Page:Stabilizing the dollar, Fisher, 1920.djvu/192

138 comes, its cost must be borne by the people anyway, whether the dollar is stabilized or not. The argument is rather the other way; for the private individual ought not to be forced to take a gamble as to the value of the money he carries any more than as to the variations of any other unit.

Instead of taking such drastic action as to give up the gold standard, we could, if we chose, make gold itself less perishable in value by limiting its production, just as diamond mines limit the production of diamonds in order to maintain their value. Such a control of gold production would simplify the problem of stabilization; for it would be a partial stabilization itself. It would be the first rough adjustment, by hand as it were, of a scientific instrument, made in advance of the finer adjustments by means of a micrometer, — i.e. the index number.

If, on the other hand, gold should, without any Government interference, become scarce and appreciate, the monetary system would be earning a handsome profit for the Government.

M. Summary. Each change in the dollar's weight changes the number of gold dollars in the reserve and disturbs the ratio of reserve to certificates.

If gold appreciates, or does not depreciate too far, the reserve will always be adequate to insure redemption. But as there is always the possibility of an excessive depreciation of gold, some method of insuring an adequate reserve should be provided. Of several possible methods, the best seems to be: to fix a definite ratio of reserve to certificates, such as 50%, which shall always be maintained; to appropriate at the outset, to the profit of the Government, all surplus above the 50% and invest it in Government bonds; likewise, in the future, to appropriate, to the profit of the Government, any further surplus which may accrue and to defray, at Government cost, any expense involved in bringing the reserve up to the 50% limit.

These Government gains and losses are not new but