Page:Stabilizing the dollar, Fisher, 1920.djvu/195

. 2, A] Evidently such a limitation would effectually stop any embarrassing speculation. Thus suppose the fee to be 1% on the Government's deposit — or buying — price, which to-day is, say, $18.00. Then the pair of Government prices, to-day, will be:

Suppose that to-morrow both prices are to be raised 17 cents, almost to the limit of 1%, or so as to be:

Clearly a speculator who tried to profit on the rising market would fail; for he would have to give to-day $18.18 and would get to-morrow only $18.17, actually losing 1 cent an ounce. Evidently, at best (i.e. if the shift were not 17 but the full 1%, or 18 cents), he would come out only even.

Reversely, if the pair of Government prices are marked down nearly to the limit, say, by 16 cents, or from

to

clearly the speculator cannot profit by the fall. To attempt it would mean to let the Government buy his gold to-day at $18.00 and sell it back to him to-morrow at $18.02, causing him actually to lose two cents an ounce. Evidently at best (i.e. if the shift were not 16 cents but the full 1%, or 18 cents) he would come out only even.

It is true that this limitation imposed on the shift, up or down, of the pair of official prices, while it would