Page:Stabilizing the dollar, Fisher, 1920.djvu/212

158 1873 and 1896 business men and farmers in America struggled to swim against the ebbing tide of prices. Yet our burden of debt was negligible compared with Europe's to-day, we were not as economically exhausted as Europe is, and the fall of prices was not so great as that we are assuming.

Under these circumstances we may well ask: Is it reasonable to expect Europe to drop her price level back to the old relation to ours or should it not be fixed at some intermediate level?

If the latter course is to be adopted so that the old relations between the various national price levels are not to be resumed and the old pars of exchange not to be reestablished, the stabilization plan as proposed in this book would afford the appropriate method for maintaining a new set of levels. For we can, by reducing the weight of European gold coins relatively to ours, enable each European nation to adopt its own price level at any desired point. If, on the other hand, we rehabilitate the old units, European price levels must go through a painful fall relatively to ours.

As to individual debts, we long ago abandoned, as impractical, the theory that a bankrupt must pay the uttermost farthing or go to prison. If there ever was a time when the modern theory of treating bankrupts should be extended to nations it is now. In fact we have already applied it to fixing the indemnity of Germany according to her ability to pay rather than according to the damage she did.

Similar considerations apply to the reconstruction loans we are making to Europe. If after loaning, in the near future, billions of dollars to Europe we double the purchasing power of the dollar, we are not only putting ourselves in the position of an unjust (and much to be hated) Shylock but the pound of flesh we would thus exact of Europe would drain her life blood and weaken her usefulness to us as a customer. The sound policy, which we are now adopting, of giving Europe long and easy credits should be carried out in fact as well as in