Page:Stabilizing the dollar, Fisher, 1920.djvu/214

160 But in such cases of a rapidly changing price level, with existing contracts originating at many different previous levels, it is impossible to select any one price level well adapted to them all. If we are to apply a single correction to them all, it must be an average. We must cut our Gordian knots as we did when we resumed specie payments after the Civil War and as we always have to do in readjusting monetary standards. To strike such an average, the price level selected should, I believe, extend back of the moment when the system starts to the center of gravity, as it were, of the outstanding contracts and understandings now in existence which would be affected by the new law.

We can strike this proposed rough average of justice by making a calculation as to the past duration of existing contracts of different kinds. The contracts to pay money are the important factors to be considered. I have made a very rough estimate, largely a guess, of the average duration of the existing indebtedness which would be affected, — railroad bonds, mortgages, bank loans, and other obligations, — which seems to indicate that it is one year, or in that neighborhood.

When the proper time comes, a judicial commission to make a special intensive expert investigation of outstanding contracts might be created and the start-off then fixed in the light of the facts found, and of common sense.

If the average thus selected should effect substantial justice — which implies that this recent average price level is not far from the price level at the moment the system is launched, nor far from the price level for any other moment during the past year at least, — nothing more need be done to secure justice on existing contracts.

But if the case is otherwise — if, for instance, the average price level as calculated should differ say by more than 5% or 10% from that of any date within a year previous to the launching of the new plan, we might perhaps better give up the idea of making a single