Page:Stabilizing the dollar, Fisher, 1920.djvu/222

168 ever maintain that they had not been given a fair chance, for they had at one time been virtually told to speak then or else forever after hold their peace.

7. Bank Credit and the Plan A. Misconceptions. It should be pointed out that the plan proposed in this book, by maintaining the purchasing power of the gold dollar, necessarily maintains also the purchasing power of all other dollars, so long as these other dollars are kept interconvertible with gold dollars.

This implies that due provision for redemption, in gold, of paper money and bank deposits must be maintained by suitable legislation or regulations, such as are usually afforded by sound currency and banking laws and practices. That is, the stabilization plan presupposes sound banking though not any special form of sound banking.

In this connection some curious misconceptions have arisen, such as the notion that to stabilize the gold dollar can apply only to gold and not to credit or can only correct such instability as has its origin in gold and not such as has its origin in credit, in commodities, or elsewhere. These views overlook the fact that all dollars are interconvertible.

One friend of the plan fell into an opposite error in that, instead of finding any limitations on the power of the plan to effect stability, he assumed that it would dispense with the need of any restrictions whatever on the inflation of paper or credit! We could, he thought, "run the printing press" ad libitum and, for instance, pay the cost of the Great War thereby, without suffering the penalty of high prices!

Of course the process of stabilizing the dollar has no such magic power to take the place of sound currency and banking. If, with one hand, we were to stabilize the gold dollar and, with the other, we were to inflate paper or deposits, we should be pulling both