Page:Stabilizing the dollar, Fisher, 1920.djvu/232

178 So far as gains or losses do exist they are only differential and due to the failure of the price and exchange movements to correspond as exactly as is assumed above. That is, there is here, as always where price movements occur, some lagging behind of certain elements. These evils are evils of transition and tend to disappear as the transition, i.e. the price movement, disappears or the movement is reversed. Whatever harm is done is due not to a changed price level, but to a changing price level.

If, as seems to be usually the case, the rate of exchange is adjusted more promptly than the price level, the exchange will reach $2.43 before the price level has doubled and the exporter will receive less than £200 and, so, less than $486. In this case he would have suffered somewhat from English inflation which, presumably, he would not have suffered had there been no stabilization and had American prices but kept pace with English prices. On the other hand, if the pound sterling should appreciate, the American exporter would gain slightly.

Reversely, the American importer would gain a little from stabilization when foreign price levels rose and lose when they fell.

We see that stabilization in one gold standard country alone would expose importers and exporters to the chance of certain slight differential gains and losses, one of the two classes always gaining from the maladjustment while the other is losing. This evil of introducing a new risk to importers and exporters is offset,