Page:Stabilizing the dollar, Fisher, 1920.djvu/275

1, J] of the gold of the world. The tail could not wag the dog.

The truth is, of course, that, even if there were no jewelry use whatever, there would be ample regulation. Thus a lowered gold price, or raised dollar weight, can reduce any stock of gold, however large, into a small number of dollars simply by enlarging each dollar; while, contrariwise, a raised gold price, or lowered dollar weight, can multiply any stock of gold, however small, into an ample supply simply by breaking it up into a larger number. It is like multiplying the loaves and fishes,—except that there is nothing miraculous about it, since small dollars will feed our monetary needs as well as larger dollars, provided they buy as much.

A correspondent calls attention to the fact that, at critical times like that of the war, each nation tends to grab gold and reasons that this would destroy the regulatory action. On the contrary, while such action does destroy the regulatory action of our present system, thus revealing one of its worst defects, it would not affect that of the proposed plan. As explained in Appendix I, § 8, the stabilization system becomes independent of foreign influence. Under it we could let other nations take any part of our gold they chose and the remainder, by sufficient subdivision, would meet our needs. Likewise we could withstand any flood of gold—and without suffering inflation, or shutting gold out as did Sweden,—simply by enlarging the dollars and so diminishing their number.

J. "It would shift to the Government the losses now borne by private contracting parties." This confuses the losses and gains on contracts and understandings expressed in terms of gold with the losses or gains to holders of actual gold. Except where the Government is itself a party to contracts, the losses and gains of contracting parties do not affect the Government Treasury.

It may be added, incidentally, that if it were true that