Page:Stabilizing the dollar, Fisher, 1920.djvu/279

2, B] is more ideal. If those who set up such standards in theory will set them up in practice, i.e. will show, in figures, exactly how much the price level ought to change, it will be as easy to make the index number follow that prescribed course as to keep it uniform. This can be accomplished by precisely the same methods as those described above for stabilization. Let us, for example, assume that, ideally, prices ought to rise 1% per annum instead of remaining constant. It would evidently be as easy to apply exactly the same method of regulation as that described in Chapter IV except that, instead of hewing to the 100% line, we would hew to a moving par. If, at the start, the par were 100%, a year later it would be 101%. At that time, therefore, if the index number should happen to be 101% no change in the dollar's weight would be made; if, instead, the index number should be 102, or 1% too high, the dollar's weight would be increased 1%; if, instead, the index number should be 100, or 1% below par, the dollar's weight would be decreased 1%. Likewise if the ideal course of prices could be shown to be first in one direction and then in the other, all we should need to do would be to map out that course in figures and hew to that line.

B. "People could 'contract out,'" i.e. they could frame their contracts in terms of ounces of gold or any other units than the new dollars. So they could,—just as they can now. But they wouldn't—not even as much as they do now! There would be no need for such action and no desire for it. "Contracting out" is a phenomenon which is frequent only when it is necessary to escape from some flagrant case of instability as in the days of greenbacks or of Colonial paper money. It was such a case, or the danger of it in the '90s, which gave rise to the "gold clause" in bonds.

When the railways adopted "standard time" there were those who predicted that many people and communities would refuse to shift their watches. One country town in Maine did! But more than 99% of