Page:Stabilizing the dollar, Fisher, 1920.djvu/280

226 the country were led by the convenience of the new system to adopt it, just as, later, they adopted the similar shift for "daylight saving," at which time also similar predictions of failure were made.

If any contracting parties should fancy that a stabilized dollar was less suitable to their needs than some other standard, their preferences should be and could be gratified. But such people would be very few and far between.

C. "It would be destroyed by war." It is true that war is apt to put a strain on whatever monetary system exists at the time. It does so when the fiscal needs of the belligerents require or seem to require resort to inflation. It is also true that there would be more strain on a system which combats inflation than on one which yields to it. Inflation affords the cheapest and easiest, although the worst, way to pay for a war. It is, therefore, inevitably the resource of war finance when all others fail. As we have seen (Chapter II, § 9) it has many subtle forms. If the dollar is to be kept stable, it will be necessary to raise the whole revenue of the Government in ways other than by inflation (i.e. by taxes or by loans out of the savings of those who make the loans). If the Government or the banks or the people who finance the Government cannot, or will not, finance it completely, without resort to inflation, stabilization will have to be sacrificed.

We have already noted (Appendix I, § 7, A) how this breakdown would come about under paper money inflation. The same principle would apply under any kind of inflation (by paper issues of the Government, or of authorized banks, or by creation of new bank deposits put to the credit of the Government, or to the credit of individuals who borrow of banks to loan to the Government).