Page:Stabilizing the dollar, Fisher, 1920.djvu/29

 GENERAL SUMMARY

war has wrought havoc with monetary systems throughout the world. War finance has given us inflation of various kinds—paper money inflation and bank-credit inflation among belligerents and gold inflation among neutrals—with the result that everywhere prices have risen, i.e. the purchasing power of money has fallen, even where there has been no scarcity of goods.

The war has thus greatly aggravated the evil of a rising cost of living of which there had already been a growing and world-wide complaint. This pre-war high cost of living was, likewise, largely due to monetary inflation.

Prior to 1896 there was equal dissatisfaction over falling prices attributable, in part, to the fact that the volume of gold and other currency did not keep pace with the requirements of business.

These two experiences in a single generation have set a larger number of persons thinking on the instability of monetary units than ever before in history.

The cumulative effect is a rapidly spreading consciousness that the price level, on which business is conducted, is now largely at the mercy of monetary and credit conditions. To-day the general public is willing to acknowledge, as before the war it was not, that the tide of prices will rise with a flood of gold or paper money or bank credit. As a consequence there xxv