Page:Stabilizing the dollar, Fisher, 1920.djvu/301

4, A] and increase of debt-burden due to falling prices, i.e. to the rising purchasing power of the dollar.

The recent great rise of prices, i.e. fall in the purchasing power of the dollar, now threatens a similar conflict of interests. The millions of bondholders, creditors to the tune of hundreds of billions of dollars mostly growing out of the war, will have an interest in stopping inflation and creating contraction, while the debtor classes, including the governments and the taxpayers, will have an opposite interest.

The conflict will be mitigated, of course, by the fact that the bondholder and the taxpayer are, to a large extent, one and the same person. But this may not prevent the conflict becoming a bitter one. In fact already at least one bitter book has appeared in England against contraction, alleging that a conspiracy is now being plotted by the creditor class to destroy the war currency and produce contraction.

The abuse most common in currency history has been inflation in the interest of the debtor class, and especially of the Government exchequer. The proposed scheme would not only be free of this danger but, when once in operation, would be a strong safeguard against the whole idea of inflationistic legislation. There is always with us a latent danger of inflation; but if a stable dollar should be adopted, that danger would be greatly diminished.

The plan would involve a double education. For, first, it could not be adopted until it was realized that its object was to stabilize prices and maintain the constancy of the purchasing power of the dollar. In the second place, it would, therefore, always be a standing object-lesson as to the principle of stability. Its adoption, or even its discussion, would tend to increase the understanding of, and desire for, a stable standard and so fend off unsound schemes. The fact of the buying and selling of gold by the Government at variable rates would itself be informative as to the object in view; and the constant clinging to par of the published index