Page:Stabilizing the dollar, Fisher, 1920.djvu/31

Rh power of money has recently been utilized in adjusting wages and salaries to the high cost of living, i.e. to the depreciated dollar. A number of commercial concerns and banks, and some official agencies have amended wages by use of an index number of the cost of living.

I believe it is manifest destiny that this principle will be utilized more generally to safeguard agreements made at one date to pay money at another date. With our present unstable dollar, the just intent of such agreements is constantly being balked by a change in prices. Gradually such corrections of the dollar will break down the popular superstition that "a dollar is a dollar"; for every time we correct the dollar we convict it of needing correction. Ultimately the correction will surely be applied not, as at present, as a patch on the dollar from the outside, but by incorporating it in the dollar itself.

Various methods for accomplishing this have been proposed. The one elaborated in this book is to vary the weight of the gold dollar so as to keep its purchasing power invariable. We now have a gold dollar of constant weight and varying purchasing power; we need a dollar of constant purchasing power and, therefore, of varying weight.

In this way we can control the price level. The more gold in the dollar the greater its buying power and the lower the price level. If Mexico should adopt our dollar (instead of its present dollar of half the weight of gold), the price level in Mexico would be cut in two. Or, if we should adopt the Mexican dollar instead of ours, our price level would be doubled. So if prices tend to rise or fall, we can correct this