Page:Stabilizing the dollar, Fisher, 1920.djvu/317

 APPENDIX IV

PUBLIC INTEREST

1. Either an Upheaval or a Collapse of Prices Weakens Confidence in Money

In Chapter III certain historical effects of changes in the level of prices were noted. These were selected to illustrate the evils of an unstable dollar.

We are here interested in certain other historical effects of price movements, namely those on popular ideas of money.

Any noticeable change in the price level is practically sure to produce a crop of complaints and of proposals to remedy the disturbance. At first these popular complaints and proposals ignore money, for the reason that, as explained in Chapter II, the popular mind is full of fallacies about money. To look to the dollar as a cause of great price movements in food, steel, and cotton, is literally the last thing to occur to the ordinary man. When those more versed in monetary theory suggest that the dollar may have any such rôle to play, the idea is at first greeted with derision. But if the price movement is rapid and long continued, the idea of a monetary cause behind it gradually begins to enter the minds of men least impervious to new ideas.

The chief, though not the only, examples of such violent price convulsions are found during and following great wars.

During a war, if the fiscal needs are great, inflation is apt to take place. After inflation has wrought its harm, a healthy distaste for inflation sets in and leaves its impress on politics, legislation, and the national tradition. Each war supplies its particular object lesson 263