Page:Stabilizing the dollar, Fisher, 1920.djvu/323

1] some of the hard experiences of history do leave traces of good results.

In Europe, the Napoleonic wars, and in America, the Civil War, seem to have left at least one indelible impression on the minds of business men—that what seems to be a rise in the price of gold bullion in terms of current irredeemable paper money is, in reality, rather a fall in the value of paper money; in short, that it is better to measure paper money in terms of gold than gold in terms of paper money. This idea may be said to be now a commonplace.

I venture to predict that the Great War will have left at least one other indelible impression, marking a new era in popular intelligence on this subject. This new idea, which I believe will sink into the minds of millions of people, is that, just as gold is a stabler standard than paper, so are goods a stabler standard than gold.

The chief reason that the writers of the famous bullion report did not take this step forward is that, in their day and generation, no index number by which to contrast the two existed. They could not go back of gold to commodities. Thus, while they tore off the outer husk surrounding money, the kernel remained hidden from view.

And this has been the situation almost till to-day. One interesting consequence is that, during the Great War, the one anxiety of most governments and bankers as to monetary standards was to avoid a "premium on gold." It was felt that we were in honor bound to prevent paper money and bank deposits from "depreciation." But the only test of depreciation generally recognized was the depreciation of paper money relatively to gold. The idea that gold itself could depreciate was conspicuous by its absence. The result was that there was little thought and less effort to keep gold at par with commodities. There were, however, economists in England and the United States and a few business men who did their best to point out the