Page:Stabilizing the dollar, Fisher, 1920.djvu/338

284 others were given up when the special occasions giving them rise were over.

The reason for discontinuing these makeshifts was, in each case, the great inconvenience caused by having two standards to deal with. Theoretically, of course, we could use the index number to correct every contract just as it has been used to correct wage contracts,—consulting the index number for adjusting our rent or interest payments or trolley carfares, for instance. But this would not be practicable, certainly not through voluntary adoption by individuals.

3. Correcting the Money Unit Itself

There are instances of legislative action, intended to correct the money unit itself, but falling short of the action proposed in this book. Probably the best example of such correction in current money units themselves is the "gold exchange standard," whereby the silver standard countries have virtually converted their silver units into gold. After the breakdown of bimetallism about 1873, when gold and silver countries began to drift apart, London exchange on India ceased to have any par. Consequently its fluctuations increased and caused great inconvenience to traders between the two countries. Finally, in 1893, the Indian Government stopped the free coinage of silver, giving the Indian rupee a scarcity value and causing it to appreciate above the value of the silver it contained. It was allowed to appreciate until it became worth 16d, at which it became virtually redeemable in gold, or, more strictly, in the right to gold, situated, not in India, but in London. This device, of redeeming silver in India, in "exchange" on gold in London constituted the famous "gold exchange standard." At the time of its adoption, the gold exchange standard was probably as radical a departure from tradition as a stabilized dollar would be to-day.

The Great War has brought two crude attempts at safeguarding the money of a country against alternate