Page:Stabilizing the dollar, Fisher, 1920.djvu/339

4] inflation and contraction. These are the prohibition of import and of export of gold. Sweden, in 1916, defended herself from the golden flood which the war brought by stopping its import, i.e. she authorized her State Bank to refuse to accept gold for notes, and this brought the same results as did the stoppage in India of the free coinage of silver in 1893. Swedish money received a scarcity value, and depreciation in terms of commodities was checked; that is, the rise of prices was arrested. Holland and Spain did much the same thing.

We, as well as practically all other nations, defended ourselves against a possible sudden drain of gold by putting an embargo on its export.

4. Conclusion

We see, then, that precedents exist for: (1) setting up a commodity standard to replace the standard of a mere money metal, (2) employing an index number for that purpose, (3) correcting a money metal standard (e.g. silver by the gold exchange standard) through a sliding scale relation to another standard.

These are precisely the essentials of the plan to stabilize the dollar.

There is therefore no element of innovation contained in the plan to stabilize the dollar. The only innovation is combining previously tested elements into one complete whole. At the same time we retain our traditional gold as the fundamental money and make no visible change in the money in use. The only essential departure from the system we now have is one quite invisible to all but a few miners, jewelers, exporters and importers, namely, varying, by a fixed rule, the price of gold from the present $20.67 an ounce. It is hard to see why such a change, the only object of which is to prevent any real change in our monetary unit, should be feared by the veriest worshiper of precedent.