Page:Stabilizing the dollar, Fisher, 1920.djvu/42

xxxviii half a pound of sugar, half an ounce of butter, a quarter of an ounce of leather, a quarter of a pound of steel, etc. Such an aggregate of goods, selected on the basis of their relative importance in trade, may be called a goods-dollar or a market-basket dollar.

4. The Gold Standard Not to Be Abandoned. Such a goods-dollar would be a good standard of value but a poor medium of exchange, being too heavy, bulky, perishable. It is proposed therefore to retain gold as a medium of exchange but to correct the gold dollar so as to make its value equal to that of the imaginary goods-dollar.

5. Merely the Weight of the Gold Bullion Dollar to Be Varied. The gold dollar is to be thus corrected by changing its weight. A Mexican dollar is only half as heavy as ours and so buys only half as much as it would if it were of the same weight.

6. No Gold Coins to Be Used. We have already changed the weight of our gold dollar twice. It would be easy to change it every month or so, and especially easy if we give up having coined gold. To-day gold circulates mostly by proxy—through paper certificates. It could do so entirely. The certificates are redeemable in gold bullion bars. The proposal is simply to change the rate at which these bars are exchangeable for certificates from the present fixed rate of 23.22 grains of pure gold for each dollar of certificates to a higher or lower rate from time to time.

7. The Essentials of a Gold Standard are a lake of gold with inflowing and outflowing streams. The inflow is from miners and importers who put their gold not directly into circulation but in the custody of the government, receiving certificates which serve