Page:Stabilizing the dollar, Fisher, 1920.djvu/48

xliv never, at any one time, shifting this pair of prices upward or downward by more than that fee.

Other forms of speculation would not do harm.

3. Selection of the Index Number. A weighted arithmetical index number for wholesale prices of commodities should be used. Wholesale prices are more prompt to indicate what change in the dollar's weight is needed than retail prices. The frequency of calculation should probably be about once every two months to afford full time for the lag between the previous adjustment and its effect.

4. Selection of the Par. This should be left to a judicial commission. Probably we should start off the system at a price level near that existing at the time.

5. What Shall Be Done with Existing Gold Coins. One answer is (while stopping any further coinage) to allow existing coins to continue in circulation unless or until their owners choose to exchange them for certificates or melt them into bullion (if gold should appreciate enough to render such melting profitable).

6. What Shall Be Done Concerning the "Gold Clause" in Existing Contracts. The best way to carry out its real purpose, which was stabilization, is to abrogate it. This the Federal Government has the constitutional power to do.

7. Bank Credit and the Plan. Bank reserves would be kept in gold bullion dollar certificates, the paper representatives of gold. The banks' own notes and deposits should, of course, be kept in some reasonable relation to their reserve. One means of accomplishing this is the adjustment of the rate of discount. This is the means used by the Bank of England.