The Calumet news., 1912-09-26
WOULD LOWER
COST OF LIVING
Plan to Stabilize Purchasing Pow
er of Money Proposed


the purchasing power OF money as a
remedy for the increasing cost of liv-
ing was laid before the International
Congress of Chambers of Commerce
today by Prof Irving Fisher. of Yale
University. His suggestion was made
in anticipation OF the International
Conference on the Cost of Living rec
commended by President Taft.
MY plan" said Prof. Fisher. us
similar TO suggestion of Governor
Woodrow Wilson that the weight of
the gold dollar should he increased
enough to restore some of its lost pur-
chasing power.
Il have said that my proposal is vir-
tually 10 Increase the weight of the
gold dollar. But this increasing
weight would not be added To the coins
themselves. but only to the bullion out
of which they are made. In other
words. the proposal is To restore the
ancient custom of n seigniorage' on
gold coinage. At present there is no
seigniorage. Coinage is free and the
weight OF a gold dollar is as great az
the weight of the bullion which the
miner takes to the mint and for which
he receives back dollar He now
takes 25.S grains of gold bullion to
the mint to secure 25.S grain gold
dollar. The coined dollar weighs the
same as the uncoined or bullion dol
lar if | may use such "A term My
proposal is tn increase the weight OF
the bullion dollar: that is. TO require
26 or q or 3S grains of gold bullion to
be taken to the mint to secure . 25.S
grain gold dollar. The coined dollar
would remain unchanged I'm weight
(25.S grains). but the bullion required
TO secure the coined dollar-the bullion
dollar-would be heavier. The differ
ence i'm weight between the two would
be the seigniorage IL would not he
fixed once for all but would be con-
tinually adjusted SO as to give the
dollar always fixed purchasing pow
err AS the coined dollar would be
interconvertible with the bullion dol
lar, the two would always bo equal IN
value. The ultimate dollar would be
as IT now is-a dollar of gold bullion
but this dollar would no longer be of
fixed weight and variable value. but
of fixed value and variable weight
"The adjustment of the scigniorage
would be entirely automatic, depend
ent on an official index number of the
is. so far as | know, the only one
proposed which Is purely self acting
If the official index number shows "A
rise Of prices In any year, say one per
cent. II would be mandatory fer the
mints TO add one peryeent TO the seig-
niorage Expressed the other way
about, II gold loses one per cent of its
value, the mints would pay one per
, cent less for IL. This would tend al
ways TO preserve a uniform purchas-
ing power Of the monetary. unit. As
soon as any depreciation occurred the
increase Of the seigniorage would op
crate 10 correct 1t. The present mint
price is fixed; II is e3, lis, l0lAd per
ounce of gold Hip fine i'm England or
$3.50 per ounce of gold $40 fine in
the UNITED States. The proposal is
simply that instead of always paying
the same money price for gold. no
matter how much ii appreciates or de-
preciates in purchasing power over
goods, we shall pay exactly what IL Is
worth. There is no virtue In fixed
mint price for gold. bat there is virtue
in fixed purchasing power of money.
THE great fall of prices ending in
1895 was often referred To as an appre-
citation of gold. just rs the rise of
prices since 1895 is often referred TO
as depreciation of gold. In other
words. the dollar, the pound sterling.
the franc, the mark and all other
monetary units i'm gold were increasing
in purchasing power before 1896 and
since 1896 have been decreasing. II
both cases the purchasing power var
led.
This continual Variation in the real
value of the dollar is the bane of bust
ness. n Is one of the sources of boons,
crises, contractions and depressions by
which modern business men are per-
petually vexed. Unfortunately. os yet,
the rank and file of business men do
not realize the close connection be-
tween the cycles of trade and the in.
stability of the dollar.
II firmly believe, however. that the
time must come when business men