, 1923-10-26
Stabalizing the Dollar

Method, of maintaining q stable purcnasuns
mower of the American gold dollar are peIns -
gently studied by financiers, monetary eAPe; -
nd government officials. In other woSls' y 10
deemed that an act of congress or q proclaniaIion
Inv = federal board can stabalizo the goio oolar'
the American monetary unit .
What makes the American dollar unstable III
u,rcbasing mower? The World War, paper or
credit money to the point of initiation, decrease1
nroduction of commodities as compared win
naner money the world over. Inc conuitlon Is
world wide, and the effect Is 1elt IN te - ios.
states. as a matter of course, to q greater or less
degree. uuod
itv having value in itself that will be absolutely
fixed in exchange value, nevertheless inc next
thing il to select some article or a quantity OF
q certain article that will remain approximately
stable, or possess the least possible fluctuatioh'
The United States has selected Zoe goid, hme'
tenths fine.
To attempt to stabalize the purchasing power
Of 25S grains of gold (the American unit or dol
lar) is another way of fixing or staphizihg
prices, which obviously is impossible.
Price is value, translated into terms OF the
unit or dollar, Both price and value arc relative
and can not be stabilized or fixed. All that con-
rress or any governmental agency can 90 Is 10
fix the amount of gold in the com called inc dol-
lar or unit. That gives meaning and approximate
CERTAINTY to the world dollar. No human agency
can go beyond that.
The purchasing power of n dollar varies Q)
necordinp to the supply and demand of the COM
modities for which it is to be exchanged; (2) &C
cording to the ratio between commodities and the
volume of government paper or credit money, all
of which are notes or promises to pay money.
During and afr the World War, paper money
,mos1ly Federal Reserve nososl were issued III
very large quantities.; and initiation means high
prices. In other words, the purchasing power of
the dollar of account declined. No act of congress
or any other federal agency to stabilize it would
have had any effect.
During 1920 and 1921, the purchasing power
declined so far as farm products were concerned
in other words, prices of farm products declined.
At the same time, the purchasing power OF the
dollar increased somewhat, so far as many man
ufactured products were concerned. Supply and
demand and cost of production $50 per cent Ia
bor) explains that phenomenon so far us manu-
featured goods were concerned. Imagine attempt
ing by law or proclamation to reconcile those
two economic conditions! Impossible!
In the course of n years domestic business,
as a rule, men or corporations are both creditors
and debtors. Any decline in the purchasing pow
ar of the dollar affecting creditors iniuriously
affects them favorably to n like degree when they
are debtors. In other words the scales balance
fairly we'll, in time except in the case of non
producers or the idle.
There is no such thing as absolute stability
or inertia, either in physics, economies or fl
nance. Everything moves and changes even the
American gold dollar, somewhat. But this does
not prevent our making measurements, calcula-
lions and equitable business engagements by the
aid Of what seems to be approximately fixed and
stable. There must be some starting point, soma
unit, in all human activities.