When, on the other hand, our exporters demand gold our Government is equally helpless to charge more for it—that is, to reduce the weight of a dollar's worth of gold below 23.22 grains. The law compels it to go on selling its diminishing store at the same old price of $20.67 an ounce; and so a violent contraction of the currency may follow.
In either case we leave our precious standard at the mercy of foreign conditions, of metallurgical inventions, the luck of gold prospectors, the fashions in jewelry, the changes in banking systems, and the policy of Government financiers.
The proposal here made is to authorize a raising or lowering of the sluice gates by which gold flows in or out, so as to keep our money lake at a uniform level. By increasing or decreasing the dollar's weight, we would thus be providing against either a flood or a drain.
4. Transition Would Cause No Shock
The plan should, of course, start off with a price level close to that actually existing immediately before its adoption.[1] There should, I believe, be no attempt to put prices back where they were many years ago. There would, therefore, be no shock. Business would simply be set free from future shocks.
There would be less shock than when we adopted standard time and changed our watches accordingly. Just as the time engagements of the whole world have been modified and improved by the shift of watches from local to standard time, and more recently by the
- ↑ This point is amplified in Appendix I, §4.
