merchant, from his point of view, saw only a rise in the price of gold, and readily ascribed the fall of American prices to the "appreciation of gold."
Sir David Barbour[1] tells the following illuminating incident: "The late General Keatings, V. C., informed me that when he was Commissioner in Assam he had an interview with an Indian merchant and mentioned to him how serious the fall in the value of the rupee was. The merchant was surprised and said he heard from his agents in Calcutta every week and none of them had said anything about the fall in the value of the rupee. After a pause he added: 'But they mentioned the rise in the price of gold, and perhaps that may be what you are thinking of.'"
Both the Englishman and the Hindu assumed his own money fixed, as a matter of course. Each could see the aberration of the other's money but was blind to that of his own. The Hindu thought gold had gone up because he measured gold by silver, and the Englishman thought silver had gone down because he measured silver by gold. Each was nearer right about the other's country than about his own! Yet neither was as nearly right as he would have been if he had gauged the values of gold and silver alike in terms of other commodities. It is reasonable to assume that the general mass of commodities is stabler than the single commodity, silver, or the single commodity, gold.
This illusion, that our own money is immovable while everything else moves, is like the illusion we often experience when the railway train in which we are sitting passes another train standing on a switch,
- ↑ The Standard of Value, London (Macmillan), 1912, p. 20, n.
