MONEY VALUE
STABILISING THE SOVEREIGN
A partial explanation of a soheme for keeping stable the purchasing ,power ot money was made in the Houso last .week by Sir' John ITindlny, the scheme being that propounded by various economists, but cniefly l>y Professor Irving I'isher, of Yale. The' Board of Trade makes the following reference to Professor Wsher's scheme:— ; , The tTouble with most of the remedies for the cost of living problem is that they deal with the volume of trade, and leave uncontrolled and unchecked tlio means of exchange j in other words, as long as no effort is' made to adjust the volume of-the 'mediujri of exchange to the, amount of business that has to ba done, it is impossible to control the general price-level, or prevent nuctua- ' vions in the purchasing power of the ' sovereign, or'solve the cosfc-QHmw.' problem. That control of the general prioe level by standardisation of the purchasing power of the monetary -unit of valuo, tho sovereign, is the way out of the eco- ' nomic labyrinth has been suggested \by many economists-notably President Woodrow "Wilson, Alfred Marshall, Simon flewcpmb, Alfred Russell, Wallace, A. 0. igou, and other writers; and this solution is' being advocated by Professor Irving Fisher with a brilliancy of statement and wealth of statistical reasoning that has attracted world-wide recognition. Tho plan proposed by Professor Irving I'isher is briefly as follows:- , (1) To rofraiu from putting gold coins mii\ into circulation, and to substitute gold certificates entitling the holder on any date to sovereigns or gold bullion of such weight as may be "officially declared to •constitute a sovereign for that date. • (2) To retain free coinage-that is, to be moro exact, the unrestricted deposit of-gold and the "unrestricted redemption of certificates. , , ~ ; (3) To designate an ideal composite or f'gbods sovereign," consisting of a reprosentotive assortment, of commodities worth at the outset a gold sovereign of the present weight, and' to establish an index nuraV « r ' w c °t& n p $ 6 !s ted times tho market prico- ot ■ thu ideal "goods sovereign" in terms of the goldbullion sovereign, i / (1) To adjust the weight of tho sovereign, (thai? is, the actual bullion sovereign) aj; stated intervale, fcaoh aajustment to bs proportionate to the recorded 'deviation ot the index, number from pa l '-' „ ,„ ■ », i {&)■ To impose a email 'brassage feo, and provide that no one change in tho bullion, sovereign weight 'shall exc&ed that fee. '. ~.'.., The crux of the plan lies in the provision for adjusting tho weight of tho gold-bullion sovereign. Its. signihoance ,is that to keep the sovereign-the unit measure of value—from shrinking', in value it should be mado to grow in .weight, thns recognising that a depreciated sovereign is a short-weight sovereign; and, reversely, to keep the sovereign from' growing, in valuo it should he made to shrink in weight, thus recognising that an appreciated aivereign is an'overweight aovoifflgnj to other words, to keep the price level of tilings in general from rising or falling, to make tho price of gold fall or rise. The plan assumes, of courso, that a sound banking system is retained or created,'as without such a system the 'effect of the stabilisation plan would ba nuito lost. The 'plan depends absolutely for its workability upon the possibility of computing a reasonably, accurate index number measuring the rise and fall in the general level of prices or changes in the cost of living, 'or changes in the purchasing powor of the unit of value, this task is not beyond the skill of our Statistician's Department. In fact, as far as it «oes, the index numbers published by ' the" Government Statistician are in the board's opinion .based upon more satisfactory data than any which hare been obtained in similar investigations m other. ; parts of the world with tho exception of-Australia, which follows the same method of computation. , So hopeful does Professor Irving Fisher's suggested remedy appear to the board that wo earnestly recommend it fo thi! serious attention of the Government.
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Dominion, Volume 12, Issue 302, 17 September 1919, Page 8
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665MONEY VALUE Dominion, Volume 12, Issue 302, 17 September 1919, Page 8
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