110 PRESIDENTIAL ADDRESS SECTION F. 



OBSERVATIONS AND PROPOSALS FOR THE 

 STABILISATION OF MONEY VALUES. 



By W. A. MACFADkEN, M.A., LL.D., 

 Professor of Philosophy, Transvaal University College, Pretoria. 



Presidential Address to Section F, delivered July 13, 1921. 



For some time it has become evident to students of economics 

 that the most important and urgent question arising out of the 

 •economics of the Great War is that of the stabilisation of the values 

 of money and the steadying of prices. Our experience of what is 

 called inflation and deflation is worse than had ever been imagined. 

 Both reach the private life of every individual in the State, and 

 prove to be more calculated to produce distress and father dis- 

 content, disloyalty, and revolution than any grievances of a poli- 

 tical or social kind of which modern society has had any experience. 

 We have read in our textbooks of economics that rising prices and 

 depreciating money penalise the wage-earners, and that falling 

 prices and appreciating money burden industry and discourage 

 enterprise, but the reality of the experience proves to be more 

 serious than was represented. We have learned through bitter 

 experience that fluctuation of values is a cause which is capable 

 of shaking the fabric of modern civilisation to pieces. This corol- 

 lary of war seems to have been neglected by all the Governments 

 which have merely drifted in matters of economic policy since 1914. 

 We shall show ourselves entirely incapable of learning from ex- 

 perience if we do not make the stabilisation of money values, and 

 the preservation of such stability, the most fundamental interest 

 of commercial, industrial, and democratic policies. The initiation 

 of such a policy is beset with difficulties of a political or structural 

 nature, the discussion or estimation of which hardly belongs to a 

 Society of this kind. But the difficulties of a theoretical kind are 

 no less real and do concern us here. I have come to the con- 

 clusion that the doctrine whereby the same material is both the 

 standard of value and the medium of exchange prevents thinkers 

 from seeing clearly what measures of reform are required in each 

 sphere. It is a maxim of modern mechanics and invention that 

 wfi never abandon integrity of function without failure of 

 efficiency. The economy of making one device serve two purposes 

 is a poor one and usually chimerical. To try to kill two birds with 

 one stone is probably to lose them both. If then we recognise at 

 once that the purposes of a medium of exchange and of a standard 

 of value are different, we shall be clearing the ground for useful 

 proposals. The virtue of a standard of value is to be stable, and 

 that of a medium of exchange to be convenient, rapid, and fric- 

 tionless. Paper currencies, duly secured and covered, fulfil the 

 latter function admirably, but nothing could be so unsuitable as 



