36 



IV. G. Langzi'orthy Taylor 



The situa- 

 tion can be 

 cleared up 

 only by an 

 objective and 

 individualistic 

 inquiry. 



The debtor 

 does not con- 

 tract in igno- 

 rance of the 

 expected 

 fluctuations of 

 the value of 

 money, 



nor can hoard- 

 ing proceed so 

 far as to cause 

 scarcity of 

 money. 



values leads again, by a roundabout route, into an objective, indi- 

 vidualistic inquiry as to exactly what the facts are. 



§ 5. The pointed questions come up, then, as to whether it is 

 possible to find out exactly what the same value consists in, as 

 between today and a year from now ; and whether there is 

 any means of imposing that value upon the creditor or debtor, 

 depending upon which way prices have moved. And again, if 

 there is, whether it be right or politic to do so. When popular 

 orators demand the return of the same value to the creditor, they 

 are asking a question almost as simple as when an infant asks who 

 God is, or how the world was created. The study of money, so 

 far, has been kept free from ethics, but cannot avoid it to the 

 end. 



The usual assumption has been that a fall in prices is injurious 

 to the debtor because, in selling his goods, he now receives in 

 return less than their former price, whereas he has covenanted 

 to pay a sum of money calculated at the earlier level of prices. 

 He can no longer rely on an income at the old higher prices, 

 from which to pay his creditor. Fisher, however, points out 

 in this connection, that in practice that is not what he covenants 

 to do. If prices are falling, the creditor and debtor both know 

 it,^- and consequently adjust the rate of interest, if not the 

 prices, in view of the future. The complaint, right at the begin- 

 ning, usually makes a false assumption, or one too narrow to 

 give a fair basis for argument. The statement that the debtor 

 contracts to pay back on the basis of the market prices in force 

 when he sold, is false ; he could not carry on business for any 

 length of time if he did so. 



If gold is appreciating, and it therefore pays to hoard it, men 

 generally overlook, in arguments for inflation, that a hoarded 

 dollar's worth of goods as surely brings loss as a hoarded dollar 

 of gold brings gain. Consequently, the appreciation of the 

 standard does not have that effect in discouraging trade which is 

 assumed, because persons who hold goods want to get rid of 

 them as soon as possible in order to avoid the loss from holding 



^'Appreciation and Interest, ch. I. The consequences of unequal fore- 

 sight of debtor and creditor are stated, ch. X, § 13. 



150 



