56 



JV. G. Langworthy Taylor 



Under the 

 multiple stand- 

 ard, the gov- 

 ernment at- 

 tempts to keep 

 prices at a 

 level by direct 

 regulation of 

 the circulating 

 medium. 



The commod- 

 ity or multi- 

 ple standard 

 favors the 

 commodities 

 that are 

 chosen to form 

 part of it. 



government according as prices have expanded or contracted, so 

 that it will not be necessary to issue a decree from time to time, 

 saying that debts due to-day are to be scaled down one-half of 

 one per cent., or must be augmented by two per cent. Instead 

 of that, the government will itself create a mechanism by which 

 the circulating medium will vary in volume, so that each dollar 

 wmII correspond to the same amount of commodities at one date 

 as at another, and debtors will continue to pay, as now, according 

 to the tenor of the contract. That, thought Professor J. A. 

 Smith,*^ could be done 'by putting a slight premium in gold or 

 silver on the notes when the currency should be inflated, as shown 

 by the fluctuation in the official price of the standard list of 

 commodities, and by buying in silver or gold, by putting a 

 premium upon it in notes, when prices should fall too low and 

 it should be thought necessary to "inject" more of the paper 

 money into the circulation. Smith admits that his system would 

 necessitate some taxation, as the people at large would have to be 

 charged, to make up to the persons who held money that was 

 depreciated, the amount of the loss, whether it were the precious 

 metal that fell, or the paper money which would be issued by 

 the government under the proposed regime. In case of a perfect 

 seesaw, the stock held over would regain its value, and taxation 

 would not be required. 



§ 21. A commodity standard is necessarily made up of a limited 

 list of articles. Each variety, admitted on Smith's proposition, 

 will be so "weighted" as to influence the average in proportion 

 to the amount of it produced and dealt in. Such an average is 

 supposed to indicate the change of prices more fairly than an un- 

 weighted one, because it " weights " the price of each commodity 

 with a coefficient proportional to the number of transactions that 

 take place in it. Regarded, however, from an individualistic 

 point of view, the expedient of weighting fails to afford complete 

 satisfaction. It disposes after a fashion of the individual com- 

 modity; but the individual man claims attention, also. Each 

 article will affect the average according to the amount of it dealt 



"The Multiple Standard," Annals of the American Academy, March, 



1896. 



170 



