Ill

THE RETURN TO GOLD

189

change in the existing Standard of Value, andredistributes wealth in a manner injurious, atthe same time, to business and to social stability.Deflation, as we have already seen, involves atransference of wealth from the rest of the com-munity to the rentier class and to all holders oftitles to money; just as Inflation involves theopposite. In particular it involves a trans-ference from all borrowers, that is to say fromtraders, manufacturers, and farmers, to lenders,from the active to the inactive.

But whilst the oppression of the taxpayer forthe enrichment of the rentier is the chief lastingresult, there is another, more violent, disturb-ance during the period of transition. Thepolicy of gradually raising the value of acountry’s money to (say) 100 per cent aboveits present value in terms of goods amountsto giving notice to every merchant and everymanufacturer, that for some time to come hisstock and his raw materials will steadily depreci-ate on his hands, and to every one who financeshis business with borrowed money that he will,sooner or later, lose 100 per cent on his liabilities(since he will have to pay back in terms of com-modities twice as much as he has borrowed).Modern business, being carried on largely withborrowed money, must necessarily be broughtto a standstill by such a process. It will be tothe interest of everyone in business to go outof business for the time being; and of everyonewho is contemplating expenditure to postponehis orders so long as he can. The wise man will