ESSAYS IN PERSUASION

PART

I 9 4

but on the fixity of its gold value, then it maybe worth our while to stand the racket of De-flation to the extent of 5 or 10 per cent. Thisview is in accordance with that expressed byRicardo in analogous circumstances a hundredyears ago. If, on the other hand, we decide toaim for the future at stability of the price levelrather than at a fixed parity with gold, in thatcase cadit quaestio.

3. If the gold value of a country’s currency canbe increased , labour will -profit by a reduced cost ofliving , foreign goods will be obtainable cheaper ,and foreign debts fixed in terms of gold (e.g. tothe United States ) will be discharged voith lesseffort.

This argument, which is pure delusion,exercises quite as much influence as the othertwo. If the franc is worth more, wages, it isargued, which are paid in francs, will surely buymore, and French imports, which are paid for infrancs, will be so much cheaper. No! If francsare worth more they will buy more labour aswell as more goods,—that is to say, wages willfall; and the French exports, which pay for theimports, will, measured in francs, fall in valuejust as much as the imports. Nor will it makein the long run any difference whatever in theamount of goods the value of which Englandwill have to transfer to America to pay herdollar debts whether in the end sterling settlesdown at four dollars to the pound or at its pre-war parity. The burden of this debt depends onthe value of gold, in terms of which it is fixed,