"That is what we want,—a stability of prices that persists from one year to another and from one generation to another....
"The object at which we aim is, as it seems to me, a currency which shall keep prices stable, a currency which shall expand, therefore, with the expansion of trade and commerce and development generally, a currency which shall not be lagging behind the commerce and development of the country, and hindering that development, and a currency which shall not, by being too rapidly increased, lead to excessive speculation and to loss."
We may summarize these conclusions in regard to money then as follows:—
Money should have an invariable value.
The test of invariable money value is stability of prices in general.
The value of money depends on the supply of it relative to the demand for it.
The demand for money is variable and uncertain. It is affected by a great variety of circumstances, most of which are beyond control.
The supply is in all cases regulated directly or indirectly by law, and can be controlled.
In any monetary system it is necessary, therefore, that the supply should adjust itself quickly and correctly to any changes in demand, so that prices of all commodities shall, on the average, neither rise nor fall. In this way, and in no other, can an honest money be obtained.
It is believed that these conclusions cannot be successfully controverted, and, using them as a basis, we now purpose to examine existing monetary systems, and some proposed changes therein, to see in how far they conform to this requirement, and what can be done for their improvement.