The advocates of the gold standard call this “honest money.” Their idea of honest money is money that ever increases in purchasing power because of its ever-increasing scarcity.
My definition of honest money is: “A sufficiently large circulating medium, whether of gold, silver, or paper, to bring down the price of money so that we shall obtain fair prices for all labor and products.” Then as population increases and as the demand for money becomes greater, let the government meet that demand from time to time by enhancing the money supply.
III. BY WHARTON BARKER.
The true test of an honest dollar is its purchasing power, and that dollar, and only that dollar, is honest that does exact justice between creditor and debtor. The gold monometallists harp on the injustice of a depreciating dollar, but they ignore the injuries inflicted by an appreciating dollar. They tell us that a depreciating dollar defrauds the creditor, but just as a depreciating dollar defrauds the creditor, an appreciating dollar defrauds the debtor, and it is not one whit worse to defraud the creditor by obliging him to accept a depreciated dollar from his debtor than to defraud the debtor by obliging him to pay in a dollar made artificially scarce and dear.
An appreciating dollar works injustice to the debtor just as a depreciating dollar works injustice to the creditor, but an appreciating dollar is many fold more injurious to trade and industry, for while the depreciating dollar taxes the creditor for the benefit of the debtor, the appreciating dollar takes from the debtor, from producers in general and the industrious classes, and gives to the creditor classes, the drones of society, a larger and larger share of the products of labor, which of necessity discourages industry. Under a depreciating standard the recompense of the producer becomes greater and greater, the creditor classes receive a smaller and smaller portion of the products of labor, the profits of industry increase, and consequently production is encouraged and trade and industry are stimulated. But under an appreciating standard the recompense of labor becomes smaller and smaller, and the share of the products of labor absorbed by the creditor larger, which tends to discourage industry and stifle enterprise.