No.
2]
EDISON-FORD
COMMODITY MONEY
67
ported goods as well as home-grown goods, luxuries as well as basic necessities. In any event, however, changes in the volume of trade are still better indications of needed changes in the volume of money. If Mr. Edison had proposed that the total volume of money in circulation should be increased in proportion to the total annual increase of trade of all kinds, he would have proposed a plan which, in theory at least, would tend to stablize money. And then he would have been face to face with the problem, as yet unsolved, of devising a practicable method of controlling the volume of money on this basis. It may yet be possible to attain a nearly perfect monetary system by making changes in the volume of money depend solely upon changes in the volume of trade. Where most of the reformers go wrong is in assuming that the gold basis of money interferes with such a plan. It does not. But does the gold basis itself insure a stable price level? Again, we must say it does not. The gold basis, of and by itself, neither insures nor prevents a stable price level. It is, however, the most effective curb upon inflation that any great nation has ever tried. Those who would abolish the gold basis of money for the purpose of curbing excessive fluctuations in the purchasing power of money seek a highly desirable end by a method that is worse than futile. As a matter of fact (the evidence for which is daily presented in every market in the world) the nations that have most nearly achieved stable money are those that have held to the gold basis. And those that have departed farthest from it-they have the mark and the krone and the ruble! The Edison plan, though aimed to stabilize monetary values, would have exactly the opposite effect. Steady price levels depend mainly on the balance between the volume of goods on the market and the volume of money offered for goods. However far short our present monetary system fails of maintaining that balance, we should note that the Edison plan is designed expressly to upset the balance. Under that plan, let us say, a farmer delivers two thousand bushels of wheat to the Government and the Government delivers one thousand dollars in new money to the farmer. When the farmer decides to sell the wheat he repays the loan and the Government destroys the [I97]