than vicious, we are now encouraged to regard as one of those mysterious “acts of God” as a consequence of which good ships with faulty gear go ashore upon strange coasts.
(b) Unemployment. This is a clear symptom of the same thing. Because of the unreliability of our unit of value, we have been suffering from a mysterious derangement which we call “deflation” and which results in industrial paralysis. There is surely no community gain in this inability to move, and the cause of it is worth investigating. What has happened is that the manufacturer dare not purchase his necessary raw material, for, if deflation continues, it may only be worth half as many “dollars” even after he has risked time and labor upon its preparation for the consumer. Because of this uncertainty he declines to take what may be a fatal risk, regarding it as much wiser to withdraw his services and lay off his help until he sees some sign of the confusion ending, and until the foolish optimists, who counted on a quick recovery and exposed themselves, have been decently buried.
Again it is worth pausing to point out that this is not the result of an issue of fiat money, as we should imagine. Andrew D. White might have been describing our monetary confusion of today when he wrote with reference to the “assignats”: “The result was that capitalists declined to embark their means in business. Enterprise received a mortal blow. Demand for labor was still further diminished. The business of France dwindled into a mere living from hand to mouth. This state of things, while it bore heavily against the interests of the moneyed classes, was still more ruinous to those in more moderate, and most of all to those in straitened, circumstances.[1]
(c) Destructive taxation of industry on the basis of inventory values (or arbitrarily limited depreciation measured in dollars). Under this type of periodic bureaucratic appraisement, real assets may have entirely disappeared before the calculated tax falls due, and all that is left is unrealizable assets which rest upon nothing more valid than a cloister-born “Treasury Decision.” The primary result of this periodic crystallization of fluctuating dollar values is the inevitable crippling of business and industrial organizations, normally capable of useful service in the social body. The secondary effect is restricted functioning and unavoidable laying off of help. In- ↑ “Principles of Money & Banking,” H. G. Moulton. Page 146. University of Chicago Press, 1916.
