November 19 1912
LOCATES REASON FOR HIGH COST OF LIVING
Yale Professor Declares it is Due Primarily to Gold and Credit Inflation
New York, Nov. 18--Professor Irving Fisher of Yale university told the members of the New York Manufacturers' association in Brooklyn tonight that the high cost of living was due primarily to what he termed gold inflation and credit inflation.
"As these two influences, gold and credit, are closely related," said the political economist, "we may unite them in the word inflation.
"history is full of illustrations, of paper money inflation and the terrible consequence in disturbing contracts and business stability as well as the injury to the salaried classes and the wage-earners. Yet scarcely was the provision made for the redemption of the greenbacks, before we seemed to have forgotten the terrible evils which they had caused. Consequently we allowed congress to pass a law preventing the retirement of the greenbacks and two laws providing for inflating our currency with silver. I believe now that business men should join in a campaign of education to make the public understand that gold inflation is just as disastrous as silver inflation.
"Monetary contraction and and monetary expansion are evils from whatever cause they may come. The lesson of the hour is that we may suffer from gold inflation which comes from natural causes just as truly as from inflation through legislative enactments.
"The weight of the gold dollar remains fixed but its value or purchasing power does not. To be so careful about the size of the gold dollar and so indifferent to its purchasing power is as absurd as it would be to stipulate carefully as to the size of the package containing breakfast cereals, but to take no notice of how much cereal it really contains.
"During the last fifteen years although the gold dollar has remained the same in size, its purchasing power has fallen to two-thirds of the dollar of fifteen years ago."