ion of the output of gold there will come a
demand for some measure of inflation in order that rising prices may
forever continue. Adding silver to the currency would, as we have
seen, accomplish this purpose only temporarily. In the long run this
metal is bound to appreciate like gold. Using paper money would have a
temporary effect and would be a more dangerous measure. Waiting for a
short time for a new adjustment of loan interest to the trend of
prices would be the only rational course. Will the further fall of
prices rob the _entrepreneurs_? They must pay only the rate of
interest that capital earns. If that is five per cent, five they must
pay, so long as prices are stable. With prices falling by one per cent
a year, they will have to pay only four. Will the fall check business
and make men afraid to buy stocks of goods? They can carry stocks as
cheaply with a four per cent rate of interest and declining prices as
they can with a five per cent rate and stable prices. Will it blight
enterprise by making men afraid to build mills, railroads, etc.? Here
again the loan rate of interest comes to the rescue of the projectors.
If they can float their bonds and notes at a lower rate, they can
build with impunity.

Steadiness is the vital quality in currency. Let its purchasing power
be either unchanging or steadily changing in either direction, and
justice will be done and business will thrive. If a metal fluctuates
greatly in its rate of increase in value, it is a poor coinage metal,
even though the average rate of gain be slow; if it gains slowly and
steadily, it is almost an ideally good one.

What would be the effect of any practical measure of inflation? If we
use as money available for all debts the present stock of silver in
the world, we make one large addition to the volume of money now
available. We start an inflation that cannot continue by the use of
silver alone. In the hope of perpetuating the rise in prices we may
follow the silver with paper. By the action of the principle that we
have stated we shall thus make the interest on loans higher, and
every man who buys a farm or a house while the inflation continues
will pay a high rate of interest on an enlarged purchase price. When
we are forced to stop the paper issues, as in the end we must be, the
price of the land, etc., will fall, and the rate of interest on new
loans will fall also. The price of all produce will go down, and the
purchasers of property