The vital part which the standard of value plays in the determination of prices suggests the importance of stability of value in the commodity which is to perform this function. Fluctuations in prices ought, if possible, to correspond exactly with fluctuations in the value of commodities. If we could be perfectly sure that every change in the price of a commodity represents and exactly measures a change in the relation between its demand and supply, producers would be able to determine with a considerable degree of accuracy the results of prospective increases or decreases in the supply of their products, and would thus secure a sound basis for the management of their concerns. Under these circumstances, too, political economists and sociologists would be able accurately to translate price statistics into vital changes in our economic life, and thus to trace causes to their effects with a certainty and a degree of accuracy now unknown. To the extent, however, that changes in prices are due to fluctuations in the value of the standard, an element of uncertainty is introduced into all calculations based on prices. Without a special investigation, always difficult, sometimes impossible, and never accurate, one does not know whether a given change in prices is due to a cause operating upon the commodities whose prices are under consideration, or upon gold. If a manufacturer, for example, on account of a rise in the price of his product, which in reality has been caused by a fall in the value of gold, concludes that the demand for his product has greatly increased, and, on the basis of a calculation founded on this conclusion, proceeds to enlarge his factory and increase his output, he is quite sure to suffer loss and possibly bankruptcy. The increased supply of goods which he throws upon the market as a result of his mistake would really not be needed and he would be obliged to sell them at a sacrifice. If his loss should chance to be great enough to cause bankruptcy, and if his concern were a very large one, and connected in a business way with banks and other large enterprises, his fall might carry others down with him in a constantly widening circle, and a great commercial crisis be the result.

Uncertainty in business affairs of the kind we have been describing can only be completely removed by a standard whose value never changes; that is, by one whose value is absolutely stable. The proof of this is the fact previously stated, that outside of changes in the values of the commodities themselves, the only cause of price fluctuations is a change in the value of the standard.

A second reason for desiring stability of value in the standard commodity is the fact that debts are nearly always measured and expressed in its terms. In this country promissory notes, bonds, stocks, and all contracts calling for payments by one party to another at some future date are drawn in terms of dollars and cents. Each of these documents contains the promise of some individual or corporation to pay some other individual or corporation a specified number of dollars at some period in the future. It is very evident that if these dollars change in value before the date of maturity of the document, the essential character of the contract is changed. If they rise in value, debtors must pay more; if they fall, less. The effect upon creditors, of course, is directly the reverse. For example, a farmer, whose land is mortgaged, must pay to his creditor more value than he intended if the value of the standard rises, and less if it falls. If the amount of the mortgage is $5000, and the value of the standard doubles before the mortgage matures, he will be obliged to pay double the amount of value he intended or an amount of produce which would have been worth $10,000 at the time the mortgage was made; if the value of the standard diminishes one-half, the mortgagee will receive no more than the equivalent of $2500 at the time the mortgage was made. The mass of indebtedness at the present time is so enormous that a comparatively slight change in the value of gold transfers millions from the pockets of debtors into those of creditors or vice versa. It sometimes happens that the people of an entire section of the country are debtors to a much greater extent than creditors or vice versa, and hence that a change in the value of the standard seriously interferes with the prosperity of the entire community or unjustly enables one region to draw tribute from another. The interests of an entire nation may be dominantly on the side of the creditor class or the debtor class, and international relations thus seriously affected by changes in the value of the standard commodity. The only way in which justice in money matters between man and man, section and section, and nation and nation can be attained, therefore, is by means of a standard which is absolutely stable.