16. In a gold-standard country, one-half of whose monetary circulation consists of silver dollars (which are unlimited legal tender) and of silver certificates payable on demand in silver dollars (and supported dollar for dollar by silver dollars in reserve), and whose mints are closed to the free coinage of silver, how would the money value of the silver dollars and silver certificates be affected if the gold price of silver should fall (1) 10 per cent.? (2) 50 per cent? (3) 5 per cent.? How would it be affected if the value of gold should fall 10 per cent? (Free coinage of gold is assumed). Explain the principles involved in your answer. CHAPTER 6 THE STANDARD OF DEFERRED PAYMENTS REFERENCES. _Fisher, Irving_, Appreciation and interest. A. E. Assn. Pubs., 11: 331-442. 1896. _Fisher, Irving_, A remedy for the rising cost of living--standardizing the dollar. A. E. Rev., 3 (no. 1, supp.): 20-28. 1913. Round table discussion of above, 29-51. _Fisher, Irving_, Objections to a compensated dollar answered. A. E. Rev., 4: 818-839. 1914. *_Jevons_, ch. XXV. *_Johnson_, chs. XI, XII, XVII. _Kinley, David_, Objections to a monetary standard based on index numbers. A. E. Rev., 3: 1-19. 1913. *_Materials_, 787, 788 (extract from _Brown, H. G._,), 788, 789 (extract from _Clark, W. E._, in "How to invest when prices are rising." 1912). _Noyes, A. D._, Forty years of American finance. 1909. Chs. I-III. _Patterson, E. M._, Objections to a compensated dollar. A. E. Rev., 3: 863-874. 1913. *_Phillips_, chs. VI, VII, XIII. _Taussig, F. W._, The plan for a compensated dollar. Q. J. E., 27: 401-416. 1912-1913. _United States Bureau of Labor Statistics_, Bul. 173. 1915. _Walker_, chs. III, VI, VII. QUESTIONS. 1. In which year between 1890 and the present year would a fixed salary of $1,000 have gone farthest? In which year would its purchasing power have been least? If a sum of $1,000 loaned in 1897 was returned in 1902, what was the difference in its purchasing power on its return and when it was loaned? 2. Will a day's work of a common laborer buy more to-day than it would a half century ago? Why? 3. The Bureau of Labor's index number for 1912 was 133. What was the percentage change in the value of money from the base period to 1912? Give your reasons and your work. 4. _Average prices for years 1860-65._ _Prices for 1900._ Coffee, lb. $ .12 $ .18 Coal, ton 3.00 3.60 Sugar, lb. .08 .06 Wool, lb. .30 .20 Wheat, bu. .80 .90