If, instead of gold, we were to make milk the standard, or eggs,—that is, if we used these to purchase all other things,—they would acquire the same fixity of price—that is, price in terms of milk or eggs; and we would then fall victims to the same illusion of inherent fixity. If a dollar, instead of being 23.22 grains of gold, were, let us say, a dozen eggs, obviously the price of eggs would always be a dollar a dozen simply because a dollar is a dozen eggs. If the hens did not lay, the price of eggs would not rise (or vary at all) but, instead, the prices of other commodities in terms of eggs would fall; while, if eggs were a drug on the market, their price would not fall (or vary at all) but the prices of other commodities, in terms of eggs, would rise—and the mystified public would then be inquiring gravely "why this high cost of living?" The world's prices would then be at the mercy of hens just as now they are at the mercy of mines, as well as of banks and of governmental and private financiering.
In colonial days, in Virginia, tobacco was money. In those days a high price of wheat might have been attributed to scarcity of wheat when really due to abundance of tobacco, just as to-day we attribute the high prices of most things to a supposed scarcity of these things when it is really due to abundance of money.
12. The Instability of the Gold Standard as Compared with an Egg Standard and Others
In order to see what the purchasing power of a dollar is from time to time we need merely to invert the index number showing the general level of prices;
