Relief in Seven Years of Stable Money 187
is because the people could not only buy goods with
a dollar, but because they had more dollars in
their income.
We do not often have such an expansion of commodities
 at reduced prices as has been recorded during
 the past few years. This expansion has taken
place in the greatest burst of speed American industry
 ever attained. But the reduction in prices was
warranted, for the most part, by an equal or greater
reduction in unit costs. Had there been a reduction
in prices such as that from May, 1920, to June, 1921,
when the dollar rose rapidly in buying power, from
40 to 70 pre-war cents, there would have been no
such expansion of American industry as the last six
or seven years have witnessed, but a repetition of the
collapse of industry that took place in the 1920-1921
period.
For when prices fell in the summer of 1920 below
the level of cost, profits ceased and losses were incurred,
 factories shut down, workers were turned
away by hundreds of thousands, continued purchasing
 power was reduced and “hard times” came on.
Such were the evils of deflation.
The evil of inflating the currency is about as great
as the evil of deflating it. A workingman who, in
1896, had put $100 into a savings bank found, in
1920, that his principal, plus compound interest at
41% per cent, amounted to about $300. On the face
of it he had his principal back and in addition $200
of profit, or accumulated interest. This $200 seemed
a genuine reward of thrift. But it was an illusory