126 Transactions. — Miscellaneous. 



low prices. These changes take place in comparatively short 

 intervals. The change may be sudden and of the nature of a 

 panic, or may extend and operate gradually over a period of, 

 say, five or six years. But, in addition to these short-period 

 fluctuations, we have a general tendency as the commercial 

 status of nations improves for the proportion of credit to cash 

 transactions to increase. In those nations which are com- 

 mercially most advanced we find to-day the proportion greatest, 

 so that in some of the wealthiest nations we find a smaller 

 amount of coin per head in use than in some of the poorer 

 nations. We may take it that the general tendency is to 

 economize the use of money and substitute credit, and this, 

 so far as it operates, tends to increase prices. 



The rapidity of circulation of money — i.e., the average 

 frequency with which each coin is used to pay for some 

 purchase — must depend largely on the character and customs 

 of the people. But the modern tendency is to keep coin in 

 hand to as small an extent and for as little a time as pos- 

 sible. This, again, tends to increase prices, since it practically 

 diminishes the demand for money. 



Thus of these three influences we have seen that one is 

 tending to diminish prices and the other two to increase 

 them. Thus to some extent they counteract one another ; 

 and, besides, apart from short-period fluctuations, the extent 

 of their influence varies comparatively slowly, and may be 

 almost neglected, compared with that of any great increase in 

 the gold-supply. 



Some Instances of Variation in the Purchasing-power 

 of Money, and their Causes. 



It will now be well, perhaps, to consider some instances 

 of variations in the purchasing-power of money that have 

 actually occurred, and their causes. Beginning with the fall 

 of the Boman Empire, we may remark that during that 

 event the production of the precious metals received a shock 

 from which the industry did not recover for a thousand years. 

 Even when a revival came, in the eighth century, the pro- 

 duction was only sufficient to replace waste and to keep the 

 volume in circulation about the same up to the time of the 

 discovery of America. During all this period the precious 

 metals were steadily advancing in value and average prices 

 were falling, at first through the reduction of the stock by 

 wear-and-tear, but also at a later period through reviving 

 trade and production making a larger and larger demand for 

 money. It was to the later portion of this period that the list 

 of prices of produce quoted above applied, and this sufficiently 

 exhibits the lowness of prices at that time. 



