Segak.— The Flood of Gold. 133 



was a crisis — i.e., many trading firms were unable to pay 

 their debts, credit was violently contracted, and prices fell, 

 although the store of precious metals in the country was 

 growing as rapidly as ever. x\fter a time credit began to 

 expand again, and prices rose till 1866, when there was 

 another crisis, and prices fell. Again credit expanded, and 

 prices rose till 1873, when, though there was no crisis, a 

 gradual contraction of credit set in which has continued till 

 1879." But " the lowest point which prices reached be- 

 tween 1857 and 1866 was much higher than the level of 

 1850 ; and the lowest point between 1866 and 1873 was 

 higher still." 



And just as it matters little that the rise in prices has 

 not been continuous, so it will not do to object that all prices 

 have not risen — that, e.g., wool was lower in price recently 

 than for many years past. If prices on the average remained 

 the same, we should still have some rising and some falling 

 according to the circumstances of the demand and supply of 

 each particular article. And when prices on the average are 

 rising or falling through an increase or diminution in the 

 currency, the price of any particular article will also be 

 affected by these same circumstances, which may aid or 

 hinder the influence of the currency, and may completely 

 counteract it in the case of some particular commodity or 

 commodities. On this point Professor Flux writes, " A fre- 

 quent objection made to the statement of the dependence of 

 the average level of prices on the quantity of money in circu- 

 lation is that the variations of different prices are by no means 

 of equal amount, and that some prices have not fallen at all 

 during the last quarter of a century when on the average 

 wholesale prices have fallen 35 to 40 per cent. As well allege 

 that the rise and fall of the tide on our coasts is not due to 

 the tidal waves which are produced by the attractions of the 

 moon and of the sun. Neighbouring places have tides of 

 vastly different heights, but all would vanish were their ori- 

 ginal cause destroyed. We have spring tides and neap tides 

 according to the relative position of the crests of the lunar 

 and solar tidal waves, and clearly due to these influences, 

 though in some places the variation is less, in others enor- 

 mously more, than in the centre of the ocean. The formation 

 of coast-lines and the location of land-masses modify infinitely 

 the observable results of one common cause, while the wind 

 may, again, interfere to reduce or increase the actual move- 

 ment at a given place. So also with prices : they show in- 

 definite variety of variation, due to the common influence — 

 changes in the amount of the monetary circulation — but that 

 they do respond to that influence can be as well denied as 

 that the tide at London Bridge is a result of the same funda- 



