THE INFLOW OF GOLD 247 



where checks arc much less used than hei-e. Great Britain 

 has $18.29, and Germany $20.48; Canada, $14.39; Russia 

 has only $6.50. Differing from notes of national banks, 

 gold is money of final reserve and redemption, and the credit 

 built upon it is higher and broader, so that the potential 

 inflation may be carried further. 



In this country, cash is used for only ten per cent of trans- 

 actions; in some localities for less; in others for perhaps fifteen 

 per cent. Cries for more money have been often heard in 

 the land; no one has said how much. The due limit for circu- 

 lation has not been established. Alexander Hamilton quotes 

 Postlethwaite as supposing that the quantity of cash neces- 

 sary is one thu-d of the rents to the proprietors, on one ninth 

 of the product of the lands. This really only names other 

 unfixed quantities as the standard. We have passed far 

 beyond such limit. The theory has been proclaimed that 

 the circulating medium should keep exact pace with the 

 population. Conditions vary in different countries and at 

 different periods. In the same land at periods not remote 

 from each other, large additions to the currency can not fail to 

 affect enterprise, industry, and commerce, the cost of living 

 and the prices of commodities. But the currency is only 

 one factor bearing on production and consumption. We 

 shall err radically if we treat it as the absolute dictator. 



With due allowance then for contrary influences, how 

 far and in what direction is the vast inflow of the yellow 

 metal carrying us? The blind may see that in the past five 

 years business has been expanded in some directions in an 

 , imparalleled degree. Credit has naturally been multiphed at 

 " least to four times the amount of cash added to our supply. 

 The exploitation of gigantic industrial corporations ran on 

 at a dangerous speed, fortunately to exhaust itself by its 

 own excesses. Promotion of stocks and bonds is not industry ; 

 it is speculation, and that finds help and impetus in inflation. 

 In that way the inflow of gold has magnified if not wholly 

 caused the frenzy and the excesses in industrial securities. 

 Those who have cHmbed too high into the reahn of credit 

 must come down, and here the descent, unlike that to Avernus, 

 is not smooth and pleasant. The promotor who has failed 



