THE PRICE OF WHEAT 167 



the lower classes would, a priori, in the absence of 

 counteracting causes, bring about a rise in these. But 

 such a rise in the prices of a few commodities would not 

 cause a rise in general prices. It may indeed cause them 

 to fall, as Professor Fisher has shown in his treatment 

 of the problem. 



It was rather the increase in the exchange media of 

 all kinds which had the most important influence. 

 Progress in metallurgical science has developed gold- 

 mining on an unprecedented scale, and the output of gold 

 has been largely increased. Moreover, new fields have 

 been opened up in North America, South Africa, and 

 Western Australia. This increase in the gold supply 

 has had a direct influence on the amount of credit money 

 in circulation. With the general development of bank- 

 ing in the civilised world, the increase in credit instru- 

 ments has been enormous much greater in proportion 

 than the increase in money proper and it is due to 

 this increase in the circulating media generally that we 

 must look for the most powerful cause of rising prices. 

 But not only have the general exchange media increased. 

 Modern tendencies also promote much greater velocity 

 of circulation. The progress of urbanisation resulting 

 in a greater density of population, the growth of know- 

 ledge as to banking, the system of shop credits, the 

 increase in small deposits, all tend to foster a higher 

 velocity of circulation both of money proper and of 

 credit instruments. To put the whole position in a few 

 words, all the factors on the right hand side of the 

 "equation of exchange" have increased greatly, while 

 the one independent variable on the left hand side has 

 also increased, but not to such an extent. The result 

 is, therefore, that the other factor of the left hand side, 

 the one dependent variable of the equation, has increased, 

 that is, prices have risen. 



(ii) Absence of Violent Fluctuations. The character- 

 istic feature of the price of wheat since 1894 is the 



