370 
DUTTON. 
gold the exportation continues until gold available for ship¬ 
ment becomes scarce and at length commands a premium. 
This is the beginning of inflation, and if the redundancy ♦ 
still persists, the money (necessarily not convertible into gold 
at par) depreciates or loses purchasing power, which is 
equivalent to a diminished quantity, and it continues to de¬ 
preciate until it becomes adjusted to the real demand for 
money. Prices being quoted in the inflated currency are 
now at a maximum, but if they are estimated in gold, at a 
premium, they will be seen after a time to be no higher than 
they were before, unless in the mean time some other cause 
wholly independent of the money supply has affected them. 
The reverse is seen when the money supply is deficient or 
when the real demand for more money has increased. 
Money being really scarce, the purchasing capacity of the 
country is curtailed, the home demand for merchandise de¬ 
clines, and prices fall. The country now is favorable for 
foreign buyers and unfavorable for foreign sellers. More 
values are bought by foreigners than are sold by them, and 
a “ favorable balance of trade ” is at length established which 
leads to an importation of gold. 
Since the close of the war there has been a growing de¬ 
mand for a larger circulation in the United States. This 
has arisen from the rapid increase of population and the 
still more rapid increase of wealth and amount of exchanges. 
This growing demand was met during the first part of the 
period by an appreciation in the purchasing power of the 
paper money, which reached a parity with gold in 1879, and 
also in part by an increase in the volume of national bank 
notes. 
In 1878 the Treasury began the issue of silver dollars and 
silver certificates, but this was in a great part offset by the 
retirement of national bank notes, so that the total issues of 
the Government did not keep pace with the growing de¬ 
mand for money. Gojd then poured in upon us rapidly, 
and within the last twelve years the statistics of the gold 
supply now in the country show an enormous increase. In 
