VALUE OR VOLUME? 297

of money in use and its velocity of circulation/'
Quite so. If you increase the amount of money
faster than that of goods, more money has to be
given for less goods; the value, or buying power,
of money is depreciated and prices go up. The
present war has given an excellent example of this
process at work. All the warring Governments
have printed acres of paper money, and have
worked the credit system with profligate energy;
and so we have a huge increase in currency and
credit, along with little or no increase (probably a
decrease) in consumable goods, and prices have soared
like rockets all over the world. In neutral countries
the rise has been as bad as anywhere, because the
neutrals have been choked with the gold that the
warring Powers exported, putting paper in its place.
So we see that the volume of money, on the theory
so emphatically expounded by Mr Kitson and en-
dorsdd by common-sense—as long as we are careful
to include all forms of money that are taken in ex-
change for goods in the definition—reflects itself at
once in prices. If money does not increase in
quantity and goods do, then prices go down, and
after the necessary adjustments are made in rates
of wages and salaries, a larger trade can be done
with the same amount of money at a lower level of
values. The volume of money thus limits the
aggregate value of trade, but not its aggregate
volume. Periods of falling prices arc not encourag-
ing to producers, and they put too much advantage
into the hands of the rentier—the man who lives on
fixed interest; on the other hand, they are generally