CURRENCY AND PRICE MOVEMENTS 10
It is rather in cases where inflation on a very large scale
has occurred as the result of expanding paper currenc
hat it is tempting to seek a more or less obvious symp-
om of the effect of an increase in the number of mone-
tary units upon the general price level: the issue o
assignats during the French Revolution offers an example
of this ; even this precedent, although it is authenticated
and typical, does not demonstrate a complete concord-
ance between these phenomena.l Moreover, in quite
—— ;
millions between 1891 and 1895, then suddenly to 1300 millions betwee
896 and 1900, and gradually reached nearly 2} milliards before the war
(1911-12). The average level of prices, as shown by the index numbers,
fell between 1874 and 1896 or, in some countries, 1897, if we excep
temporary rises in 1880 and again in 1889-18go. Then it rose from 1897
1898 onwards, except for a temporary fall from 1901 to 1904 and again in
1908. M. Rist, in his study of changes in French monetary stocks and prices
during this period (“La circulation monétaire francaise et le mouvement
des prix,” Rev. d’écon. polit., 1914) also points out a general concordance
between the two curves (though the price curve is much more regular than
the other), to the extent that currency expansion began in 1891 and that
the fall in prices lasted till 1897. (See also on this subject, A. Aupetit, “Essai
d’une théorie générale de la monnaie,” thesis, Paris, 1901, and R. Lenoir,
“Etude sur la formation et le mouvement des prix,” thesis, Paris, 1913.) It
may therefore be said that apart from the possible effect of fluctuations due
o the Trade Cycle, there is a general coincidence between the two sets of
facts, in that the gold production showed a marked increase from 1891
onwards. This coincidence certainly deserves to be noted, although it does
not warrant scientific conclusions so long as it is not possible to estimate the
effect of the other factors mentioned above, which are just as susceptible o
furnishing an a priori explanation of the moderate rise in prices at the end
of the 19th and the beginning of the 20th century (from 61 in 1896 to 75 in
1900, from 70 in 1901 to 80 in 1911, and 85 in 1912, according to the
British Index number). :
! The depreciation, for instance, began very slowly and several times
diminished, although the note issue continued to expand. This is shown in
the table set up by the Treasury and annexed to the law of the § Messidor
of the Year V. One hundred livres of assignats were still worth go francs
at the beginning of 1791 (although the issue had started at the begin-
ning of 1790 in pursuance of a decree of December 19-21, 1789), and
the circulation had reached 1200 millions and was double that of coin,
and no longer carried interest. Again, it will be observed that while the
assignats fell to 79 francs in August of the same year, they recovered to 8;
in October. Similarly, in 1792 they fell to 72 in January and 59 in March,
but recovered to 72 in December, and again, having fallen to 22 in 1793,
recovered to 40 in January 1794. It was not till 1793 that the depreciation
