106 MODERN MONETARY SYSTEMS 
recent cases, such as that of Germany, the rise in prices 
seems to have been chiefly caused by the exchange, and 
inflation appears to be an effect rather than a cause. The 
case of Czechoslovakia should also be borne in mind. 
Apart from these extreme cases of unlimited currency 
expansion, the last war offers examples of a comparatively 
moderate issue which ultimately trebles or quadruples 
the pre-war circulation, and is accompanied by a rise in 
prices of the same dimensions. Here again it seems 
reasonable to attribute this phenomenon to the effect of 
inflation on prices. At the same time, a large share in 
the maladjustment of demand and supply must be 
assigned to underproduction and to the difficulty, risk 
and expense of transport, also due to war conditions.l 
To all appearance the expansion of the currency is only 
responsible for a part of the rise in prices—a part which 
it 1s almost impossible to determine; but in any case it 
may well have contributed to making the rise permanent 
by bringing the amount of available currency into pro- 
portion with the new level of prices. 
Again it is difficult to find any exact proof of this hypo- 
thesis by comparing currency and price variations in each 
country during the war, and it is also difficult to find a 
proof in a comparison between different countries at the 
same point of time. 
It is, of course, true that there is a general concord- 
became catastrophic, with a drop from 18 francs in Nivose of the Year III 
to something between 0°3 and 0°4 in Ventose. See, on this point, the tables 
showing the depreciation of paper money edited by M. Pierre Caron. See 
also Marion, “Situation monétaire de la France depuis 1715,” and M. 
Albert Despaux, “L’inflation dans I’histoire,” in which the author 
attempts to bring out the various causes of the depreciation of the 
assignats and of the fluctuations in their value. 
1 Thus M. A. Nigh, in a thesis on “La politique financié¢re des Pays Bas 
pendant la guerre,” observes that there was continuous currency expansion 
in his country, whereas the upward movement of prices was often inter- 
rupted; hence prices appear to him to have been determined, not only by 
changes in the volume of currency, but also by special causes, which suffice 
to explain each case—in particular the grant or refusal of export licences, 
the torpedoing of vessels, the signature of agreements with foreign 
countries for the delivery of coal, etc. (pp. 81, 82).