CURRENCY AND PRICE MOVEMENTS 113 
year 1923 brings a curious check ; between February and 
April the circulation nearly doubled—it rose from 3513 
milliards of marks to 6546 and prices tended to fall.1 
Finally, two recent experiments, so far from con- 
tributing any precise proof of this theory, give rise to 
serious doubts, viz., the monetary reform in Czecho- 
slovakia and the monetary reform on Austria. In the first 
case, a policy largelybased on the Quantity Theory showed 
that the limitation and even the contraction of a currency 
did not prevent prices from rising considerably between 
1919 and November 1920. The index reached about 
1500 in 1920 (the base index being 100 for 1914 and 
the figure at the end of 1919 being about 700) and showed 
a level of prices which, in 1920 and the first quarter of 
1921, was at least as high as in Germany, where inflation 
has been continuing. Moreover, at the very time when a 
fresh increase in the circulation (12 milliards of crowns 
as against 8 milliards when the monetary reform took 
place) brings it to its maximum, prices begin to fall ;2 
and here again we find that the fall was much sharper 
from 1922 onwards than the further reduction in the 
circulation, viz., 100 to 67 as compared with 100 to 89. 
On the other hand, we have another counter proof in 
experience in Austria, where the note issue trebled 
between September 1922,3 when the exchange was stabil- 
ised, and the end of 1923 without being accompanied 
apparent inflation, the increase in clearing operations or setting off debts, 
if it does not bring about an increase in the number of real units, at least 
multiplies the number of units of account proportionately to the rise in 
prices. But the fact that, in spite of a restriction of the number of monetary 
‘nstruments, methods of settlement tend to increase proportionately to a 
rise in prices, shows that prices are not proportionate to the number of 
“physical” monetary instruments, which alone can be regulated in quantity 
by public authorities. 
1It may be added that this was a period of stable prices. As soon as 
methods directed towards stabilisation ceased to operate, prices resumed 
their upward movement. See Aftalion, “La circulation, les changes et les 
Prix,” in the Revue Economique Internationale, February 1924. 
2 It has been pointed out above that this double price movement again 
corresponds very exactly with the movements of the exchange. 
8 See above, p. 91.