284 VALUATION, DEPRECIATION AND THE RATE-BASE 
was first written (February, 1920), would have been equivalent 
in value to about $2.30. It would now (May, 1926) be equiva- 
lent to about $1.70. 
To the foregoing a brief historical reference may be of interest 
to show the quick response of prices of commodities to changes 
in the amount of currency in circulation. That currency in- 
flation increases the cost of living has already been noted. It 
will now be of interest to compare the volume of currency in 
circulation in the United States from time to time, with the cost 
of living as shown by the index numbers based on the wholesale 
prices of commodities. Thus, for example, in the five years 
preceding the civil war, roo coms would have been equivalent 
to $103. At the same time there were about $14 of currency per 
capita in circulation. At the close of the civil war in 1865 the 
per capita currency circulation had been increased to nearly $21 
and the equivalent of roo commodity units had gone to $185. 
The 50 per cent inflation of currency was accompanied by an 
8o per cent increase in the cost of living. (See diagram, Fig. 11.) 
In the five years, 1910 to 1914, preceding the recent war, the 
currency circulation was about $34 per capita; it had reached 
$51 in 1918. The money equivalent of 100 coms had in the same 
period gone from 114 to 225. A 50 per cent increase in the per 
capita amount of currency in circulation has been accompanied 
by a 97 per cent increase in the cost of living which is, however, 
probably considerably more than can reasonably be ascribed to 
inflation of currency. 
In the years following the civil war the per capita currency 
circulation gradually fell from $20.57 to a minimum of about 
$15.32 in 1878. During this decline of 25 per cent in the per 
capita circulation prices fell 46 per cent, from $185 per 100 coms 
to about $100 in 1878. 
These facts are not offered to establish any definite relation 
between the amount of money in circulation and the cost of 
living, but they do show what seems to be axiomatic, that the per 
capita increase or decrease in the amount of money in circulation 
must be reflected in the shifting prices of commodities and that,