THE MONETARY CRISIS 85 
This whole series of phenomena is disconcerting for 
those theoretical writers, more or less attached to the 
Anglo-Saxon school, who expected that the magic of 
deflation would bring about the recovery and even the 
stabilisation of the Czech crown, and who, above all, 
did not believe it to be possible that with a limited note 
issue there should occur either a collapse in the exchange 
or a serious rise in prices. 
One of the exponents of this theory has been obliged 
to admit in a recent work ! that, in view of the interval 
of two years between the end of the attempt to deflate 
and the final recovery of the Czech crown, “it is really 
difficult to attribute this reversal to the measures for the 
contraction of purchasing power which were taken 
immediately after the war | 
He also admits that the rise in prices was produced, 
in spite of a wise restriction of the fiduciary currency, by 
the collapse in the exchange, and that the fall in prices in 
1922 succeeded its recovery. 
He even emphasises this observation in the following 
passage : “ Far from the exchange rates being influenced 
by domestic price movements, prices were exceedingly 
sensitive to exchange fluctuations. For the effect of an 
internal or external appreciation of the crown was to raise 
the price of exported or imported food-stuffs and so of all 
other commodities.” 2 
But he still finds it surprising that prices could rise 
in spite of the initial reduction of the currency.” “ The 
rise in prices provoked by the drop in the exchange,” he 
adds, “ought surely to have met with an insurmountable 
barrier in the shortage of currency.” After all, he con- 
cludes that “the facts show that the opposite was the case ; 
1 Ch. Rist, “Ia déflation en pratique,” p. 95. 
2 And again: “Not only did the two movements begin at the same 
moment ; even before there had been a striking resemblance between 
their curves. A temporary fall in prices between December 1920 and 
July 1921 coincides with a temporary stabilisation of the exchange. The 
enormous rise from 1919-1920 was parallel to the decline of the Czech 
crown during nine months, from 33 Swiss francs to 9°40 francs.” (Rist, 
op. cit., p. 95.)