86 MODERN MONETARY SYSTEMS 
the influence of the exchange showed itself to be stronger 
than the contraction in purchasing power.” 
We confess that we do not share his surprise ; for we 
have always admitted that the quantity of money, whether 
real money or money of account, which is required for an 
increase of transactions due to a rise in prices will inevitably 
create itself. But the experience in Czechoslovakia is 
peculiarly instructive in that it gives some indication of 
the machinery by which media of payment spontaneously 
multiply. It must be remembered, of course, that the 
fiduciary circulation of Czechoslovakia, although strictly 
limited under the law of 1919, was nevertheless capable 
of expansion through an increase in the bank holdings of 
commercial bills, and that, as we have already seen, it 
did in fact increase by 509%, between February 1919, when 
it was stamped, and the end of 1921. But this increase 
is admittedly small compared with the rise in prices 
which nearly trebled during the same period. Therefore 
we must not only take into account the discounts and 
advances by the Banking Department which had them- 
selves increased much more in proportion than the 
secured fiduciary circulation; it rose from 656 million 
crowns in May 1919 to 4,337 million in December 1920, 
and remained thereafter at between 3 and 4 milliards. 
We must also and indeed mainly take into consideration 
other indices, such as the amount of clearings effected 
by the Prague Clearing House, which rose from 11,870 
million in 1919 to 41,535 million in 1920. 
This increase in credit and transfer operations pre- 
supposes a corresponding rise in deposits, and the latter, 
in fact, took place, especially in the deposits of the postal 
cheque department, which rose from 21,284 million 
1 Rasin, 0p. cit., p. 82. The author points out that during the year 1919 
the aggregate of commercial bills presented to the Clearing House increased 
much more than nine times, whereas the crown had only depreciated to 
one-fifth of its value in comparison with 1914, and that in 1920 the same 
clearing operations had increased thirty-one times, whereas the currency 
had only depreciated to Xs of its value. He thus emphasised that the 
increase in clearings was a preponderating element in the expansion of 
media of payment necessitated by the rise in prices.