CURRENCY AND PRICE MOVEMENTS 107 
ance between the increase in the currency Sf ee rise in. 
prices, and that it became more marked in each case as 
hostilities were prolonged.! Some economist may have 
thought that this approximate parallel was sufficient: to 
convince those who were still doubtful ; it would ceftainls 
be very impressive if it were somewhat more exact and if 
the war had not itself been capable of causing simul- 
taneously, but separately, the increase in the currency and 
the rise in prices. But it is impossible to determine by 
merely observing this coincidence whether one pheno- 
menon follows from the other, or whether both are a 
direct result of the same cause: the existence and duration 
of a state of war involve frequent recourse to new issues 
of currency, but may also explain the rise in prices merely 
by the decline in production of commodities in common 
use. Moreover, on a closer examination, the following 
facts emerge. 
In all the countries under consideration it is true that 
both an increase in the currency and a rise in prices took 
place if a comparison is made between the beginning 
(August 1914) and the end (1919 or 1920). But prices do 
not always rise just when a large increase in the circulation 
has taken place. Thus in France during the long period from 
November 1918 to March 1919, a rapid increase in the 
paper currency occurred simultaneously with a cessation 
in the rise of wholesale prices; on the other hand, the 
enormous rise in wholesale prices which declared itself at 
the end of 1919 proceeded from November 1919 to 
July 1920 at a time when the note issue remained almost 
stationary. Similarly in England, the note issue expanded 
enormously between the end of 1917 and the end of 
1918, but wholesale and retail prices hardly rose at all 
during this period ; on the other hand, prices rose sharply 
in December 1919 just at a time when there occurred a 
temporary contraction of the currency. These facts may 
no doubt be explained by the observation that the effects 
of currency expansion on prices do not make themselves 
1 See M. Gide, “Les mouvements des prix et leurs causes,” Br. Paris, 
1022.