142 MODERN MONETARY SYSTEMS 
Now it has been seen how in the case of India a blind 
attachment to the Quantity Theory led to wrong conclu- 
sions; in the first place the internal fluctuations in 
purchasing power which, during one period under con- 
sideration, were not very considerable, did not correspond 
to changes in the volume of currency; secondly, the 
exchange problem was, in this case, largely independent 
of the problem of variations in the internal purchasing 
power of the currency, for the fluctuations of the Indian 
exchange were not unrestricted ; it fluctuated within the 
limits of an unstable silver point which was bound up 
with the world market of silver. 
Again certain writers dominated by a confused idea of 
depreciation attributable to over-expansion, said to be the 
cause of loss on exchange, have been led in their study of 
contemporary phenomena to limit their examples, in 
trying to prove their point, by comparing the curves 
of exchange and circulation at periods which are 
favourable to their thesis, and even to eliminate dis- 
crepancies.} 
1 For instance, in a thesis on the exchange crisis in Spain (Mitjaville, 
Bordeaux, 19o4) the writer presents a table which shows a remarkable 
harmony between the movements of the circulation and exchange at the 
end of the 19th century. But on a closer examination of the table which 
appears to give a continuous series of concordant figures, it will be seen 
that three years are missing, viz., the years 1895 and 1899, when an im- 
provement in the exchange coincided with anincrease in the circulation, 
and the year 1897, when the exchange was at least as high as in 1900 in spite 
of a smaller circulation. On the whole, the concordances which have been 
noted in this table may be summarised as follows. For several years the 
fiduciary circulation rose progressively, as in most other countries, and as 
long as the loss on exchange increased, this increase follows the expansion 
of the currency. But the concordance ceases with an improvement in the 
exchange. Moreover from 1903 onwards the Spanish exchange improved 
without any contraction of the currency, contrary to the forecasts of the 
theorists of the classical school, who considered that the only way of 
restoring the exchange was to reduce the circulation. 
On the parallel curves of inflation and exchange in Brazil, see the 
author’s article, “Les derniéres expériences monétaires et la théorie de la 
dépréciation” (Rev. Econ. Intern., September, 1908). There are discrepancies 
commonly known to be due to changes in the balance of payments which 
had been made positive by the grant of foreign loans, and there are 
similarities which can also be explained by such changes.