TO DISCOVER A STABLE STANDARD zor: 
mechanism at the present day, whereby the real circulation 
is largely independent of the stock of metal. 
It is true, of course, that a heavy flow of currency is 
likely to stimulate a demand for goods more rapidly than 
a corresponding development of credit would increase pro- 
duction, but it is .nuch less true that a decrease of the stock 
of metal would result in a decrease in the demand for ob- 
jects of consumption more quickly than in a contraction 
of credit and of production. 
In any case, a theory under which the movement of 
prices is affected by slight and frequent variations in the 
stock of currency seems to us to have neither a logical 
basis nor to be capable of proof in view of the large num- 
ber of external factors which may come into play. It 
therefore seems to us to be entirely useless to attempt to 
regulate the monetary standard and even to neutralise the 
slight variations in prices which are the inevitable result 
of changes in the production and in the markets of various 
commodities. On the other hand, experience shows that 
apart from rare periods of crisis in which the scarcity of 
production, the increase of monetary instruments or the 
condition of the exchange may provoke an abnormal rise 
in prices, variations in prices are small enough as between 
one period and another in a man’s life for it to be possible, 
without serious inconvenience, to use money as a standard 
of deferred payments.1 
Starting therefore from a belief which may be rough and 
ready but which avpears to us to rest on a surer basis, that only 
very considerable changes in the volume of circulation will pro- 
duce equally large variations in the purchasing power of cur- 
rency, we will confine ourselves to the conclusion that the main- 
tenance of approximate stability in the purchasing power of a 
currency presupposes the maintenance of the circulation without 
any great changes at a figure corresponding to the price level 
Which it is desired to maintain. 
Moreover, it should be remembered that this is not the 
only condition for approximate stabilisation, for experience 
! Except as we have shown above, in so far as it may be possible to apply 
a coefficient based on the index of retail prices for long-term contracts.