with profligate energy; and so we have a huge increase in currency and credit, along with little or no increase (probably a decrease) in consumable goods, and prices have soared like rockets all over the world.  In neutral countries the rise has been as bad as anywhere, because the neutrals have been choked with the gold that the warring Powers exported, putting paper in its place.  So we see that the volume of money, on the theory so emphatically expounded by Mr Kitson and endorsed by common-sense—­as long as we are careful to include all forms of money that are taken in exchange for goods in the definition—­reflects itself at once in prices.  If money does not increase in quantity and goods do, then prices go down, and after the necessary adjustments are made in rates of wages and salaries, a larger trade can be done with the same amount of money at a lower level of values.  The volume of money thus limits the aggregate value of trade, but not its aggregate volume.  Periods of falling prices are not encouraging to producers, and they put too much advantage into the hands of the rentier—­the man who lives on fixed interest; on the other hand, they are generally believed to be in favour of the working classes, since reductions in wages generally lag behind the fall in prices, which means increased buying power to the wage-earner.

Mr Kitson’s view that the volume of trade is limited by the quantity of currency and credit is thus based on confusion between volume and value.  Moreover, it follows also from the “Quantity Theory of Money,” which he holds, that if he applies his remedy and multiplies currency and credit as fast as he appears to want to, the result will be a still further depreciation in the buying power of money, and a further rise in prices and an increase in all the bitterness, discontent, suspicion, and strikes that the rise in prices has already caused during the war.  Is this a prospect to pray for?  Surely if we want to enjoy “boundless wealth and prosperity” the way to do so is to turn out goods—­things to eat and wear and enjoy—­and not to multiply money, thereby merely depreciating its value, on Mr Kitson’s own admission.  He thinks that “nothing but an abundant supply of currency in the shape of legal tender notes and bank credit, could have enabled us to undertake successfully such unprecedented burdens” as we have borne during the war.  But it may equally well be argued that we have borne these burdens because we worked harder than ever before to turn out the needed stuff, organised better, used our machinery to its full power, and spent less of our product on luxuries; and that the abundant currency, by forcing up prices, immensely increased the cost of the war and produced industrial friction which several times brought us unpleasantly close to disaster.