ABSTRACT
The expression “a fixed price of gold” has led some people to imagine that the possibility of a depreciation of this metal is precluded by the Mint regulations. The process by which an increased production of gold operates in depreciating the value of the metal and raising general prices appears to be twofold: it acts, first, directly through the medium of an enlarged money demand, and, secondly, indirectly through a contraction of supply. When an increased amount of money comes into existence, there is, of course, an increased expenditure on the part of those into whose possession it comes, the immediate effect of which is to raise the prices of all commodities which fall under its influence. It is evident that the quantity of metallic money necessary to support any required advance of prices throughout a given range of business will vary with the character of the currency into which it is received.
