A reduction in the volume of money relatively to population and
business, or, (to state the proposition in another form) a volume which
remains stationary while population and business are increasing, has the
effect of increasing the value of each unit of money, by increasing its
purchasing power.
It is only within a comparatively recent period that an increasing value
in the money unit could produce such widespread disturbance of industry
as it produces to-day. In the rude periods of society commerce was by
barter; and even for thousands of years after the introduction of money,
credit, where known at all, was extremely limited. Under such
circumstances changes in the volume and in the value of money, while
operating to the disadvantage of society as a whole, could not instantly
or seriously affect any one individual. An increase of 25 per cent. in
one year in the value of the money unit--a change which now, by reason
of existing contracts or debts, would entail universal bankruptcy and
ruin--would not be seriously felt by a community in which no such
contracts or debts existed, in which payments were immediate or at short
intervals, and each individual parted with his money almost as soon as
he received it.
Such proportion of the annual increase in the value of the money unit as
could attach to any one month, week, or day would be wholly
insignificant, and as most transactions were closed on the spot, no
appreciable loss could accrue to any individual. Such loss as did accrue
was shared in and averaged among the whole community, making it the
veriest trifle upon any individual. But how is it in our day?