1890 76.5 39.8 30.8 $ 9.3 billions 1891 81.5 42.0 34.2 10.4 1892 75.6 43.5 32.8 10.0 1893 77.3 42.9 33.2 10.1 1894 71.5 38.1 27.2 8.3 1895 68.0 40.7 27.8 8.4 1896 63.8 40.6 25.9 7.9 1897 62.2 42.4 26.4 8.0 1898 66.4 45.1 29.9 9.1 1899 72.3 49.6 35.8 10.9 1900 78.1 54.0 42.1 12.9 1901 80.6 59.4 47.8 14.6 1902 84.0 62.6 51.3 15.6 1903 83.1 70.1 58.2 17.7 1904 84.0 70.3 59.0 18.0 1905 84.0 76.4 64.2 19.6 1906 88.1 85.0 70.5 21.5 1907 94.0 92.9 86.3 26.6 1908 92.4 81.8 75.6 23.0 1909 99.0 91.7 91.0 27.6 1910 100.0 100.0 100.0 30.5 1911 98.1 99.0 97.0 29.6 1912 104.1 106.9 111.0 33.8 1913 101.7 112.5 114.0 34.8 1914 102.5 104.5 107.0 32.6 1915 106.0 110.0 116.0 35.4 1916 125.0 129.0 161.2 49.2
THE VOLUME OF TRADE AND THE VOLUME OF MONEY AND CREDIT
In the argument so far I have said nothing of the reverse relationship, the dependence of the volume of money and the volume of credit on trade. The two are indeed _inter_dependent. Interdependence suggests circular theory, and is often a phrase to cover circular reasoning.[313] In the case of the relation under discussion, however, I have, I trust, already abundantly protected myself against the charge of circular reasoning by _denying_ that either volume of money and credit on the one hand, or volume of trade on the other hand, is a true cause at all. Both are mere abstract names, designating highly heterogeneous individual occurrences, which, _individually_ are cause or effect. In general, both volume of money and credit, on the one hand, and volume of trade on the other hand, are results of common causes, which are the _veræ causæ_ of economic phenomena--values, psychological phenomena. The whole thing is to be explained immediately and primarily in terms of social relationships and mental processes,--in terms of social values.
To show that increasing trade tends to increase money and credit is not difficult. If one may venture a hypothetical illustration--and the sort of hypothetical illustrations, like the dodo-bone case, of which quantity theorists are fond make one hesitate to do so--let us assume a communistic community, isolated from other markets, with a developed system of production, including an extensive use of gold in the arts. Let the communistic régime gradually pass over to an individualistic régime. Assume that the inhabitants are acquainted with the use of gold as money, and that their government is willing to coin it freely. As individualism spreads, and trade grows, will not more and more gold be taken to the mints? I am not here concerned with the principles determining the apportionment of gold between the money employment and the arts. It is enough to show that expanding trade tends to increase the volume of money.