Page:Stabilizing the dollar, Fisher, 1920.djvu/103

15] The mine owners convert their product into money, getting coin or "yellowbacks" (gold certificates) from the mint. They then find themselves in possession of money far beyond what is needed for pocket money. Suppose one of these men gets from the mint a thousand gold dollars while, for pocket money, $50 is sufficient; he is almost sure to get speedily rid of at least $950 by spending it for enjoyables, investing it in durables, or depositing it in the bank. In any case he and the hundreds of others in the same situation tend to raise prices in the community where they are expending their money, or where they and others draw checks on the banks in which it is deposited.

It was thus that prices rose in the mining camps of California a half dozen decades ago and in Colorado and the Klondike one or two decades ago. This local rise of prices soon communicated itself to other places; for the price level in one locality cannot greatly exceed that in a neighboring locality without causing an export of money from the former to the latter as a cheaper market to buy in. Thus, new money gradually finds its way into circulation throughout the world, raising prices as it flows from place to place, the process consisting, in all cases, of the effort on the part of somebody to make use of an otherwise idle surplus,—a surplus which cannot be dissipated by transferring it from hand to hand, but only by a rise of prices.

15. Tracing the Invisible Source of the Tide

This operation, by which an increase of money causes a rising tide of prices, is so subtle and pervasive that it seems to come from nowhere in particular and