Page:Stabilizing the dollar, Fisher, 1920.djvu/207

. 3] in the previous quarter rather than to that in the same quarter, thus suggesting a lag between cause and effect of one quarter of a year. His figures did not admit of a closer analysis. A lag about half as great seems to exist in the United States between the changes in the money in circulation (i.e. in pockets, tills, and banks other than Federal Reserve Banks) and the index numbers of Dun or Bradstreet or the United States Bureau of Labor Statistics.

The specially responsive index number which I have had calculated seems to show a still shorter lag, namely, about one month. Perhaps the most sudden and unmistakable single instance of a right-about-face of prices succeeding that of money is that in the autumn of 1915. In August of that year the money in the United States shot up suddenly and rapidly. In September, one month later, the price level likewise shot up suddenly and rapidly and has scarcely receded since. The lag is here one month.

It is interesting to note some other cases sufficiently analogous to be illuminating on this point. The closure of the Indian mints in 1893 showed the same promptness of influence on the value of the rupee. The rate of exchange on London in New York has often changed from the maximum to the minimum inside of a fortnight. Again, Canadian and American price levels, as worked out by the labor bureaus of the two countries, correspond with each other year by year with extreme precision. Even month by month, judging by a careful comparison for twenty-four months, the agreement is very noticeable. The price levels of different countries tend to approximate each other like two connected lakes, through the overflow of currency from one to the other, back and forth. That