wastage involved in the competitive distribution of modern commerce, and last, but not least, the temporary stress which the new investment policy has laid upon those industrial operations throughout the world which conform to the so-called law of diminishing returns. When the full fruits of the development of South America and Canada are reaped, the acceleration of supply of goods may be found to balance or outweigh the further growth of the supply of credit, and prices may cease to rise, or even fall.
Meanwhile, the counterplay of these two sets of forces, the one expanding the production of credit, the other checking the production of goods, seems to give the best explanation of the current rise of prices. The part played by the enlarged output of gold is a useful though a minor one. It has facilitated the operation of the forces stimulating credit, by furnishing the larger gold reserves which, though to a diminishing extent, are still required to maintain the easy currency of credit-notes. It is a condition, but not a chief efficient cause of the acceleration of supply of credit.
