it is not necessary that either gold or silver should be "on hand." Money of account and the medium of circulation are identical with him and both are "coin." Hume concludes that a rise or fall of prices depends on the quantity of money in circulation, because a change in the value of the measure of value, i. e. of the precious metals which serve as money of account, causes a rise or fall of prices and, consequently, also a change in the amount of money in circulation, the rapidity of the latter remaining the same. That not only the quantity of gold and silver increased in the sixteenth and seventeenth centuries, but that the cost of their production had declined at the same time, Hume could know from the closing up of the European mines. In the sixteenth and seventeenth centuries the prices of commodities increased in Europe with the influx of the mass of American gold and silver; hence the prices of commodities in every land are determined by the mass of gold and silver to be found there. This was Hume's first "necessary consequence."[1] In the sixteenth and seventeenth centuries prices had not risen uniformly with the increase of the quantity of precious metals; more than half a century passed before any change in prices became perceptible, and even then it took a long time before the exchange values of commodities came to be generally estimated according to the depreciated value of gold and silver, i. e. before the revolution affected the general price level. Hence, concludes Hume, who, quite contrary to the principles of his philosophy, gen-
- ↑ David Hume, l. c. p. 303.
