on the quantity theory to account for the rise in prices. But the quantity theory as a practical formula goes bankrupt when we try to explain the fall of prices within the past few months. The gold is here, the safe high ratio of deposits to money due to the Federal Reserve System is still possible, but prices have fallen. Bank credit, or, using

Fisher's formula, the velocity of circulation, has fallen off, and we want to know why. We come back, then, to the question of the conditions under which banks will extend purchasing power to those who want to use it.

Beginning with the conditions in 1914, a great increase in the gold reserve and a still greater expansibility of credit, why was the credit extended then and not now? The answer is suggested by McLeod: the bankers saw the opportunity for profit. They saw that if they advanced credit, conditions were such that they could be sure of the repayment of the loans. We may analyze this situation. from the point of view of supply and demand. The principle involved is as follows: whenever the probable demand exceeds the probable supply of any good, it is profitable to engage in the production of that good. And, of course, it is profitable for bankers to advance credit to one producing that good, as they can be reasonably sure of repayment.

At the beginning of the European War millions of men were transferred from economic production to economic waste. Under-production was imminent, and American industries were called upon to help make up the shortage. Under the pressure of great immediate need prices were raised to a level that would evoke an increasing supply. American farmers and manufacturers were assured a high and rising market for their goods, and, as their costs rose at a slower rate than prices, they strove to increase output to gain the added profits. A heavy demand from abroad was reinforced by a heavy demand at home, since war profits and rising wages placed a large volume of purchasing power in the hands of the American consumer.

Yet in time the purchasing power of Europe began to

decline. This purchasing power rested normally on current productive power, reserves of gold, the advanced state of industrial capital, and comparative freedom from public indebtedness. At the beginning of the war the productive power of the belligerents was largely diverted to the production of war munitions and supplies instead of the ordinary commodities for exchange. Not having goods to exchange for goods, they gave their gold. When this reserve began to give out, they pledged their public credit. And then their purchasing power began seriously to decline. With the machinery of production run down, the gold reserve depleted, over-issue of paper money, capital in need of repair or replacement, and the probable margin of future production over consumption already hypothecated for a good many years, the effective demand of Europe for American goods was seriously reduced. Meanwhile the home demand was maintained. On a rising market people bought more than they currently needed, so as to stock up before prices should go entirely beyond their means. Producers and speculators over-reached themselves. Thinking they could. charge the public any price, they held their products off the market for a greater rise, and borrowed from the banks on the security of the goods they were holding. Post-war credit was extended $1,800,000,000 in nine months. But the people at last began to do without. Then ensued the painful process of deflation that we are now witnessing.

The conclusion of the matter seems to be that the serious price disturbances of 1914 on are due, not to rapid accretions in the world's supply of gold, as Fisher's theory would require, but to serious disturbances in the orderly flow and exchange of goods that normally take place over most of the world. One-half of the world consumed its patrimony of social capital in riotous living, and the other half throve on the process. But the first half impaired its productive power so that when its reserve was spent, it lacked the goods that could maintain the normal exchange. And as power of production measures power of effective demand, it spoiled

the market for the industrious half. On the other hand, our enterprising Americans, failing longer to exploit Europe, tried to make up by exploiting more vigorously their own compatriots. But a large supply cannot be equated with a moderate demand by means of a high price; so we have the present business depression.

The principle that appears to emerge from this discussion is that price changes and the ensuing economic and social disturbances are due to breaks or fluctuations in the orderly flow and exchange of goods and services. Wars cause inflation because they engender a great and imperative demand. They ultimately cause deflation because they destroy productive power, which itself is the means of repayment and of continued demand. The orderly process of economic life is the regular exchange of goods for goods, increased output in one industry or nation meaning increased demand for the products of others, the sum total of the whole process being a gradual increase of goods for all or a gradual increase of leisure. This end may be facilitated by an improvement in the banking system; not necessarily in increasing the efficacy of a given gold reserve, but in extending and strengthening national and international machinery for exchanging goods and services, putting the instruments of production progressively into the hands of the ablest and most responsible men, mitigating the inevitable local shocks due to crop failures by distributing them over the whole system, and adjusting production to demand.

Thus the Credit School, or the proponents of goods, seem to score on the Quantity School, or the proponents of gold. Yet, on further reflection, the goldites seem only a subdivision of the School of Credit. The exchange of gold against goods is only a phase of the exchange of goods against goods. Originally gold was the most characteristic good; the most durable, portable, universally desirable, and hence, the most. exchangeable of goods. For these reasons and the facts that it could be easily concealed and cheaply stored, it was the most suitable good for an individual or nation to accumulate

in order to exchange for other goods when old age or war should impair productive power. In modern times, however, as Hobson shows, the intrinsic value of gold is declining. Other material is now preferable for filling teeth. Modern fashions of giving expression to the instinct of selfdisplay tend toward millinery, fur cloaks, and high-priced automobiles. And platinum is replacing gold in much of our jewelry. As Hobson points out, gold is not intrinsically essential to the manufacture of credit; credit may be based on the actual or anticipated existence of real, concrete goods. Gold is a necessary ingredient of the credit system only as long as it can be legally demanded by holders of credit. notes. Gold now is a regulator of currency; but, as we have just seen, it regulates very inefficiently. Besides, we do not need to insist on the intrinsic value of money instruments, but on the efficiency of them. Paper and other token money costs less to produce than gold and can do the work of gold just as well if honestly regulated. If we break with the legal requirement-overcome the inertia of custom and tradition, we can establish a useful system of regulation by working out scientific indexes of production, exchange, distribution, and consumption. And for reserve against crises and depressions we can resort to government or bankers' certificates. Thus the world's economic development need not wait on the output of mines or bankers' devices for increasing the circulating power of gold; but bankers and business men may devote their energies to exploiting the productive potentialities of nature and man; and the exchange system may contribute to economic progress by coordinating and harmonizing actual and potential production with actual and potential demand.

SHAKESPEARE'S COMEDIES

BY D. T. STARNES

Traditional stories and sayings concerning historical events and historical personages, often rehearsed, come to be regarded as authentic. By a similar process of repetition, the old saying, "Shakespeare never repeats," has, curiously enough, found wide acceptance among the occasional readers of the Shakespearean plays, and among the wider public to whom Shakespeare is a mere name.

This pronouncement upon the famous dramatist probably originated during the early nineteenth century, the period of reaction from the attitude of the Restoration dramatists and those of the eighteenth century, who generally regarded Shakespeare as an untrained and somewhat barbarous playwright. His plays, however, were regarded as worthy of presentation when properly re-written. So extreme was the reaction in the nineteenth century that Shakespeare was often overrated, and sometimes lauded for virtues which he did not possess. Colonel Ingersoll's tribute to Shakespeare is perhaps typical of the rather extravagant encomiums of the dramatist's genius.

Modern students of Shakespeare, however, no longer accept unqualifiedly the unstinted praise of an Ingersoll, nor do they hold it a self-evident truth that "Shakespeare never repeats." They know that Shakespeare, like his immediate predecessors and his contemporaries, economized in subject matter. This economy involved, in Shakespeare's plays, the repetition of dramatic themes, devices, situations, character types, and lan

A few critics, notably Neilson, have casually called attention to certain similarities of various plays, but no one, so far as I can determine, has made a detailed study of these repetitions. It is, therefore, my purpose in this paper to point out recurring themes and situations in the various comedies, and to suggest the significance of these recurrences.