THE PRICE-SPECIE-FLOW MECHANISM AND THE GOLD-EXCHANGE STANDARD:
SOME EXPLORATORY EMPIRICISM RELATING TO THE ENDOGENEITY OF COUNTRY MONEY BALANCES*
University of Western Ontario
‘Suppose there are 12 millions of paper, which circulate in the kingdom as money … and suppose the real cash of the kingdom to be 18 millions. Here is a state which is found by experience to be able to hold a stock of 30 millions. I say, if it be able to hold it, it must of necessity have acquired it in gold and silver, had we not obstructed the entrance of these metals by this new invention of paper. Whence would it have acquired that sum? From all the kingdom of the world. But why? Because if you remove these 12 millions, money in this ...
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