Thus the changes in the first four factors have tended to raise prices, while the change in T has tended to lower prices. The relative importance of the four price-raising causes may be stated in terms of the per cent. already given which represents how much lower prices would have been except for each of these causes separately considered. According to this test we find the relative importance of the four price-raising factors to be as follows:
The importance of V is represented by 1,
The importance of M´/M is represented by 23,
The importance of V is represented by 28,
The importance of M is represented by 45.
That is, the increase in the quantity of money had an importance nearly double that of any other one price-raising factor, during the period mentioned.
Indirect Influences on Purchasing Power[52]
Thus far we have considered the level of prices as affected by the volume of trade, by the velocities of circulation of money and of deposits, and by the quantities of money and of deposits. These are the only influences which can directly affect the level of prices. Any other influences on prices must act through these five. There are myriads of such influences (outside of the equation of exchange) that affect prices through these five. It is our purpose ... to note the chief among them....
We shall first consider the outside influences that affect the volume of trade and, through it, the price level. The conditions which determine the extent of trade are numerous and technical. The most important may be classified as follows:
1. Conditions affecting producers.