What is the result? _The result is a very rapid increase in the pace at which the gold circulates._ Every purchaser feels himself richer. The gold is tendered for a much larger number of bargains, and though the mind, by this illusion it has of gold value as a fixed thing, cannot bring the actual gold back, what it can do is so to increase the second factor, =Efficiency in Circulation=, as largely as to make up for the lack of gold; and under the effect of this prices will gradually rise again. In the same way, if the mass of current medium by some accident becomes suddenly increased that should lead to an equally sudden rise in prices; but the unconscious tendency of the human mind to keep prices stable sets to work at once. Efficiency in Circulation slows down, the new large amount of currency works more sluggishly, and, though prices rise, they do not rise nearly as much as the influx of money might warrant. We see, therefore, that the factor in the making of prices called “Efficiency in Circulation” works like a sort of automatic governor, tending to keep prices fairly stable; but of course it cannot prevent the gradual changes, and sometimes it cannot prevent quite sharp changes, as we shall see a little later on. For the moment, the interesting thing to note about Efficiency in Circulation is that we owe to this factor in prices the creation of _paper money_. If, with only a certain stock of gold to work on, business rapidly and largely increases, if a great many more things are made and exchanged, then, as the gold will have a lot more work to do--and so become more difficult to obtain in any one time or place--that should have the effect, of course, of making it more valuable, that is, of lowering prices. Now with the beginnings of modern industry, about a hundred and fifty years ago, a vastly greater number of things began to be made than had ever been made before, and the number of exchanges effected multiplied ten, twenty and a hundredfold. The stock of gold, though it was increased in the nineteenth century by discoveries in Australia and California, and later in South Africa, would have been quite unable to cope with this flood of new work, and prices would have fallen very much indeed, had it not been for the creation of _Paper Money_. Paper money was a method of immensely increasing Efficiency in Circulation. This is how it worked. A Bank or a Government (but especially the Bank of England, with the guarantee of the Government) would print pieces of paper with the words: “I promise to pay to the bearer of this Five Pounds.” Anyone who took one of these pieces of paper to the Bank of England could get Five Golden Sovereigns. But since this was publicly known, people were willing to take the piece of paper _instead of_ the five sovereigns.