The five factors, M, M', V, V, and T, are the only factors that can affect P directly. Any other influences on prices must act through one or more of these five factors and there are hundreds of such influences. M is affected by such factors as the production of gold and other metals, their consumption in the arts, the habit of hoarding, the international shipment of specie, and so forth. V and V depend upon the methods of making payment - how frequent, how regular, how synchronized with receipts - the habit of hoarding, the facilities of communication, the development of banking, and the like. M' varies with the banking system, with the extent of the use of deposit currency and with industrial conditions. T is affected by geographical differences in natural resources, the division of labor, the knowledge of the technique of production, the accumulation of capital, the extent and variety of human wants, facilities of transportation, freedom of trade, the character of the monetary and banking systems.

To illustrate: Consider the effect of the introduction and development of the telegraph on the price level. This means of communication has increased the velocity of the circulation of money (V) and of deposits (V') and therefore has tended to increase prices (P); it has also facilitated production and increased the volume of trade (T), and therefore has tended to lower prices. The net resultant of these two opposing forces is difficult to determine, but it was probably upward. Or consider the effect of the immigration of foreign workmen to our country. It has increased the total production and trade (T), and therefore tended to lower prices (P); it has also occasioned a continuous outgo of funds from our country to friends in the emigrant country, reducing M and M', and therefore P. The immigrants have tended largely to live in cities and other densely populated areas, and thus to accelerate the velocity of money (V) and of deposits (V') and to foster banking accounts (M'), and therefore to increase prices (P). In this instance also the net effect of these influences on the various factors is difficult to determine. These illustrations are sufficient to suggest to the reader that too categorical statements as to the effect of some factor on the price level are dangerous unless careful consideration is given to the various and often conflicting ways in which a particular factor may possibly affect the price level.