href="@public@vhost@g@gutenberg@html@files@34823@[email protected]#Page_290" class="pginternal" tag="{http://www.w3.org/1999/xhtml}a">290-291

  CHAPTER XV

THE QUANTITY THEORY: THE "PASSIVENESS OF PRICES" Heart of quantity theory: price-level cannot change without prior change in money, deposits, trade, or velocities: independently rising price-level, unable to alter trade or velocities, would drive money away, and so be unable to sustain itself; individual prices can rise independently, but other prices must fall to compensate 292-295 Criticism: argument impressive only because it assumes an uncaused rise in general price-level; when causes assigned, prices can independently rise, compelling modification in other factors in "equation of exchange"; "transitional" and "normal" effects: instances 295-299 Quantity theory conflicts with supply and demand: supply and demand holds good: particular prices and price-level 299-300 Generalization of conflict to include cost of production, capitalization theory, imputation theory 300 Capitalization theory vs. quantity theory; different psychological assumptions of the two theories 300-306 Cost of production vs. quantity theory; money-income vs. quantity of money 306-308 Quantity theory false, granting all its assumptions 308-310 Doctrine that price-level independent of particular prices, and presupposed by them, false; absolute value of money, not price-level, presupposed; price-level may change with value of money constant, through changes in absolute values of goods 310-314   CHAPTER XVI

THE QUANTITY THEORY AND INTERNATIONAL GOLD MOVEMENTS Quantity theory holds that gold movements depend on price-levels; but price-level mere average, cause of nothing 315-316 Some prices, rising, tend to repel gold, but most prices have no such effect 316-317 Some prices, rising, bring in gold 317-319 Gold movements and money-rates 319-320   CHAPTER XVII THE QUANTITY THEORY vs. GRESHAM'S LAW 321-323   CHAPTER XVIII

THE QUANTITY THEORY AND "WORLD PRICES" Types of quantity theory: world's volume of gold vs. quantity of money in given country; standard vs. token money; abandonment of dodo-bone theory and "equation of exchange" 324-326 Credit does not rest on money: measure of values vs. reserves; loans and wealth; value of money vs. price-level 326-328 Loose relation of reserves and credit in world as whole; no proportionality of quantity of gold to value of gold; no quantity theory needed to assert that value of gold related to its quantity 328-330   CHAPTER XIX

STATISTICAL DEMONSTRATIONS OF THE QUANTITY THEORY—THE REDISCOVERY OF A BURIED CITY Criticism of quantity theory statistics yields constructive conclusions; Mitchell and Greenbacks; Kemmerer's and Fisher's statistics of "equation of exchange"; Kemmerer's criticism of earlier statistics 331-335 Kemmerer's and Fisher's figures all wrong except for volume of money and deposits, and prices in base year; if correct, would not prove quantity theory 335-337 Fisher's statistics, resting on Kemmerer's, chiefly studied: their relation to Kinley's "deposits" figures 337-338 M´V´ calculated: errors in calculation; New York very incomplete in Kinley's figures; private banks and trust companies; clearings and "deposits," in New York and outside; "total transactions" and clearings; Fisher exaggerates country checks by at least 116 billions, for 1909;