CHAPTER XIII.

THE VOLUME OF MONEY AND THE VOLUME OF TRADE--TRADE AND SPECULATION

Quantity theory doctrine that volume of trade, and volume of money (and credit), are independent; trade governed by physical and technical conditions, not money 216-219

View that quantity of money vitally affects production and trade 219

Walker, Sombart, Withers, Price, Holt 219-222

Increase of money increases trade, even on static theory: increase of money increase of capital; lowered margin in exchanges; money-rates and interest; money tool of exchange; elasticity of demand for money-service; in Arizona and New York City 222-225

_Trade_ distinguished from _production_ and from _stock_ 225-226

Trade chiefly speculation; Fisher's $387,000,000,000 of trade in U. S. in 1909 analyzed; index of variation in trade; figure based on Kinley's returns from 12,000 banks; double-counting 227-230

Figure largely represents speculation; statistics of total wealth of U. S.; small role of wholesale and retail deposits; "all other deposits" bunched in speculative centers, especially New York; trifling "deposits" in country banks; evidence of bank-clearings: clearings and stock speculation; clearings and ordinary business 230-241

Measurement of "ordinary trade" 241-248

Volume of stock speculation 248-251

Commodity speculation 251-252

Unorganized speculation 252-254

Bill and note speculation 255

Fisher's and Kemmerer's indicia of trade variation wholly misleading 255-257

Production waits on trade; selling costs _vs._ "cost of production"; "good will"; are banks useless? 257-262

"Normal _vs._ transitional": statics _vs._ dynamics; money and credit make static assumptions possible; very little trade in "normal equilibrium" or static state; volume of trade depends on transitions and dynamic changes; functional theory of money and credit must be dynamic theory; abstraction from money by static theory; no static theory of money and credit possible; quantity theory misses whole point of money-functions 262-266

APPENDIX TO CHAPTER XIII

THE RELATION OF FOREIGN TO DOMESTIC TRADE IN THE UNITED STATES

Ambiguity of "domestic trade": figures comparable with export and import figures cannot include turnovers; net income of United States, minus imports on retail basis, counted as domestic trade; exports on retail basis counted as foreign trade; net income for 1910; index of variation for other years; cautions and qualifications; ratio of foreign to domestic trade, 1890-1916 267-278