Page:Bankers and Credit (1924).pdf/259

 for its truth not only on the quantity of money in relation to things to be bought and sold but on the use that is made of the money by its holders, that is to say, on the velocity or slackness of its circulation. You may contract and expand—if you can—the volume of currency and of bank credits like a concertina, but if the public makes a nimbler use of the scantier currency and credit left after contraction, and leaves idle in its pocket and in its bank balances the larger amount produced by expansion, the effect on prices will be little, if any.

And the original contraction and expansion is not going to be as easy as it looks. Professor Soddy told us all about one way of doing it, dismissing it in a couple of sentences as a thing which went without saying. "Currency," he said, "must be regulated pari passu with the changing revenue, issued as the latter expands and destroyed as the latter contracts." (It should be noted that the Professor when he talks of revenue does not use the word in its ordinary sense, of the Government's income, but means the whole income of the whole nation.) "Since it would neither be given away in the first nor taken away in the second event, but used to buy back old, or taken in exchange for new State loans, the community as a whole would share the prosperity of good