Note 21 — Chapter III · THE THEORY OF MONEY AND OF THE FOREIGN EXCHANGES

My exposition follows the general lines of Prof. Pigou (Quarterly Journal of Economics, Nov. 1917) and of Dr. Marshall (Money, Credit, and Commerce, I. iv.), rather than the perhaps more familiar analysis of Prof. Irving Fisher. Instead of starting with the amount of cash held by the public, Prof. Fisher begins with the volume of business transacted by means of money and the frequency with which each unit of money changes hands. It comes to the same thing in the end and it is easy to pass from the above formula to Prof. Fisher’s; but the above method of approach seems less artificial than Prof. Fisher’s and nearer to the observed facts.