Note 22 — Chapter III · THE THEORY OF MONEY AND OF THE FOREIGN EXCHANGES

Money, Credit, and Commerce, I. iv. 3. Dr. Marshall shows in a footnote as follows that the above is in fact a development of the traditional way of considering the matter: “Petty thought that the money ‘sufficient for’ the nation is ‘so much as will pay half a year’s rent for all the lands of England and a quarter’s rent of the Houseing, for a week’s expense of all the people, and about a quarter of the value of all the exported commodities.’ Locke estimated that ‘one-fiftieth of wages and one-fourth of the landowner’s income and one-twentieth part of the broker’s yearly returns in ready money will be enough to drive the trade of any country.’ Cantillon (A.D. 1755), after a long and subtle study, concludes that the value needed is a ninth of the total produce of the country; or, what he takes to be the same thing, a third of the rent of the land. Adam Smith has more of the scepticism of the modern age and says: ‘it is impossible to determine the proportion,’ though ‘it has been computed by different authors at a fifth, at a tenth, at a twentieth, and at a thirtieth part of the whole value of the annual produce.’” In modern conditions the normal proportion of the circulation to this national income seems to be somewhere between a tenth and a fifteenth.