Note 152 — Chapter VIII

The above was written before the discussion in the Annalist (Feb. 7, Feb. 21, March 6, March 13, March 20, 1916) in which the present writer urged that Professor Fisher had greatly exaggerated the volume of trade in the United States by taking banking transactions as representative of trade. In reply (see especially the number for Feb. 21, pp. 245 et seq.) Professor Fisher maintains that the overcounting to which I call attention is offset by undercounting, and considers offsetting book-credits, which actually dispense with the use of money and checks, an important element in the undercounting. I am unable to reconcile this position with the reasons given for excluding book-credits from the "equation of exchange." A detailed discussion of the points at issue appears in later chapters, particularly in the chapter on "Statistical Demonstrations of the Quantity Theory."