56 
MONEY 
very large in comparison with the annual output, so 
that it is not surprising that in its case ‘ quantity ” 
has been used instead of ‘‘ supply.” 
Given a certain demand, increase of the supply or 
quantity (whichever is the more appropriate word in 
the particular case) of any article reduces its value, 
and currency is no exception. The additional 
currency is usually given by the producer (or issuer) 
in exchange for commodities and services, and his 
coming in as a new and additional buyer of such 
commodities and services raises the price of these 
things and diminishes the value of the currency 
which he is offering in exchange. Whether the 
currency is gold or paper this is equally true. The 
gold mine-owners and workers turn their gold into 
currency and spend it on the things they want. 
A government involved in a war prints legal tender 
notes and buys munitions and military service with 
them. On the return of peace, it is true, it does 
not itself buy with the currency, but gives it away 
in doles and subsidies, yet this makes no difference— 
the spending of the additional currency still takes 
place, as the recipients buy what they want with it. 
Even if the new currency is only issued by way of 
loan, the effect is the same: the borrowers are then 
the new and additional purchasers. 
Sometimes it is objected that the demand for 
money is, unlike that for other commodities, in- 
exhaustible, so that the issue of additional currency 
will not cause its value to fall, since the new issue 
will always be met by an additional demand for 
currency. But this objection is absolutely unfounded. 
It arises from neglect of the distinction pointed out 
by Sidgwick between the kind of “increase of 
demand ”’ which raises price and the other kind 
which he calls, very aptly, ‘“ extension of demand.” 
We often say that the demand for a thing has